How to Give The Best Possible Tour of a Property

You can put great pictures and floorplans on your website all you’d like — nothing matters quite as much as that initial impression that a prospective tenant gets when they take a tour.

That’s what helps them stop thinking of a place as a nice-looking property and more as a potential home.

 

It’s always a good idea to perform repairs on a property to get it up to snuff for prospective tenants.

But by the time that you’re booking tours for a property, you’re no longer thinking about painting walls or oiling door hinges — it’s time to present the existing property in the best possible light.

How can you pull that off successfully?

 

Ask Your Current Tenants to Help

In a perfect world, every property you show would be vacant.

You would have plenty of time to spruce up the place, and when prospective tenants walk in, they would see the residential equivalent of a blank slate, ready for them to daydream about where their furniture goes.

But most of your properties are probably already occupied.

This is a good thing — it means you’re making money — but it makes tours harder.

It’s difficult to do important work, like extensive repainting or cleaning, when a property is occupied, so it might not be in its best condition.

If your current tenants are messy, have unfriendly pets, or if there’s a notable odor, the prospective tenant may walk away with a bad first impression.

Unfortunately, you can’t force a tenant to sequester any pets or straighten up the place.

In many jurisdictions, landlords are expected to give tenants notice (typically 24 hours) before they or their agents head into the property for any reason.

Take advantage of this, and be sure to give your tenants enough notice of a showing.

Most tenants don’t want their landlords to think they’re slobs, so they’ll usually clean up in advance, corral pets, or vacate the premises long enough for you to conduct your showing in peace.

 

Put Your Best Foot Forward

Be sure that the person conducting the tour is friendly and prepared.

They should be on time for the showing and dress nicely (business casual is usually wise, but it can depend on the price point of the property), and be ready with accurate information about the property and its neighborhood.

Don’t be afraid to give them notes for reference, and be sure they have rental applications with them when they’re conducting the tour.

The person conducting the tour shouldn’t be afraid to make the property look its best.

This may mean turning on lights, opening windows or showing off features such as garbage disposals, ceiling fans, or dishwashers.

Most importantly, if they find anything amiss during the tour, don’t apologize for it or draw too much attention to it. Instead, say, “We’ll fix that before move-in.”

Make a note of it during the tour and follow through. Prospective tenants will be able to tell if you’re lying about something like that.

 

Finally

Make sure you follow up with your prospective tenants a few days after a tour.

Remember that following-up is a balancing act: you don’t want to seem too needy or like you’re hounding them, but you do want to be friendly, and make it clear that you’re available to answer any questions or concerns about the property.

Giving a tour of a property, especially one that’s already occupied, can be difficult, but with these tips, it should be a breeze.?

Do I Need A Real Estate License To Manage Property?

Professional licensure requirements in the United States are intimidating to many novice property managers.

Many times, if a property manager is working for a larger company, the company will make these requirements clear.

Both a company and its employees can receive hefty fines, mandated continuing education, or worse if an individual at the company is practicing without a license.

However, if property managers are starting out on their own, they don’t have that kind of guidance and may not even ever take into account that they need a license.

What’s worse, whether a property manager needs a license – and how he acquires that license – varies from state to state.

Each state and the District of Columbia sets its own laws by statute, which are then interpreted as needed by the individual state’s real estate board or equivalent, resulting in widely disparate laws.

Furthermore, calling up the state’s licensing board about the finer points of licensure requirements may not result in a useful answer.

Curious property managers may be able to ask their questions directly of the board and get an answer to their practice question, depending on the state.

But many boards refuse to answer pointed questions about licensure on the grounds that they cannot give anything that can be construed as legal advice or advice about individual cases.

Ignorance Is No Excuse

As a rule of thumb, no matter the state, all professionals are expected to know the licensure requirements of the state where they work.

 In other words, the burden is on them and any company they’re affiliated with, and not on the licensure board.  

Property managers should make sure they do their homework about licensure requirements and stay abreast of new developments, whether via news sources or the licensing board’s website.

In most states, property managers need to have a real estate broker’s license.

In addition, some states may have requirements for a property manager, or a real estate broker more generally, to be affiliated with a company, or licensure requirements may be less stringent if the professional is with a company.

Yet again, it’s a good idea to check with the state in question.

However, some states (as of this writing, Idaho, Kansas, – for residential property management – Maine, Maryland, Massachusetts and Vermont) do not require a license for property management.

Still other states and districts (D.C., Montana, South Carolina and South Dakota) require a license that is specifically for property management rather than including property management as a subset of real estate.

Some states, though not many, have still other requirements for managing a community association.

How to Get a License

The requirements for getting a license – what the individual needs to do – vary from state to state as well.

Most states require that an aspiring licensee be of age (over 18 or over 21).

Often licensees need to take courses and pass an exam, although these requirements may be waived if the licensee can practice law in the state.

Once the license is issued, keeping it up usually involves paying a fee on a regular schedule and possibly also taking continuing education.

Specific courses may be mandated by the state, or the license’s first renewal may not require CE, so be sure to check.

If this is all still confusing, check to see if there’s a state-level professional real estate organization that can clarify, or contact the licensing board with questions.

Even if it seems clear, or especially if there are rumors that the licensure requirements may be changing, it’s never a bad idea to get in touch with somebody to be sure.

It only takes a minute, and the consequences of unlicensed practice can be serious.

Top 10 New Technology Solutions for Realtors

As a realtor, you handle many duties — from connecting with new clients to scheduling open houses. If you try to handle every aspect of your business operation manually, you can’t maximize your productivity if you spend more time on administrative tasks than you do with duties requiring a human touch. Implementing technology in your day-to-day operations can help make more productive use of your time while providing an even higher quality of service to your clients. In turn, clients are increasingly looking for more online solutions these days. Using technology to streamline your business is a win-win situation.

  1. Online Forms

Make it easy to stay on top of paperwork by keeping digital forms. Your listing inquiry forms, property paperwork, rental applications and other paperwork can be filled out online and submitted to you without requiring an extra trip to deliver them in person or depending on fax machines or scanned documents. You can then easily pair your online forms up with electronic signing (see below).

  1. Online Scheduling

Trying to find a time when you and/or a colleague is free at the same time as your clients is time-consuming, not to mention, confusing at times. This is where online scheduling tools come in handy. Your clients can book a time that suits them from a list of times that you have previously approved. No need for calls and back-and-forth emails. Acuity and Calendly are great scheduling tools to try out.

  1. Customer Relationship Management

Do you provide timely feedback when a potential client contacts you about listings? Do you have your clients’ contact details and preferences saved somewhere easy to find? A customer relationship management (CRM) tool helps you stay on top of your client contacts. You can sort messages, make notes, attach files and schedule follow-up contact through email, phone or in-person meetings.

  1. Email Automation

Another tech option is email automation. You can auto-respond to emails, address common questions and reconnect with previous clients. You can also set up emails to automatically send clients new listings that meet their parameters and other time-saving configurations. If you use an email marketing tool like MailChimp or ConvertKit, you can also deliver regular newsletters to your clients to keep them in the loop and ensure that your company remains front and center in their minds.

  1. Video Marketing

Video marketing can benefit your business in a number of ways. You might want to send your clients a quick video message introducing yourself – a personal touch and a great way to put a face to your name (and help you stick in their memory). Platforms such as Facebook and Instagram are giving preference to video content which means that if you are including video in your marketing strategy, more people are likely to see that content over standard text and image content. You can also use video to showcase your properties that allow people to get a much better idea of exactly what is on offer and view it at a time and place that suits them.

  1. Cloud Storage

Photos, videos and other media are likely just sitting on your computer’s hard drive, USB drives and SD cards. Instead of searching through multiple drives when you need a particular listing’s media, you can consolidate your media into a cloud storage service such as Google Drive. Using cloud storage also means that your team members can access and share those files from anywhere which will save time when you don’t have to keep searching for them or resending them via email.

  1. Social Media Scheduling

Social media sites provide a valuable way to connect with potential clients, but you need to post at specific times to get the widest audience for your content. Instead of sitting at your computer to update your social content, you can use a scheduling tool like Buffer or Hootsuite to automatically post your message at a scheduled time. Most of these tools will recommend the best time of day for you to post based on when your audience is the most active and offer sophisticated analytics to help you figure out which strategies are working well and which need to be tweaked.

  1. Automated Listings

Instead of manually inputting listings on multiple sites, you can use a service that posts your listing across all of them automatically. This will maximize your property’s visibility by putting it on as many sites as possible while also saving time in the process.

  1. Floor Plan Software

You provide renters with plenty of property information through video tours, photos and descriptions, but it’s still a challenge for tenants to visualize being in the property before they actually tour it. To increase your chances of matching tenants with the best property for their needs, you can provide detailed floor plans to give them another way of sorting through properties before they request an in-person tour of the property.

  1. E-Signature Software

If there’s one thing that is certain, it’s that any real estate transaction requires a lot of signatures. Trying to find a time and place to collect those signatures from different parties can be time-consuming and often frustrating for everyone involved. Using a tool like HelloSign or DocuSign means that you can send documents to the relevant parties, they can sign them electronically and then return them to you in a matter of minutes.

Maximize your working hours by putting technology in place to automate and streamline many of your day-to-day realtor business processes. Whether you need a way to find listing photos or quickly post new listings, these tools give you many choices. You can spend less time on repetitive, administrative work, allowing you to focus your energy on bringing in new business and wowing prospective tenants.

Due Diligence: Getting The Lay of the Land On Investment Properties

1. Choose Your Investment
Determine whether you desire a long-term property investment or a “flipping” property. Long-term investments produce positive cash flow, increasing your net worth.

If you plan to flip, your focus will be on property appreciation and a quick cash return.

Flipping

  • Your profit margin depends on your acquisition cost, and it’s important you buy the property at a low price so you can sell at a profit.
  • Don’t be thrifty with small purchases but wasteful with large costs. If a property is super cheap, the amount you may need to spend on repairs will drive up the cost.
  • Have a “what if” plan in place. Even if you buy at a great price and get the property ready for the market, there’s no guarantee it’s going to sell.
  • Partner with an experienced flipper your first time, and consider it an apprenticeship. Your profits will be lower, but what you’ll learn will be invaluable.

2. Good Property Characteristics
Research areas that have characteristics to enhance the value of your investment.

  • High-quality suburbs close to cities, and properties near business districts or waterfronts are all desirable locations.
  • Close to public transportation. People generally like to leave their vehicles when they go to the city. Public transportation no more than 15 minutes away from the property is ideal.
  • Lifestyle amenities within 10 minutes of the property. These include malls, schools, libraries, theaters, parks, restaurants, cafes, and gyms.
  • Areas that have 35/65 renter to homeowner ratios.
  • Low or non-existent crime.
  • Available jobs.
  • Affordable property taxes.

3. The Lay of the Land
Park your car, and walk around to chat with the residents, shop owners, and anyone willing to share insight on the neighborhood.

Check with the city or county planning department to get an idea of what the area’s future holds.

New strip malls, business developments, or condos mean area growth; these developments are great news.

If new subdivisions and complexes are planned, they could drive down your rents, absorb available green space and lower the value of your investment.

4. Research Realtor Claims
Never take a Realtor’s claim of “guaranteed rent” as gospel; it could simply be a sales ploy.

If you work with a Realtor, and he or she makes such a claim, get second or third opinions from independent Realtors before you accept it as truth.

5. Additional Tips

  • Avoid areas that have 10 or more apartment complexes; scarcity is a desirable sales attribute, since rents plummet with an abundance of available units.
  • Try to buy the property at least 12 percent below market price. This gives you wiggling room should you decide to sell the property. You’ll be able to sell below market value and still pocket a profit.
  • Look beyond just dollars and cents, since time is a commodity. The specific property you buy dictates the time required to manage it.
  • Several investment property types are very high maintenance, requiring substantial property management. These include college rentals, vacation rentals, and properties in crime-ridden or very low-income areas.
  • If you buy a high-maintenance property, you can hire a property management company. They charge under 9 percent of the rental gross and sometimes lease fees as well.
  • Be open and friendly with other real estate investors. These folks have great insight into the market, and they are more than happy to spare a few moments to offer advice.

 

Make sure you go over all available data on the property you plan to buy, and do a thorough investigation to make sure your decision is good.

Since knowledge is power, though, due diligence always pays off in the end.

 

Purchasing a New Vs Used Rental Property

If you’re buying a home to live in for a while, it makes sense to purchase property that feels right to you: a home in the neighborhood you prefer, a home with the charm or vibrancy you’re looking for and a home that is easy on your eyes.

However, if you’re buying a property for investment reasons, such as renting it out, the picture gets blurrier.

Here are considerations to weigh when deciding to invest in a new property versus an older property.

Maintenance
When you’re investing in a property with an eye on renting it out, you want to be proactive in keeping your maintenance bills as low as possible.

Not only does this save you headaches and money, it helps your tenants, too.

In general, older homes mean older construction and older fixtures—and more maintenance.

The exception to this, of course, is if you buy an older home for a dirt-cheap price and renovate it so its innards are new.

Doing this could save you significant money.

Price and Community
Buying a new home often costs more than buying a used home, although this isn’t necessarily the case across the board.

Expect to pay 15 to 30 percent more for a newer home than its older counterpart, and if you’re comparing properties, look at what you’re getting for the price.

For instance, an older home may come with a larger yard and more shade, while a newer home is built on a smaller lot but has the latest technology inside.

Consider the community at large as well.

College students look for certain things married couples with kids don’t, and the same goes for single professionals.

You could buy a newer home that has everything, but if the community in general prefers proximity to work as well a unique look, large yards and charm that some newer homes lack, your purchase could end up costing you.

Look at the rental market in the community.

Are the majority of rental homes older properties?

What do newer rental properties look like?

What can you make work?

Long-Term Picture
Is it possible you’d want to live in the home you intend to rent out at any point?

For instance, after retirement?

If so, give more consideration to buying a home that matches your preferences regardless of its age.

Also keep in mind that a new home now won’t be as new by the time you move in.

Let similar factors guide you if you’re thinking about buying a home for your heirs to live in at some point.

Also consider resale values.

Location, age, condition, size and layout affect resale, and in general, a newer home brings a higher resale value.

Due Diligence
Follow due diligence when evaluating new and older properties.

Even new construction can be shoddy with cracked foundations. Never assume anything.

The bottom line is that there’s no black and white answer.

Some older properties are smart investments, as are many newer properties.

Factor in the demand and preferences of the community where you plan to rent out your property and how long you might keep it.

Look at costs as a whole; don’t focus just on selling price.

For example, buying an old home and renovating it could be much cheaper than buying a brand-new house.

 

Avoiding Liens and Legal Issues When Buying a New Property

If you invest in rental properties, you know that purchasing a property can be lucrative when the price and location are right.

However, it’s easy to get caught up in deals that seem too good to be true.

When buying any property, it’s important to conduct a check to determine whether there are any strings attached.

Tax liens against a property, for example, could cost you thousands of dollars, so you need to know how to do your homework before you make a purchase.

Tracing Lien Information
Property investors may flock to foreclosure auctions to try to make the most of their investment by purchasing a property at a great price.

The problem with foreclosure auctions, short sales, and other property sales that involve a below-market selling price is that the properties in question often come with liens attached.

Tax liens may be levied against the property, but liens can also be placed in relation to delinquent credit card or loan debt, unpaid bills from contractors and even child support back payments.

When a person purchases a property that has liens attached to it, he or she becomes responsible for settling the liens.

Liens have the potential to cost buyers thousands of dollars, and a purchase price that seems like a good investment can end up taking hard-earned money out of your pocket.

Follow these steps to ensure there are no liens on the properties that you are considering adding to your portfolio:

  • Obtain the parcel ID number from the seller.
  • Access the local county clerk office’s website.
  • Navigate the website to find where a lien search can be completed. If you are having trouble locating this search option, contact the county clerk’s office for help.
  • Be sure that you are selecting “liens” during the parcel ID search. After you search for liens, do a search for all records related to the parcel ID to ensure that financial liabilities attached to the property are not listed under another category.

If you are worried that the results of a parcel ID search are not sufficient, you can visit the county clerk’s office to ensure that a professional is conducting the search for you.

If you would prefer not to do the search on your own, it is also possible to hire someone who is knowledgeable about searching for liens to do it for you.

Title search companies are responsible for ensuring that the property title is clean.

While you will have to pay to hire a title search professional, it’s often worth it to ensure that properties do not have hidden costs.

Finding Out About Legal Issues
Even if the property does not have a lien on it, there are other legal issues that could make it a bad investment for you.

To avoid dealing with the headache of a property that is tied up in legal issues, you can start by asking the seller if they have a legal representative who you could talk to.

However, sellers who are highly motivated to sell or who are selling due to legal issues may be inclined to hide these issues from potential buyers.

Legal issues that may be encountered in relation to a property you are purchasing include:

  • Unlawful additions: If the previous owner added rooms or changed the layout of the house, these additions may not have been completed with the proper permits in hand. Once you purchase the property, you are responsible for ensuring that any additions comply with zoning and building safety requirements. You could end up having to do a large-scale renovation to get the property in compliance with regulations.
  • Lead-based paint, mold, and asbestos. If you are purchasing an older home, there is a chance that lead-based paint or asbestos were used when it was constructed. Even in a newer home, mold can grow if the previous owners were not proactive about managing moisture levels. When you’re purchasing an investment property that you plan to rent out, the presence of these dangerous building materials could open you up to liability.
  • How do you protect yourself against these issues? Here are some options that will help you invest wisely.
  • Hire a lawyer: Lawyers who specialize in real estate transactions are able to navigate through the legal issues that may be attached to a property you are purchasing. In fact, legal professionals are also often able to help with your lien search to ensure that you are not liable for expenses that you did not incur.
  • Have a home inspection completed: Home inspectors are knowledgeable about building safety regulations and will look over the structure of the building, as well as the electrical and plumbing structures, to ensure that everything complies with legal requirements. In addition, home inspectors are able to determine whether wear or damage could require costly repairs in the future.

When you purchase a property without doing your homework, you stand to lose money on your investment.

You’re not in property investment to suffer financial losses, so it’s important that you take a proactive role in determining whether a property will yield positive financial results.

Liens and legal issues threaten to eat up your profits, but you can protect yourself by taking a few precautionary steps.

 

Mortgages as They Relate to Landlords

Getting a loan for a rental property is not the same as getting a mortgage for a residence.

While the two situations have some similarities, they also have important differences.

Landlords who are considering applying for a loan to purchase a new rental property should look at the requirements carefully.

Credit Scores
You can do a few things before you apply or put in an offer to make getting a mortgage and closing on the loan easier. First, make sure your credit score is where it should be.

Fannie Mae allows up to 10 loans for investment properties at a given time, but the credit score requirements vary; more loans mean higher risks.

  • The first four loans require a minimum credit score of 630.
  • The remaining six loans require a minimum credit score of 720.

Cash Reserves
You also need cash reserves.

Many lenders require six months of loan payments in savings to ensure you can make the payments even if your property remains unrented for a period of time.

Cash reserves may include the mortgage payment for the rental property and any other loans or expenses you have.

Down Payment and Income
Another requirement is a higher down payment.

You may be required to put down 25 or 30 percent, but the minimum is usually 20 percent.

Many investment mortgages have stringent limits on loan to value. Unlike personal home mortgages that allow up to 97 percent LTV, investment loans may limit the LTV to 70 or 80 percent.

You must show stable income on your W-2s or tax returns.

Your rental income may be considered if you have a history as a landlord.

If you are a first-time landlord purchasing an initial rental property, your regular income must be sufficient.

You need to have higher income to qualify, especially if you already have a personal mortgage.

Find the Right Lender
Not all lenders are experienced with investment properties. Make sure the lender you choose has handled loans for landlords and investors in the past. Otherwise, you may end up in a nightmare with delays and even the loss of a property you want.
Ask your lenders about their experience.

Even better, work with lenders who have purchased investment properties. They will understand where you’re coming from.

Find out how many loans they allow for investment properties.

Just because Fannie Mae increased its allowance from four to 10 doesn’t mean every lender has relaxed their standards.

Rent Loss Insurance
Another requirement you can expect for many investment loans is the need to purchase rent loss insurance.

This policy protects you if you should lose out on rent income for various reasons that result in damage to the property.

This can include fire, water damage, or other natural disasters.

It doesn’t cover you if your property is vacant because you can’t find a tenant.

This policy is usually included in your property insurance once you let the insurance provider know what kind of property it is.

It is purchased at an additional cost based on cost of property, mortgage payments and vacancy rate in the area.

FHA
You may be surprised to learn you can get an FHA loan for a rental property.

Most people assume these loans are limited to people who plan to occupy the residence. In essence, this is true because you are required to live in the property for 12 months.

After that time, you can rent it out.
An FHA loan is a viable option for someone who wants to get started in real estate investment with limited cash.

Only one loan is allowed from FHA, so you have to find other options for your second and future rental properties.

Types of Loans
If you plan to rent out your property immediately, you have to choose between a residential and a commercial property loan.

The residential loan is usually designed for properties with four or fewer units and is most similar to traditional mortgages.

You still have more stringent requirements, but not as complex as for commercial investment loans.

The benefit of this type of loan is that previous experience as a landlord isn’t generally required, and the interest rates are only slightly higher than for traditional home mortgages.

Commercial loans aren’t just for rental properties, but for any type of business.

They require much of the same information as residential investment loans, but the details may be different.

For instance, lenders look closer at the amount of cash flow that is expected over just verifying income. They also check your background and experience in managing the properties.

These loans include DSCR or Debt Service Coverage Ratio.

This means the lender is checking the cash flow as compared to the income and expenses.

The formula is DSCR=(Net Operating Income)/(Debt Service).

It’s possible to get a loan to purchase new rental properties, but be prepared for things to work differently than with a traditional home loan.

Know what is expected and find a lender who can guide you and support you through the process.

 

How Can You Make Sure You’re Financially Ready to Invest in Your Next Rental Property

If you’ve had a good experience with your first rental property, you may be thinking about purchasing another.

But while a successful stint as a landlord is definitely a good sign that you’re prepared to take on another property, it’s important to remember that all the same financial risks that came with your first purchase still apply.

Consider these important factors to make sure you’re truly financially ready to buy your next rental.

Cash Flow
From a month-to-month standpoint, the most important thing to consider is whether your cash flow can support a new investment, even above and beyond saving for the initial down payment.

Ideally, you’ll have enough free cash flow saved up to pay for both (or all) of your rental properties entirely on your own for at least three months.

That kind of buffer ensures that you won’t be caught off guard if you have difficulty securing quality tenants for the new property, or even if you lose your existing tenants at the same time.

In short, you need to make sure you can cover catastrophic scenarios for all apartments simultaneously, or risk falling into debt.

Additional Costs
It’s crucial to remember that you’ll incur most of the same additional costs during a second property purchase that you did for the first property.

Of course you’ll need to calculate the “always expected” costs of things like property and income tax for a new property, but you also need to include all the incidental and one-time costs that might arise.

Use your experience with your first rental property to estimate a broad window for how much you’ll require in repair and renovation costs when purchasing an additional property.

You’ll also want to keep in mind any advertising or brokerage costs that might be required to find quality tenants in your area.

In general, it’s a good idea to sit down and make a list detailing every penny you spent on your initial property during its first one to three years, then make sure your cash flow or savings can accommodate at least that amount for an additional property.

If you had an especially easy time of things the first time around, you’ll want to be more pessimistic in your calculations, and assume for safety’s sake that you’d need to spend more with a new property.

Assessing the Market
Beyond your own finances, one of the biggest factors to consider is whether your local market is a good choice for renting at all.

Nearly every city has a very active rental market, but you need to confirm what the exact state of that market is, and how it may have changed since your first purchase.

Accordingly, you need to do all the research you did the first time around.

Look at how many active vacancies exist, what the going rental rate is, and how long the average apartment stays vacant.

If any of those factors have soured since your first purchase, you’ll need to adjust your plans for cash flow accordingly, and may need to delay the new purchase entirely.

Once you’ve ensured that you can support not only the purchase price and mortgage, but also all additional expenses and worst case vacancy scenarios, you should be well on your way to expanding your rental property portfolio.

 

Specialized Housing

How to Make Sure You’re Matching Up with the Fair Housing Laws

Specialized housing, which is intended to provide housing to a specific niche of the market, must also comply with the Fair Housing Act.

This law, which was enacted in 1968, prohibits discrimination in the housing market based on gender, race, nationality, familial status, and disability.

Because specialized housing, like student or senior housing, aims at a particular demographic by its very definition, complying with it can seem like a tricky proposition.

Here are some guidelines for landlords in, or entering, some of the most common specialized housing markets. Use them to make sure your properties always match up to fair housing laws.

Fair Housing Laws and Student Housing

While all types of discrimination are possible within student housing, it is the familial status aspect that is the most problematic.

Studies have shown that rentals listed as “student housing” have high rates of discrimination against families with children, especially in situations where student housing takes the form of dormitories or “by-the-bed rentals.”

For landlords who want to invest in the student housing specialized market, it is important to make sure that there is always an option for every segment of the population – a specific dorm room meant to accommodate a family is good idea to maintain and have available for those with kids.

Students with disabilities also present unique challenges to owners of student housing.

Often disabled people need customized access to the property – like wheelchair ramps – or have a particular need – like a guide dog for the blind – that can present conflict with other renters, especially in dormitory style situations.

Before building or investing in student housing, it’s a good idea to run through all the possible scenarios you may have to deal with later.

Fair Housing Laws and Senior Housing

Senior housing may seem like it is discriminatory by its very nature, and it is.

But an amendment to the Fair Housing Act called the Housing for Older Persons Act, signed into law in 1995, gives senior housing an exemption from the “familial status” restriction.

This means that housing designed to be a senior living community can discriminate against renters under 55 years of age, and still be in full compliance with the law.

Be aware that all other facets of fair housing still apply, and senior housing, in particular, should be ready to accommodate those with disabilities and other special needs.

Single Room Occupancy Units and Fair Housing Laws

Single Room Occupancy units (SROs) are another specialized housing niche that can seem confusing and contradictory to fair housing laws.

Because SRO units are designed to only house a single person, discrimination against families seems almost impossible to avoid.

According to the Department of Housing and Urban Development (HUD), SRO units do need to comply with all fair housing laws if they are used for permanent housing.

But because the majority of SRO units are used as temporary and short-term housing solutions they do not need to meet the same criteria as long term housing.

This means that SRO units that are used as shelters, particularly for the homeless, or as extended stay hotels only have to meet the same non-discrimination clauses as those used by the hospitality industry.

If the unit is intended for residence however, or if a formal rental contract or lease is signed, then the unit falls into a different category and is subject to the full letter of fair housing law.

What You Need to Know About Refinancing a Rental Home

Refinancing a rental home is usually a bit more complicated than refinancing your primary residence.

Before you start sending applications to lenders, here are a few things that might help you navigate the process.

You’ll Need Plenty of Equity in the Rental Home

Most lenders want you to have 20 percent equity in your own home to refinance your mortgage, but when it comes to refinancing a rental home, you need at least 25 percent equity.

Few reputable lenders will go below the 25 percent mark. Since the property isn’t your primary residence, lenders see it as a bigger risk.

If you have at least 25 percent of the home’s value invested in the property, lenders know that you are committed to maintaining the house and paying your mortgage on time.

The Lender May Not Care About Rental Income

Today’s mortgage lenders are all about lowering risk.

That means they are unlikely to consider your rental income when deciding whether they will refinance your mortgage. If the current tenant moves out, then that money disappears.

Given its capricious nature, many lenders simply don’t care how much you can potentially make by renting the property.

Some factors may make a lender more or less likely to consider rental income.

For example, if the tenant has been living in the home for several years, the lender is more likely to look at the income. Long-term tenants come with less risk than new tenants.

Having a new tenant isn’t the only reason that lenders may disregard rental income.

If, for instance, you are renting the property to a relative, the lender will want to see proof that person is paying an appropriate amount each month.

Lenders may think that relatives can get away with more than other tenants, so they represent a higher risk. If you have bank statements proving the relative has been paying for several years, the lender may take a different position.

You’ll Probably Pay a Higher Interest Rate

Between November 2015 and February 2016, rates for 30-year mortgages bounced between 3.88 and 4.15 percent.

Rates for a 15-year mortgage fell as low as 3.15 percent during the same period.

Not surprisingly, higher risk associated with income properties means you will pay higher interest when you refinance.

In most cases, lenders will add about 0.5 percent to the going rate.

It’s not a substantial amount, but it’s worth thinking about because the higher rate will increase your overall costs.

You Can Deduct Associated Fees at Tax Time

Refinancing a rental property is often more difficult than refinancing your personal residence, but the rental gives you more tax advantages.

In fact, you can deduct every expense associated with the new mortgage, including

  • Fees for credit reports
  • Application fees
  • The cost of appraising the property
  • Insurance premiums
  • Points

Most of these deductions are spread over the life of the mortgage, so you can expect to save a little money each year.

Even if you only save $100 each year on your taxes, it’s still more than you would get from refinancing your home, and it will help make your rental property more profitable.

Refinancing the mortgage on a rental property could help you lower your expenses and free up cash that you need to repair the home or invest in other properties.

Getting a lender to refinance the mortgage, however, takes some work.

That doesn’t mean it’s impossible, but you should expect to face closer scrutiny and higher costs.