10 Affordable Rental Property Upgrades That Pay Off

Better property equals better tenants and higher rent. I have seen landlords milk their properties for years without doing any upgrades. The result is a string of bad tenants. 

It’s a self-fulfilling prophesy: bad property attracts bad tenants and bad tenants make the property even worse. 

1. Wall Paint

Wall paint is the upgrade that has the most impact. Paint the property one neutral color, make a note of it and you can do touch-ups after every turn and keep your rental fresh for many years.
Currently, a color that is on-trend but at the same time is very neutral is gray. Our favorite is Agreeable Gray by Sherwin Williams.
Because you will be able to do touch-ups easier and cheaper than cleaning the walls I don’t recommend using semi-gloss or even satin on the walls. It looks cheap and overall it’s not worth it.

2. Paint the Front Door

Painting the front door instantly improves the curb appeal of the property and impresses the tenants because that’s the first thing they see. 

If you have extra cash, upgrade the door hardware. If you go with a black or dark gray color, silver is a good choice for the door handle. 

If you want to make showing the property easier, use Electronic Door Lock with Bluetooth. This will also eliminate calls from tenants because they locked themselves out (not that this should be your responsibility).

3. Welcome Mat

This is one of those extras that give the rental a sense of being at home, it’s super inexpensive and it’s totally worth it.
You can pick one up at Home Depot or on Amazon. Here is a link (not an affiliate link)

4. Paint Baseboards and Interior Doors


Painting baseboards and interior doors immediately give the rooms a lift.
The paint that we use is Berh semigloss ultra white.

5 Add Mulch and Edge The Lawn


Adding mulch and edging the lawn instantly changes the exterior of the home. Your rental will look well maintained and homey. Sometimes red mulch is appropriate because it gives the landscaping some color but in more upscale communities pine bark is better.

6. Change Outdated Light Fixtures


You can replace outdated brass fixtures or paint them to look better. The video below is a great example of what can be done with simple paint.

7. Frame Large Builder Grade Mirrors


Large builder-grade mirrors get delaminated at the edges after a couple of years. Replacing them is expensive and usually is next to impossible to find another large mirror. Here is another way to salvage them and save yourself some cash.

8.  Install New Sink and Faucet


The kitchen faucet is the jewel of the kitchen, it elevates the look of the whole kitchen automatically.

9. Paint the Cabinets and Replace the Knobs and Handles


We remodeled the kitchen below for $600 including the kitchen stove and the counter tops. We did the work ourselves. We used SherwinWilliams ProClassic Alkyd Interior Enamel Paint.

9. Install a kitchen backslash


White subway tile backslash upgrades this kitchen and gives it a more custom look. It’s also makes it easier to clean for the tenant and the landlord.

10. Replace or Upgrade the Appliances


Appliances are so cheap these days. We usually look in Loews for floor models. We have picked a glass stove top for $150 once and we always find something on sale. You have to go to the stores, you can’t find the deals online.
We don’t buy used appliances because it’s just not worth the risk.

I hope these tips gave you some good ideas on how to remodel and upgrade your rental property in order to attract good tenants and keep your rent high.

The Ultimate Guide to Florida Property Investment

Florida Economy and Population Growth

Why Florida? 

We’ve lived in Tampa Bay since 2004, almost 16 years and we haven’t regretted our decision to move to Florida ever since we put everything on the moving truck and drove 16 hours from Washing, D.C. with our chocolate lab Charlie.

The reason we moved was the weather and cheap real estate. We bought a house in the second year, started a business and we’ve never looked back.

That’s the reason many other people move to Florida. The population in Florida has added almost 6 million people since 2000.

The main driver of the economy is tourism, healthcare, and agriculture. But with the current gig economy, many people who relocate to Florida are self-employed.

According to the Business Insider, If Florida were an independent nation, it would have the 17th-largest GDP in the world with a gross domestic product of $1 trillion in 2018.

This guide is based on our experience buying, flipping and managing real estate properties in Florida. We included the pros and the cons of buying an investment property in the sunshine state.

Where to buy?

It’s impossible to write about every single city in Florida but we will discuss the major cities and the towns that are trending with investors lately. 

To get a general idea of what the sale and rent prices (in 2020) are in the four largest cities, here is the median list price per square foot.

  • Jacksonville $125
  • Tampa $194
  • Miami $420
  • Orlando $161

Rent Prices:

  • Jacksonville $1,370
  • Tampa $1,580
  • Miami $2,260
  • Orlando $1,650

Jacksonville is the most affordable place to buy. There are a lot of smaller cities becoming popular with investors: Pensacola, Lakeland, Lake Worth, Boyton Beach, Deerfield Beach, and Pompano Beach.

While some of the small cities are up and comers with good prospects. I would caution investors to check on job growth, quality of jobs and poverty level. 

North-west (Florida Panhandle)

The Panhandle stretches from the border with Alabama on the west, Georgia to the north and the Gulf of Mexico to the south. This area culturally is more “deep south” than South Florida. Here, God, guns, and country come first. 

The main cities are Pensacola and Tallahassee, the state capital.
Pensacola, Milton/Pace, Gulf Breeze/Navarre areas have a healthy rental market. That combined with reasonable prices make it very appealing for investors. Another positive is less competition for deals. There is not much price appreciation but good cash flow.

The median household income for  Pensacola is $48,688, way below the US median household income of $60, 293. U.S. Census

The median household income for Tallahassee is $43,799 and a slightly higher unemployment rate than the US. What is concerning is the 26.7% persons in poverty (data from U.S. Census)

This explains the lower prices and rent. 

North-east

The North-east is home to St Augustine, the oldest permanent European settlement in America, dating back to 1565 and Jacksonville the largest city in Florida.


Many investors are attracted to Jacksonville because real estate prices are lower than Orlando, Tampa, and Miami and the city offers a fair amount of multifamily assets for the investors looking to buy over 100 units.


Jacksonville’s lower prices may be the result of lower-income and a lack of good-paying jobs. Statistics show 2.8% job growth, which is slightly higher than the US job growth however the real story here is the quality of the jobs, the median household income is $52,576 compared to $60, 293 US median income.

Central West

The central west area of Florida contains Tampa Bay (check our guide), Lakeland and Bradenton.

Central West and Central Florida are the fastest growing areas in terms of population and job growth. 

When census officials looked at the population growth by metro area, the Tampa-St. Petersburg-Clearwater region ranked in top 10. The population increased by 1.6%, that’s 51,000 people from 2017 to 2018.

Lakeland-Winter Haven population grew by 3.2% in the same period.

The good news is the population growth, the bad news is the median household income.

The Census Bureau lists Tampa Bay’s median household income at $50,909. That’s $9,384 less than what the USA median household of $60,293.

Lakeland’s median household income is $44,313 with real estate price and rent significantly lower than Tampa Bay.

Bradenton’s median household income is closer to Lakeland at $44,137, median gross rent is closer to Tampa at $1083.

Central

The central region is home to Disney World, Universal Studios, Sea World and of course Orlando. This area of Florida also has over 1000 lakes and Ocala National Forest is a major attraction for nature lovers and freshwater fishermen.

Other large towns in this area are Ocala, Kissimmee, Sanford, and Bushnell.

Median household income for Orlando is $48,511, which is not surprising when you consider that tourism, retail, and healthcare services are the largest employers in the area.

What makes this region different for investors is the opportunity to own vacation rentals and charge higher rent prices.
To illustrate how transient the city population is, only 35.1% of all properties are owner-occupied.

Central-east

Sandy beaches, car races and space shuttle – these are the things that come to mind when I think of this region.
Major cities in the area are Daytona Beach, Melbourne, Palm Bay, Port St.Lucie, Titusville and Fort Pierce.


Lake Okeechobee is the largest freshwater lake in America and was a great attraction for anglers. Unfortunately, lately, the nickname for it is the “toxic lake”.


Cocoa Beach median household income is $58,453, much higher than Tampa Bay and Orlando. The median home price is much higher too. Although, lower prices can be found in the nearby Merritt Island.


Median Income for the rest of the major cities:

  • Daytona Beach – $32,932
  • Melbourne – $45,938
  • Palm Bay-$47,640
  • Port St.Lucie-$57,113
  • Titusville-$43,765
  • Fort Pierce-$30,44

South-west

The south-west region is home to some sophisticated and wealthy cities and resorts like Naples, Venice, Sarasota, Fort Myers, Cape Coral, and the islands of Sanibel, Captiva, and Marco.

South-west Florida was hit the hardest during the last recession mostly because of lack of economic diversity: construction 12%, retail 16%, health care 16%, tourism 10%.

Towns like Lehigh Acres exists to serve Naples and the resorts. If there is a recession that hits tourism and construction we will see a repeat of 2008.
Naples median household income is $94,394, poverty rate 9%.
Lehigh Acres median household income $46,816, poverty rate 20%.

That being said, one can still find deals close to the beach around Venice Manasota Key and Englewood.

South-east

The south-east area stretches from Palm Beach to the Florida Keys. This region is also called the Gold Coast because it’s the playground of the rich and famous.
The main cities are Miami, Hialeah, Fort Lauderdale, West Palm Beach, Boca Raton, and Key West.


Miami has been a shelter for investors from Latin America for a long time. Fearing devaluation of the currency in their native county makes investing in South Florida real estate attractive.
The main driving force of the economy in South Florida is trade with South America and tourism.


Key West, of course, relies mostly on tourism. While the price of homes is high so is the room rent and the occupancy rate hovers around 74%.

What You Should Know About Home Construction and How it Affects Prices

Florida homes built after 2002 are mostly constructed with concrete blocks and are designed to withstand hurricane-strength winds.
Two-story homes are usually built with concrete blocks on the first level and wood frame second story.

Why is this important? First because of pricing. On average wood-frame homes are less desirable and thus cheaper.

Second because of the climate and the potential of termite damage. It’s possible to maintain a wood frame home but it requires regular treatments and inspections.

Most homes are built on floating cement slab and the plumbing runs through the slab.
If you are buying an older home, ask if the home has cast-iron pipes. In the older communities where homes were built in the 50s, 60s, 70s, you can have issues with cast iron pipes. Even if the home plumbing was replaced with PVC, you can still have plumbing problems because the city or county pipes are iron.

Currently, there is a lawsuit against home insurance companies who refuse to pay for damage caused by these pipes because they don’t consider this an accident.

How to Search, Make an Offer and Close on a Property

If you know where you want to buy a rental it’s more convenient to search with a buyer’s agent. In the USA the buyer doesn’t pay commission.

When a seller lists a property with an agent (listing agent), this is usually an exclusive listing, no other agent can advertise it.

The listing agent enters the property in the MLS (multiple listing service), which is accesses by all member agents. It’s a requirement that the listing agent declares the commission amount they will pay if another agent or broker brings them a buyer. 

Typically the entire commission is 6%, the agent who works for the seller (the listing agent) gets 3% and pays 3% to the buyer’s agent.

If there is no buyer’s agent, which only happens 30% of the time, the listing agent gets the entire commission.

Many investors work directly with the listing agents because they know in a hot market they will have a better chance to get the property. 

However, in a buyer’s market, that’s just not the case.

Once you find the property you like, ask your agent to write the offer.

Before you do that, your agent should email you comparative listings so you can make an educated offer.

Know that you can ask the seller to pay all or some of the closing costs. If you are financing the property with FHA or VA there are limits on how much closing costs you can ask for.

How you negotiate and what depends on the current market. One way to find out what market you are in is to ask your agent about the ratio list/sale price. If this ratio is 98%, there is a slim chance that you will negotiate a steal.

Always do an inspection, preferably with an inspector who has a background in construction. You will be surprised to learn that home inspectors are not regulated. Don’t hire the cheapest guy you can find and don’t allow your agent to recommend one. 

Do your research and hire someone you are comfortable with.

After the seller accepts your offer, the seller’s agent will forward the contract to a title company.

In Florida, whoever pays for the title insurance picks the title company. 

Because that’s not a small amount, generally the seller chooses and pays for the title insurance. 

This is how much title insurance costs in Florida:

  • Up to $100,000 a rate of $5.75 per $1,000 of insurance;
  • Over $100,000 up to $1 Million a rate of $5.00 per $1,000 of insurance;
  • Over $1 Million up to $5 Million, a rate of $2.50 per $1,000 of insurance;
  • Over $5 Million up to $10 Million, a rate of $2.25 per $1,000 of insurance;
  • Over $10 Million, a rate of 2.00 per $1,000 of insurance

Next, you and your buyer’s agent if you have one, need to schedule a home inspection and a termite inspection. Most inspectors do both.

After the inspection is done and your lender approves the loan, a closing date is scheduled. The title company notifies both parties.

No attorney is required in Florida to close on a property.

The date of the closing, the buyer should do a walk through to make sure that everything is still the same as when she saw the property. The buyer’s agent usually schedules that for you.

How to Handle Late Rent Payments

You can get everything else right, but if you don’t get paid, you will not stay in business for too long. 

Tenants who pay late or not at are the reason so many investors and landlords give up before they get the chance to reap the financial rewards from their rentals. The solution is simple but not easy to implement.

So, how do you prevent and deal with habitual late rent payments?

There are three proven ways to do it:

  1. Train your tenants at the beginning of the lease by giving them a Tenant Manual or Tenant Welcome Letter.
  2. Enforce the rules you’ve created. Deliver Pay or Quit Notice immediately.
  3. Charge late fees for late-payments and give discounts for early payments of rent.

How to Train Your Tenants to Pay On Time?

The primary tool we use to reduce late rent payments is our Tenant Welcome Letter. 

This letter is an introduction of the tenants to the property, our systems, and the community in general.

A brilliant landlord once said that tenants should be treated as employees. This made a lot of sense to me because the process of introducing a new employee to a company is very similar to the orientation we do with a new tenant.

You can watch the video below  if you want to check out everything that’s included in our Tenant Welcome Letter.

We usually meet with tenants when they move in. We show them how everything works, and we go over our Tenant Welcome Letter.

Part of this letter is our Rent Payment Policy. In it, we explain when the rent is due  when it is late and our policy on rent payment. We also make it clear that if the rent is not paid by a specific date, they should expect a Pay or Quit Notice.

We also make it clear that we don’t make any exceptions because that will be considered discrimination. We can’t treat one tenant differently from another just because we think they have a better reason for being late.

Since we started doing this, we don’t get any phone calls or emails with excuses. 

Our tenants know the guidelines and what’s expected from them.

Enforcing the Rules

Do you remember when you were a kid, and your mom punished you for not doing your homework one day, and the next day she didn’t even ask?

Maybe your mom was more consistent than mine.
In my case, I tried to test her and see how many days in a row I can get away without doing homework.

Some of your tenants will test the limits as well. If you told them that you deliver Pay or Quit Notices on the 7th, but you didn’t. I can almost guarantee that they will do it again and again until it becomes a habit that’s very difficult to break

My mom probably felt bad about continually reminding us about homework, so she didn’t do it every day.
Landlords and property managers have a good excuse too. Delivering Eviction Notices doesn’t feel right, but it’s crucial to growing a healthy rental business.

If you currently have a tenant who pays habitually late, mail them a Late Rent Payment Warning Letter.

If they don’t respond to that, deliver a Pay or Quit Notice immediately the next time they are late with rent.. In Florida that’s a 3 Day Notice.

 

Discounts for On Time Payment and Late Fees

The “carrot and stick” method of motivation has been used since the industrial revolution.
The carrot is the discount for early payment, and the stick is the late fees. 

I only use carrots for my dog Kimmy; see photo above, and not for my tenants.
I don’t use discounts for early payment as a reward, but many landlords swear by it. The reason I don’t like it is that I don’t want tenants to think that paying on time is optional and that they should be rewarded for it.

What I use is Late Fees and Notice Delivery Fees.

A couple of things about late fees: 

  • Include all fees in your lease.
  • Charge reasonable late fees.
  • Give tenant grace period even if not required by law.

The fees should be written in your lease agreement
You can’t charge tenants’ late fees even if they are reasonable if they are not mentioned in the lease.

Have a grace period
If your state has no statute on the required grace period before charging late fees, it’s a good idea to give tenants at least three days.
The reason for that is you want to be able to enforce and collect late fees. If you are unreasonable, for example charging a 10% late fee on the first day after the rent is due, this may become a burden for them, and they will resent you for it.
Be fair but consistent.

Charge reasonable but sizable late fees to motivate tenants and stay legal.
What is a sizable but reasonable fee depends on the rent amount.
What would motivate a tenant who is paying $1500? I believe $20 is not enough to encourage them to pay on time. However, 7% might be enough a deterrent to stop late payments.

Daily Vs. One-Time Late Fees
Your state laws determine the late fees you can charge. In general, you can charge three types of late fees:
-One time late fee
-Daily fees
-One time fee plus daily fees

One time fee plus daily fees encourage the tenants to pay ASAP even if they are late one day. If there are no daily fees, the tenants wouldn’t have the motivation to pay immediately.

Notice Delivery Fee
I charge $100 for the delivery of a Pay or Quit Notice. I started doing that after we had a tenant who will only pay after we delivered a notice. Running to her house every time the rent was late, become tiresome very quickly.

Can You Sue a Tenant for Unpaid Rent and Damages?

How To Collect on Back Rent and Damages Not Covered by a Deposit

Having to go through eviction or finding out that your tenant disappeared in the middle of the night with all appliances is a nightmare every landlord dreads.

Thankfully, this is rare if you screen your tenants thoroughly, and there is something you can do to recover some or all of the money you are owed.

Here are the steps you can take to collect on back rent and/or damages.

  1. After evicting the tenant and regaining possession of the rental, you need to send them a collection letter for the total amount due. If they don’t pay you can file a lawsuit to get a judgment for the money they owe you (if the eviction didn’t include that)
  2. With the money judgment against the tenant, contact the local Sheriff (or the appropriate “levying officer”), give them your tenant’s employer information, and they will serve the garnishment order to the employer.
  3. Alternatively, you can sell your judgment. Don’t expect more than 6-10 cents on the dollar.
  4. Another option is to contact a collection agency to deal with collecting the debt. You can hire a collection agency even without getting a money judgment. Expect to pay 50% percent commission if they collect. 

Suing a Tenant for Back Rent and Damanges

You can sue tenants for unpaid rent and damages beyond what their deposit covers. 

When evicting a tenant, a landlord can seek possession judgment, money judgment, or both. Most property owners file for possession only because it’s less complicated and faster. 

But what happens after a tenant is evicted with possession judgment only and the landlord wants to sue for back rent and damages?


The next step will be to file a lawsuit in Small Claim Court and seek a money judgment

 

How To Collect on the Money Judgment

There are three ways to collect on a judgement: 

  1. You can hire a collection agency.
  2. Try to collect yourself
  3. Sell the judgement

Hire a Collection Agency

There are some agencies with an excellent reputation, like National Credit. However, typically you need to split the recovered money 50/50. That’s more than zero, and it’s a no-hassle solution for the landlord or property manager.

Tenants will not be able to buy a house or even rent a place until they pay off the judgment.

A collection agency will ask for three things:

  1. Social Security Number
  2. Date of Birth
  3. Court Judgement

 

 

DIY Collection and Wage Garnishment

Collecting on the judgment is possible with some free time and patience. The process may vary from state to state. If the tenant doesn’t pay, you can garnish their wages. In some states, this is not allowed.

What you need to do is contact the local “levying officer”, the Sheriff in most cases who is responsible for serving the garnishment order.
You need to provide them with the name and address of the current employer of your tenant.

If the tenant finds another job, this order will need to be updated.

To find out if your tenant currently works and who is their employer, you may have to look at their social profiles. Many people make this information public.

I’ve heard mixed reviews on the level of success regarding wage garnishment. There are a lot of conditions, for example:

  • The debtor needs to be employed. They can’t be self-employed or have LLC.
  • You can only garnish 25% of their disposable income.
  • Their income must be above the poverty line. It must exceed 30 times the minimum wage, whichever is lower.
  • Their salaries are being garnished already.
  • They are exempt from wage garnishment – for example, they are a head of household.
  • Income from social security, disability, retirement, child support, and alimony doesn’t count.

Sell Your Uncollected Judgment

There’s a site called Judgement Marketplace where you list your uncollected judgments, and people and companies bid on the. Usually ends up paying around 10 cents on the dollar, but might be higher for a more significant amount.

How long does the landlord have before filing a lawsuit for unpaid rent or damages?

Each state has a different law. However, most have specific time frames for notifying tenants about intentions to impose a claim on their deposit.
If the deposit wasn’t enough to cover the damages and the unpaid rent, the time frame is 2-6 years.

Can a landlord sue for unpaid rent without a written lease?

Oral leases are enforceable despite what people think. There should be enough evidence that the tenant was paying rent. If the tenant was paying cash and the landlord did not keep a ledger, it won’t be very easy to prove that they owe back rent.
The only exception to this is longer leases, typically leases over one year need to be written and witnessed.

Can a roommate sue for unpaid rent?

Roommates have equal responsibilities and rights under the lease with their landlord.
If one stops paying rent, the landlords can evict all of them. Each cotenant is equally responsible for paying the rent.
If, however, the roommates had a document showing how much each is responsible for paying, they can seek a judgment in small claims court if one of the tenants stops paying rent.

How Do I Find a Good Property Manager?

It’s tough finding a good property manager. They all sound great on the phone. You will hear a lot of promises, guarantees, and benefits. But how do you know if they will deliver?

Here is our strategy for finding a great property manager:

  1. First, find candidates to interview. Start with NARPM, the National Association of Residential Property Managers, search Yelp, join Facebook Word of Mouth groups. 
  2. Second, conduct an interview. Ask each potential company the same questions.
  3. Call at least three references.
  4. Pretend to be a tenant and call them. Check how fast they respond and what is the process that you will go through to see an available  rental.

Create a List with Potential Candidates to Interview

Start your search at NARPM, the National Association of Residential Property Managers. 

  • The main reason to start there is that the members are committed to educating themselves and subscribe to specific standards of conduct. Can you find a good manager if they are not part of NARPM? Yes, you can, but this association is a good starting point.
  • Why is education important? Any licensed broker can be a property manager; however, the classes and exams to become a real estate broker, offer minimal training on how to manage a property for someone else.
  • NARPM continually educates its members on how to manage their clients’ properties, on crucial pending legislation, etc.

Another place to look for is Yelp.

Read the three-star and one-star comments, also look at the comments that are hidden from view and focus on feedback from landlords, not tenants.
Many property managers have learned how to game and increase their online reputation, but they can’t hide negative reviews. Mind you; some threaten tenants and landlords with lawsuits and have language in their agreements that forbid clients to review their business online.

Word of Mouth Facebook Groups

People are starting to distrust online reviews, and they have a good reason for it. Many Words of Mouth groups were created on Facebook to help find excellent pros. Joining one of those groups is a great idea not only to find a property manager but also to discover other professionals like handymen, AC companies, etc.

Look into our directory as well; we only list companies we have personally used or were recommended by another landlord. While the list is still very small, we hope to develop this into a useful resource for investors.

Interview Property Management Companies

After compiling a list of potential candidates, call them, and ask each company the same questions, write down the answers.
Here are some potential questions that you may ask:

What is your property management company structure: portfolio or task?

With a portfolio style management, one manager is responsible for a certain number of properties, and they oversee the entire process, from leasing, management, maintenance, etc. This means that ideally, as a landlord, you will speak to one property manager, instead of being transferred to different departments as it may happen with task style management.

The portfolio style has a negative side as well as positive. Your property manager may quit, and this happens often.

How many properties do you currently manage?

If this is a task- style property management company, you may want to find out how big the company is? Bigger is not better. 

How many properties do you assign to one portfolio manager?

Each manager should not handle more than 50-60 rentals. If they do, communication will suffer. 

Who does the accounting?

 Is the owner’s wife handling the books, or do they have a professional accountant or bookkeeper doing that? Super important!

Ask them to describe the process for rerenting a property.

The answer to this question will tell you if they have systems in place to handle rerenting.

Vacancies are the most significant expenses for landlords. The property management company should have a system in place to minimize this loss.

I know companies that will not show the property until it’s cleaned and ready. Most of the time, this is done because it’s just not convenient for them to arrange viewings with the current tenants. While in some instances that’s justified (tenants are not very clean), this should not be a rule.

Ask them how they proceed if tenants is late with rent payment.

Does the company have a system for dealing with late payments? Does it apply this rule consistently to all late-paying tenants?

Do you charge the vendors you use any fees in any shape or form? Do you mark up repairs?

Property management companies can be sneaky in how they call this markup. Some are upfront, and this is mentioned in the property management agreement. But some show you an invoice and then charge the vendors separately. Of course, vendors will mark up their initial invoices — either way, you need to know if this is happening.

What fees do you charge the tenants?

Move-in fees, application fees, late fees? Who receives these fees? Some property managers discovered a different way to make money – if they can’t charge landlords, they will charge tenants. What you need to know is what these extra charges are and who keeps the fees, you, or the company.

What is your management fee and leasing fee? 

This question is necessary but is not the most important one. An incompetent property manager can costs you a lot of money, even if the management fee is low.

Are there any other fees like lease renewal fees, etc.?

How do you pay landlords, and when should I expect payment if the tenant pays on time?

What is your repair limit?

Usually, property managers will have a repair limit in the property management agreement. If the repair is below this amount, they will not call the landlord for permission. The standard amount is $200-$300. Emergency repairs usually do not require permission. You will need to know what they consider emergency repair.

Would you provide me with three landlords I can call for references?

The property manager should be willing to give the names of at least three landlords you can call or email.

Call References

After you narrow down your list, call the references they gave you. Talking to these landlords is just one piece of the puzzle. Keep in mind that these are their best clients.

Pretend to be a Tenant

Finally, for the last test, call on some of the properties that the property management company has currently listed.

Pretend to be a tenant. What you need to know is how fast the company responds to rental inquiries.
Sometimes the properties may be already rented, so you need to call on more than one rental. Good property companies have this process automated to a certain degree; tenants should be able to see the property 24/7. Many tenants may be in town for one day only. If your property manager is busy or not responding, your property will stay on the market longer.

How Much Do Property Managers Charge?

Property Managers typically charge 8 to 10 percent of the monthly rent plus leasing fee of half a month to one month’s rent every time they have to find a new tenant. Some managers charge additional fees for overseeing major repairs and mark-up on repairs, inspections, and contract cancellations.

Vacation rental management fees are higher, typically 25 to 40 percent. Most of the time that’s an all inclusive fee. Companies that handle only marketing and booking usually charge around 10 percent.

 

What is the difference between the property management fees and leasing fees?

Leasing Fee

A leasing fee is  paid to find a tenant.  This fee is usually equal to one month’s rent, but in more competitive areas, it’s often 50 percent of one month’s rent.

Why do managers change this fee? 

Most property managers participate in their local MLS (Multiple Listing Service). 

To list a rental property in the MLS, property managers have to declare how much commission they will pay to any realtor who brings a renter.

How often does another broker bring a renter? In my experience, 70 percent of the time. 

For example, if a landlord is paying a $600 leasing fee, often 50 percent of this fee is split with  another broker if they bring a tenant.

How vital is broker cooperation?  Tenants who are brought by other brokers tend to be better qualified, and the sheer volume of agents, in my city 15,000 agents, makes it an excellent idea, especially in a down market.

Can you hire a property manager only to lease your property?

The answer to this question is yes. If you are reasonably sure that you can handle the management, this is an excellent idea. 

The fee for finding a tenant only, without managing the property, usually equals one month’s rent.

If you decide to hire a property manager only to lease your property, please screen the applicants yourself.  Here is our guide on how to screen tenants the right way.

Property Management Fee

A property management fee is paid to manage the property and  the tenant. This fee is usually 8 to 10 percent of one month’s rent. I have seen it as low as $59 flat fee for condo management to as high as 12 percent. 

What does a property manager do to earn this fee?

These are the usual property manager’s responsibilities:

  • Conducting a Move-In Inspection with the tenant
  • Preparing a lease
  • Coordinating repairs and maintenance
  • Conducting inspections usually every six months
  • Enforcing the lease including timely rent payments
  • Conducting Move-Out  inspections
  • Accounting and preparing statements for the landlords
  • Dealing with security deposit disputes.

What about flat-fee property management?

Some property management companies charge a flat fee.  Most of the time, this leads to awful service.

Why? It takes one manager to oversee 50 rentals properly. If they are paid a living wage, let’s say $3000 per month, that leaves only $950 for rent, taxes, insurance and other expenses. 

The manager will have to take on a lot of properties to make up for  the low management fee, but they will not have enough to pay someone to help them. Too many rentals and not enough staff  may lead to inadequate service and disappointment, even if the manager is  a good one and has good intentions.

Can you negotiate property management fees?

Most property management companies will not lower their management fee, but they may give you a free month or two or possibly lower the leasing fee.

What additional fees should you look for?

Property management is not an extremely profitable business. Historically, real estate brokers did property management as a loss leader, as a way to bring more customers as sellers and buyers. 

As a result, the industry learned to bring more fees from other services and the tenants. Here are some of the unnecessary expenses that you should look for.

  • Overseeing repairs
  • Repair mark-up. Some managers are hiding these fees, charging the vendors without showing that on the invoice. Of course, the vendor has increased the invoice to cover these fees. They can be as high as 15% on each repair.
  • Extra visits to the property.
  • Eviction guarantees.
  • Move-in fees from the tenants.
  • Late fees that they collect.
  • Agreement canceling fees.
  • Lease renewal fees.
Make sure you read your entire agreement and ask questions about any of those fees. 

Do Property Managers Pay for Repairs?

Property managers oversee the maintenance of the property, but they don’t pay for repairs. They collect the rent at the beginning of the month, subtract any maintenance expenses, the management fee, and transfer the rest to the owner by electronic transfer or check.

Some vacation property management companies include essential maintenance in their fees.

Property Management Fees for Vacation Rentals

Typically, property managers that are onsite charge 40%, and independent property managers’ commissions are 25% to 35%.
Some companies offer marketing and booking only at 10% to 15%.
Few property management companies offer guaranteed income even if the rental is vacant.

Full-service vacation rental managers typically handle inquires, handle keys, cleaning, and maintenance.

Look for Hidden Fees When Comparing Vacation Property Management Companies

You should compare the actual management fees. Additional expenses like linens, amenities, credit card processing, housekeeping, marketing can add 25% or more to the total cost.

Property Management Fees for Home Owner's Associations

HOAs hire property managers to collect the HOA fees from the homeowners, enforce the rules of the community, publish a newsletter, maintain a website, conduct the Association meetings, deal with insurance and maintenance.

There are three fees that are typically charged by the HOA management company:

  • Initiation Fee – this fee covers transferring all of the accounting and paperwork to the new company
  • Management Fee – Typically, $10-$20 per unit. Some companies offer services a la carte. HOAs can pick and chose only the services they need.
  • Exit Fee- this fee is to ensure a smooth transition to the new management company.

Tampa Bay Real Estate Investment Guide

The Ultimate Guide to Real Estate Investing in Tampa Bay

If you are planning to invest or buy a property in Tampa Bay, you need to read this guide. Get unbiased and critical information on the hottest spots for real estate investors and on the current development trends.

 

Overview

Greater Tampa Bay consists of three counties: Hillsborough, Pinellas and Pasco. The three major cities are Tampa, Saint Petersburg and Clearwater.

Tampa Bay area has more than 2.6 million people and is projected to hit 3.3 million by 2020. The majorly  of the population growth is in Hillsborough and Pasco counties. The reason for the growth is the availability of land. 

Who Lives in Tampa Bay?

The three counties have a slightly different demographic (U.S. Census), the most diverse is in Hillsborough county with 17% of it’s population being foreign born. 

What People Do for a Living?

The first industries that allowed Tampa to thrive in the 1900 s were the cigar and phosphate business. While the phosphate industry still exists, and it employs 6,000 people according to the Florida Phosphate Council, the cigar industry had a different fate. J.C. Newman Cigar Company is the last surviving cigar factory in Ybor City.

Currently, the five largest employers in the Tampa Bay area are:

  1. Publix Super Markets – 37,572 employees
  2. BayCare Health System – 27,600 employees
  3. Hillsborough County School System – 25,170
  4. Raymond James Financial – 18,550
  5. MacDill Air Force Base – 18,000
  6. HCA West Florida Division – 17,000

Companies that have HQ in Tampa Bay are Jabil, Tech Data, The Penny Hoarder, Home Shopping Network, Bristol-Myers Squibb, Depository Trust and Clearing Corporation, Citigroup, Amazon, SouthEast Personnel Leasing, USAA, and Welbilt.

Where are the highest rated schools?

Hillsborough County Schools

  • South Tampa – zip code 33629
  • Lithia – zip code  33547
  • New Tampa – zip code  33647
  • Westchase – zip code  33626
  • Lutz – zip code  33549
  • Thonotosasa – zip code 33592
Pasco County Schools
  • Wesley Chapel – zip code 33544
  • Land O Lakes – zip code 34638
  • Trinity – zip code  34655

Pinellas County Schools

  • Clearwater – zip code  33765
  • Dunedin – zip code 34698
  • Palm Harbor and East Lake – zip codes 34685, 34683
  • St Petersburg – zip codes 

    33710, 33709

 

What is like to live in Tampa Bay?

Most newcomers are attracted to Tampa Bay by the weather,the beautiful beaches and the low cost of housing. 

If you like boating, fishing and kayaking, you will love living here. Tampa Bay is also great for sports fans: Tampa Bay Lightning, the Bucks, the Rays and the USF Bulls.

The main negative is the lack of good paying jobs. The are plenty of jobs, unemployment is at 3.6% and job growth is estimated at 2.3%. However, the median household income is still at $56,137, while the median sold home price is $237,800 (Zillow stat)

Another concern is the lack of good transportation and  as a result traffic congestion.  

Tampa Bay Cities and Neighborhoods

Lithia Real Estate Market

About Lithia

Lithia, Florida is a land of past and present, old and new. It’s a land of stately oaks, towering pines, hardwood hammocks and river cypress swamps; yet a land resisting urban sprawl and development from it’s big brother Brandon just nine miles to the north. 

Some say Lithia has been “rediscovered”; until the early 1980s, the community remained largely agrarian, with large farms providing citrus, cattle, and milk to neighboring towns.

Today though, groups like U-CAN (United Citizen Action Network) and R-LAND (the Rural Lithia Area Neighborhood Defense) are working hard to protect their land against what county planners say is inevitable: that the area south of the Alafia River, which includes Lithia, will swell to more than half-a-million people by 2025.

Real Estate Trends

Lithia is most well known for the famous Fishhawk communities, Fishhawk Trails and Fishhawk Ranch. Fishhawk Trail is a guarded, gated community with custom homes on half-to one -acre sites surrounded by towering oaks. 

The community offers a six-mile-long natural preserve trail system with a catwalk over Fishhawk Creek, as well as a recreation center and pavilion, tennis,  roller hockey, playgrounds and more.

Fishhawk Ranch is an award-winning, master-planned community offering residens an enclosed community-center life with neighborhood cafes, bars and restaurants, a movie house, skate park,  aquatic center with water-slide, on-site daycare, and 20 miles of trails that connect the community’s distinctive villages and parks.

Fishhawk Ranch sits on 4,400 acres, 1500 of which are reserved for conservation: the community received recognition from the National Arbor Day Foundation and the State of Florida for it’s work in saving trees during development. The 9000+ homes in Fishhawk vary in price from $159,000 for a townhome to $700,000+.

Older single-family homes are still available on country acreage outside the major new developments; you can find a 3/2 on a country acres for $260,00, as well as undeveloped acres at reasonable prices. Despite booming planned developments and excellent schools, the median home price in Lithia is still $336,276.

Sale and Rent Prices

  • $336,276 Median Price, 1.3%  One Year Price Increase
  • $1,750 Rent list price
  • $0.98 Rent list price / sq ft

 

 

 

Ruskin Real Estate Market

About Ruskin

Think Ruskin, think inlets, islets, tomatoes and fishing. Think Ruskin, think revitalization and redevelopment; think preservation of the past. Ruskin Florida, once considered off-the beaten-path, is now beating a path of it’s own as one of Florida’s most progressive and well-preserved west coast communities.

Situated on the shores of Tampa Bay, the Little Manatee River and the Ruskin Inlet, Ruskin is about 16 miles southeast of Tampa. It’s population of 17,208, 38% of which is Hispanic, is expected to more than double by 2025; in an area with just a little over 15.5 square miles.

 A strong movement is underway to incorporate, to invigorate the once thriving downtown, and to preserve the area’s many natural treasures.

Real Estate Trends

The community plan for Ruskin  today calls for residents and visitors alike to “tread lightly” on the delicate ecosystem they call home. It values” nature over commercialism,” “star-filled skies over the glare of city lights,” and “the sounds of crickets and frogs” over that of traffic.

The community itself comprises four distinct neighborhoods. “Old Ruskin” is an area of single-family homes to the west; east of downtown and west of I-75 are multifamily and starter -home units. Southern Ruskin is considered the suburbs, where residential homes dot the shores of the Little Manatee River. The final district, southeast of the city proper, is reserved for rural and agricultural uses-for open spaces and protected spaces.

A major development in Ruskin was the opening of the Amazon Fulfillment center, which is part of the Corporate park, built next to I-75. 

The stalled development of Little Harbor is starting to  show signs of life after the large builder Lennar bought some lots and started to build luxury home in the high $700s.

Typical Homes

Home in Ruskin reflect an unique blend of architecture styles, from the charming turn-of-the-century cottage on the banks of the Little Manatee River to the Georgian-style homes reminiscent of the pre-civil-war to modern style homes built to withstand hurricane force wind.

Sale and Rent Prices

  • $211,024 Median Price, 2%  One Year Price Increase
  • $1,595 Rent list price
  • $0.86 Rent list price / sq ft

 

 

Seminole Heights Real Estate

Overview

When locals talk about Seminole Heights, they refer to the whole area encompassing Old Seminole Heights, South Seminole Heights, and Southeast Seminole Heights. ZIP Codes: 3360333604, and 33610.

The first things that come to mind when someone mentions Seminole Heights are the beautifully restored bungalows with wraparound porches and the thick oak canopies casting shade over the wide sidewalks.

This area attracts artistic types and people who are dedicated to the idea of preserving the architecture and the sense of a tight-knit community. Seminole Heights has a lot going for it: innovative food scene, craft breweries, cultural diversity, beautiful historical buildings each with its character.

Homes and Real Estate Trends

Most of the historic “California bungalows” were built around 1910 by the Seminole Development Corporation around the trolley line connecting downtown Tampa and Sulpher Springs (small resort destination).

 

Bungalows are commonly frame construction, which creates a problem if the home has been neglected and not treated for termites and carpenter ants. Newer homes in this area are built in the style of the craftsman bungalow but with block construction.

There is a lot new development in this area, mostly rehab but a couple of brand new loft-style luxury multifamily buildings were built along Florida Ave, price ranging from $1,700 – 1,900 for 1BR apartment.

Median sale home price: $230,545; 4.4% 1-year change (2019)


Median rental price: $1,490
Travel time to downtown Tampa: 10 mins
Things to watch for: locals complain about the availability of parking.

Nearby neighborhood to watch for: Tampa Heights- 10% 1-year change (2019)

 

Seffner Real Estate Market

Overview

Seffner, Florida is one of Hillsborough County’s earliest communities. Because it sits three miles north of Brandon and ten miles northeast of Tampa, this still-rural area is rapidly becoming a bedroom community, with most folks commuting to Brandon and Tampa.  Seffner’s population is  7,579 according to the 2010 census, up almost 30 percent since 2000.

Sociocultural Data Report from Hillsborough County

Real Estate Trends 

 Homes in Seffner include upscale ranches and contemporary, single-family homes on large lots in gated subdivisions. Seffner living is still considered affordable with median sale price of $199,900 in 2019. 
Sale price have gone up 4.2% since last year and the expectation is a 2% increase for 2020, according to Zillow.
 

Rentals and Investments

Seffner is very popular with investors because most communities are older with no CDD fees (community development fees),  most only have small HOA fees. 

The builders are also buying large tracts of land in the area, which helps lift the median sales price. They have to do a lot of work before building because the area is prone to flooding from the summer rains. 

If you are buying land, make sure that you visit after a heavy rain.

Typical Buildings

Most homes are build with concrete block but there are  still some frame homes. Please read our Investing in Florida Guide for more information on what you should look  when buying real estate anywhere in Florida.

Sale and Rent Prices

  • $1,450 Rent list price
  • $1.01 Rent list price / sq ft

South Tampa Real Estate

  • Overview

Where New Tampa may bring to mind a tangle of disconnected, albeit beautiful, new master-planned communities and big box shopping outlets and malls, South Tampa brings to mind a unique combination of gracious, established, character-rich neighborhoods and urban sophistication.

South Tampa is not a community proper; instead, it comprises the upper and lower Tampa peninsula and is home to McDill Air Force Base, the University of Tampa as well as many thriving commercial districts and well-established residential communities south of West Kennedy Boulevard, such as the notable Hyde Park, Bayshore Boulevard and Ballast Point.

While South Tampa is considered one of the most expensive areas in Tampa, it’s residents are quick to tell you the many reasons they love to call South Tampa home, among them the always-on bay breeze, the area’s architectural diversity, brick streets, towering oaks and city living-and with it the ability to find just about anything you need or want within 15-mile drive…without four-lane highway traffic and long commutes out of new subdivisions.

Neighborhoods and Prices in South Tampa

Residents in South Tampa enjoy a mix of mostly older homes and new construction, single family homes and condominiums with dramatic bay views, such as those along Bayshore Boulevard. South Tampa also features luxury golf course homes, as well as gated waterfront communities, townhomes, executive homes and custom estates. 

In general, the neighborhoods south of Gandy Blvd, which bisects the South Tampa peninsula north and south, are more modest, with many homes being more than 40 years old and much smaller than their newer counterparts. And although you can still find townhomes, condominiums and starter homes in the $200s, most South Tamps homes begin in the $300s and extend into millions.  

The two zip codes in this area are 33611 and 33616. The median price of home in 33611 is $290,545, an increase of 2.7% over last year. Properties in the 33616 zip code tend to have lower prices, median price of $246, 316, appreciation of 1.7% over last year. 

Rent prices:

  • 33616, average rent $1800
  • 33611, average rent $1797

 

 

Bayshore Boulevard, called the “emerald jewel of Tampa,” is home to the longest, continuous pedestrian sidewalk in the world, lined with a historic white balustrade atop the seawall of Hillsborough Bay. It’s also home to Tampa’s most stately and elegant homes, many of which reflect the proud history of the Tampa area. 

The Boulevard runs south to north, from the Tampa Yacht and Country Club to the outskirts of downtown Tampa, with many townhouses and high-rise condos lining it’s shores. Homes in the Bayshore area range from $250s for a condo to $5 million and up.

Hyde Park is one of South Tampa’s oldest neighborhoods; as such it offers many heavily shaded, older bungalow-style homes with inviting front porches, reflecting the architectural style of the 1920s ans 30s. Many of these homes have been lovingly restored and retain the area’s old-word style charm, thus making Hyde Park a destination experience in itself.

Location-wise, Hyde Park lies just across the Hillsborough River and extends west of Tampa’s downtown business and cultural center. It’s social center is Old Hyde Park Village, an upscale shopping and entertainment venue with large and small boutiques, excellent restaurants with outdoor seating and a movie theater. Homes in Hyde Park range from $160s to a small one bedroom  condo to $4 million.

Another notable and popular South Tampa community is New Suburb Beautiful; although it is still beautiful, it is no longer new-the community was originally developed during the 1920s and 30s. Many of the homes along New Suburb’s oak-lined, cobblestone streets have been restored to their original splendor; prices today range from $200s for a condo to $1 million.

South Tampa is also home to the up-and-coming, 50-acre mixed-use waterfront neighborhood called Water Street Tampa. 

Rentals and Real Estate Investments

Valrico is great area to invest because the amenities available to residents and the quality of the schools. It’s five elementary schools-Alafia, Buckhorn, Cimino, Lithia Springs and Valrico-are all “A” schools, as is its sole middle school Mulrennan Middle. Bloomingdale High, the community’s high school, is not far behind with “B”.

Schools are not the only reason to invest in this area.  With 65 golf courses within 30 miles of the city, chances are good you’ll find one to your liking. The semi-private championship course at River Hills, nestled within more than 200 acres of countryside, offers plenty of challenge for the serious golfer and plenty of fun for the weekenders. The Bloomingdale Golfer’s Club, also semi-private, is ranked one of Florida to 10 courses.

But golf is not the only thing to do – not by far! Nearby is the popular Alafia River State Park. As most of the land is reclaimed mines, the park offers some of the most radical elevation changes in Florida. With 20 miles of trails, opportunities for canoeing and fishing, as well as full-service campground and equestrian-friendly campsites, the Alafia River State Park makes for relaxing fun time and time again.

Typical Buildings

This area is really mixed with most of the newer homes build with concrete blocks but there are also some older wood frame structures

Sale and Rent Prices

  • $1,675 Rent list price
  • $0.97 Rent list price / sq ft

Other notable South Tampa communities, each with their own unique personality and flavor, include Ballast Point, Beach Park, Davis Island, Interbay, New Suburb, Parkland Estate, SoHo(South Howard) and Sunset Park.

The median home value in 33611 is $290,545. 33611 home values have gone up 2.7% over the past year

Valrico Real Estate Market

Overview

If you ask Tampa-area locals to tell you about Valrico in just a few words, the answer is usually the same: lots of big, beautiful trees, great golf courses and excellent schools. Valrico, Florida is an evolving community 13 miles east of Tampa. Just under 35,600 people call Valrico home according to the last census. 

Real Estate Trends

A variety of neighborhoods dot this peaceful, family-friendly, and mostly upper-middle-class community, including large acreage next to densely packed subdivisions. Available for sale are single family homes, some condominiums and town-homes, and large lots for building a custom castle of your very own. 

Bloomingdale (zip code 33596) is the largest neighborhood in Valrico, it has over 32 smaller single family communities. Some of the homes are in deed restricted communities and some have voluntary HOAs.  Half of Bloomingdale is actually addressed to Brandon. 

The median home value in Bloomingdale (Valrico) is $291,939. home values have gone up 1.7% in 2019 over the past year.

 

Lakefront homes are another options; residents living along the shores of the 124-acre Valrico Lake enjoy fishing, water-skiing and air-boating, as well as an abundance of wildlife from raccoons and foxes to geese, ducks and alligators.

The median price for this area of Valrico (zip code 33594) $231,095, home prices have gone up 3.4% in 2019. 

New, larger estate homes with pools and lavish landscaping are also available for those with larger budgets and tastes,  in communities like Country Gates and River Hills. River Hills, a member of the Audubon Society, has within it’s borders several areas designated as wildlife preserves.

Rentals and Real Estate Investments

Valrico is great area to invest because the amenities available to residents and the quality of the schools. It’s five elementary schools-Alafia, Buckhorn, Cimino, Lithia Springs and Valrico-are all “A” schools, as is its sole middle school Mulrennan Middle. Bloomingdale High, the community’s high school, is not far behind with “B”.

Schools are not the only reason to invest in this area.  With 65 golf courses within 30 miles of the city, chances are good you’ll find one to your liking. The semi-private championship course at River Hills, nestled within more than 200 acres of countryside, offers plenty of challenge for the serious golfer and plenty of fun for the weekenders. The Bloomingdale Golfer’s Club, also semi-private, is ranked one of Florida to 10 courses.

But golf is not the only thing to do – not by far! Nearby is the popular Alafia River State Park. As most of the land is reclaimed mines, the park offers some of the most radical elevation changes in Florida. With 20 miles of trails, opportunities for canoeing and fishing, as well as full-service campground and equestrian-friendly campsites, the Alafia River State Park makes for relaxing fun time and time again.

Typical Buildings

This area is really mixed with most of the newer homes build with concrete blocks but there are also some older wood frame structures

Sale and Rent Prices

  • $1,675 Rent list price
  • $0.97 Rent list price / sq ft

Can a Lawn Company Place a Lien on My House if My Tenants Hired Them?

The short answer to this question is No. Mechanic’s liens or contractor’s liens were created to help contractors and subcontractors get paid without having to sue the owner of the property. The work that the contractors did should permanently improve the property.

Because the lawn mowing company only did maintenance work , they can’t file a lien.

 

Legault v. SUNCOAST LAWN SERV. INC., 486 So. 2d 72 (Fla. Dist. Ct. App. 1986)

 

Verified Vacant Houses Review

This review is based on the sample of 10 addresses I was emailed by Verified Vacant Houses .

I use an address validation tool that checks the address of the property with the USPS and it shows if it’s valid and if it’s vacant or not.

Here is the result for the ten properties I checked:

1. Burlwood St – Vacant, I found code enforcement liens,, the information for the owner is correct

2. Meadow Ln – Vacant, listed on the MLS

3. Travis Blvd – Vacant, Code Enforcement Lien

4. Manchester Ln, – Vacant, Code Enforcement Liens

5. Ashford – vacant, recently sold.

6. Whittier – vacant, there was a code enforcement lien that was released.

7. Carolton Cir – vacant

8. 54th St – vacant, curently pending in the MLS

9. Carnegie Cir – vacant, recently sold

10. Puritan Cir – vacant

I have to say that I didn’t expect to find all properties vacant.  Couple of the properties were either sold recently or  pending but that was acceptable.

The monthly fee is $79. It looks like you can cancel at any time.

I am not paid in any way to write this review.  Contact me if you had any experience with this company.

How to Find Real Estate Deals?

Vacant Properties

Why vacant properties can sometimes equal great deals?

  1. It’s more difficult to locate the owners, which means less competition
  2. No curb appeal
  3. The house is not a priority for the owner
  4. The owner is tired of maintaining a vacant house and wants out.
  5. The owner is not capable of maintaining the house.

How do you find vacant houses?

1. Drive or walk in the neighborhoods.

The best way to discover a vacant house is to drive around and talk to the neighbors. The neighbors will reveal information that could be helpful to locate the owners.

If you are driving around, do it on a garbage collection day. That combined with the appearance of the house will be your first clue that the house is vacant.

To make sure we knock on the door and if no one answers, we  look at the electric meter is it’s outside the house. If it’s not turning it’s a pretty good indication that the house is vacant.

While we are at the house we will talk to the neighbors and ask around about the house. Most neighbors will be happy for someone to take care of the house so they wouldn’t mind sharing what they know about the owner and the property.

 

2. Search online

Buy a list from a company that sells vacant homes data.  We tested the Verified Vacant Houses  only because we got a free sample.

Foreclosures

The Stages of Foreclosure and How You Can Find Deals at Each Stage.

Pre-Foreclosure

What happens after the owner of a property stops paying their mortgage is largely dependent on the state they live in.  

There are two types of foreclosure: Judicial and Non-Judicial.

Example of a Judicial Foreclosure state is Florida, the lender has to file a lawsuit in order to foreclose on the property. During the 2008 crisis, it took almost 3 years for properties to be foreclosed because the courts were so busy.

In a Non-Judicial Foreclosure state like California, the foreclosure is done with the aid of a third party – a foreclosure trustee and it’s done out of court.

How do you find that a property will be foreclosed on in a Judicial foreclosure state?

The filing of the lawsuit is recorded in the public records as Lis Pendens (pending legal action). All you need to do is go the Courthouse or in most cases, search online to get the list.

Ideally, you want to find an owner who has a lot of equity and make them an offer. 

Unfortunately, most homeowners being foreclosed owe more money than the house is worth, thus creating a need for a short sale. You can still get a deal from the owners but the lenders need to agree to receive less than they are owed.

For this to happen, the owner needs to prove that they have a hardship (lost job, bad health, etc)

Some investors are under the wrong impression that they can buy the house directly from the lender during this period. They can’t because the homeowner owns the house until it’s sold during a courthouse auction.

Courthouse Foreclosure Auction

Attending a foreclosure auction is quite entertaining but also scary if you are new to the process. 

By the way, many auctions are done electronically nowadays.

Why you can get a deal at the courthouse foreclosure auction? Because you are buying house unseen and paying cash.  No many people are willing to do that.

I hear many scary stories but they usually happen when the buyers have not done their research and in most cases, they don’t know what they are doing. 

The way the auction in  Tampa Bay works, you have to deposit 5% of  the potential purchase price before the auction (a couple of days before to make sure your funds are available)

If you have a local service that does  preliminary title search use them or you may end up buying a property that still has a first mortgage on it. 

After you bid on and win the auction for a property you like, you have until next day noon to pay the entire balance in cash.

How can you finance buying at the court foreclosure auction?

JVs with other investors is a very common way to do this.

What kind of deals can you expect to find? 

Currently 2019, you can still find deals at 30 percent of market value. During the 2008 crisis, it was 50 percent and more. 

My best deal was a newer home that I bought at $80K, spend $8K to renovate and sold for $150K.  That house would have made a great rental but I had partners in that deal so It had to go. 

During the court foreclosure auction, the lender bids along with the other bidders. If the lender wants to take the property back they will bid higher and take it into their inventory (REO or Bank-Owned)

Real Estate Owned or Bank-Owned Properties

Usually, after a lender  takes over a property, the next step is to list it with a broker. If the broker doesn’t sell it, the lender will list it with one of the auction sites like Auction.com and others.

These are foreclosures you can finance with a mortgage it doesn’t matter if you buy them at auction or not.