How appraisers determine how much a property is worth
Whether you want to buy or sell a property, the appraisal process can determine what decision you make.
In Texas, each County Appraisal district is required to do an appraisal of the properties within their district every 3 years.
It is also important to remember that the value of your property determines the amount of property taxes you will pay each year, so you really want to make sure that you get a fair appraisal, and being aware of how the process works and what techniques appraisers use can be really helpful.
You can find more information on how appraisal works and appraisal experts in your county in this link.
There are three main ways appraisers calculate the value of your property.
Market Approach
This approach evaluates the market in the area where the property is located and makes tweaks taking into account the differences between the properties. This means, they look at properties recently sold and based on a Comparative Market Analysis (CMA), they make their appraisal after making adjustments depending on determining factors.
Income Approach
In this method, appraisers look at income and expense data to calculate the present worth of future benefits. Doing this, they try to determine how much a future investor would pay today for the possible revenue the property will generate in the future.
Cost Approach
This last method calculates how much it would cost to replace the building on the property with another building of equal utility with certain improvements. Depreciation, which is the process used to deduct the costs of buying and improving a rental property, is factored in and it is added to the value of the land.
Some other factors
Appraisers do take other things into account. This includes:
- The condition of the property both of the exterior and interior.
- The size of the property.
- The home improvements made.
If you feel overwhelmed and need guidance through the process, you can reach out to our experienced realtors and property managers that will happily help you through every step of the way!
Need help managing a property? Contact us today!
May – Improve your ROI strategy 
After you have created the perfect strategy to find properties, now you will need to find ways to get the best out of them.
If you are not sure how, don’t worry! See below our tips for getting the most out of your properties by maximizing the Return of Investment on them:
Boost the value
One of the best ways to make sure you increase the value of your property, is to make improvements to it. Making home renovations or adding technological features can make the occupancy rate higher and more attractive to high-paying tenants which will help you get more money, faster.
You can check out our newsletter on home improvements that give the best ROI here.
Automate
If you have more than one rental property, you can automate the process of renovating them. Use the same paint color, the same fixtures, the same flooring and even the same design if possible. This will help you not only perfect the way you do the home improvements, but will also help you know the price of the renovations beforehand and can even help you save money if there is an option to buy the products needed in bulk.
Trust the experts
Get a dream team that can advise you. Getting a good agent and a good property manager can save you a lot of headaches and a lot of money. These experts in your area have done the work and understand the dynamics of the market, so you can be sure that they will know the best way to make the best out of your investment and will make it easier on you when it comes to things like picking out the right tenant for your property or what the best way to move forward is.
When it comes to choosing the right one for you, make sure you look at someone who you are comfortable with and with whom you have the right chemistry.
Crunch the numbers
Always be aware of the market trends, inflation and the overall real estate market before making any decisions, this will save you from wasting money unnecessarily and making any mistakes that could impact your investment negatively. Be aware of how much rental rates are in the area of your property to improve the tenant retention rate.
You need to keep in mind that the real estate market always has its ups and downs, so don’t get frustrated and remember it may take a little to get the ROI you were hoping for, but slow and steady wins the race!
Don't know how to improve your ROI? We can help!
April – Rethink your strategy for finding new properties
Now that you have created the perfect routine, what is the next step? One of the keys to being successful in any industry is to keep innovating, and Real Estate isn’t the exception. To grow and prosper, it is important to find new ways to do business and to hunt for the best opportunities.
In today’s housing market, having a great offer is crucial. Here are our tips for finding the best properties to invest in:
Do a thorough inspection
Make sure the property is in the condition you need it to be, whether it is a fixer-upper or a turnkey property in prime condition. Take your time and do as many visits as you need to really be able to inspect every nook and cranny of the property. Some things to look out for are the HVAC system, the plumbing and the roof.
Don’t forget to also do some research on the area, do some rounds around the block to see local restaurants, attractions, schools, and ask questions about crime statistics, flooding risk and any other pertinent information.
Have patience
Don’t rush into buying a property just because you think you’ve spent too much time looking. Patience is really important when it comes to finding a property. See as many properties as you need to, but make sure it is the perfect option for you.
Do the math
Be really thorough when it comes to how much you can invest. Don’t get in over your head with a property you can’t afford or a property that will drown you with the repair or upgrade costs. Be decisive when you choose the property, but don’t jump into it before you are 100% confident about the property.
You may need to adjust your expectations as you go along through the process, but don’t lose hope! You will find the best property that fits perfectly with your needs and finances.
Have a clear purpose
Do you want to buy the property to lease? Do you want a vacation property? How long do you want to spend fixing it up? Have a clear idea about what you want and don’t stray from it. Stay within the range of what you can afford, how big of a project you want to take on and what you want to do with the property.
If you are thinking of investing long distance, you can see our suggestions on it here.
Not sure of how to start building an investment strategy? No problem! Reach out to us and we can help you get started.
Have a property you need help with? Contact us today!
How to invest long distance
When it comes to real estate, it can be scary to think about investing long distance, since it can be a hefty investment, but don’t be afraid! Today, thanks to the internet and other tools, you can find the perfect property, check its condition and buy it with just a few clicks.
Here are a few tips on how to start the process:
Research diligently
The first and most important step to invest long-distance is to research everything you can regarding your target market. Some things to look out for are:
- Is it a growing population?
- What is the school district like?
- What are the crime rates like?
- Is there a considerable demand for rentals?
If you need a reliable source for this information, you can check the US Census website and do thorough research.
Build a team of local experts
You can keep an eye on your investment by searching local experts. Start by picking out the best real estate agent you can find and continue with finding the perfect Property Manager (like us!) for your needs. One of the biggest mistakes investors make is relying on family or close friends with no experience. Leaving your investment in capable hands is key to making the returns you are hoping to make.
See our blog post on building a perfect team here.
Do the numbers
Be as accurate as you can be to make sure that the property you are thinking of purchasing will really be worth it and that the ROI (Return of Investment) is what you are looking for. Just because a property is turnkey, doesn’t mean it is right for you, so start crunching numbers and stick with search until you find the perfect investment opportunity for you.
Why Texas?
The Texas Real Estate Industry is one of the fastest growing in the U.S. Since 2010, there have been 1.5 million homes sold in Texas due to the growth of 3.5 million in population (more than California and Florida!). Cities like Houston, Dallas, Austin and San Antonio are becoming technological hubs which has allowed thousands of young professionals to come flooding in, searching for homes to live in.
Reach out to us today and see how we can turn your long-distance investment into a dream investment!
Do you have a property you need help with? Contact us!
Pros and Cons of starting an LLC
It can be tricky and scary to enter into an industry as big as Real Estate. One of the biggest challenges can be figuring out how and where to start. To help you out, here we have a list of advantages and disadvantages of creating an LLC to manage your properties.
First, let’s define what an LLC is. A Limited Liability Company is a legal business structure that allows all its members to have the flexibility and simplicity of a partnership, while having the limited liability protection of a corporation. LLCs can have as many members as needed and it exists as a legal entity from all of them.
Advantages:
Legal Asset Protection
Typically, members cannot be held accountable for the actions of the LLC. This means that any personal asset (such as properties, accounts or credits), cannot be used by creditors or others to pay debts incurred by the company.
Pass-through Federal Taxation
The income made by the LLC goes directly to its members (unless otherwise stated) and each of them reports and pays taxes personally. This can make filing taxes easier than if it needed to be done at the corporate level.
Flexibility in the management and decision making
This structure allows you to manage the corporation yourself, manage it with the other members or hire a professional manager. Having this flexibility can lighten the burden of everything being over one person’s shoulder.
Disadvantages:
Cost of upholding it
Most times, forming and maintaining an LLC can be higher than a sole proprietorship or a partnership. A lot of States, including Texas, charge a fee for filing and registering an LLC.
Also, the IRS considers an LLC a partnership for taxation purposes, which means the members are considered self-employed and they have to pay taxes accordingly.
Hard to transfer ownership and membership
In many States, if something happens to a member of the LLC, it has to be dissolved and the remaining members are responsible for any issues that remain, and they need to create a new LLC if they decide to stay in business together. Adding members can be very difficult, since every member must approve it.
If you have any questions or need help managing your property, don’t hesitate to reach out!
Do you need help managing a property? Contact us today!
Some Must Reads for Real Estate Investors: Multi-Family Edition
Real Estate investing can be a daunting industry to break into! Between determining how to obtain financing, picking a property, and figuring out how to get the best ROI (return on investment) there is so much to know and learn that it can be overwhelming to the point of discouragement. One of the best ways to learn about real estate investing is to read books written by investors and other experts.
Below is a list of some of the most popular books among multi-family real estate investors.
Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits
This book is often mentioned as one of the best books to get started in multifamily investing. It focuses on scaling up from single family residences into multifamily. He offers strategies for finding the properties, fixing or flipping them, and then selling them. It uses a step-by-step system for each part of the investment, which can be great to use as a starting point for creating your own efficient system.
Crushing It in Apartments and Commercial Real Estate: How a Small Investor Can Make It Big
Crushing It in Apartments and Commercial Real Estate is a beginner’s guide to investing based on Murray’s experience bootstrapping his way from newbie investor to award-winning CEO of Washington Street Properties. Murray shares the secrets to his success through straightforward, actionable advice that will help you get started no matter what your experience level, or how much cash you have on hand. You’ll learn how to:
- Find and creatively finance commercial property
- Grow a portfolio without any help from outside investors and without taking on excessive debt
- Use your small-investor status as a competitive advantage over corporate investors
- Identify simple, practical ways to increase profits while keeping costs low
The Complete Guide to Buying and Selling Apartment Buildings
Whether you’re a first-time real estate investor or a seasoned professional, The Complete Guide to Buying and Selling Apartment Buildings helps you map out your future, find apartment buildings at a fair price, finance purchases, and manage your properties. Now revised and expanded, this Second Edition includes tax planning advice, case studies of real acquisitions, and appendixes that add detail to the big picture. Plus, it includes a handy glossary of all the terms investors need to know, helpful sample forms that make paperwork quick and easy, and updated real estate forecasts. With this comprehensive guide at hand you’ll find profits easy to come by.
How To Create Wealth Investing In Real Estate: How to Build Wealth with Multi-Family Real Estate
This is not a book about flipping or wholesaling homes, its about investing in real estate that is a proven method for creating massive wealth.
This book is about how you can buy income producing real estate, protect your capital, and provide you and your family with passive while the property pays down debt and you wait for asset appreciation.
This book focuses on buying and holding income-producing multifamily properties to provide passive income to support you and your family. The author worked his way to nearly 1 billion in real estate holdings with 5,000 units and shares the tools he used to get there. It details how to properly evaluate a property and then secure bank financing for a secure long term investment.
How to Make Big Money in Small Apartments
How to Make Big Money in Small Apartments reveals the opportunities, strategies, myths, secrets, and internal obstacles for those considering investing in multifamily housing. Readers will discover step-by-step approaches for finding and qualifying deals, identifying buyers or investors, monetizing small apartment deals, and how to scale-up to larger apartment communities in a readily understandable format.
Sharing his experiences along with over forty case studies of other successful investors, Edwards offers a guidebook to success for every investor, instructing both beginners and professionals on how to make money by wholesaling, buying, and/or rehabbing apartment buildings without using their personal cash or credit.
Dive in to learn proven strategies for moving into the fast lane and making small apartment deals now.
Investing in Apartment Buildings: Create a Reliable Stream of Income and Build Long-Term Wealth
The author of 2 Years to a Million in Real Estate gives you a step-by-step plan you can follow to generate a business plan that scales up as you grow. He helps guide you through the initial deal finding, how to manage the properties, and then how to exit and roll the profits into your next deal. It will help you build your real estate portfolio so you have income-producing properties to rely on.
The Science Of The Deal: The DNA Of Multifamily & Commercial Real Estate Investing
From his roots in Hyderabad, India, to the heart of Texas, Shravan Parsi tells the story of his journey from pharmaceutical scientist to founder and CEO of successful real estate investment firm American Ventures. The secret to his investment success is like any science: a marriage between quantitative and qualitative facts, between abstract numbers and concrete action. Here Parsi outlines the technical information you need to learn how to invest in multifamily and commercial real estate, how to understand what makes a good potential investment, and when to walk away. In conversational style, the book shares ideas about how to identify, evaluate, and mitigate risks; how to learn from downsides as well as upsides; and how giving back to your community is as important to success as the right numbers. It’s wisdom that benefits any entrepreneur.
Do you have a property that you need help with? Contact us today!
Why Choose a Professional (And Licensed ) Property Manager?
As the demand for rental property increases more and more investors are turning to real estate as a reliable and timeless investment. And while real estate can be an extremely profitable investment, it can also be very time consuming and become extremely overwhelming if you are not well versed.
If you, like many, have ever wondered if professional property management is worth the expense. The answer is: Absolutely! As long as you partner with the right company. Here are a few ways that Frontline Property Management can increase your profits and improve the value of your investments.
Maximizing Rent by Monitoring the Market
Did you know that, in the state of Texas, professional property managers must also be licensed real estate agents? One of the many benefits to hiring a professional property manager is their vast knowledge of the real estate market. Knowing the market will ensure that you are listing your rental property at the right price and will get you the most bang for your buck!
Screening Tenants
One of the quickest ways to kill your profitability in a rental property is to approve the wrong tenant. While you obviously want to put focus on whether or not a prospective tenant can pay the monthly rent there are many other items to consider when approving a tenant. Some of these items include: How will they care for the property? Will they fulfill their lease obligations? Are they likely to be there long term, or will they be likely to move after just one lease term?
Hiring a property manager can help ensure each tenant is screened thoroughly before they move into the property.
Collecting Rents
Once the tenant has moved in, the monthly rent must be tracked meticulously. In addition to tracking the rent a professional property manager will have systems in place to ensure that any late payments are handled appropriately and that prompt and proper action is taken in the event of non-payment.
Keeping Your Property in Tip Top Shape
At the end of the day your investment is only as good as its value. Having a professional property manager on your side will ensure that your investment is well cared for. A good property manager will track and perform preventative maintenance resolving issues before they become costly.
Considering taking advantage of this knowledge by hiring a professional property management company?
Frontline Property Management has been dedicating itself to the well being of our investors for over 30 years. Reach out today to see how we can help protect your frontline in order to increase your bottomline.
Have a property that you need help with? Contact us today!
