Author: Home Rental Services
Author: Paul Branton
The Great Exchange… no, I’m not talking about Obama v. Trump. While it would be apropos to discuss politics and the “transfer of power” or “alternative facts” in light of that recent great exchange, I would rather stick to what I know best and that is REAL ESTATE. (Real Estate also happens to be a lot more fun!)
The Great Exchange that you should know about as a seasoned or potential real estate investor is known as the 1031 Exchange.
In the past few weeks, I’ve had the pleasure of working with two of our investment property owners that are in the midst of navigating through the requirements and timelines associated with what is commonly referred to in real estate and the tax code as a 1031 Exchange. (also known as a Starker Exchange.)
With this fresh in mind, I wanted to take the time to share the basics of what you should know about these types of property exchanges.
2 quick notes:
- Be sure to consult a tax professional before considering a 1031 Exchange.
- In June of 2016, the House Republicans created a “Blueprint for Tax Reform” called A Better Way. The proposed changes threaten 1031 Exchanges. If you’re considering an exchange, you may want to pursue it before any substantial changes are passed.
What is a 1031 Exchange?
- A 1031 Exchange is a wealth building strategy known as Internal Revenue Code Section 1.1031. It’s used for the exchange of real and personal property held in the productive use of a business or for investment.
- With each 1031 Exchange is a timeline requiring strict adherence.
What are the Timeline Requirements?
- Starting from the day the “relinquished property” closes, you have 45 days to “identify” potential replacement property.
- Starting from the day the “relinquished property” closes, you have 180 days to acquire the replacement property.
- The exchange must be completed in 180 days. (not 45 + 180)
How do I “Identify” a “like kind” replacement property?
- By the end of the identification period, the potential replacement properties must be unambiguously identified to the qualified intermediary. (Legal Description or Property Address)
- You may identify up to three properties of any value with the intent of purchasing at least one.
What is “Like-Kind” property?
- This is a very broad term, meaning that both of the properties must be “the same nature or character, even if they differ in grade or quality.”
- In terms of real estate, you can exchange nearly any type of property, so long as it’s not personal property.
What is a “Qualified Intermediary”?
- This is the name for the entity through which the proceeds from the sale must pass.
- The proceeds from the sale must go to a qualified intermediary in order to be reinvested and remain tax deferred.
- The sale proceeds must not come to you or they become taxable.
- Any proceeds retained from the exchange (“Boot”) will become taxable.
Why should I do a 1031 exchange?
- The main reason is the tax deferral of the federal and state capital gains and recaptured depreciation taxes assuming the replacement property is of equal or greater value and is acquired within the exchange timeline.
- The 1031 exchange allows you to, rather than paying the tax, use those dollars towards a replacement property that may generate additional cash flow, have greater depreciation, be in a better location or no longer require as much effort to maintain.
In summary, a 1031 exchange has limitations and guidelines, but when done correctly could help you offset or defer paying capital gains taxes on your investment properties.
Until next time….
Overland Park landlords need to have a strong lease because this is the document that will protect you, your property, and your tenant. Today, we are sharing five specific clauses that you need to include in that lease.
Due Dates and Penalties
Have the rent due date clearly listed in your lease. That sounds logical, but you need to have the due date and the date that rent is considered late. Make sure you include late fees, and we highly recommend that you enforce those late fees.
Subleasing the Property
Include language that does not allow your Overland Park tenants to sublease the property. You don’t want your renter to move in and then a couple of months later when they decide they don’t want to live there anymore, they sublease it to their buddy who has friends moving in, and you don’t even know who is living there.
List every occupant who is authorized to live in the property. That would include children. Put first and last names because sometimes families have different last names. So, list the first and last name of every adult and child on your lease.
Your lease should list any maintenance responsibilities that belong to your Overland Park renters. Typically, that would include raking leaves in a single-family home or a duplex, changing the furnace filters, and any other duties that you need the tenant to understand. Make sure the details are explicitly explained in the lease.
Timely Reporting of Maintenance
In your lease, you should require the tenants to report maintenance issues to you on a timely basis. You don’t want the leaky toilet to become a soggy ceiling that runs up thousands of dollars worth of damage. So, put this requirement in the lease.
These are the five clauses that every lease should have. If you have questions about Overland Park property management or you need help with a lease, please don’t hesitate to contact us at Home Rental Services.
Overland Park landlords who want to get the most out of their rental property should follow these six tips that we have gathered throughout our years of experience providing services to Overland Park landlords.
Buy the Right Property at the Right Price
When you’re buying, buy at the right price and leave the emotion out of it. Maybe the home is not the kind of floorplan you look for, and it’s not in an area that you would live. Pick it out based on how a renter would look at it and how it will perform for you financially. You want to buy the best investment property from a tenant perspective.
Assess Your Financial Standing
You need to have enough money to invest in rental real estate. You know your fixed expenses like mortgage, taxes, and insurance. But you’ll also need to consider the age of the roof and the hot water tank. Make sure you have the reserves to cover the things that will come up through normal wear and tear.
Screen Your Tenants
Always make sure you thoroughly screen your Overland Park tenants. It’s better to have a vacant property than a property occupied by tenants who aren’t paying rent or who are doing lots of damage.
Buy in the Right Location
Pay attention to the area that you’re considering. Look for something with high job growth and good schools. These things will keep long term tenants and ensure you always have a large pool of available renters.
Consider Maintenance Needs
Know your limits when it comes to maintenance. It’s always better to hire a professional than to try and do it yourself. Repairs that are not made correctly will only cause more damage and increase your expenses.
Familiarize Yourself with Laws
Know the laws of your state, county, HOA, and the federal government. Not adhering to the laws as written or not knowing them can cost you a lot of money.
If you are looking for additional Overland Park landlord advice, or you have questions about Overland Park property management, please contact us at Home Rental Services. We provide leasing and management services to investors all over the Kansas City area, and we’d love to tell you more.
Author: Sandy Fisher
A big part of my job at Home Rental Services is writing notes: “just saying hi” notes, “introducing myself” notes, and mostly “thank you” notes. I’m from the handwriting generation, so I love doing this. I love everything about writing these notes – from picking out my favorite pen and ink color to selecting the notecard style to carefully thinking through the message I’m going to put on that particular note.
Don’t get me wrong—I send dozens of emails and texts every day. I wouldn’t be able to do my job without all of my tech gadgets. However, I’m so glad writing these notes is an important part of my job. It’s reminded me how important the handwritten note is and how it can affect people.
For my work relationships, it’s showing people more and more that the team at Home Rental Services cares enough to take the time to write a custom note and not regularly spew out a bulk mailing that might not get read, or even opened. There’s a purpose of bulking mailings for sure, however, and I do send those out occasionally.
I think about the daily mail that gets dropped on my desk. Because I don’t want to miss a thing, I open it all. However, without a doubt, I thumb through it, see what’s handwritten, and open that first.
Because of all of the note writing I do at work and the value and benefit I see in it, I challenged myself to hand write my personal Christmas cards this year. I have for years sent out the token form letter updating all on my family’s happenings, folded it around the annual Fisher family picture, and popped it in the mail. I even pre-printed the mailing labels. Not one bit of handwritten ink on those notes.
This year I bought the good old-fashion Christmas card, still included a pic of my kids, and then I actually wrote a note to each recipient. Did it take a heck of a lot more time? It sure did. But I loved doing it and I hope my friends and family who I don’t see often loved receiving them. I know one did: my Great Uncle Dick. Just a couple of days ago I got a letter back from him. It wasn’t a Christmas card, but a wonderful handwritten letter back. He thanked me for my note to him and updated me on his life. I loved it, and I have a feeling I’ll be writing him back very soon.
A few years back I read the book A Simple Act of Gratitude by John Kralik. I had heard great things about it and wasn’t disappointed. A quick summary: a man is not in a very good place in his life both personally and professionally, so he challenges himself to hand write notes every day of the year. He wrote “how are you” notes, birthday notes, notes to the Starbucks’ guy (I still need to try that!), and he even wrote notes to his clients thanking them for paying their bills. How his life transformed over that year was amazing. It’s a great quick read and I’d highly recommend it for both personal and professional benefits.
I’m glad that note writing is a big item on my to-do list. I’m definitely looking forward to writing my way through 2017 to great relationships and business for myself and Home Rental Services!
Author: Paul Branton
If you’ve visited my LinkedIn profile, you may have seen that I list the following items in my professional headline: Director of Investor Services | Real Estate Consultant | Project Manager | Estate Sale Enthusiast | Ice Cream Aficionado.
Today, I would like to take a moment to talk about the “Estate Sale Enthusiast” side of my life and introduce you to a not-so-secret, secret…. You can see a lot of great houses by attending estate sales! In the past year, I’ve been able to attend estate sales all across the KC Metro including Olathe, Lenexa, Lee’s Summit, Raymore, Prairie Village, Leawood, Stilwell, Overland Park and Mission Hills.
The other secret about estate sales is that they almost always precede or coincide with the home going on the market. It’s the sale before the sale. So, by going to the estate sale, you are able to get a sneak peek of the house and you may discover it’s a worthwhile investment opportunity!
I understand the purpose of going to an estate sale for the majority of people is to score a great deal on some furniture, housewares, jewelry or perhaps a vintage figurine. For me, it’s more about seeing the house. I enjoy seeing the old construction with vintage décor and original woodwork. I enjoy seeing the older home that’s been renovated to meet today’s modern tastes, and I enjoy getting lost in the custom built, Italian marble adorned mansion that has rooms for days.
Don’t get me wrong, I also try to find great deals. After finding something, I think about whether or not my wife will give me “the look” when I bring this “treasure” into our home; then, and only then, do I decide if it’s a worthwhile purchase.
Here are a few of those items:
Here’s a tip for finding out the details on estate sales. It’s a website called www.estatesales.net and more recently, they released an app which is super handy while on the go! It will tell you where the nearest estate sales are, provide you with all the details of the sale and give you directions!
Let me know if you end up using the app or if you have your own treasure stories to tell about estate sales!
4 Tips on Taking Great Photos to Get Your Investment Property Rented Quickly in Overland Park [VIDEO]
Research shows that you should have at least 8 to 10 good photographs of a property to draw the most interest from prospective tenants. Today, we are helping Overland Park landlords take better marketing photos. These tips will help you rent out your investment property quickly.
Take Pictures During Vacancy
Take your pictures while the property is vacant. That way, you don’t have any personal items interfering with the pictures or causing distractions. You can lightly stage the property, not with furniture, but with accents like towels in the bathroom and a candle, or a teapot on the stove in the kitchen. These things will provide a homey feel for your photos.
Interior and Exterior Photos are Needed
Pay attention to where you are taking pictures. Outside photos are needed for sure, and you should take two to three pictures of your kitchen, even if it’s small. You’ll need a photo of the master bedroom and the bathroom, as well as the living area. When you’re taking a picture of the bathroom, make sure the toilet lid is down. Pay attention to those details.
Think about the time of day you’re taking pictures. If you show up to the house and you look at the front of the house and there are lots of shadows, come back when there’s more direct sun, or when the sun is not creating so many shadows. Even pictures on a cloudy day would be better.
Focus on Angle
Pay attention to your angle. Not every house looks beautiful in a photo straight on. Angle it when necessary. Always minimize the amount of driveway you see. More sky and less driveway is more flattering. Inside, don’t take all the pictures standing from your eye level. Think about squatting or taking a photo from cabinet height so people get a different viewpoint.
These four tips should help Overland Park landlords take better marketing photos. If you need help with your picture taking, or you have questions out Overland Park property management, please contact us at Home Rental Services.
When you’re looking for Overland Park tenants, you want to find people who are responsible, reliable, and willing to pay rent on time while taking good care of your property. Today, we have some advice on screening for the best renters.
Pre-Screen Your Tenants
When potential tenants first contact you after seeing your listing, start qualifying them right away. If it’s October and your house is currently vacant, and the tenants don’t want to move until January, I would cut that call short and move onto the next tenant. Pre-screening during the initial contact is important and will save you time and money.
Have a High Quality Application
Your application should have a release for the renter to authorize you to pull credit, check with previous landlords, and research employment history. You’ll need every applicant to fill out the application completely, and to sign it before you can begin the screening process.
Verify Applicant Income
It’s important to make sure your tenants earn enough money to pay the rent. We recommend a requirement that three times the gross rent is earned by all tenants living in the property. So, if your house is $2,000 per month, you need a tenant who earns at least $6,000 per month. For self-employed individuals, ask for tax returns, and for employees, get two sequential and recent pay stubs.
Develop Written Screening Criteria
Have written criteria that explain what requirements a prospective tenant needs to meet before becoming approved for your property. You can email the criteria or share it with any applicants when you show the property. Put it on your website. Be consistent in screening so there won’t be any conflicts with federal fair housing laws.
Pull a Credit Report
Have renters run their credit and provide you with a report, or if you run them regularly, get an account with a credit bureau so you can run it yourself.
This Overland Park landlord advice should help you find some of the best renters in the market. If you have any questions or you need help with Overland Park property management, please contact us at Home Rental Services.
Author: Paul Branton
When I started at HRS back in 2010, I had the pleasure of being the property manager for one of our investor clients. For the purpose of this story, I’ll call him Dave.
When Dave and his wife brought their first property to us, I believe it was more of a decision for strategic planning rather than a desire to own a rental investment. If you recall, the real estate crash around 2008 had caused home values to decline. It wasn’t a good time to sell a property.
Dave was moving out of the Kansas City area for new employment opportunities. He really didn’t want to sell his property and lose equity, so he and his wife turned to Home Rental Services to professionally lease and manage their former residence.
In hindsight, we can plainly see that this was a wise decision. We’ve been collecting rent for Dave for years. The mortgage is getting paid off. And home values have recovered nicely.
Interesting stats from this report:
The average sales price for homes rose 5%
Pending sales were up 14%
Inventory was down 30.4%
I’m giving you the history of our relationship with Dave because we’ve been working together for six years and he and his wife recently closed on their fifth rental investment property! They learned from the experience of their first home the “Hey, this really works!” feeling, and decided to jump in and build a portfolio of homes over the past few years.
Here’s a quick synopsis of how this most recent deal came together:
- They reached out a couple weeks ahead of their trip back to Kansas City and let me know they would be looking with their Realtor® for their fifth investment property.
- I told them to narrow their search over the weekend and I would plan to visit properties with them the following Monday morning.
- We met Monday morning, looked at a few homes, went to lunch at Joes Kansas City, discussed the pros/cons/potential of each of the homes and chose the “winner.”
- With the help of their Realtor®, they presented the offer, got the property under contract and inspections scheduled.
- I attended the mechanical inspection, took a couple hundred photos and prepared my suggested renovation budget.
- They negotiated post-inspection repairs/price and moved on to closing.
- Final walk-through the day prior to closing – We met at the home with a general contractor to prepare for improvements.
(Outline scope, get bids etc.)
- Closing Day – We went to the home, installed our sign and lockbox and activated online marketing.
- The day after closing – The general contractor began work and leasing agents began showing the home.
- Six days after closing – Offer to lease was presented and accepted. (We actually had 2 competing offers!)
- Fifteen days after closing – Rehab work completed and home inspected for tenant possession.
- Twenty days after closing – Tenants moved into the home.
If you’re ready to jump into the world of real estate investments, give us a call. We would love to help you!
As you probably know, the most expensive part of owning an investment property is having a tenant move out. It’s not necessarily because your tenant has caused damage, but because there are a lot of expenses involved in making the property look great for your next tenants. You want your tenants to stay as long as possible in your property so you can avoid those expenses.
We have a few tips!
Make Regular Improvements
Instead of just making repairs when they are necessary, make constant improvements to your property. Things come up, and even though the renters are there, they appreciate you upgrading the light fixtures or painting a room. It might cost you a little more to have it done while your tenants are in place, but they will be more willing to commit to leasing your house for longer.
Be Responsive to Tenants
When your renters call or email, be responsive to what they need. Listen to them. They may ask you to do something that you’re not willing to do or that you don’t want to do, but sometimes they just want to be heard.
Be Accessible to Tenants
You have to be easy to contact. No one wants calls at 2:00 in the morning, but your renters need to know that you are responsive and available. Make sure you answer your phone and respond to emails and messages.
Run This Like a Business
Don’t be best friends with your renters. Enforce late fees when they don’t pay rent on time, and hold them accountable to following the lease. Your renters will appreciate that you are running the property like a business because you’ll be consistent and they will know what to expect.
These are four tips that will help you keep your renters past their initial one-year lease. These tips will also make you more money by avoiding turnover. If you have any questions about this topic or anything pertaining to Overland Park property management, please contact us at Home Rental Services.
Author: Sandy Fisher
I came to work for Home Rental Services in early Fall of 2015. During my interview, much of what this position would be doing was discussed. One word I repeatedly kept hearing was “Buffini.” It was Buffini this, and Buffini that. I remember leaving thinking, “They want me to Buff what?” I think I actually said this out loud in the elevator, with others present, on my way back down to my car.
I tend to think out loud occasionally.
Now, a little over a year later, I’ll tell you what I’m “Buff-ing”, or more specifically, “Buffini-ing”: phone calls, personal notes, coffees, lunches, pop-by gifts, business partner breakfasts, and most recently our first annual owner appreciation open house. Many of the things I’ve worked on this past year are kind of firsts for Home Rental Services, and all incredibly valuable and important.
However, our owner appreciation open house event surprised us all.
A few months ago, I had a conversation with Kandy Meehan, our owner and President, about hosting an event where we give pies as gifts to say thanks for ________. That blank wasn’t a typo; at first we just didn’t know what type of relationship on which to focus this event. Should it be our awesome Realtor® friends who continually send referrals our way? Should it be our amazing group of contractors/service providers who take great care of our homes? Should it be… wait, our owner clients! What about them? Absolutely! And the planning began.
It wasn’t a wheel we had to recreate. Again, it’s a Buffini thing, but we did have to customize the event for our audience and our needs.
Lots of thoughts (again, said out loud) like, “What will our owners think?”, “Will they come?”, “Will they stay?”, “If they stay, what will we talk about?” Optimistically, I moved forward with planning the event.
Our owners received an invitation to our owner appreciation open house. It involved a three-hour timeframe with drinks, snacks, and pies. Yep—pies. Each owner was asked to pick from three pie flavors, and we would have that pie ready to go for them to take home for their Thanksgiving holiday.
The day arrived and again, my thinking out loud returned… “Here we go!”, “I hope someone shows up!”, “If people show up, where are we going to put them all?”, “What are we going to do with all this food?”, “I hope we like pie!” Well, out of our local Kansas City owner client invite list, we ended up getting about 20% attending. We were thrilled with the turnout.
And finally, I wasn’t the only one thinking out loud… “You are really giving me this pie?”, “What a great idea!”, “Thank you!”, “It was great meeting you in person!”, “What a nice office you have!”, “Thank you for the pie!”. These are just a few of the wonderful things said to us from our owners during the event. And did I say the event had a three-hour timeframe? It did. But almost four hours later, we were still having a great time and thinking out loud with some of our wonderful owner clients.
I remember looking around during the event and thinking to myself, “Yep. We’ll be doing this again.”