5 Ways Landlords Save Money By Making Homes Eco-Friendly

Many individuals, landlords included, are opting to “go green.”

By making a property more eco-friendly, a landlord reduces the environmental impact of that home, but in addition to this benefit, there are a variety of ways it can also save them money.

1. Utilities Savings
While some landlords leave it to their tenants to have all utilities turned on, many also offer certain utilities, such as water and gas, as part of the rental agreement.

By installing water-saving technologies, such as low-flow shower heads and toilets, landlords can greatly reduce their water costs.
Similarly, investing in better insulation and new furnaces can reduce natural gas costs.

These are only a few options, as there are numerous home energy audits a landlord can perform to reduce a property’s environmental impact.

2. Tax Breaks
Although tenants are the ones who will inhabit a property, they’re not the ones who will have to pay taxes on it.

Because of this, it’s important for landlords to try to reduce their tax burden in any way possible, and fortunately, it’s easy to do this by simply going green.

The Database of State Incentives for Renewables and Efficiency (DSIRE) offers a resource that lists federal, state, and local tax incentives for home upgrades that are more environmentally sustainable.

3. Reduced Supplies Costs
Even seemingly minor costs can quickly add up for landlords who maintain more than one property. Paper waste, for instance, can quickly add up over the years.

Fortunately, a fair amount of this waste can be eliminated by simply using property management software that allows tenants to pay their rent online and landlords to perform background checks right over the internet.

4. Lower Repair Costs
Making a few eco-friendly changes around a property can also greatly reduce the repair costs that landlords see during a typical rental agreement.

Installing efficient insulation, for instance, will provide a home with better temperature regulation.

By doing this, HVAC systems will experience less strain from trying to maintain a comfortable temperature in a home.

Reduced HVAC running time equates to less wear and tear, and in the end, this means longer periods of time between necessary repairs and replacements.

5. Savings on Waste Removal
It’s also possible for landlords in certain areas to save money by reducing the amount of waste generated in their rental properties.

Many cities and counties, for instance, actually charge for waste removal based on the weight or volume of what’s removed from the property.

This means that, by simply eliminating some of the garbage created by tenants, landlords who cover waste removal can save money.

Unfortunately, it’s not easy, or sometimes even possible, to force tenants to reduce the amount of waste they produce.

It is possible, however, to increase the likelihood that they’ll do their fair share.

By providing composting areas for tenants, for instance, it’s possible to eliminate some of the waste generated in the average home by 25 percent.

Additionally, providing recycle bins can reduce waste even further.

In the end, these measures can result in substantial cost savings for landlords who pay for garbage collection by weight or volume.

There are countless environmental benefits of going green, but that’s not where the benefits end.

Whether a landlord is focused on saving money or saving the world, taking eco-friendly measures in their properties will help them succeed in their goal.

Low-Cost Kitchen Renovations That Boost Rental Value

It is no secret that kitchen renovations boost property value, so it should come as no surprise that an upgraded kitchen can also help to attract tenants and boost the amount that you can charge in rent.

Unfortunately, major kitchen renovations run well over $10,000.

If you are not able to put a lot of money into your investment property, a low-cost kitchen renovation can still allow you to reap benefits now and when you sell the property in the future.

Even a minor kitchen renovation can offer a return of 82 percent on average.

Here are some ideas to get you started.

Refinish Cabinets
Instead of putting the money into getting all new cabinets, strip the current cabinets, sand them down and refinish them.

You can add a coat of paint to brighten up the kitchen, and the best part about this idea is the fact that it does not require you to do any major demolition in order to achieve your goal of a more updated kitchen space.

Backsplash
Backsplashes are a major part of the modern kitchen, and having an outdated backsplash or none at all can turn potential tenants off to your property.

Chipping away at the current tile is a tedious task, but it is one that you can complete on your own.

Laying the new tile is a do-it-yourself venture as well, and there are low-cost tiles available that still fit in with modern kitchen decor.

Overall, this is one of the cheapest ways to give the kitchen in your rental property a much-needed facelift.

Shop Smart
If there are new pieces that you need to add to the kitchen to make it look its best, shop through surplus retailers in order to snag a deal.

You will have to deal with installation on your own, but the deep discount is worth the trouble.

Many of these retailers provide the latest styles when it comes to kitchen decor, and you can find everything from countertops to islands this way.

Add an Island
Counter space is often at a premium in rental units, and more people are becoming interested in cooking their own meals at home.

That means that offering more room to slice, dice, and mix sets your rental unit apart from the rest.

An island offers an ideal way to expand counter space without actually adding a fixture to the kitchen.

Design options include wheeled islands that can be removed from the room if your tenants want more floor space, so these portable options are ideal.

Add Storage
Cabinet space is another desirable feature in any kitchen.

While adding an island will increase storage space, look at all of your options when it comes to low-cost methods of increasing storage for your tenants.

Shelving on a bare wall can be used to stack dishes, and kitchens that do not yet have upper cabinets can benefit from having these installed.

Change Up the Lighting
A modern lighting fixture helps to change the decor while better lighting the space.

While it will not improve a completely outdated kitchen, it can help to spruce up a kitchen that just needs a little boost.

Now that you know that there are ways to increase the rent you charge for your property while improving property value, it is time to get started.

Whether you choose one or several of these suggestions, a small renovation can go a long way when it comes to attracting tenants.

 

How Adding Hardwood Floors Ups the Value of Your Rental Property

Owners are often wary of making upgrades to their rental units, and for good reason.

Why spend loads of money on things that can be damaged or otherwise devalued as soon as they are added?

There are a couple of upgrades you can make that will not only add value right away but for years to come, and will make maintaining the property even easier than it was before.

One of these is taking out the carpet and adding hardwood floors.

Thankfully this is a relatively simple process that pays off in the following ways.

Instant Property Value Increase
As soon as you replace carpets with hardwood floors, the entire apartment or house looks classier and cleaner.

These aesthetic changes also translate into cold hard cash, as a recent survey of realtors found that 82 percent agree that simply adding hardwood floors meant that properties sold faster and for more money.

For rental property owners, the advantages are even better, as this is not just a one time value increase but a way to continue to get more for the property every time it is rented out.

Because the property is now more attractive to renters, you not only get more money for it, but you may have more interested potential renters.

Long Term Savings
Hardwood floors may cost more to put in than simply carpet, but over the long run most landlords with hardwood in their properties will end up paying less overall than those with carpet, and enjoy the higher rental income as well.

This is because carpets usually need to be cleaned after a guest moves out, which often involves a professional service of shampooing, vacuuming and drying.

Hardwood floors on the other hand can be quickly cleaned with a mop and some good sterilizer and hardwood-safe spray.

Carpet also will need to be replaced at some point, especially if the property gets a lot of turnover.

It is only a matter of time before a major spill or accident takes place.

Once again, hardwood floors rarely stain and are not as susceptible to damages from cigarettes or other burning material and therefore withstand the test of time much, much longer.

Hardwood Floors and LEED Credits
For those that would like to get their property certified as a green building by the Leadership in Energy and Environmental Design (LEED), getting hardwood floors put in is often a necessary step.

A green building is one that uses a certain amount of environmentally friendly products or materials in its construction, and in doing so contributes positively to the environment.

Green certified buildings also tend to fetch higher price points on the rental market, as the supply of them is limited and those that demand them tend to be willing to pay more.

If you have a historic building that is made of wood, stone, or other natural materials, simply replacing the carpets with hardwood floors may be all you need to do to earn the LEED green building certification.

For newer buildings however, there are many more areas of the edifice that may need to be replaced before it can be considered green.

 

Lucrative Landlord Locales

Perhaps you inherited a house, have been renting it out, enjoy being a landlord, and are interested in acquiring additional rental properties.

Or maybe you’ve come into some extra cash and are interested in investing in a property and making a steady rental income.

Regardless of the reason, do your homework first.

You’ll only make money on your rental property if it is occupied. Here are three hot spots where rentals are always in demand and command top dollar.

1. Miami, Florida
This sunny southern city is a melting pot of cultures. Walk down any busy Miami street and you’ll likely hear Spanish, English, Portuguese, French, German, and Creole being spoken.

Miami is the gateway to Latin America and a top tourist spot for Americans, Canadians, and Europeans.

With its pristine white-sand beaches, abundant nightlife, world-class restaurants, and energetic ambiance, Miami is a paradise — for tourists and for landlords.

The number of Miami residents who rent jumped a whopping 25 percent between 2006 and 2013.

The tourists who flock to Miami year-round keep the city’s huge number of hotels and motels occupied.

The service workers who staff them have to live somewhere, and can’t afford to buy a property in a city where the median home sales price tops $300,000.

Hospitality workers are plentiful in Miami — and they’re renters.

Besides service workers, Miami is a mecca for young singles who work hard and play hard.

From models to marketing gurus, Miami’s large young professional population tends to want to live near the action.

Neighborhoods like South Beach and Little Havana are full of rental bungalows, condos, and townhomes. Snag one, maintain it well and you’ll have no trouble keeping it rented out.

2. Scottsdale, Arizona
On the other side of the country from Miami sits another decidedly less-flashy city that’s a smart investment for landlords.

Scottsdale is a top destination for snowbirds, retired Northerners who fly south in winter to bask in this city’s year-round warmth.

One study estimates the number of annual Arizona snowbirds at more than 300,000.

Scottsdale, with its myriad resorts, golf courses, restaurants, and entertainment options is a popular place many of them choose to roost.

With a median home price of nearly $400,000, snowbirds are far more likely to snag a rental here than they are to buy a house.

While some snowbirds prefer a long-term rental others opt for short-term.

Landlords can command top dollar for these more flexible arrangements.

For the rest of the year, there are plenty of potential tenants thanks to Scottsdale’s large hospitality industry.

Scottsdale is also a favored spot for Arizona State University professors and graduate students to live.

With more than 76,000 students (plus the faculty that teaches them), landlords in nearby Scottsdale have a steady stream of tenants interested in renting, but interested in distancing themselves a bit from Tempe’s undergrad-saturated communities.

3. Dallas, Texas
Everything’s bigger in Texas, they say, and in Dallas that includes the number of renters.

Of the more than 484,000 houses in Dallas, 57 percent are occupied by renters.

Dallas has a huge single, upwardly mobile professional population.

This demographic is a landlord’s dream, as young professionals tend to be responsible and reliable tenants.

Currently, median housing prices are on the lower end of the spectrum (around $250,000) and are trending slightly downward.

That means landlords ready to invest should take a close look at property in this north Texas city.

Neighborhoods like University Park, M Streets, and Oak Lawn command the highest rents because they’re the trendiest and most desirable places to live for young professionals.

If you’re looking to expand your rental property portfolio, take a close look at Miami, Scottsdale and Dallas area real estate.

These hot markets are full of renters anxious to sign on the dotted line and find their next home.

 

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.