My top 5 tips for investing in real estate

If you’re just beginning to invest in real estate, you’ll find that there’s a lot to learn. Real estate investing is more complicated than investing in stocks because of the financial, legal, and extensive due diligence requirements involved. That’s why it’s a good idea to give yourself a solid education before you purchase your first investment property.
However, before you get your advanced degree, it’s a good idea to familiarize yourself with the fundamentals. To that end, here are 5 basic tips for investing in real estate.
1. Location Matters
The old adage that “location matters” is most accurate when it comes to real estate investing. Before you fork over a down payment and put yourself in a significant amount of debt over a property, ensure that it’s in a good location.
Look for the worst house on the best street. That’s a principle you’ll come across quite a bit as you delve into further real estate investing advice.
You want to invest in the worst house on the best street because it gives you an opportunity to build equity. It’s a property in a great neighborhood (“the best street”) that needs some work (“the worst house”). You can invest some money to fix it up and sell it to someone else who wants a ready-to-move-in house in a fabulous location. Professional real estate investors call this “fixing and flipping.”
2. Look for Wholesale Properties
Investing in real estate is just like investing in the stock market in at least one way: you’re looking for the best deal. If you’re a savvy stock market investor, you probably won’t buy too many stocks at their high if you plan on holding them for a long time. Instead, you’ll follow the Warren Buffet principle of getting greedy when everyone else gets fearful. You’ll buy stocks that are beaten down and make a fortune when they turn around.
That’s what you want to do when it comes to real estate investing. Avoid paying “full price” for properties. Instead, look for so-called wholesale properties that are offered at a steep discount. Sure, they’ll probably need some work. Run the numbers and see if the investment in rehab is worth the ultimate selling price.
As noted at ThinkConveyance: “You can easily invest $20,000 in a property and add twice that much to the selling price. That’s why real estate investing is so attractive to investors who want to maximize their return on investment.”
3. Understand the Tax Benefits
The people who run our government want private investors to provide housing for people. That’s because they know that if private investors don’t provide housing, then the government will be responsible for it.
To that end, Uncle Sam offers significant tax benefits to real estate investors. The most significant benefit, arguably, is the depreciation write-off. When you buy an investment property that includes a building, you get to write off the depreciation of that building as a tax deduction. You’ll have to consult your tax advisor for specifics, but basically you can expect to depreciate a residential building over 27 years and a commercial building over 39 and a half years.
Keep in mind that the IRS views your real estate investment efforts as a business so you also get to claim the “necessary and ordinary“ deductions that business owners take, including mortgage interest, insurance, and maintenance expenses. Again, it’s a good idea to consult your tax advisor about specifics.
4. Check Your Credit Report
You’re more than likely going to need to borrow money to buy real estate. That’s why you should check your credit report before you begin investing in real estate.
If you have problems on your credit report that are mistakes, get those resolved as quickly as possible. If you have problems that are legitimate, then you’ll need to work to improve your credit.
Simply put, banks aren’t going to loan money to you for a property that’s not your primary residence as readily as they’ll loan it to you for your own home. That’s why your credit has to be spectacular.
5. Use the “1% Rule”
If you’re planning on buying a property that you’ll rent out one or more tenants, use the “1% Rule” when you decide whether or not the property is worth the price you’ll pay for it.
The 1% Rule simply states that an income producing property must produce 1% of the price you pay for it every month. For example, if you’re looking at buying a property for $150,000, then the monthly rental income should be 150,000 x 1% = $1,500.
Wrapping It Up
Real estate investing offers the potential for fabulous returns. However, people have also bankrupted themselves investing in real estate. Be sure that you know what’s involved before you start.

We Buy Houses Louisville/ Eagle Thirteen Properties

Want To Get the Best Loan? Here's 7 Ways to Clean Up Your Credit Score

Like it or not, your credit score dictates everything from whether you’re approved for a credit card to what rate you’re offered on a mortgage.
As the economy has recovered from the Great Recession, many Americans have managed to get on better footing, but nearly one-third still have “bad” credit scores (under 600), according to credit.com. If you are one of them, it’s time to give that baby a boost. Here are seven of the fastest ways to increase your credit score.

1. Clean up your credit report

Before you do anything else, go to AnnualCreditReport.com and request a free credit report from each of the big three credit reporting companies:

• TransUnion
• Experian
• Equifax

By law, you’re entitled to one free report each year, no matter what. When you request it, be ready to print or save it to your computer.
Once you have the report, examine everything. In particular, look for any accounts that show late payments or unpaid bills. If that information is inaccurate, the report should tell you where to send a dispute.
Keeping a clean credit report isn’t only important for your credit score; it can also make or affect your job prospects. Employers can and do pull credit reports before making hiring decisions.

2. Pay down your balance

According to myFICO, the consumer division of FICO, the company that calculates one of the most widely used credit scores, 30 percent of your score is based on the amount you owe.
However, it’s not simply how much you owe that’s important. It’s how much you owe compared with how much credit you have, a ratio known as your credit utilization. For example, if you have a $10,000 credit limit and a $5,000 balance, your credit utilization is 50 percent. If you’ve maxed out that $10,000 limit, your utilization is 100 percent.
There are many theories on what is the best credit utilization level, but on its website, Experian suggests it’s best to have a rate of no more than 30 percent. In other words, you should never have more than $3,000 charged at any time if you have a $10,000 limit.
If you owe more than that amount, paying down your balances is a quick way to boost your score. Live lean for a few months, hold a garage sale or pick up a temporary second job to find the cash needed to drop your credit card balances.
For more ideas on tackling debt, read: “8 Foolproof Ways to Pay Down Debt.”

3. Pay twice a month

You might think you’re doing great because you pay off your card every month, even if it’s maxed out. The problem is that your creditors are only reporting balances to the credit bureaus once a month. If you run up a big balance each month, it could look like you’re overusing your credit.
For example, assume you have a credit card with a $1,000 limit. It’s a rewards card, so you use it for everything. In fact, every month, you hit your limit. The statement arrives, you owe $1,000, and you send in a check to pay it off. The problem is the credit card company is likely reporting the statement balance each month. So it looks like you have a $1,000 limit and a $1,000 balance. That’s a 100 percent credit utilization rate, and not a good thing as far as your score is concerned.
You can help alleviate the problem by breaking up your credit card payments. Go ahead and charge everything to get the rewards, but send in payments at least twice a month to keep your running balance lower. In addition, if you make a large purchase on your card and have the cash handy, pay it off immediately.

4. Increase your credit limit

Maybe you’re not in a position to pay down your balances. You could take a different approach to improving your credit utilization rate: Call your creditor and ask for a credit limit increase.
If you’ve maxed out your $1,000 card and get a limit increase to $2,000, you’ve instantly cut your credit utilization rate in half. The key is to not spend any of your new credit. It defeats the purpose of getting a limit increase if you immediately charge the card up to $2,000.

5. Open a new account

If your current credit card issuer balks at the idea of giving you a credit increase, apply for a card from a different issuer. It will still help your credit utilization rate, since your score lumps all your open lines of credit and balances together.
An individual with $10,000 in credit and a balance of $5,000 will have a 50 percent credit utilization rate regardless of whether her or she has all those amounts on one card or spread out over multiple cards.
Be aware, though, that opening multiple accounts at once is not good either. Too many new accounts can make you look like you desperately want to go on a spending spree. Don’t risk dinging your credit score — apply for only one or two new cards if you’re going to try this strategy.
You can compare credit card deals to find the best one for you at our Solutions Center.

6. Negotiate outstanding balances

Maybe your credit score took a dive because you have bills in debt collections. You can’t wipe out past mistakes from your credit report, but you can do some damage control by settling them.
Dummies.com has a short, easy-to-understand primer on how to negotiate your debt. The most important step is to get an agreement in writing.
If you don’t have any cash on hand to offer as a settlement, you can sell some of your stuff or try one of these “20 Clever Ways to Make Extra Money.”

7. Become an authorized user

Finally, if none of the above suggestions helps you, don’t despair. There is one final option, and that is to be added as an authorized user on someone else’s credit card.
Now, for this to work, you’ll need to find someone who loves you very much and who manages his or her money very well. Once you find this very special person who is going to do you a HUGE favor, you need to cross your heart and hope to die while explaining you have no intention of using their credit card. You just want to be added to their account as a way to build credit.
You see, when you’re an authorized user, the account will show up on your credit report so long as a card has been issued in your name. Then, your credit report will show all the cardholder’s on-time payments and (hopefully great) credit utilization rate. As a result, your credit score gets a boost, too.
While these seven strategies can raise your credit score fast, keep in mind that “fast” is a relative term. You won’t see results overnight; give it three months or so for the changes to begin affecting your score positively.

20 Tips for Being a Successful Landlord

1. Use “lease targeting”

Schedule the majority of your lease end dates for times when the market is providing the most prospective tenant traffic. June 1st is often a great target move-in date.

2. Treat your rental like a business

What system do you have in place to manage maintenance requests if you’re out-of-town on vacation? Are you setting aside 10% of your rental income for repairs?

3. Screen out the bad tenants

Make sure tenant income is at least 3x the cost of monthly rent. Run a credit and background check, follow Fair Housing laws, ask for referrals from previous landlords, and avoid tenants with past evictions.

4. Keep your tenants happy

It’s a LOT cheaper to retain a tenant than to find a new one. Fix repairs promptly, keep the property in good shape, treat your tenants with respect, and you’ll see less turnover and more cash flow.

5. Have a lawyer review the lease

Many of the common provisions placed in lease contracts are illegal. An attorney familiar with changing landlord-tenant laws can quickly spot lease errors and provide you with a court-tested document.

6. Reinforce good behavior

Reward on-time, advanced rent payments, or tenant referrals with movie tickets, chocolates, dinner vouchers, anything your tenant would appreciate.

7. Do not discriminate

Follow Fair Housing laws when screening prospective tenants. These Federal lows make it illegal to discriminate on the basis of race, color, religion, national origin, sex, disability, or familial status.

8. Move-in / move-out inspections

Have the tenant document and sign off on any damages before the move in. Shoot video of the property before move-in and after the tenant vacates the property.

9. Set your hours

Set “office hours” or your tenant will set them for you. After all, it’s one of the perks of being a landlord in the first place :)

10. Get professional help

Just because you worked in construction and know how to operate power tools doesn’t mean you should be breaking up concrete and fixing the plumbing problems by yourself.

11. Document everything

When it comes to being a successful landlord there is no such thing as a verbal agreement, only a signed contract. In order to protect your interests and the interests of your tenants, get everything in writing.

12. Figure out the right rent

How do you go about setting rental rates in line with the current market? Look in the local newspaper. Pay close attention to location. Check the internet for local rental rates. Always base your rent rates on current market conditions.

13. Set up a Google Voice number

Instead of giving tenants access to your personal cell number, set up a Google Voice account – which will supply you with a phone number that will forward through to your cell phone.

14. Electronic rent payments

Many tenants prefer to pay rent online. It’s faster and often more convenient. Look into setting up automatic rent payments with Cozy. I LOVE Cozy!!!

15. You are NOT the owner

When you are the owner the tenant will blame you for these decision. Fear of this blame will often lead many landlords to start making decisions out of convenience rather than common sense.

16. Have a late policy

Make it clear from day one you will be charging a late fee for overdue rent. The key is to be strict with the policy. The extra income will help compensate for the stress of not getting rent on time.

17. Use multi-media marketing

“List it and they will come…” I wish it were that easy. In order to get your property in front of the renter (many or which are millennials), you need to have a presence across multiple marketing channels.

18. Keep family out of it.

Renting to friends and family is a recipe for disaster. Each time, you’ll be faced with the following dilemma: Lose the money or lose the relationship. Don’t put yourself in that situation.

19. Have an enforceable lease

Make sure you have an air tight lease that sets the terms and conditions for your tenants.

20. Get the right insurance

Make sure you have the maximum amount of rental insurance, property liability insurance, and any other type of insurance required in your state.

How to Make Good Tenants Happy and KEEP THEM!

As a property manager/landlord, you are already aware that good tenants who pay their rent on time, take care of the property, and are well-mannered and polite, are hard to find. Add to this the loss in rental income as the property lies vacant, the time, effort and money that goes into advertising for new tenants, screening potential tenants, turning the property….phew! It makes more sense to put your effort into retaining the good tenants, who are already renting from you, doesn’t it?
Here are a few pointers to help you ensure your best tenants stick around and renew their lease:

1. Look after the property… and your tenants

Your job does not end with handing over the keys to the rental unit. In order to attract and retain good tenants, you have to maintain a clean, well looked after property that demonstrates your intentions as a landlord or a property manager. You have to make your tenants feel happy and proud that they are living there. A swimming pool that is always filthy, overgrown landscape, malfunctioning outdoor lights – all these factors will count against you when your tenant makes the final decision to renew the lease or move out.
On the other hand, a landlord or property manager who ensures the walkways and sidewalks in his property are cleared of snow in a timely manner in winter, responds to requests or complaints promptly and efficiently, maintains a clean and well-maintained property, and shows concern for the comfort and well-being of his tenants wins their support and loyalty.

2. Be responsive and proactive

It is simpler to get your tenant to renew the lease if he likes you and is happy to deal with you. If you never answer your tenant’s calls, do not call back or show up for the important things, don’t be surprised if he decides not to stay for another year.
Respond to your tenant’s requests or complaints promptly and efficiently. If you feel you need more time to resolve the issue effectively, communicate the situation to the tenant. And most importantly, don’t ignore the request – even if you feel that the problem is something beyond your control. Instead, discuss the issue with them and offer support or resources to help them solve it on their own.

You should also be proactive in solving issues that you know are bound to crop up sooner or later. Come up with a preventive maintenance program to keep track of periodic tasks such as testing smoke detectors, tree trimming, changing HVAC filters and so on. One of my previous landlords used to arrange for a home inspection every fall to make sure that the property is well-insulated and equipped for the coming winter. He also used to contact us on the first of every month to ensure that we are happy with the home or apartment and do not have any concerns. Remember, happy tenants make for a happy landlord.

3. Observe fair housing practices

Follow fair housing rules that help your tenants create a comfortable home for themselves. Offer reasonable rental prices that are comparable with other properties in the neighborhood. It doesn’t take a genius to understand that your tenants are not going to stay with you if you charge high rents that are not inline with the neighborhood or current market conditions.

4. Don’t be a stranger

Don’t be the stranger who turns up only to collect the rent. Send out a greeting card or gift basket to your tenants on their birthdays. Wish them on major festivals and thank them for being a good tenant or paying the rent on time. It won’t cost you much, but will bring you a lot of trust and goodwill and help build a relationship.
At the same time, remember your boundaries as a landlord. Don’t show up every other week without prior notice. It is a huge invasion of privacy and can quickly scare away even the best of tenants!

5. Set up a rewards system

Several innovative property management companies have recently come out with resident rewards systems to reward tenants for good behavior, and hopefully, reduce tenant layover. For example, a tenant gets 100 points if he pays the rent on time. He gets another 500 points if he refers a friend who also becomes a tenant. He can then redeem these points for free gifts, household items, restaurant coupons, movie tickets or property upgrades. Obviously, such programs are beneficial for the landlord only if he has a sizeable number of tenants.

6. Form a big, happy family!

Involve your tenants in the community and help them out down roots by organizing events, talks, games or seminars where they can interact with each other. Set up a weekly book club or sports league. Create a garden area where residents can hang around out. Throw seasonal parties. Send out weekly or monthly community newsletters detailing local programs.

7. Train your staff to be tenant-friendly

Remember, you may or may not be able to personally address every tenant concern or complaint that comes your way. Most often that not, your tenants are going to interact with your employees or the leasing office staff. Hire people who understand your policies and treat your tenants with respect.

8. Offer renewal incentives

If you’ve got some great tenants coming up for a lease renewal shortly, contact them before the end date and find out what their plans are. Offer them a renewal incentive if they are still deciding – it may just swing the vote in your favor.
Though you can always ask them directly what it would take to renew the lease, you can also go with the standard and tested renewal incentives such as cash bonuses, electronic gifts, free covered parking, new kitchen appliances or rent discounts. You can also allow them to choose from a list of pre-approved home modifications, such as new flooring, window treatments or different wall colors, to make them feel more at home.
As with any other relationship, the tenant – landlord/property manager relationship requires continuous investment of time and effort. If your tenant is still set on moving out, don’t hesitate to ask him what went wrong. If you are lucky, it may be something that you can fix, or at least, correct the next time around.

7 Lucky Reasons to Go to Thurby

Thurby is the new Oaks.
Locals say it’s what Oaks used to be, before the world caught on that the Friday before Derby was one of the greatest days to go to the track. After this discovery, what was once “Louisville’s Day at the Track” became awash with outsiders. Out-of-towners, with their tour buses and overpriced tickets, stampeded our track and took over our holiday on Friday.
No worries–we just moved our party back a day, to the Thursday before Derby, now affectionately known as “Thurby.” Louisvillians have made this day their own, with lighter crowds and a perfectly primed Churchill Downs ready for the taking.

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The Paddock is perfection at Thurby. You can actually walk through the area and see a horse.

If you have not had the pleasure of attending a Thurby, might we offer you seven solid reasons why you should go? In no particular order, they include:

1. It’s Louisville’s day at the track.

Remember when you’d go to Oaks, and you’d see every single person you knew, plus their families and even their grandparents? Everyone had a section that they gravitated toward, where they had lifelong seats. Remember when you knew that if you wanted to see your friends from college, you would go to this section? See your friends from high school, go to this section and on and on. That’s what Thurby is now shaping up to be.

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Back to the old neighborhood seats, where everybody knew your name

2. It has all the trappings of Derby with no fuss.

You would think you were going to Derby when you go to Thurby. Everyone is in their best finery, wearing dresses, suits, hats and fascinators. Mint juleps and lilies are flowing. Horses are all there. But here’s the twist: THERE ARE NO LINES. There is no crushing mass of humanity. Best of all, everything is immaculate. It feels like being first in line to go to Disney World.

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Concessions are ready and waiting for you, with no sign of a crowd.

3. You get a lot of bang for your buck.

General admission to the Paddock is $15. Third-floor clubhouse box seats are only $30. And it’s really only $30. It’s not like when they list the Derby tickets at $100 and you really end up paying $1,000 a ticket. Plus, you feel like you’re having a private tour of Churchill Downs before the Derby. With no crowds and the track in prime condition, you get to experience all of the wonderful amenities without all the crowds and craziness.

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You cannot get this close to a horse, much less SEE a horse, on Oaks and Derby days.

4. The cocktails, entertainment and food are all top-notch.

There’s a band! There are premade drinks and punches! There’s awesome food at the concession stand! And you’re not standing in line for an hour to get a $9 beer in a can.

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Huge vats of margaritas and Bloody Marys all made with top-shelf Brown-Forman products

5. It’s a test run for Oaks or Derby (or both!).

Want to see if that fascinator is going to give you a headache? Can your shoes make it all day? Is your dress too short? Consider Thurby a test run for so many operational issues. It’s like having all the prep work done for Derby, so that the little things, like a raging blister or a wonky hat don’t ruin your day.

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Guess what? You’ll miss my favorite people outside the track on Thurby. They don’t get there until Friday.

6. It is a great girls’ day or boys’ day out.

Thurby is a great excuse for a girls’ day out or even a boys’ day. We’ve even celebrated birthdays at Thurby. If you need a reason to get a bunch of friends together, this is a good one.

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Girls’ day out!

7. It doesn’t have to be a marathon.

Because it’s on a regular workday (well, not really here in Louisville), you can go at lunchtime, stay for a few hours and be home for dinner. It’s a little like a secret rendezvous. Because the tickets are so cheap and nothing is a hassle, you can just do a drop in and not commit to an entire day of marathon tracking.

13 Simple Tips for Selling Your Home

We’ve all heard about how “bad” the real estate market is. But what’s bad for sellers can be good for buyers, and these days, savvy buyers are out in spades trying to take advantage of the buyer’s market. Here are 13 thing you can do to help sell your house.
1. Audit your agent’s online marketing. 92% of homebuyers start their house hunt online, and they will never even get in the car to come see your home if the online listings aren’t compelling. In real estate, compelling means pictures! A study by Trulia.com shows that listings with more than 6 pictures are twice as likely to be viewed by buyers as listings that had fewer than 6 pictures.
2. Post a video love letter about your home on YouTube. Get a $125 FlipCam and walk through your home AND your neighborhood, telling prospective buyers about the best bits – what your family loved about the house, your favorite bakery or coffee shop that you frequented on Saturday mornings, etc. Buyers like to know that a home was well-loved, and it helps them visualize living a great life there, too.
Plus: 13 Moving Tips to Keep in Mind
3. Let your neighbors choose their neighbors. If you belong to neighborhood online message boards or email lists, send a link to your home’s online listing to your neighbors. Also, invite your neighbors to your open house – turn it into a block party. That creates opportunities for your neighbors to sell the neighborhood to prospective buyers and for your neighbors to invite house hunters they know who have always wanted to live in the area.

© iStockphoto/Thinkstock

4. Facebook your home’s listing. Facebook is the great connector of people these days. If you have 200 friends and they each have 200 friends, imagine the power of that network in getting the word out about your house!
5. Leave some good stuff behind. We’ve all heard about closing cost credits, but those are almost so common now that buyers expect them – they don’t really distinguish your house from any of the other homes on the market anymore. What can distinguish your home is leaving behind some of your personal property, ideally items that are above and beyond what the average homebuyer in your home’s price range would be able to afford. That may be stainless steel kitchen appliances or a plasma screen TV, or it might be a golf cart if your home is on a golf course.
6. Beat the competition with condition. In many markets, much of the competition is low-priced foreclosures and short sales. As an individual homeowner, the way you can compete is on condition. Consider having a termite inspection in advance of listing your home, and get as many of the repairs done as you can – it’s a major selling point to be able to advertise a very low or non-existent pest repair bill. Also, make sure that the little nicks and scratches, doorknobs that don’t work, and wonky handles are all repaired before you start showing your home.

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7. Stage the exterior of your home too. Stage the exterior with fresh paint, immaculate landscaping and even outdoor furniture to set up a Sunday brunch on the deck vignette. Buyers often fantasize about enjoying their backyards by entertaining and spending time outside.
8. Access is essential. Homes that don’t get shown don’t get sold. And many foreclosures and short sale listings are vacant, so they can be shown anytime. Don’t make it difficult for agents to get their clients into your home – if they have to make appointments way in advance, or can only show it during a very restrictive time frame, they will likely just cross your place off the list and go show the places that are easy to get into.
9. Get real about pricing. Today’s buyers are very educated about the comparable sales in the area, which heavily influence the fair market value of your home. And they also know that they’re in the driver’s seat. To make your home competitive, have your broker or agent get you the sales prices of the three most similar homes that have sold in your area in the last month or so, then try to go 10-15% below that when you set your home’s list price. The homes that look like a great deal are the ones that get the most visits from buyers and, on occasion even receive multiple offers. (Bidding wars do still exist!)
10. Get clued into your competition. Work with your broker or agent to get educated about the price, type of sale and condition of the other homes your home is up against. Attend some open houses in your area and do a real estate reality check: know that buyers that see your home will see those homes, too – make sure the real-time comparison will come out in your home’s favor by ensuring the condition of your home is up to par.
11. De-personalize. Do this – pretend you’re moving out. Take all the things that make your home “your” personal sanctuary (e.g., family photos, religious décor and kitschy memorabilia), pack them up and put them in storage. Buyers want to visualize your house being their house – and it’s difficult for them to do that with all your personal items marking the territory as yours.
12. De-clutter. Keep the faux-moving in motion. Pack up all your tchotchkes, anything that is sitting on top of a countertop, table or other flat surfaces. Anything that you haven’t used in at least a year? That goes, too. Give away what you can, throw away as much as possible of what remains, and then pack the rest to get it ready to move.
13. Listen to your agent. If you find an experienced real estate agent to list your home, who has a successful track record of selling homes in your area, listen to their recommendations! Find an agent you trust and follow their advice as often as you can.