Cleaning & Securing an Investment Property Adds Value

As soon as we close on an Investment Property, we want to implement our Exit Strategy. The faster you get this distressed investment property back on-line the less money you are losing due to holding costs and the quicker the asset will cash flow. Every step we implement adds value to the property.

The first part of bringing the property back on-line is to Clean and Secure the property. This adds the most value to the property with minimum overhead. Below is an outline that describes the basic process of cleaning and securing a real estate investment property. By the way, most of these steps you can do it yourself.

Clean and Secure Process

Removal of debris from Interior & Exterior of House - If the investment property has been abandoned or on the market for a while, chances are there has been a buildup of debris and the property was broken into and trashed. The property becomes an eyesore and the city is just waiting to pounce on the new owner. Dumpster for Debris Order a Dumpster - Depending on the amount of debris, you may have to order a dumpster. Delivery and removal are handled by the Dumpster Company. You just pile in the debris. Can be very expensive. Neighbors will help themselves by using your dumpster to pile in their debris. Permit Fee is built into the price. The City keeps track. Suddenly, city inspectors will begin to show up to see what you are up to and do you have the proper permits. Neighbors can see the dumpster on the premises. They will report you to the City. Finish cleaning and get rid of the dumpster as soon as possible. Less attention. Recycle Materials - Every house contains items that you can recycle and receive money for these items. We are serious! You can start pulling cash out of the property right away. eBay - You can place in eBay's Classifieds an ad selling items you found inside the property. It Works! Metals - based on cost per pound. Non-Ferrous - You know the metal that doesn't let a magnet stick to it. Copper, Brass, Aluminum, Lead, Tin, Nickel, Gold, Silver A/C Coils, Radiators, Batteries, Pots, Stainless Steel, Motors, Transmissions, Bathroom Fixtures, Electrical Wire. Scrap - Less money. Pull wiring and motors off of appliances and recycle them separately. Iron, Steel, Sheet Metal, Rebar Old Appliances, Water Heaters, Non-Copper Pipes Dryer & Stove Electrical Wiring Three prong cords - Found on ranges and dryers. Make sure all access points are secure Doors with locks Locksmith - You made need one if you are not handy with installation Windows are covered with wood, rejas (metal bars) or original window. If glass is cracked or missing must board whole window. Board on window must be painted & uniform with other boarded windows. If there are iron bars on the bedroom windows, they must have breakaways. Minimum size 20 x 41 inches. If all windows are boarded, air holes must be drilled into plywood to provide ventilation. Independent Securing Service - If you don't want to board up your property by yourself. Secure your Outside Water Access - People will steal your water, especially if your neighbors have well water and you are connected to the City Water System. Place lock on outside water faucets Landscaping Trim Grass, Bushes and Trees Landscape Equipment for Cleaning Property's Exterior

By cleaning and securing the property you are adding value to your property right away, preventing break-ins, getting the city off your back and who knows, sell it as is to another investor for a nice profit!

Written by Bob Burns

Related Links, Blog Postings, Presentations or Articles:

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• Real Estate Investing Tip: Check to see if you have any liens or violations caused by your tenant before giving back their security deposit. We got nailed for $500 for a pit bull violation.

Written by +Bob Burns.

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Clean and Secure! +Real Estate Investor about.me/RobertKBurns Telephone #: 305-586-5280 email: sec8@planocho.com

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Real Estate Investors need to use an Action Plan.

There is a saying among Real Estate Investor's - "You Make Your Money when You Purchase the Property not When you Sell It."

There are so many things that can go wrong so it is important to make sure you buy the property right.

Smart Real Estate Investors need to develop an Action Plan before they are going to purchase an investment property. This plan should include the following:

• Identify a possible property for investment.
  • Make sure your SELLER is MOTIVATED to do the deal.
• Perform a market analysis.
  • What are going to be your carrying costs for the next 90 Days. Principal, Interest, Insurance, Taxes, Utilities, HOA fees....
  • After Repair Value ARV - What is the property worth after repairs. Look at the COMPS! Yes, the comparables.
  • Calculate your repair costs.
  • Calculate your Fair Market Rent FMR. See if the property is going to cash flow.
    • See previous posting and video about calculating Fair Market Rent FMR
• Secure Your funding for:
  • Purchasing the Asset.
  • Carrying Costs.
  • Repairs.
• Note: Don't forget to pay yourself for all this work you are doing!
• Make an OFFER based on the Maximum Allowable Offer MAO Rule, using ARV, Carrying and Repair Costs.
  • See previous MAO post at Using the MAO rule for determining your Investment Property Offer Price.
• What are you going to do with the asset? Develop an EXIT Strategy:
  • Flip the property for a profit or
  • Hold the property for Cash Flow.

This is the basic action plan which needs to be very fluid. Things change and you need to adapt.

Turnkey Property!

One of the more successful Action Plans we have used is to bundle a Section 8 or Plan Ocho tenant within the property FOR SALE. The tenant is part of the BUYER's Turnkey Package.

TURNKEY means the BUYER simply needs to turn the key to the front door and start making MONEY.

All the hard work has been done for the BUYER:

• Buying a Property that will Cash Flow.
• Rehabbing the property and brought up to Code.
• All utilities are functioning.
• Finding a reliable tenant.
  • We use Section 8 as a great resource for tenants because it is a very popular program for housing.
  • Section 8 Web Sites for listing Your Investment Property.
• Asset Protection strategy is already in place.
• Selling the Investment Property with minimal Closing Costs.
• Optional: Have it already furnished.

Investors should provide a turnkey solution for all their properties they plan to sell in the near future.

BUYERS like the idea of purchasing a property that comes bundled with a tenant.

Action Plans allow for Immediate Cash Flow and no Headaches!

Written by Bob Burns.

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Money in The Bank Baby! Real Estate Investor about.me/RobertKBurns Telephone #: 305-586-5280 email: sec8@planocho.com

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Top 20 Most Common Reasons Why Units Fail Section 8 Inspections.

One of your hats that you wear as a real estate investor is being a landlord. As a landlord, your job is to maintain the properties and keep them rented.

Keeping your properties fully occupied throughout the year increases your cash flow and provides a better return on your investment ROI but can be a difficult task! The longer a Unit remains unoccupied the less ROI landlords are going to have.

Below are several channels available to landlords to find qualified tenants:

• Retail Market - Newspapers, Word of Mouth, Church, For Rent Signs on property, internet, etc...
• Multiple Listing Service MLS - Database Realtors use to find rental properties for their clients
• Section 8, Plan Ocho, Sec 8, Plan Eight, Plan 8, Section Eight - Government subsidized rental payment plan.

The more channels you have, the greater possibility of finding a qualified tenant for your unit. SPEED is essential for success. Any delay will hurt ROI.

Section 8 will eliminate a lot of the drawbacks of being a landlord but you have to follow HUD's guidelines to be successful.

One part of the guidelines is the unit or property must pass an interior and exterior inspection. If you fail the inspection, more delays and your ROI will be affected. Being prepared for the inspection will help make the rental transaction a smooth process.

From my experience with Section 8, below is a list of items that will fail a HUD inspection:

1. Smoke alarms missing or not working.
2. Lack of ventilation in bathroom.
3. Outlet covers missing or broken.
4. Infestation by bugs or vermin.
5. Absence of handrails where 4 or more consecutive steps.
6. Utilities disconnected (must be connected).
7. Hazards (i.e. tripping as a result of floor covering or exposed electrical wiring.
8. One window in each room must open and have a screen.
9. Chipping paint on the outside of the building – gutters, outside surfaces of building.
10. Hazardous hole or trash in the yard.
11. Door not sealed properly (light can be seen coming through).
12. No hot or cold running water.
13. All windows must have sash cords or balancers and must stay in the open position without assistance.
14. All ceilings must be at least 7 feet in height in areas used for living, sleeping, etc….
15. All steps to landing or basements have handrails.
16. Baths without windows must have power fan or gravity vents in high rise buildings.
17. Open electrical distribution box must be covered with appropriate cover.
18. Windows in bedroom too small and will not qualify as areas for sleeping.
19. Security bars (rejas) can’t be opened from the interior will not be allowed to remain.
20. All bedrooms must have a built in closet.

I provided pictures of potential failure points below. Can you identify what would cause a failed inspection item?

Click on each image to view a larger photo!
Have you any experience with Section 8 inspections? Share them with US!

Related Links, Blog Postings, Presentations or Articles:

• Our Section 8 telephone interview - Podcast
• Our Sec 8 Power Point presentation given to the Miami Real Estate Investor Association MREIA

Written by +Bob Burns. ####    

Yeah Baby! Real Estate Investor about.me/RobertKBurns Telephone #: 305-586-5280 email: rkburns@investmentpropertiesmiamiflorida.com

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Why aren't Your Real Estate Taxes reduced when Property Values are Down? Time for Tax Appeal!

It is that time of year again! Every year counties within the United States issue their real estate tax bill to commercial and residential property owners. These funds are used for various line items of the county's budget. Your tax bill is based on the assessed value of the asset according to the tax assessor's evaluation of the properties contained within in the county (Using Arial Photos). It is also based on the last purchase price that you paid for the property.

In case you didn't notice but A LOT of people purchased properties at the height of the market. Did the counties care if you did that? Noooooo....the more you pay for the asset, the more taxes they collect. But what investors didn't count on was the market tanked and property values dropped like a rock in some parts of the country. Unfortunately that included Florida, mainly Broward and Dade counties.

So here you are, holding onto a property and paying taxes (pre-bubble burst) on a property that lost at least half of its value or more! Does the county government care about this? Nooooooo....If they did, there would be less revenue for the county coffers. So what can we do as property owners?

No Taxation without Representation!

Luckily for us our founding forefathers saw this happening too! This great country of ours was founded on tax revolt. They made sure our representatives are held accountable for their actions. So, most counties have made provisions in the municipal code to allow tax payers to appeal their accessed property values. There is a small window, yes I mean SMALL, during the calendar year where you can file the proper documents with the county to ask for a reduction. Now don't get me wrong, the county is not going to give up. They will fight you. You better be able to prove that you are being over taxed!

As a real estate investor, I don't relish the thought of doing this every year for the rest of my life for various reasons:

1. Time consuming.
2. Need proper documentation.
3. Dealing with government employees.
4. Traffic.
5. Parking Fees.
6. And on and on...

I leave that up to EXPERIENCED professionals. Let them hassle with this process. The advantages are:

1. They know the proper filing dates.
2. They are experienced.
3. They know the proper documents to file.
4. Familiar with the tax appeal system.
5. They only get paid if you win the appeal.
6. The asset looks attractive to other investors.
7. Nice profit windfall for investors. Found Money...Yeah Baby!

Now is the time to start considering how you can increase your cash flows on your real estate investment portfolio. Remember, the window for filing your real estate tax appeal is small so start considering your options NOW!

Do you have any experience with the tax appeal process that you would like to share with us?

Related Links, Blog Postings, Presentations or Articles:

• Update #1: After I wrote this posting, I started looking for a Real Estate Tax Reduction Specialist because current properties are severely over assessed. Here is a company that has been successfully appealing commercial property taxes for 21 years:
  Real Estate Associates - www.realestateassoc.net

• Update #2: RETA does residential and commercial. However many Homes are protected by the Save Our Homes Amendment and Homestead exemptions. Therefore the Taxable value maybe lower than the Market or Assessed value. Please send us your properties Folio Number and we will let you know if a reduction is possible.

Written by Bob Burns.
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	"God Bless!" MREIA's President about.me/RobertKBurns Telephone #: 305-300-6242 email: rkburns@investmentpropertiesmiamiflorida.com MREIA's Web Page: www.miamireia.com

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