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CategoriesEntrepreneurship

Screw New Years. Start Goals On Your Terms.

By brioproperties,

Why I don’t do New Years Resolutions

I love the New Year celebrations.  I believe it mostly comes from my childhood because New Years has always been a big deal in my family.  Every year we get together as siblings with our parents and a few choice people we bring into the fold to have fun, enjoy laughs and ring in the New Year. But I don’t like New Year’s Resolutions.

New Years Resolutions are often empty promises we make to ourselves.  “This year I’ll [get healthy, slow down, travel more, etc]. We don’t go any further than making that promise in one sentence uttered sometime between Christmas and that fateful stroke of midnight.  As my Grandma liked to call them “A thin statement masquerading as an intention.” It takes more than than saying that statement to create real change.  

I plan in October/November and Execute in December

A few years ago I started my own tradition with making the best of the New Year.  I stopped starting my best work on January 1. Instead by the time January 1 comes around I’m already 30 days into executing on my new goals and ambitions. 

To start with I begin thinking about where I want to go in the next 365 days in October.  I look at all aspects of my life professional, personal, and my relationships. I contemplate where I want to improve and what may be a priority.  How many new properties do I want to bring into my rental management company in the coming year? How many books do I want to read next year? What challenges do I want to give myself?  In my important relationships what do I want to accomplish in the coming 12 months? I write down my list of goals and ambitions and I make sure I have plenty of them. I don’t pick just 1 or 2.  My list usually has around 30. You might think 30 is high but I pick that many for a very useful reason.  

Oh The Webs I Weave

Once I have my list I make webs.  This is my favorite part! If you think back to grade school in maybe 3rd grade when you were learning about writing short stories.  One of the tools we were taught were utilizing story webs. In the center of a paper you wrote the topic and then ran lines off of that center area where you wrote the setting, characters, problem, solution, etc.  It was meant to help you map out where your story was going before you started writing.

I still weave webs, though not so much for stories now days.  Each of my goals from my list becomes its own web diagram. The lines that come out from the center are the steps necessary to meet that goal or things to think about in relation to the goal.  I usually have about 5-7 offshoots on a web diagram. This is an absolutely crucial step, don’t skip it! It’s where your “thin sentences” become executable goals because you identify what you need to do to get from where you are to where you want to be. You’re creating a plan.  

These “web” pages become my constant companion for the next 365 days.  Yes, they are written on scratch paper, and yes it may look like my 7 year old wrote them but I don’t alter it. I don’t make it pretty, I don’t rewrite them.  They go in the back of my annual planner where I know I can reference them. And I will reference them. 12 times in fact. 

Constant Goals V. Execution Goals

My goal list is usually a mix of items that are year long goals (constant goals) and execution goals (items with discernible end points that can be achieved in less than 2 months realistically). 

Constant goals are: number of books to read, health/weight goals, learning a skill or language, etc.  These are items that are for the long haul of the year. They aren’t something that is accomplished in 7 steps and considered done.  They take a longer time commitment and consistent effort over at least 6 months. If possible breakdown your constant goals with deadlines.  I.e. If you have a goal to lose 20 pounds on top of creating your plan set some deadlines of lose. 10 pounds by April, 8 by September, etc. Having deadlines like that helps keep you on track with your constant goals because it adds the idea of a time constraint.  When we have all year, we’re more likely to put it off.  

Execution goals include: classes I want to create, marketing changes, marketing materials, administrative aspects I want updated in my company, etc. These are more projects than goals.  They have concise steps where executing on them in a certain order gets me to complete the project in less than 60 days. These are usually the bulk of goals list. I may have 2-3 constant goals but over 25 execution goals. 

The Lucky Four

The last step in my yearly planning is selecting the 4 lucky execution goals that get assigned to December (the first month in my goal year).  I usually pick ones that would be more beneficial to be accomplished early in the 365 days and/or ones that are rather simplistic that can be easy wins.  Easy wins are a necessity for keeping us on track, especially when the other goals may be more time consuming or more difficult. 

Each month I repeat this process.  I select 4 new ones to accomplish and make sure they are written in my month view for the planner. I do consider how busy my month is and any time off I may be taking when I pick the goals.  If I’ve got 3 speaking engagements and a vacation I may pick 1 larger goal and 2 smaller ones.    

I will admit there are times where I have a carry-over or two.  New projects come up, new opportunities and sometimes I don’t get through all my goals in a month.  I strive for all four to be completed but I am also realistic and understand the nature of my life and industry may only allow for 2.5 to be accomplished in 30 days. I don’t beat myself up for it.  I just make the carry-over ones my number 1 priority in the new month and work harder to get back on track. 

It’s All In The Planner (and Planning)

One of the big reasons I’m able to accomplish all this and execute on itl is because of the style of planner I use.  I use a goal-orientated planner. It’s not just a Day-Runner that functions as an appointment calendar. It helps highlight my goals for the year and month. Each month has a goal section where I can write the goals the steps for them.  The goal annual view helps remind me of milestones I may have wanted to hit (I.e. average 50 podcast listeners, etc). Other than the actually brainstorming the planner is the 2nd biggest contributor to my success. 

Once you have the planer the next thing is to schedule the time to accomplish them.  The first 90 minutes of my day are “project time”. This project is for executing on my goals.  Before I check email, before I answer my phone, before I do any meetings I have my project time.  Nothing changes that (or very, very little does). I even include 2 extra sessions on other days during the week. This forces me to start with what important (my goals) and work on those before I get pulled into any drama or urgency that exists in my world.

Keep In Mind

Resolutions are just thin sentences masquerading as intentions.

Set multiple goals and outline the steps to accomplish each.

Have a mixture of constant year long goals and project execution goals.

Assign goals to certain months.

Written by: Corina Eufinger CEO of Brio Properties/Owner CRC Investments/ Host of Passive Income Revolution Podcast

CategoriesLong Term Rentals

Why Hasn’t My Property Rented Yet?

By brioproperties,

By Kim Schmitt, Managing Broker

November 21, 2019

“Why hasn’t my property rented out yet?” As a property manager, we dread questions such as this from our investor clients and thankfully it rarely happens!  At Brio Properties, we utilize our experience in the rental market to keep our investor’s cash flow moving.  

This article is for the investor who manages their own rentals who have found themselves having difficulties getting their vacancies filled.  

In my experience, usually the reason for a continued vacancy is due to one or more of these reasons:

  • The rent price is too high for the current rental market
  • The condition of the unit isn’t up to par or has an undesirable feature
  • The property location is a problem
  • Security deposit is too high
  • Tenant screening expectations are not realistic
  • Poor marketing or poor applicant response time

SO, WHAT DO I DO?  Well, here are some of my suggestions…

Adjust Your Rental Price 

How did you come up with your rental rate? To help with deciding, you can get a VERY general idea by researching ADVERITISED rental rates for similar properties in your area via classifieds, Zillow, Trulia and even Craigslist.  Please remember that just because these rent rates are advertised does not mean that they’ll get rented. This is just to give you an idea of where to start. Generally, you’ll want to pick a starting rate somewhere in the middle between the highest and the lowest.  

Remember, the market will always drive the price.  If you’ve had your property listed for a week and have not had anyone apply for it, drop the price a little.  Then, drop the price again after two weeks if you still have no interest. You’re losing money when your home sits vacant. Don’t wait too long to drop the price. You must adjust the rent based on the competition and the market.

Improve Your Property Condition

You may be having difficulty getting your property rented because of an undesirable feature of the rental unit or of the property condition in general.  If your rental’s condition leaves a lot to be desired, you shouldn’t be surprised that it isn’t renting. No tenants want to walk in and see stains on the carpet or messy touch-up paint on the walls.  The exterior of your property could be keeping tenants from even coming inside to see the property. Undesirable features may be no laundry onsite, too may stairs, room size, not enough bathrooms, etc.  

When it comes to the condition, it’s a better idea to spend a little money and improve the condition of the home so you don’t lose thousands while it sits vacant. Fixing it up will help you attract better tenants. The changes do not have to be complex or expensive. Paint, clean up the exterior, replace carpet and make sure the home is clean and presentable.  In most cases, just as with location issues you may not be able to do anything about undesirable features other than price the rent accordingly.  

Location of Rental Property

You cannot really do much to change the location of your property, but you can often work around it.  Ideas would be that you may need to lower your rent rate, offer a 1-year lease signing special when advertising (Example: $200 off 2nd Month’s Rent), provide a washer and dryer, ETC.  Where there is a will, there is a way!

Security Deposit Overkill

Tenant prospects may be fine with the monthly rent you are charging, but they may be turned off by a security deposit that is too high.

Two- or Three-months’ rent may be overkill, especially if all the other landlords in the area are only charging one month’s rent as security.

Tenant Screening Expectations

Tenant screening (Criminal, Credit and References) are very important and should be conducted by EVERY landlord! 

It is important to have reasonable screening expectations based upon the property class in which your rental falls under. Property classes are defined as classes A, B and C or below and are based on a combination of physical, geographic and demographic characteristics.  Just remember to have your screening policy in place and presented to all potential applicants. Stay consistent and stay within the federal and local laws to avoid Fair Housing violations!

Marketing and Responding to Applicants

It may be time to reassess your marketing strategy.  Good marketing is yet another important consideration in getting your rental filled.  You will want to use every available avenue to provide the most exposure. You will also want to make sure you take pictures (please make sure they’re not blurry or too amature looking) and write up a good description of the property and use a catchy tag line/heading to draw attention to your listing. 

Communication is also important. You need to be prepared to answer questions from prospects and show them your rentals as quickly as possible once they show an interest.  Remember, if you can’t, they’ll move onto something else. In this rental market, tenants have multiple options and they will not wait for you! 

Summary 

If your property isn’t renting as quickly as you’d like it to, consider working with a professional investment management company such as Brio Properties.   Professional management companies have the knowledge, experience and resources to keep your rentals producing cash flow. 

CategoriesUncategorized

3 Ways Creative Financing Can Accelerate Your Portfolio

By brioproperties,

Maybe you’ve heard the term…maybe you haven’t.  Creative financing is becoming an increasingly popular means of building a portfolio.  Some rental investors mistakenly think that creative financing is only used for wholesalers or flippers.  Not true! Buy and hold investors can benefit just as much from using creative financing. 

PURCHASING A PROPERTY THAT A BANK WON’T TOUCH

Every once in awhile we find the diamond in the rough…the very rough.  A property that sparks our imagination about “what could be”. Then we go to the bank and they tell us…what can’t be.  

For most investors this is where the thought process stops.  They think “Oh well, I don’t have the cash to buy it.” You may not have the cash to buy it but that doesn’t mean you can’t buy it.  Just because a bank won’t finance it doesn’t mean your dream has to die.  

You can get a private money lender.  Someone who has the cash to fund a real estate deal in full.  (You may be thinking “I don’t know anyone like that”. Truth is most of us do know someone like this, we just don’t know that we know them.)  Another option is hard money lending. Which is a “unregulated” loan from a non-government backed institution. This type of lending isn’t just something you look up in the Yellow Pages (or now days Google).  Your lender should be reputable and hopefully come recommended, especially because the industry is highly unregulated.

FUNDING THE REHAB

Sometimes our diamond in the rough is worthy enough to be financed by a bank…but they only will fund the purchase. You need to find the moola to do the rehab.  You have the funds for the down payment, but you can’t fund your rehab. Enter creative financing.  

You can use the same two methods above to fund your rehab.  Finding someone you know who could fund a $25k rehab is much easier than finding someone to fund a $155K purchase. You’ll have to be a little creative with how the loan is secured but at least your pool of potential lenders is larger.  You can also use a hard money lender. In fact, this is their bread and butter transaction. (Though they don’t issue a loan for the rehab. Its work similar to a reimbursement system.)

USING AN EXISTING LOANS REALLY SWEET TERMS

The idea of an existing loan have significantly better terms than what you can secure now may seem odd in today’s financial climate.  But there was a time when the already established loans had interest rates that were 1.5-2.25% lower than what the market at the time allowed.  Even today we are over 1% higher than the lowest rates in the past 10 years. If you are having trouble following this, in 2012 the residential loan market hit a low of 3.31% on a 30 year loan.  As of writing this, the interest rate is 4.51%. Someone purchasing an investment property with a 2012 mortgage rate would likely prefer that rate and want to secure it if possible. To do this you are entering into a form of seller financing which involves assuming the mortgage (taking over the loan payments).  

Now this does come with its inherent risks.  Since all mortgages have a “Due on Sale” or “Acceleration Clause”.  These clauses give the banks the right to call the loan due in full if there is a change in ownership or they believe any other violation of mortgage terms occurred. Will this happen to you if you assume someone’s mortgage, don’t change title or deed and never miss a payment? Likely not.  After all we’re familiar with the idea of the bank wanting their money more than the property. To many investors the risk is worth even the 1% decrease in the mortgage interest they get by assuming the mortgage.  

Remember 1% isn’t as small as you think. On a principal loan of $200,00 a 1%  jump in the interest equates to an additional $35,900 over the 30 year life of the loan! That’s a game changer for your calculations and profit down the road. 

Creative financing doesn’t need to be scary.  It doesn’t need to seem risky. It’s also not the unicorn that most people on the outside think it is. Situations do arise where creative financing is feasible to be used and feasible to secure.  But don’t think securing it doesn’t involve a little leg work and grit. You will likely need both to get your first creative financing deal done.  

But now you can go out in the investing world knowing that what 90% of investors think is implausible is achievable. Those are 3 real world plausible investing situations where creative financing can be your asset…or tool.  As famed small multi-family investor Brandon Turner says “The more tools you have in your tool belt the more investing you can do.” 

CategoriesLong Term Rentals

Communicating With Problem Tenants

By brioproperties,

By Kim Schmitt, Managing Broker

I am often asked, “How do you effectively handle difficult tenants?” First, I prefer to use the term challenging rather than difficult. You’re probably asking, “why does changing a word make a difference?” It’s important that our attitude is not negative going into communications with a challenging tenant, as our goal must always be to deescalate the situation and solve the problem.

A few of the most common issues that arise with what we call challenging tenants include late or missing rent payments, unauthorized occupants or pets, parking violations, tenants not getting along with neighboring tenants and the condition of their unit.

As a property management company, we encounter challenging tenants all the time. It is important that when communicating with these tenants we practice professionalism, listening skills, problem-solving skills and have solid policies in place to try and prevent bad behavior before it starts.
As a landlord or property management company, it is important to make effective communication your priority before resorting to more drastic measures. So, how do you communicate better with challenging tenants?

Clear Rules and Guidelines
Make sure your tenants have a clear written guideline outlining your property standards and what your expectations are during their tenancy. It is our policy that prior to accepting money to hold the unit, we provide a sample copy of the lease and rules. This packet also includes a signature page in which the tenant signs confirming they have received it and have read through the documents. At the actual lease signing, we take our time outlining our property standards in detail. These procedures cut down the
possibility of our policies being misunderstood or ignored.

Be consistent with rule enforcement and penalties. It is important that within your policy you also let your tenants know what the penalties will be. Remember, what you do for one tenant, you must do for all.

Multiple Ways to Communicate
Provide tenants with multiple ways to communicate with you. We like to provide an online tenant portal, emailing, calling, in-person meetings and an emergency after hours phone number. When setting up ways to communicate with your tenants, you must remember that not everyone is computer savvy.

Patience is a Virtue
Whether you are handling a disruptive tenant who causes drama or a forgetful tenant who missed a rent payment, both situations can be irritating. This is where you must find your patience and handle them
professionally.

It is never a good idea to approach tenants with hostility. Remember our two main goals? We want to deescalate the situation and solve the problem. If we lose our patience, we lose our goals. Explain to the tenant what the violation is and discuss with them how to fix it. If after a set number of warnings with no success, it may be appropriate to start eviction proceedings.

Stick to Policy!
In other words, your policies are in place for a reason. For example, if you have specific dates in your policies for rent collection, grace periods, late fee, etc. Stick to them! You need to provide consistency by upholding your policies so that your tenants know there are consequences for not following them.

RESPECT Goes Both Ways
You may find that you just do not like your tenant. They’re just not someone you would invite over to your home for a cup of coffee. Well, that’s okay. Nobody said you and your tenant need to be friends.
However, you and the tenant do need to provide each other with a level of mutual respect. Again, the tenant needs to know what you expect while they occupy your property, and what will happen if they disrespect it.

It is important to remember that unless the tenant is engaging in illegal activities, disturbing other tenants or causing property damage, you must respect their privacy. Remember to provide appropriate notice of entry per your state statues, don’t just drop by without notice. Tenant’s have rights and you do not want to risk legal action. Tenants may have issues that are significant to them even though they seem minor to you. It is important to respond within a reasonable time frame to their concerns and
requests.

Summary
Good communication is key. Whether it is with your “perfect” tenant or with your “challenging” tenant. The end goal is to create a property where tenants want to stay long term, pay rent on time and follow the policies and guidelines you put into place. It is up to us as the property manager or landlord to handle situations as they arise, take appropriate action when necessary and keep the lines of communication open.

CategoriesEntrepreneurship Long Term Rentals Real Estate Investing

Quick Tips For Less Stressful Bookkeeping

By brioproperties,

Do you dread bookkeeping? Does your accountant audibly sigh when you bring in your paperwork every year?  Here are 4 quick tips to remove some of the pain and delirium over bookkeeping.

1) Set an appointment every week for bookkeeping activities.  

Block 60-90 minutes every week at the same time. Make it a time where you concentrate because if you already detest bookkeeping getting interrupted or being able to postpone in lieu of something else will only make it worse.Use that time for entering your purchases, filing receipts, and completing monthly bank reconciliations.   Having this consistent time keeps us on track, ensures we have up to date information, and helps us catch errors quicker.

Make receipts and accounts payable weekly activities in whatever time block makes sense.  A smaller portfolio may only require 40 minutes a week for these. Then once a month set a specific day of the month (10, 13th, 23rd) where you are reconciling the previous bank statement and allow yourself 30 minutes for this.   (If you are on top of your bookkeeping even the most active account takes less than 30 minutes.)

2) Create an electronic file of your receipts.  

Receipts fade, get spilled on, get torn.  It’s your responsibility to maintain a good record of your accounts.  This includes preventing against receipt fade and life accidents. Scan your receipts into an electronic file weekly.  

Pro tip: To make audits (eek!) easy, your receipts should be filed by year and accounting category.  Accounting category is whatever account you assigned the transaction in your bookkeeping software. Paint, repair, advertising, etc.  On a computer (which I highly recommend your digitize your receipts) your main folder would be the year and your subfolders would be your accounting categories.  (2019-postage; 2019-cell phone, etc)

Bonus: If you still use a flatbed scanner, receipts can be trimmed and more than one in the same category can usually fit in a file. 

3) Have receipts with mixed accounts on them? No problem. 

You can create one file category you name as “mixed”.  On your receipts itemize each item by category and calculate the totals for each account.  (Want to earn extra credit, you could even color code your account on your mixed receipts.) 

4) Do quarterly company cash flow checkups. 

Every quarter pull up your company or property cash flow statements and just do a quick audit.  Do you have any accounts that suddenly appeared out of the blue? Any numbers seems abnormally high?  These may be signs of clerical errors you need to adjust. Doing this quarterly will prevent hair-pulling and headaches for you (or your accountant) at tax time. 

5) Make A Checklist Of What You Need For Your Taxes.

I also felt like I was shooting fish in a barrel when I sending documents in for my taxes.  I would send the business statements, husbands w-2, my 1095-A from the marketplace, mortgage statements.  I’d think I was on the ball. Then I’d get an email from my accountant. You missed [mileage, car insurance payment, payroll docs, student loan docs, etc].  

One year I was done feeling like a headless chicken and sat done with my accountant to create a checklist of the docs I should have every year for all my companies.  I then took that checklist and make it a Google Note checklist where I copy the master every year and check items off as I send it to him. I know I’m happier and I think my accountant is happier too!

Make tax time less stressful by being ahead of the game and on top of your books. Keeping your books organized makes you life and mind seem less cluttered.  Mistakes caught early are easier to fix and receipts nicely categorized make auditors…almost smile. Those are some pretty good reasons to stop putting off bookkeeping and start making it a routine priority.

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