Spring/ Summer Home Maintenance

Before anyone, decides to, seek the so – called, American Dream, of home ownership, he should, look ahead, with his eyes, wide – open, and consider, the responsibilities of being a homeowner. Since those, who purchase real estate, for investment purposes, factor – in, effectively, as many foreseeable expenses, and expenditures, as possible, before deciding if it’s a wise investment, wouldn’t it make sense, for those purchasing, a house, to have a better idea/ concept, of some of the financial responsibilities, it involves? While nearly all, realize the monthly costs, associated with mortgage payments, including principal, interest, real estate taxes, and many escrow items, they seem to pay, far too little attention, to many of the other costs, associated with home ownership. While some, try to procrastinate, and therefore, often overlook, properly preparing, for many of the eventualities, smart homeowners break up, these possibilities, in order to effectively plan, to become better prepared, While there are many approaches and possibilities, this article will attempt to briefly, consider, examine, review, and discuss, a seasonal approach, to planning. This article will examine the preparations, and smart plans, for Spring and Summer planning and maintenance.

1. What/ Why, Spring Cleaning?: We’ve all heard of Spring Cleaning, but, when was the last time, you considered, why we do this, at this specific time of year. In most areas of the country, we experience four seasons, and, the most severe, is Winter. The low temperatures, ice, snow, and other weather conditions, often, create a wide variety of stresses and strains, on both a house, and the related, exterior components, and grounds! We drag in a wide variety of substances, on our shoes and coats, including snow, ice, salt and sand, etc, as well as leaves, which may get blown into the home, also. When the temperature changes, and we wear different clothing, often accompanied by changing – over our closets, most people feel elated, to be rid of the cold, severe weather, and our dispositions brighten. When we clean the houses, thoroughly, inside, and outside, we become capable of evaluating, the best way, to properly maintain our property. Spring is usually the best season for exterior painting, addressing issues related to concrete, on walkways, and foundation, and preparing our gardens and grounds, in order to beautify the grounds.

2. SpecificsThe specifics of maintenance and repair, for this season, is creating a schedule, for specific items, and preparing a realistic reserve, for these purposes. Items, such as exterior painting, maintenance of decks and patios, etc, should be scheduled, on a realistic schedule. Additional reserves should be put aside, for caring for the air conditioning, window – screens, etc, so there are fewer unforeseen surprises!

3. Enjoy the houseEnjoy your house, to its fullest capacity, while avoiding being house – rich, but consumed, by a so – called, money pit. When you prepare, and maintain your property, on a realistic, smart schedule, you significantly reduce many of the stresses and strains of home ownership.

A Case Study – Del Val Turnaround of 47 Rental Units

A Case Study – Del Val Turnaround of 47 Rental Units

Del Val Realty & Property Management (“Del Val”) took over the property management duties for a group of 47 rental units in Philadelphia and New Jersey in 4 separate buildings as of August 2015. At the time Del Val took over, the buildings were being managed by a single real estate agent with little or no support.

The buildings had extensive collection and deferred maintenance issues. When we took over, the buildings were 81% occupied and there was over $150,000 in unpaid rent. Additionally, it took months and even years to understand that the buildings had extensive deferred maintenance and almost every unit needed new paint, carpet/flooring, new/upgraded kitchen and other general upgrades. The common hallways also needed work to make them acceptable to tenants. Basements were full of years of trash left behind and needed extensive clean outs. The exteriors were also run down, and landscaping needed reworked.

Del Val took over and started to upgrade the vacant units with paint, carpet and other improvements. We also spent considerable time and effort to get all the buildings up to code from local township and state regulators. We cleaned up the exterior areas and did extensive clearing of trash from basements and storage areas. This allowed tenants to have access to their storage areas and dramatically reduced fire risks.

We then increased the rent $25 to $50 on any units we rented. We also gave the existing tenants a new 2-year lease with rent increases every 3 months to bring the rent up to market rates. We have also increased rent at each lease anniversary.

This process has been going on for over 3 years now and here are the results.

FY2016 FY2017 FY2018

Revenue $351,000 $385,000 $400,000

Net Income $114,000 $198,000 $270,000

Occupancy % 81% 98%

Average Rent $700 $780

As you can see by the above, the revenue has improved every year, but the real improvement has been the bottom line net income. The net income has more than doubled from $114,000 to $270,000. This has been a result of the occupancy percentage going from 81% to 98% and increasing the average rent by over $80 per unit during the last 3 years. We have also completed many of the deferred maintenance items and now maintenance costs have dropped by over 50% with that money dropping to the bottom line.

Real Estate Investing and Property Management in West Chester PA

Real Estate Investing and Property Management in West Chester PA

Residential property management in West Chester, PA involves serving two different rental communities.

The first community includes students who attend West Chester University. As certain geographic areas of West Chester do not allow student rentals, it is very important that you make sure what part of town your investment property is located. Student housing is very time consuming for property managers and requires extra man hours to serve their needs. For example, with student housing we get calls to change light bulbs, remove snow or ice, clean rooms and many other requests that we typically do not get from non-student tenants. As an investor you want to make sure that you have a property management company in West Chester, PA lined up to handle these issues or be prepared to handle them yourself.

Also, with student housing you will get a lot of turnover and most students stay one year and move out. So be sure to plan high tenant turnover when considering investing here.

The second community in West Chester, PA is non-students. This may include individuals that live in this very popular community or in some cases people that work at West Chester University. These types of tenants tend to be more mature and easier to manage the properties in which they reside. Additionally, they tend to pay rent on time and do not need nearly as mush maintenance or attention. As an investor this may be the better option, but these types of investment properties tend to cost more per unit.

The good news is non-students may live in your investment property for many years and reduce your vacant time.

West Chester, PA is a very popular community with lots of shops and restaurants in the downtown section. West Chester, PA is also the home of QVC, one of the largest employers in the area.

This town continues to be a very hot market for both sales and rentals. The average sales price for home as of November 2018 is $414,100. The average sales price is up 3.4% over the last year. The rental market is also seeing nice price appreciation. The average rental is $2,242 per month and is up 1.5% over the last month. This compares to the average rental in Philadelphia of $1,581 and nationally of $1,449. Given the strong popularity and strong employment in the area I would suggest this a great place for real estate investors to look for investment properties and above average returns.

Landlords Rent Philosophies: Pricing, Tenant Quality, Occupancy, Cash Flow

Landlords Rent Philosophies: Pricing, Tenant Quality, Occupancy, Cash Flow

Have you ever wondered, why certain storefronts, and apartments, etc, seem to remain vacant, longer, than other similar ones, which might be owned by different owners/ landlords? Different owners seem to have differing philosophies, perspectives, and points of views, when it comes to key components, including: pricing; tenant quality; occupancy rates; and overall cash flow requirements, and priorities. Although, there is no such thing, as an iron – clad, way, to manage any particular property, this article will attempt to briefly, consider, examine, review, and discuss, some of the options/ approaches, including advantages and disadvantages, and other considerations.

1. PricingWhenever a property, either residential, or commercial, becomes available/ vacant, the specific owner, must make many decisions, about the best way to proceed. Perhaps, one of key considerations, is about pricing it. It seems, many owners, especially those owning commercial buildings/ storefronts, decide to ask as high a price, as they believe, they can. Because of this, we often witness, larger turnovers in some locations, than others. What is often confusing, is, why they don’t realize, or seem to care, that, every month, it remains vacant, means it takes, many months, or longer, to make up, that loss of rental income. Some believe, it is important to proceed this way, because, it will set the level of future rents, and although, this may, perhaps, be true, it only will, if they don’t constantly experience turnover, and prolonged periods of vacancy! This is even more true, when it comes to residential properties. My wife and I own several residential units, and, are pleased, we have amongst, the lowest turnover and vacancy rates. We would rather price these units, more conservatively, and lower, and maintain high quality, dependable tenants!

2. Tenant qualityOne of the costliest parts of owning real estate, is, every time, we need, to find a new tenant. Doing so, often, requires additional fees, marketing expenses, maintenance/ repairs/ renovations, and time/ hassle! If you find reliable tenants, doesn’t it make sense, to try to find common ground, and a meeting – of – the – minds, to keep them?

3. OccupancyThose who maximize their occupancy rates, often enjoy far less stress and hassle. Carefully considering the two factors, above, is a significant factor, in your best interests!

4. Cash flowOwning income property, produces the least amount of stress, tension and hassle, and, generally the best results, when there is the best possible focus on maintaining the necessary cash flow, to cover monthly expenses, etc.

Being a landlord, might, either be extremely profitable, or a nightmare. Focus on the bigger picture, don’t be greedy, cherish quality tenants, etc, and you will maximize your possibilities, in the longer – term.

How The Overall Economy Impacts Real Estate?

Many of us, who are involved, on a daily basis, with the many nuances of real estate, get so involved with buying, selling, marketing, and promoting homes, and making/ giving listing presentation, we often ignore, the many economic factors and other conditions, which impact the real estate market. Some of these factors are local, in nature, while others may be national or international/ global. Some are actual, while others are perceived (for example, belief in their job security, negative possibilities because of some action taken by government, etc). With that in mind, this article will attempt to briefly consider, examine, review, and discuss, how the overall economy impacts the real estate/ housing markets.

1. Mortgage/ interest ratesWhen the Federal Reserve announces they are raising, planning to, or considering raising rates, in most instances, mortgage rates follow. About 2 years ago, we witnessed historically low mortgage rates, and today, while, from an historic perspective, they are still relatively low, they are about one percent higher, than they were, at the low. When mortgage rates are low, many buyers qualify for a higher price, and thus, we often witness a rice in home prices. As they rise, generally, prices, and, especially, the rate of increase, slows.

2. TaxesWhen local real estate taxes are comparatively low, the effect on monthly carrying charges, is a positive, for the housing market. When they rise, they cause homeowners, to have to pay more monthly. Some houses, neighborhoods, regions, counties, etc, have lower taxes than others, so when one region abruptly raises rates, that local market is hurt, and certain surrounding areas benefit. In addition, in higher tax areas, such as New York, New Jersey, Connecticut. Massachusetts, Illinois, California, last year’s tax legislation, may have potential longer – term ramifications, on the housing market. That inclusion, known as State and Local Taxes, or SALT, limited/ capped the federal tax deduction, permitted, for state and local taxes, to a total of $10,000. Since many houses in these regions, have much higher taxes, and, several of these areas, also have state and/ or regional taxes, these caps, have the potential, to harm the real estate market, especially, if, they increase, any more.

3. JobsDo people perceive, they have job security? Is the job market, strong, or relatively weak? Are incomes increasing? The more confident, and comfortable, qualified potential buyers, are, the stronger the market.

4. Overall economy, and world newsFor example, if the present, partial government shutdown, continues, for a substantial period, many workers, industries, and small businesses, especially, will be negatively impacted! There seems to be lots of fears, doubts, and insecurities, about safety, etc. The more confident, the public is, the better off, usually, is the real estate market.

These items are just the tip of the factors, which have an impact on the housing market. Beware, prepare, and plan accordingly.

U.S. Real Estate Predictions for 2019