4 Reasons to Invest In Real Estate – Part 3: Paying Down Your Loan

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We answer lots of questions about why it’s good to invest in real estate. We thought you might want to know our top four reasons for owning investment property!

This is part 3 of a 4 part series of blog posts:

1) Cash Flow
2) Appreciation
3) Paying Down Your Loan
4) Tax Benefits

Paying Down Your Loan

Paying Down DebtWhen you purchase a rental property with a mortgage, you make a monthly payment to the lender. That payment includes two parts: principal and interest. Interest is the profit for the lender, but the principal is money you are paying down the loan with.

For example, if you purchased a house five years ago for $100,000 and got an $80,000 mortgage. We’ll say it was a 30-year mortgage with a 5 percent fixed rate.

Today, you would owe only $74,000 because $6,000 of your monthly mortgage payments went towards the principal of the loan amount. Ten years from now, you would owe only $65,000. This means that every year your equity increases, you would gain value in the property as long as the market value didn’t go down. Equity is the difference between what a property is worth and what you owe on the mortgage.

If you are in a financial position where you can buy the property outright, you have 100% equity. But you’ve also tied up a sizeable amount of your liquid assets (cash) in that property.

The decision to take out a mortgage or purchase a property outright is influenced by many factors including interest rates, tax law and more. We recommend that you talk with your accountant about the best way to financially acquire a property.

Next week, we’ll talk about the fourth benefit of owning investment property, Tax Benefits!

4 Reasons to Invest In Real Estate – Part 2: Appreciation

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We answer lots of questions about why it’s good to invest in real estate. We thought you might want to know our top four reasons for owning investment property!

This is part 2 of a 4 part series of blog posts:

1) Cash Flow
2) Appreciation
3) Paying Down Your Loan
4) Tax Benefits

Appreciation

AppreciationWe appreciate you reading our blog posts! But that’s not the “appreciation” we are referring to when talking about reasons for owning investment property.

Appreciation is the historical trend that properties rise in value over time. Sure, there are corrections in price when the economy is suffering like in 2007, but over the years, property values usually increase.

If you currently live in a home that you own, you’ve probably seen this happen first hand. You get a tax assessment every year and it’s rare that the assessed amount goes down.

Let’s say that you bought your home for $250,000. Ten years later, that home might be worth $270,000-$300,000 based on how well real estate performs related to the economy. If you sold your home, you would realize $20,000-$50,000 of gain (minus closing costs, etc.)

And that’s an example for just one home.

In the first part of this series, we talked about buying multiple investment properties and assumed that you were able to purchase 5 homes over a period of years. When you start multiplying appreciation gains across multiple investment properties, the numbers really start to add up. You could be looking at $100,000-$250,000 of potential gain after 10 years. (We say potential, because you won’t realize a gain until you sell the properties, and many investors choose to hold them for the long term.)

Next week, we’ll talk about the third benefit of owning investment property, Paying Down Your Loan!

4 Reasons to Invest In Real Estate – Part 1: Cash Flow

Posted on Updated on

We answer lots of questions about why it’s good to invest in real estate. We thought you might want to know our top four reasons for owning investment property!

This is part 1 of a 4 part series of blog posts:

1) Cash Flow
2) Appreciation
3) Paying Down Your Loan
4) Tax Benefits

Cash flow

Cash FlowCash flow is the profit you have each month after you’ve paid for all of the expenses on your investment property.

Let’s say that you get $2,500 per month in rent. Let’s also assume that your mortgage and property management fees are $1,800 per month, leaving you $700. During the month, you had a garbage disposal that needed to be replaced for $300, leaving you $400 in cash flow.

You might be thinking to yourself that $400 is not going to make you rich. And it probably wouldn’t unless you had multiple properties yielding $400 per month in cash flow… but this is just one of the four reasons investing in real estate is a great investment.

Many of our investment clients own multiple properties that we manage for them.

Let’s say that you were able to buy five properties over the course of 5-10 years. If they were all cash flowing $400 per month, you would have $2,000 per month of passive income. That’s starting to become a number that matters. It’s a number that could allow you to buy the boat you’ve always dreamed about or retire a bit earlier.

Next week, we’ll talk about the second benefit of owning investment property, Appreciation!

Happy 4th of July from Home Rental Services!

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4th of JulyIndependence Day, also referred to as the Fourth of July in the United States, is a federal holiday commemorating the adoption of the Declaration of Independence on July 4, 1776. The Continental Congress declared that the thirteen American colonies regarded themselves as a new nation, the United States of America, and they were no longer part of the British Empire.

Independence Day is commonly associated with fireworks, parades, barbecues, carnivals, fairs, picnics, concerts, baseball games, family reunions, political speeches and ceremonies celebrating the history, government, and traditions of the United States.

We hope that you are able to spend time with your family, watch some fireworks and grill up some wonderful food to celebrate our independence this year!

Be sure to check out VisitKC’s website for a list of 4th of July celebration events that are happening over the weekend.

These include:

 

2016 Team Building – Home Rental Services at the Royals [PICS]

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Every year, we take our staff to a Royals game as a team building event. It’s always a great time, and the game against the Chicago White Sox  on Friday, May 27th was no exception.

It was a beautiful evening at Kauffman stadium. Everyone loves the traditional opening to the game, including the singing of the Star Spangled Banner, the opening pitch and which hot dog topping will win the ketchup, mustard and relish race.

The Royals started off the game with a run in the first inning, but then it was quiet until the 6th inning. The White Sox scored 5 runs which definitely changed the energy in the stadium. The Royals answered with a second run that inning.

Going into the 7th inning, the score was 5-2 in favor of the White Sox. The Royals stepped up like they so often do and scored 4 runs. The score was now 6-5 Royals and the momentum never changed after that. The Royals scored another run in the 8th inning and didn’t bat in the 9th after the White Sox didn’t score ending the game at 7-5 Royals.

We loved going to an exciting Royals game and getting to spend some time with each other outside of work!

Party Pic Companies!

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Party Pic ExamplesWe’ve been to quite a few events recently and noticed that there’s a party pic photo booth at just about every event. We love doing these, as you can tell in the photo!

A photo booth experience is a fun thing to do at an event, especially with the people you work with. It makes a great souvenir to take with you as a reminder of how much fun the evening was.

We thought we would do a quick roundup of photo booth companies that you could hire for your next party or event!

Booth Crazy Photo Booths

Booth Crazy Photo BoothsA blurb from their website: “Looking for a retro photo booth to have at your next event? Booth Crazy Photo Booths is not for you! Really, Booth Crazy is the un-retro modern Kansas City photo booth experience. When you see what we offer, we think you will agree it is the best photo booth available in Kansas City at any price. Just so happens that it also costs less than many lesser photo booth companies! Whether your event is upscale or on a budget, Booth Crazy Photo Booths is your KansasCity photo booth connection.”
Visit the Booth Crazy Photo Booths website.

A Good Time Photo Booth

A Good Time Photo BoothA blurb from their website: “Our photo booth measures 5 foot by 5 foot and stands approximately 7 feet tall.  The booth is wheel chair accessible and it’s large enough to fit all your friends.  It is draped in regal black velvet with a luscious, red velvet curtain as the entrance to the booth. Inside the booth a 22 inch touchscreen allows you to chose between color and b&w photo strips, and see yourself getting ready for each photo.  A series of four photos are taken with time between each photo allowing you to switch poses.  The event host will also have the choice between four different backdrops and the use of a prop bucket filled with costume props to add an extra element of fun!”

Visit the Good Time Photo Booth website.

The Photo Bus

The Photo BusA blurb from their website: “The flowers, your dress, the linens, the music… these are all things your guests will enjoy the day of the event but they’ll soon fade from their memory. A printed photo of them being silly, goofy, loving that’s personalized for your event and posted on their fridge? That’s something they won’t forget. When you rent from The Photo Bus Company you have a choice of three different photo booths: The Photo Bus, The Enclosed Booth, and The Open Air Booth. They’re all unique on the exterior but they all come with the same service and quality. ”

Visit the Photo Bus website.

Kansas City Anti-Violence Project – Xtravaganza!

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KCAVP XtravaganzaRecently, we supported KCAVP’s mission of anti-violence by attending the 2016 Extravaganza. Joshua, one of our property managers, has volunteered at KCAVP for 4 years and organized the entire event. (He did a GREAT job!)

The theme for the evening was a carnival, complete with a magician, entertainers, games and a balloon artist. The host for the evening was award-winning magician Victor Le’Yon. The featured entertainers were from MoonDrop Circus. Balloon artistry was created by Astro the Clown of PopCulture Sculptures.

Kandy loved the stilt walkers and jugglers. It was just like being “under the big top!” She said the games reminded her of childhood school carnivals.

KCAVP XtravaganzaShe loved the ring toss game, because whatever bottle you were able to get a ring around you got to keep! There were all kinds of bottles ranging from water to wine. It wasn’t easy to win… lots of strategies were tried including the “frisbee” throw and throwing all three rings at the same time.

A couple of our employees volunteered to help at the event. Melissa helped with the silent auction that included trips to Disney and Cozumel, concert tickets and more. Adam volunteered to help with the balloon darts with prizes ranging from AMC movie tickets to Planet Sub gift cards.

It was a fun evening for all!

The Kansas City Anti-Violence Project (KCAVP) is a nonprofit corporation committed to providing domestic violence, sexual assault, and hate crimes advocacy and education to the lesbian, gay, bisexual, transgender and queer community. Currently, KCAVP is the only LGBTQ-specific domestic violence or sexual assault service in Missouri, Kansas, Nebraska, or Iowa.

5 Simple Ways To Keep Insects Out Of Your Home This Summer

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Mosquito1) Avoid standing pools of water

Mosquitoes need a water supply in order to breed, so eliminating pooled water in your yard is one of the best ways to reduce the mosquito population.

If you have a bird bath, it’s important to change the water once or twice a week. Bird baths are mosquito magnets, and if the water is left undisturbed for too long, mosquitoes will lay their eggs with plenty of time for them to hatch.

2) Keep gutters clean

It’s important to make sure you have good drainage, especially when it comes to gutters. Keep gutters free from leaves and other debris that can block the flow of water. If you rent from us and need to have your gutters cleaned, please submit a maintenance request.

Termite3) Keep the foundation clear

Your home’s foundation is the closest part of the house to the ground. That’s why it’s one of the most common entry spots for bugs. Remove debris or trim back shrubs so they aren’t touching your foundation.

Mulch, such as wood chips and pine straw, provide ideal shelter for pests. Instead of using these in areas that touch your foundation, consider placing less pest-attractive ground cover, such as rock or stone.

By keeping foundations clear and protected, you can greatly reduce the chance of a bug infestation.

4) Trim back trees

Trim back any tree branches that touch your home to eliminate pest “bridges” into the house.

5) Keep firewood away from your home

If you have a stack of wood for your fireplace, be sure to keep it far away from the house. Firewood is very tempting to termites.

2016 Pop Tab Pandemonium – HRS at the Ronald McDonald House Event [PICS]

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Ronald McDonald House Charities LogoEvery year, we support the efforts of the Ronald McDonald House through their “Pop Tab Pandemonium” event. This year marks the 14th annual event since it began!

Pop Tab Pandemonium is an event where people bring the aluminum pop tabs and old keys that they have collected as a donation for the Ronald McDonald house. We save pop tabs all year long, and in the course of doing business as a residential property management company, we accumulate quite a collection of keys that can be recycled. We had hundreds of keys and a bunch of tabs to drop off!

The Ronald McDonald house partners with a local salvage and recycling company to convert the keys and tabs to dollars that go directly towards supporting the Ronald McDonald house programs and projects.

Pop-Tab Pandemonium is an opportunity for groups and individuals across the metro area to visit the Ronald McDonald House and drop off pop-tabs.

On any given night, Ronald McDonald House Charities of Kansas City serves 87 families. Last year, our Houses and Family Room provided lodging to more than 4,500 families as well as opened our doors to support over 63,000 visits from family and friends of in-patients at Children’s Mercy Hospital.

Home Rental Services Launches Investor Services Program

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Paul Branton is the Director of Investor Services for Home Rental Services.

Paul BrantonThere is a growing trend of people wanting to purchase investment properties in the $180,000 – $350,000 range rather than leaving their money in an under-performing brokerage account.

Renters in this rent range are staying longer and are more stable. The “new” renter is a family with a large household income that used to buy a home, but now enjoys the flexibility of renting instead of owning.

Home Rental Services recognized this growing need. We have a new program to help investors find the right properties before they write a contract. Paul is leading that program for us!

Here are some of the things that Paul does for investors:

Estimate Current Market Rent and Potential Market Rent

  • Review location, condition of property and comparable rentals.
  • Review what upgrades could be done to the property to increase rent and lower vacancy.

Assist Investors in the Search and Acquisition of Rental Investment Properties

  • Provide suggested homes to buy and/or areas to target for investment homes.
  • Provide estimated rent ranges for potential properties.
  • Perform site visits to confirm lot, location and condition are as expected.

Create Budgets to Improve/Rehab Properties

  • Prioritizing work to be done to maximize rent and return on investment.
  • Manage rehabilitation budgets with our trusted vendors.

If you or someone you know is considering buying an investment property to lease, please give us a call at (913) 469-6633!

More about Paul

Paul has been a licensed Realtor since 2006. This is the second position Paul has held while working for Home Rental Services. In 2010, Paul was hired as a property manager. He served in that role for two and a half years and learned all about managing our rental properties.

Paul wanted to learn more about real estate investment related to short sales and foreclosures and ended up leaving to take a position at ServiceLink to follow that dream. (Home Rental Services intentionally doesn’t buy or sell homes. We don’t compete with traditional real estate companies because they are a great source of owner referrals.)

We stayed in touch with Paul over the next two years. During that time, we started focusing more on multi-property investors. As a result, we started doing business with a large investment group in London that has a large percentage of properties in Kansas and Missouri. We needed help to bring all those properties on board as quickly as possible. Paul was the right solution, and he rejoined our team in November 2014!