Erie Real Estate and Community News

Oct. 8, 2018

Is the Real Estate Market Finally Getting Back to Normal?

Article From Keeping Current Matters 

The housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007 according to the latest Home Price Expectation Survey:


After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually.


These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory.


When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an “irrational exuberance.”


Inventory levels grew to 7+ months. With that many homes available for sale, there weren’t enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall.


Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery.


Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market. 


That was the past. What about the future?

We currently have about 4.5-months inventory. This means prices should continue to appreciate at above-normal levels which most experts believe will happen for the next year. However, two things have just occurred that are pointing to the fact that we may be returning to a more normal market.


1. Listing Supply is Increasing

Both existing and new construction inventory is on the rise. The latest Existing Home Sales Report from the National Association of Realtors revealed that inventory has increased over the last two months after thirty-seven consecutive months of declining inventory. At the same time, building permits are also increasing which means more new construction is about to come to market. 


2. Buyer Demand is Softening

Ivy Zelman, who is widely respected as an industry expert, reported in her latest ‘Z’ Report:


 “While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Surveydoes suggest that buyers have grown more discerning of late and a level of “pause” has taken hold in many large housing markets.Indicative of this, our broker contacts rated buyer demand at 69 on a 0- 100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey.”

With supply increasing and demand waning, we may soon be back to a more normal real estate market. We will no longer be in a buyers’ market (like 2007-February 2012) or a sellers’ market (like March 2012- Today).


Prices won’t appreciate at the levels we’ve seen recently, nor will they depreciate. It will be a balanced market where prices remain steady, where buyers will be better able to afford a home, and where sellers will more easily be able to move-up or move-down to a home that better suits their current lifestyles.


Bottom Line

Returning to a normal market is a good thing. However, after the zaniness of the last eleven years, it might feel strange. If you are going 85 miles per hour on a road with a 60 MPH speed limit and you see a police car ahead, you’re going to slow down quickly. But, after going 85 MPH, 60 MPH will feel like you’re crawling. It is the normal speed limit, yet, it will feel strange.


That’s what is about to happen in real estate. The housing market is not falling apart. We are just returning to a more normal market which, in the long run, will be much healthier for you whether you are a buyer or a seller.

Oct. 1, 2018

Where Are Mortgage Interest Rates Headed In 2019?

From the KCM Blog 

The interest rate you pay on your home mortgage has a direct impact on your monthly payment; the higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.


Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next year.

Where Are Mortgage Interest Rates Headed In 2019? | MyKCM

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.2% from this time last year and are predicted to be 5.1% higher next year.


If both the predictions of home price and interest rate increases become a reality, families would wind up paying considerably more for their next homes.


Bottom Line

Even a small increase in interest rate can impact your family’s wealth, so don’t wait until next year! Let’s get together to evaluate your ability to purchase your dream home now.

Posted in Community News
Sept. 17, 2018

3 Potential Maintenance Hazards That Tank Deals (and How to Spot Them!)

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G’Day, everyone. I hope you’re well and that you had a great Easter holiday. It’s time to get back into things and hit those numbers again. How many emails, calls and meetings have you committed to? I always stress that if you do the small things consistently, it will allow the big things to just fall into place. Keep pumping the numbers daily, and you will see the miracle happen.



Today I want to share with you my opinion on the top 3 potential future maintenance issues to look out for before purchasing a property. This is not exactly my complete area of expertise, but I have always followed a rule of having smarter people around me doing the things that I can’t do or don’t want to do. Using this approach has enabled me to learn as I go while growing my knowledge base.


Imagine this scenario. You have found what appears to be a steal in a hot market like Toledo or Dayton, Ohio, and you have an accepted offer and are in the inspection period. It is easy to look at the purchase price as well as the drafted after repair value based on comparable sales and be on cloud nine about what you have in front of you. However, do not get ahead of yourself — because some homes that may seem like diamonds in the rough turn out to be big lumps of coal if you do not examine these three key maintenance hazards.


3 Potential Maintenance Hazards That Kill Deals (and How to Spot Them!)

Maintenance Hazard #1: Foundations

One of the first things we look at with the homes we intend to purchase is the foundation. No matter if it is a basement, crawl, or even slab (rare in the area, but still an item we have found), we want to be sure the foundation is in good shape. Without a good foundation, the cost of repair and ongoing maintenance can be a profit killer for any deal. We look for signs of cracking on the exterior of the home, examine the ground around the home to determine if water damage could be possible, and pay very close attention to any chips or blocks that seem out of sorts, broken, or shifting. From the exterior view, we can generally tell major issues.


In the case of a basement, we will always look for signs of water infiltration and issues by again looking for cracking or worn out grout on the interior of the basement walls or staining on the walls, especially a few inches off the ground. We also examine any mechanicals in the basement to see if any water has damaged them in the past. If we see any warning signs of current or previous foundation issues, we will not go forward with a purchase and will escape our contract within the inspection period of the purchase agreement.


Maintenance Hazard #2: Roofs

During our walk around the property examining the foundation, we will also look at the roof as a potential maintenance hazard. This hazard can be a very pricey item down the road if we do not take prudent steps in looking over the roof, gutters, shingles, and more in our inspection. We will look for major slopes, grooves, or weak spots on the roof. This could be a sign of issues with the roof decking, indicating weakness in the structure of the home or aged materials requiring costly repair down the road.


We will look at the condition of the shingles (and if there are multiple levels of shingles). Curved shingles, missing shingles, or more than two layers of shingles all point towards the age of the roof being over 15 years. We will examine soffits and, if applicable, venting. In general, we are looking for an age on the roof to be no more than 10 years and in proper shape to avoid maintenance hazards down the road and to assure we do not see major expenses early in the life of the property.


Maintenance Hazard #3: Electric Panel and Furnace

Ok, maybe there are technically 4 maintenance issues. The last two are simple to explain, but are indeed very important to review as you finish your inspection walk through of the property. When we hit the basement or garage, or wherever we find the panel, we are looking to see if the house has a minimum of 100 amps. These days, with all the electronics tenants and homebuyers have, if you do not have 100-amp minimum, you will undoubtedly run into issues with electric in the home. These issues are not only maintenance hazards, but fire hazards as well.


The furnace along with the electric is one that requires care in examination. We are looking to see if the home has at least an 80% efficient furnace. Without due care in examining the furnace and the age of the unit, this can quickly lead to issues once you get the property to close and begin work, let alone once you have the unit tenanted.



When buying a property, do not be fooled by great pricing with motivated sellers and the perception of a great margin. We will never allow major maintenance issues to slip by us because we are looking at the potential profit in the deal, as maintenance issues should never be passed along to the next buyer. Keep your head in the game, be thorough with your inspection, and when in doubt, get a second opinion from your trusted partners and contractors just like I always do.

Sept. 10, 2018

8 Low-Cost Ways to Dramatically Increase the Value of Your Rental Property

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Having a decent rental property guarantees a steady cash flow as long as you manage that property well. In fact, the biggest contributor to your cash flow is your ability to increase the perceived value of your property.



As a landlord, you should have two goals. First and foremost, you want to make sure your property doesn’t go down in value, ever. Sure, markets fluctuate, but I’m talking about maintaining the state of the property. Then, you’ll want to increase the value of your property whenever you can and ensure your property is always rented out. Sometimes tenants leave, and that’s your opportunity to make improvements. In fact, you can easily use your previous tenants’ feedback to improve where it matters most. While it’s true that a property with modern gadgets and equipment excites tenants, there are other low cost and surefire ways of sprucing up your property for a higher rental value. These improvements will not only raise the value of your property but will also ensure that your property is attracts new tenants.


Here is a list of low-cost improvements that you can make to your property that will increase its rental value:


Before You Show the Property to Your Prospects

1. Perform a makeover of the yard and uniform fences.

Picture this: As your prospective renters arrive to check out your property, what do they notice first? It’s the outside of your building or your front lawn. A neat and clean front lawn will help create that initial positive impression and set the mood for the remainder of the visit.


You may not have the budget for extensive landscaping work, and that’s ok. Just upgrade whatever you can so that your lawn looks tidy and presentable. Trim overgrown bushes and shrubs. Remove fallen leaves, sticks or anything that might make your lawn look cluttered.


You can even consider placing a few bushes, flowers and ground covers strategically. You can look for inspirations to upgrade your yard from landscaping websites and garden stores. A new mailbox or even just a freshly painted one can work magic. Having outdoor lights and shutters can quickly and inexpensively make the exterior of your property pop. You can even use cheap solar powered lighting posts that you can just stick in the ground.


Related: The Top 5 Items to Replace or Upgrade in Every Rental Property You Buy


If there’s a fence around your property, make sure it looks nice. A broken fence or missing pickets are something no tenant would like to see. Ensure your fence is uniform and looks cohesive. Here too a fresh layer of paint might do the trick but is of course more expensive.




2. Give the place a fine scrubbing.

Painting the whole of exterior and interior of your property will cost you dearly. You’ll have to buy paint to cover your building, fences and garage. If you don’t have the funds to cover everything with a fresh coat of paint, a thorough scrubbing and cleaning of your property will do. You can either get it done professionally or you can do it yourself. All you will need is a few hours of your day, a ladder, a pile of old rags, a lot of soapy solution, and a brush with an adjustable handle.


If you have some budget available to buy paint, do so. Use it to paint the areas that are more crucial and obvious. Before you enter the property, you are greeted by the front door. Make sure your front door looks welcoming and fresh. A freshly painted door gives the impression that you’ve actually renovated the house for the next tenant.


3. Clean the carpet.

If you give your potential tenant the feeling they’re entering a new house, it will help you with getting the rent you want. A clean carpet does exactly that. Rent a steam cleaner to clean every inch of your carpet. It’s a low-cost activity but has a high impact on the presentation of the rental. It also makes your property smell fresh.


If you have vinyl floors, cleaning might not be an issue. Of course, it will certainly help, but it’s probably not as critical as cleaning the carpets. Instead, the flooring might be damaged in certain places. This is not the kind of thing you want to skimp on. Luckily vinyl flooring is on the cheap side, so any repairs don’t have to cost you a kidney.


If you have a tiled floor, just get down on your knees and scrub the floor thoroughly. Hardwood looks new and shiny by simply waxing it. Scrubbing the floor will give a new look to your flooring. But if you’ve got chipped pieces of wood flooring or stubborn stains on your tiles, consider replacing them with new tiles. You can ask for leftover pieces from your local flooring company. They might be interested in giving you the pieces at a discount.


4. Inspect the appliances.

New looking, shiny and well-maintained appliances help raise the perceived value of your rental property. Make your appliances look as good as new even when they’re not new. Buy a bottle of hard surface cleaner like Windex and shine all the appliances with them. Also, malfunctioning appliances are a huge turn-off for people looking to rent. Ensure that all the appliances in your property are functioning well.


Sprucing up a rental property for a new tenant is an all-important exercise for every landlord. However, if you’re thinking about spending money on your rental property, don’t be wasteful. Every single penny you spend will eat into your ROI. For most of the tenants, new appliances (or new looking) and clean washrooms are the top priorities. So, if you’re thinking about renovating your property for rental purposes, do not ignore these parts. Focus on increasing appearances of cleanliness in your washroom. Tenants appreciate a modern-looking, clean and bright washroom. Similarly, invest in well-maintained and new-looking appliances.


Also, make changes in your property according to the surrounding market. For example, turning a house into a semi-mansion located in a slum area will probably not attract the right tenants. It will cost you more than what it’ll be rented for. Make sure to NEVER overcapitalize with the improvements you do.




When Your Prospects Visit Your Property

We talked about what you can do to increase the appeal of your rental property so that you can demand a higher rent. These all are practically meaningless if you are not at your best when you invite your prospects over to inspect your property. There are a few important best practices that will maximize whatever you can ask for your property.


Related: 12 Steps to Quickly Filling Your Rentals (& Keeping Them Full!)


5. Create higher demand.

A simple law of economics says that a commodity demands higher value when its demand goes up. If you apply the same rule when you’re showing your property to your prospects, you might be able to demand a higher rent. This means that if possible, invite all your prospects to inspect the house at nearly the same time. When the prospects see a huge demand for your property, they’ll obviously be more inclined to pay a premium. They’ll also feel as if they want it more than they would otherwise. It’s human nature. You can put an advertisement in a newspaper and wait for a week so that you have enough inquiries from your prospects. After a week, request all of them to turn up at a designated time.


This has a second advantage. You might even be able to pick your preferred tenant. We all know not all tenants are made equal. Well, here’s your chance to make sure you picked the best available.


6. Have the necessary papers ready.

When a number of prospective tenants show up together, it will be difficult to remember all of them. Don’t get overwhelmed. Instead, have some forms and applications handy so you can ask each of them to fill in their necessary details and employment information. You can later use these forms to select your tenant and eliminate the others.




7. Document everything.

Lease contracts set the rules for a healthy relationship between a tenant and a landlord. Contracts are legal documents that pen down the rules that both the parties agree to follow. Make sure that your tenant has thoroughly read your contract and has understood each point clearly. In the long run, a point that’s not well understood might lead to a bad relationship between you and your tenant. Make a point of it to discuss the most crucial points.


8. Be available.

An unresponsive landlord is the last thing a tenant would wish to have. Be available for your tenants and respond promptly to their calls or mails. This starts when they’ve come to check out your property. Being unresponsive to questions can leave a bad impression. Do your best to assure your tenant that you care for them.


You can follow the guidelines outlined above even if you hire a property manager and don’t self manage. I suggest quizzing them with these tips to see if they genuinely look at ways to save investors money while at the same time satisfying tenant needs.

Aug. 27, 2018

12 Creative Ways to Add Major Value to Apartment Buildings

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In apartments, the options on ways to increase the value of the property are only limited by the owner’s creativity. In this article, I will list just some of the endless ways to add value.

Before we jump into the list, let’s do a quick rundown on how properties are valued.

1-4 Unit Property

These properties are valued based on the comparable sales approach. This means if a 3-bed, 2-bath home in similar condition to your 3-bed, 2-bath in the same neighborhood or one very similar sold for $X, then your 3-bed, 2-bath home is also worth $X because that’s what the market has determined your property is worth. When you hire an appraiser, this is precisely what he/she is doing. They find comparable sales “comps” and use them to give your property a value.

5+ Unit Property

These are valued based on the income they produce. Everyone buying these types of property are buying them to make money, so that is the universal focus. To find their value, you find the net operating income (NOI). NOI is simply all the money you made minus all your expenses, not including the debt service payments. We don’t include the debt service because it can vary from one owner to the next. In other words, NOI is all the income the property can produce minus all the expenses the property requires to operate, regardless of who the owner is. Once we have the NOI, we divide it by the capitalization rate for the area. The cap rate is the rate of return the market has determined is adequate to deploy capital for this type of property.

If this is how apartments are valued, then we can see that if you are able to decrease expenses or increase the income, then the value of the property will go up. Even if you save one dollar, the value of the property goes up. If you want a more detailed explanation of how we find value on apartments.


If every dollar you decrease expenses or increase income adds to the value of the property, shouldn’t we all be trying to do that in any way possible? The answer is yes, but often owners only focus on the obvious, conventional ways, such as raising the rent. That is a good one, but as I mentioned before, the list is only limited by the owner/manager’s creativity. Below is a list of just some of those less conventional ways to add value to your apartment building.



Before you skim over the list and think, “No thanks, that will only earn me about and extra $500 a year — not worth it,” know that this incentive isn’t the extra $500 in cash flow — it’s the increase in value. If your property is a 6% capitalization rate, that extra $500 a year adds $8,334 to the value of your property. Find 10 ways to add $500 a year income and 10 ways to decrease your expenses $500 a year, and you will have added $167,000 to what your property is worth.


12 Creative Ways to Add Major Value to Apartment Buildings

1. Sub-Meter Utilities

We have all driven past that apartment building in the middle of winter where the tenant has the windows wide open, heat blasting. We also all know the tenant who never reports that their toilet is constantly running because they don’t pay for water. Depending on the mechanics of the property, sub-metering can be one of the largest value-add activities.

2. Washers and Dryers

The number one amenity currently added to rental leases are washers and dryers. This could add $40-75 per month to your income.

3. LED Lighting

If you are a long-term buy and hold investor, LED lighting in common areas is a no-brainer. First, it uses so little energy, you save on the utilities. Second, the bulbs last 25 years, so you aren’t paying maintenance to change them.

4. Vending Machines

Yep, the income produced from a vending machine can increase the value of your property. I have seen these in several settings: 1) in common areas, such as placing a drink or snack vending machine in a gym area or around the pool, 2) in common area laundry rooms that have laundry and other household essentials in them. Think single serving detergent, stain remover pen, carpet stain remover, fabric softener. The best part is you don’t have to buy the machine. Just like with coin laundry, many companies will place and service vending machines, and you get a percentage of the income.

5. Garage Parking

People can and do pay more to park their cars or have additional storage in a garage. Adding an additional charge for garages is common and can be worth building garages in some instances. A less expensive substitute would be carports.

6. Prime Parking

We all have done it — you turn into a parking lot and yes! — the front and center spot is open for you. Tenants will pay to reserve those special spots. Pop a few signs in the best spots that say “Reserved Premium Parking for Rent.” This will add more income to your bottom line, and the value of your property will go up.

7. Renovations

Although this one is pretty conventional, I thought I’d list it anyway. By renovating the interiors, common areas, or curb appeal you can increase demand, which will allow you to push rent rates up.


8. Trash Pick-Up Service

Do you have a full-time maintenance man on the property? Why not utilize him for custom services? A friend of mine had a resident who hated carrying her heavy trash bags to the dumpster. He then offered for the maintenance man to come pick up her trash outside her door two times a week and walk it to the dumpster for $20 a month. Other residents saw this and asked for the same service. Now it is an option for all his residents. The handyman makes his rounds twice a week and collects. Residents love the option.

9. Pet Rent

If you’re allowing pets and not charging for them, you’re missing out. I have seen pet rent as high as an additional $100 a month.

10. Storage Units

Have you ever lived in an apartment? Is there ever a good place to put all those boxes of old books, your bike in the winter, or whatever else you want out of the way? Well, most people are this way, and that’s why they are willing to pay for what is essentially an extra closet. For our units, we charge $19 and $29 respectively for 15 sqft and 30 sqft storage closets that were built into an old, unused laundry common area.

11. Cable Bill Kickback

In larger complexes, owners can sign exclusives with cable providers and receive a small kickback from when residents sign up for the service.

12. Renegotiate Expenses

As investors, we often focus on how to make more money. Just as important is how to spend less. In apartments, the operating expenses will include quite a few expense accounts. Landscaping, snow removal, cleaning, management, maintenance, dumpster fees, and many more items are all things you can look at for ways to decrease operating expenses. It could be as simple as calling around for quotes on grass cutting or calling the dumpster service and renegotiating the monthly fee.

In today’s market climate, multifamily is very competitive, and adding these unconventional value-add tactics is a great tool to have in your belt when they fit your property.


What I really want to stress is the value added to the property more so than the extra cash flow. Cash flow is good, but the value can be captured through refinance or sale. Multifamily allows control, and although everyone knows cash flow is king, creativity is a close second. With creativity and control, amazing wealth can be built in multifamily.


Aug. 20, 2018

The Top 5 Items to Replace or Upgrade in Every Rental Property You Buy

After you have purchased an investment property, have you ever encountered this dilemma?

Shall I replace this part? Shall I keep it as-is until it breaks?


Granted, chances you have already spent so much in acquiring the property, so you may be reluctant in spending any extra dime in renovating the place (or at least, delay until the cash flow starts coming in).

For some fixes, you can reasonably delay the fix until quite some time.

For other fixes, to give you a better sleep at night, you should always ensure the operations of these items. Don’t even think about ignoring these. Just do it.

Here are the top 5 things you should seriously consider replacing or upgrading whenever you acquire a new investment property, regardless of their condition.


The Top 5 Items to Replace or Upgrade in Every Rental Property You Buy

1. Toilet

Why is a toilet on top of the list? Because a toilet can be one of the largest money drains in your property!

You may be surprised how large of a water bill a leaking toilet can cause. As an example, one of my toilet leakages went undetected for two months, and the corresponding water bill was $3,500! As a comparison, normally we pay around $150 a month for water, or $300 for two months. That’s more than 10 times the normal usage.

The main reason that a toilet is a must-fix item is because leaking toilets can run 24 hours a day. A leaking faucet or a leaking shower diverter will result in only a small water issue when you don’t turn them on. A leaking toilet, on the other hand, is continuous.

While the potential damage can be immense, the action to be taken is surprisingly easy.

We are not even talking about replacing the toilet (although for long term holds, it’s not a bad idea either). We are talking about just “gutting” the toilet by replacing the toilet system inside.


Google “Fluidmaster Complete Toilet Repair Kit,” and you will know what I am talking about. Get a flapper, fill valve, nuts and bolts, etc. and do a makeover for your toilets. All it requires is $20 of material and a couple hours of labor.


Ever since the “leaking incident,” we have implemented the toilet makeover policy for all newly acquired properties.


Would you do the same?


2. Locks

Even if the lock is fully functional, you should always change the locks. You don’t know who possessed the keys before. Instead of coming up with any justifications to convince yourself why it is okay to use the old ones, just change them.

Money saving tip: If you have multiple properties, you can always recycle locks from time to time. Say you just took out the old locks from 123 Main Street. You can always reuse the same old set of locks at 456 Main Street next time when you have a tenant turnover.

Let’s play locks musical chairs!


3. Light Bulbs (Including Security Lights)

For common areas such as hallway, using long lasting, energy saving light bulbs will reduce your electricity bill. More importantly, new light bulbs reduce the number of easily avoidable “Would you please change the light bulb” phone calls.

In fact, a lot of times, I would go one step further by changing the bulbs in my tenants’ apartments.

Once you change the bulbs, it will be some time before you have to change them again. Each energy-saving light bulb lasts for 9 years (double-life bulbs last for 18 years). These days, as LED technology becomes more mature and costs start to become more affordable ($3 per bulb at Home Depot), we might potentially move in this direction. If you have any experience with LED lights, please share!


4. GFCI Electric Outlets

These are special electric outlets that can shut off automatically when electricity runs through unintended paths (e.g. body, water). Such outlets run a little bit more expensive ($10 a piece vs. less than $1 a piece for normal ones), but they are well worth it in certain places for safety reasons. In fact, they may be required by law for places near water, such as kitchen countertop, bathroom, washer and dryer.


I didn’t bother to check the law, because whether or not it is required by law, for everyone’s safety, you should strongly consider replacing these outlets at appropriate places. You only need a few GFCI outlets per apartment.



5. Fire Extinguishers and Smoke Alarms

Another safety item.

Install a whole new set of smoke alarms and fire extinguishers, and you won’t have to worry about them for the next several years (as long as your tenants don’t tamper with them). Of course, if you use the battery operated alarms, you will have to change batteries for the alarms every year. As a hint, don’t count on your tenants changing batteries themselves. Instead of viewing replacing batteries as a chore, think of it as a good chance for you (or your property manager) to “inspect” the property as well.

By the way, if you are looking for the specific type of smoke alarms to buy, consider buying the dual-sensor ones (ie. alarms with both ionization and photoelectric sensors). Such alarms can detect both the slow smothering fires and fast spreading fires effectively.


Final Words

All the suggestions above revolve around several major items: water, fire, electricity and safety.  

You may think some of the specific items are overkill and/or certain things are missing. Feel free to tweak this checklist to better suit your needs.

The intention is to plan ahead and do the small little things to minimize headaches down the road! Your tenants will appreciate them.

For the benefit of your tenants and for the protection of your business, consider changing all the aforementioned items for your next property.


Aug. 13, 2018

The Wave Of Millennial Homebuyers Continues To Swell

Many have written about the millennial generation and whether or not they, as a whole, believe in homeownership as a part of attaining their American Dream.

Comparatively speaking, millennials have taken longer to obtain traditional milestones (like getting married, having kids and buying a home) than generations before them, but that does not mean that they do not aspire to still achieve those things.

For older millennials (aged 25-34) who have established themselves in their career and are starting to build their families, homeownership is the next logical choice.

According to the Urban Institute’s State of Millennial Housing, the probability of a millennial becoming a homeowner increases by 17.9% if they are married, and by an additional 6.2% if they have children.

Last year, according to the US Census Bureau, the average age at first marriage was 30 for men and 27 for women, while the National Association of Realtors (NAR) reports that the average first-time homebuyer was 32 years old.

With most of this generation having yet to age into the ‘Responsibility Zone’ (the time in their lives when their responsibilities start to dictate their behaviors), there will be a steady wave of buyers for years to come!

Those who are currently out in the market searching for a home are being met with a strong, highly competitive seller’s market. NAR’s Chief Economist Lawrence Yun recently commented,

“Realtors® throughout the country continue to stress that there’s considerable pent-up demand for buying a home among the millennial households in their market.  

Unfortunately, they’re just not making meaningful ground, and continue to be held back by too few choices in their price range, and thereby missing out on homeownership and wealth gains.”

Bottom Line

If you are currently renting and thinking about jumping into the real estate market this year, contact a local real estate professional who can help you navigate your market.

Posted in Real Estate News
Aug. 6, 2018

The New Investor’s Simplified Guide to Landing a First Investment Property

Do you know what the number one cause of chickening out and not purchasing real estate is? Analysis by paralysis, a “disease” caused by over-analysis and inaction. I’m no doctor, but from what I’ve seen, the primary cause of this disease is the overwhelming amount of tasks that need to be completed in order to close a deal.



It’s like the old cliché goes, “How do you eat an elephant? One bite at a time.” That elephant is a metaphor for your first deal. The way you overcome it is by figuring out what you have to do and then breaking it down into actionable steps that you can prioritize.


I understand that you may not know all of the steps that go into purchasing your first property.


That is the purpose of this article—to outline the steps the first-time investor needs to do to secure his or her first deal. To keep it simple and to cater to the majority of BiggerPockets’s audience, the main focus is going to be on purchasing a buy and hold property with your own money for the down payment.


There are, of course, other ways you can get into real estate much more quickly, such as wholesaling, fix and flipping, and partnerships. These methods are beyond the scope of this article. Without further ado, let’s get this party started.


Step 1: Save

Before you do anything, the first thing you need to do is save! You do not want to be too hasty by depleting all of your savings to purchase a property. What happens if something goes wrong? You have no margin for error. The rehab on the property could cost more than you expect. You could have an unexpected large medical expense. Something might break. There are a million things that could go wrong, and that’s why the first step is to put yourself in a strong position financially before purchasing a property.


So what is a strong financial position? This really depends on your risk tolerance. Personally, I have two layers of reserves. I set aside $250-$500 per month (depending on the size of the property) as my first layer and also like to have a $

10,000 second

reserve per property.


I understand that you may have a higher or lower risk tolerance than me. However, my recommendations would be to at least have $10,000 over the estimated down payment and repairs in your reserve account before moving on to the next step.


For ways to save and optimize your life from a savings perspective, I highly recommend reading Set for Life by Scott Trench.




Step 2: Build Your Team

A common misconception throughout BiggerPockets is that you need a full team before you start making offers on deals. You need to be equipped with a lawyer, accountant, contractors, as well as an agent and a lender.


This is a complete fallacy and is one of the biggest excuses for inaction. The only two team members you need before you start making offers on your first deal is an agent and a lender.


Don’t get me wrong: A good lawyer, accountant, and contractors are invaluable, but they can be sourced as needed. They are likely not necessary for your first deal.


Related: What Newbies Should Know About Financing Investment Properties (Versus Homes)


To build a team, my preference is to go through recommendations or referrals. Go to your local meet up and ask folks there who they have used for an agent and a lender. If you have little success, direct message BiggerPockets members in your area and ask if they could recommend an agent or a lender. Most people are happy to help.


Once you have five to seven potential candidates, interview them. Ask questions that allow you to get a feel for their experience working with investors, their knowledge of the market, and their understanding of what you want. Whittle it down to one agent and one lender then proceed to the next step.


Step 3: Get Pre-Approved

You’ve got your agent and your lender, now it’s time to get pre-approved. This process involves sending the lender your account balances (checking, savings, brokerage, retirement, etc.), your last two pay stubs, previous year’s tax returns, etc.


Once the lender reviews these documents, he/she will determine how much you are able to afford through a pre-approval letter. You present this letter to the listing (or seller’s) agent alongside any offer so they know that you are interested and are able to obtain financing for their property.


Step 4: Search for Properties

After you are pre-approved and know what you can afford, it’s time to start looking for properties. Ask your agent to sign you up for the MLS listings that match your criteria. Things that I look for are price,


of beds/baths, square footage, and location in relation to work and a bike path.


You will get a daily email with any new listings for properties that go up for sale that match your criteria.


Once you see a property that you may like, run the numbers using the BiggerPockets calculators. Make sure that you are able to cash flow with your current down payment and estimated interest rate, insurance, taxes, PMI (if necessary), and reserves.


Once you have a deal that checks all of the boxes, it’s time for you to have your agent draft up an offer. Once completed he or she will send the offer to the listing agent along with your earnest money.


(Note: Earnest money is the money that you send in along with your offer to show the seller that you are seriously interested in the property. It gets applied to your down payment at closing.)


Many times there will be some back and forth negotiation between the initial offer you send and what the seller ultimately wants. If you can come to an agreement and you both sign, you will be under contract.




Step 5: Under Contract

Once you are under contract, this is where the fun begins. The first thing you do is tell your lender so they can start their underwriting. Not to bash lenders, but oftentimes they are the ones that hold things up (


why you need to find a good one). By giving them everything they need in a timely and organized manner, it greatly increases the probability of them being able to close in time.


After you alert your lender, you need to get the inspection ordered. Make sure this is completed at least one week before the inspection contingency deadline. After the inspector has drafted his report, you can have your agent draft an inspection objection report pointing out any things you would like fixed. If the seller disagrees and it is before the inspection deadline, you are able to back out and get your earnest money back in full.


Related: 4 Steps Newbies Can Take to Get Ready to Invest (Even if You’re Still Saving Up!)


The other important part of the closing is the appraisal. Your lender will order this for you. They need to get a third party to value the property to make sure their loan is covered. If the appraisal comes back lower than the purchase price, the lender will often not lend on the property. Don’t fret, though—most offers have a financing contingency such that you will be able to back out if the lender does not want to lend on the property.


If the inspection objections are resolved and the appraisal comes back at or above the purchase price, you should be in the clear for a smooth closing.


Step 6: Closing

The day of closing is usually the easiest part of the transaction. You meet at the title company’s office and sign what seems like are hundreds of papers. Make sure you do some hand exercises the week prior. You’ll be very sore otherwise.


Step 7: Repeat



you followed this overview and are able to complete your first deal. Now, it’s time to make any renovations and get tenants in the property. Check out the BiggerPockets Tenant Screening Guide for a step-by-step process on screening tenants.


Now it’s time to rinse and repeat. Start saving up for the next down payment on the next property!


July 30, 2018

6 Lies We’re Told About Money Growing Up

Content From Bigger Pockets

These common lies and myths are hammered into most of us as we grow up. Some are just outdated beliefs that no longer work. Others are misconceptions from those with a limited perspective on life and money. Some may be the result of billions of dollars in marketing and programming. It is good to be aware of them and reprogram yourself to harness empowering beliefs that can deliver on what you really want.

6 Lies We’re Told About Money Growing Up

1. Money can’t buy happiness.

Simply having more money in your bank account may not make you happier—at least, not after a certain point. However, anyone who has both been broke and has enjoyed an abundance of money can tell you it’s a lot better to have it than not.

Money does provide a gateway to more experiences in life. It allows you to solve more problems quickly and easily. Imagine you have a relative who gets sick. If you have the funds, you may be able to pay for whatever surgery they need. Conversely, if you’re broke, you may be powerless to help them. No amount of money is better than your health or your family’s health, but having some can empower you to provide resources in times of need.

Money can also buy you freedom. It can give you security and reduce stress, as well as allow you to focus on things you really care about and want to do, whether that is traveling or giving your kids all the advantages to live their passions.

2. Wealthy people are thieves.

There are both broke and rich people who seem to believe they can only win, get rich, and feel good if they take from others. Still, to say all wealthy people are thieves and must have gotten there by ripping others off is far from the truth. In fact, those who share and give the most value to the most people are able to gain the most wealth and keep it long-term. This myth is just something told by those without money as a way to justify why they don’t have it.  

3. Money is the root of all evil.

Money—just like political titles, big houses, and fancy cars—is not inherently good or bad in and of itself. This quote has been twisted from what it originally stated, which is “the love of money is the root of all kinds of evil.”

If you are only chasing the money to get rich at all costs and don’t care about anything else, then yes, at some point it is probably going to get you into trouble. At least you’ll probably make a few enemies on the way.

Money is just a tool. It can be used for incredible good. There are lots of problems out there, from famine to lack of clean drinking water and sickness, that can be cured with money. It’s all about the priority it has in your life compared to your other values—and what you do with it.

4. Save, save, save.

Some of us with smart and hard-working parents or grandparents were told all our young lives to “save, save, save.” That was supposed to be the key to success.

It just doesn’t work. You can’t save enough, quickly enough to get ahead or stay ahead. The average retirement account balance right now is only around $100k. That includes those who have been working a lifetime to accumulate that and maybe even some who inherited money. You might need several million to get through retirement. The numbers just don’t add up.

A new report from CNBC reveals that it now takes an average of 36 years for someone living in San Jose to save up just a 20% down payment on a house! If prices rise and your rent goes up in the meantime, then you might never be able to save that much in your life by just working a 9-5.

If you want to keep up or get ahead, your mantra should be “invest, invest, invest” or “earn, earn earn” instead. That’s what will help you supersize savings, enjoy more free income, and be able to retire.

5 . Money doesn’t grow on trees.

This is a scarcity mindset. If you always think and act out of scarcity, that’s what you get. So many people have gotten into real estate investing and have woken up to just how much money is out there and freely available. Some people dream their whole lives of winning a million dollars. They think that if they hit that golden number, they’ll be set forever. In reality, you can blow through a million bucks pretty fast. There are cars that sell for over $1M. In many cities, the average house starts at $1M. As Grant Cardone puts it, “Millionaire is the new middle class.”

There is definitely enough in the world for everyone to have abundance. It’s about logistics and bridging the gap from where you are now to where you want to be. Increasing the cash flow in your own life is about investing and finding more ways to serve more people.

6. Go to college.

They tell you to go to college to get an education that will land you a good job that pays well, so you can ride it out until retirement. That strategy might have worked a few decades ago, but it doesn’t anymore. Chances are it will just make you even more broke with lots of student loan debt.

Learning is good. It is important. But many may be better off learning real financial skills and how to invest and make money work for them, instead of trading their lives for just enough to get by.




If you’ve heard these things, I urge you to consider who told them to you. They may have been shared out of good intentions, but that doesn’t mean they’ll work. How wealthy have these beliefs made those who perpetuate them? Learn from those who are living how you want to live. Do what they are doing instead.

July 23, 2018

4 REAL Reasons Why We Buy A Home!

Content from: The KCM Crew


We often talk about why it makes financial sense to buy a home, but more often than not, the emotional reasons are the more powerful or compelling ones.

No matter what shape or size your living space is, the concept and feeling of home can mean different things to different people. Whether it’s a certain scent or a favorite chair, the emotional reasons why we choose to buy our own homes are typically more important to us than the financial ones.

1. Owning your home offers you the stability to start and raise a family

Between the best neighborhoods and the best school districts, even buyers without children at the time of purchase may have these things in mind as major reasons for choosing the locations of the homes that they purchase.

2. There’s no place like home

Owning your own home offers you not only safety and security, but also a comfortable place that allows you to relax after a long day!

3. You have more space for you and your family

Whether your family is expanding, an older family member is moving in, or you need to have a large backyard for your pets, you can take this all into consideration when buying your dream home!

4. You have control over renovations, updates, and style

Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit in your apartment building? Or maybe you want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t do just that in your own home?

Bottom Line

Whether you are a first-time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a home.

Posted in Buying a Home