Expanding your real estate portfolio

REAL ESTATE as an investment has been on the increase this past decade as more and more people see the long-term benefits. Many of these investors entered the rental market by accident when they inherited a home from an aging relative. Others moved away and were unable to sell their home, so they opted to rent it for a while. After seeing the benefits of long-term rentals, and finding the security of a good Property Manager, they have decided to stick with it for the long haul.

But where do you go from here? If you are truly interested in rental property as a long-term investment, you need to understand the benefits of expansion. One method is to cash out the equity of one property, split it, and purchase two or more properties to increase your cash flow and rate of growth. Here's an example:

Dave inherited a modest single-family home when his mother passed away. The sales market was slow so he decided to rent it for a while. He found a Property Manager that quickly rented it out for $1,000 a month. Dave was pretty happy with the additional income but wondered if he couldn't be doing more. He approached the Property Manager to see about a more aggressive approach to building wealth. 

After developing a plan, the Property Manager sells Dave's home for $180,000. Dave splits the equity and purchases three apartment complexes with four units each. He now owns 12 apartments that rent for $550 a piece or a combined total of $6,600 monthly. His combined mortgage payment is $3,600 so he is making $3,000 a month instead of $1,000 a month with the single-family home. 

Not only does he bring more home but the value of his property is growing at three times the rate of the market (three properties instead of just one) and he is earning/growing based on the full value of the properties, not just the money he invested.

This is a very simplistic explanation. If you dig into the details, Dave could be getting a 60% return or better on his investment, which beats the stock market any day! If you are interested in growing your portfolio and building long-term wealth, we would love to sit down with you and show you how leveraging your money can generate a better return. We have a full-service real estate office with real estate agents ready to help you buy and sell real estate to expand your portfolio and our Property Management is ready to protect that investment. Contact us today!

The true cost of Property Management

Everyone has heard the stories of crooked, lazy, thieving Property Managers that rack up the bills while allowing tenants to run amok in your home. I've heard them myself, and even seen a few. Does that mean all managers are crooked and Property Management is a waste? Absolutely not!

Most of these horror stories include two responsible parties: the manager AND the owner. You see, the owner shares the responsibility of choosing a quality property manager. Most of them fail to do their research and simply grab the first manager with low fees. Well, you get what you pay for!

At American West Realty, we encourage you to do your research. Check out our web site for a description of our Property Management services and a detailed list of fees. We even provide you an article that spells out what to look for in a property manager so you can educate yourself and make an informed decision before hiring us - or anyone else. Once you are ready, interview several managers in the area to see what services they provide, the fees they charge, check references, etc. A little home work will go a long way towards ensuring the right manager.

The bottom line is that a good Property Manager will not cost you; they will increase your bottom line, protect your investment, and reduce your headaches so you can enjoy life. Visit our web site at www.americanwestrealty.com and let us help you on your path to financial freedom!

Cody Wyoming Rental Disaster

We've all heard the stories about bad tenants. They move in, stop paying rent, it takes forever to get them out and then you discover they have destroyed your home. Well, let me give you my horror story and then tell you how we've managed to keep it from happening again.

I bought my company in 2010 with an existing portfolio of about 115 rental units. Most of them are located in Cody and were easy to visit and even inspect. Others were located 30 miles away, including the subject home. I quickly learned the previous property manager took the unit over from another REALTOR but had never been inside the home. The tenants had lived there for about 11 years. They always paid rent on time, never bounced a check, and rarely had a complaint or maintenance issue. The manager assumed "No news is good news" and left them alone. No inspection. No drive-by. Nothing...for 11 years.

I discovered this just a few weeks after buying the company and put this home high on my priority list for a visit. It took a couple weeks and several phone calls to get a response from the tenants (first warning sign) but everyone continued to assure me they were good tenants. The wife finally called to apologize because she was buying a home and had been too busy to respond to my request for an inspection. She said they were moving out in two weeks (second warning sign) and asked if I could hold off on inspecting it until they were completely out. I agreed because it couldn't possibly make much difference after 11 years.

Two weeks went by and she still wasn't out (third warning sign). I was very busy and the home was 30 minutes away so I continued to hold. Another ten days went by before they called to tell me the home was "empty, clean, and ready to go!" They even thanked me for my patience. They really were nice!

Two days later I drove down to inspect and this is what I found: VIDEO

To make a long story short, paying rent on time doesn't mean they are taking care of the rental! In fact, some tenants pay on time and keep quiet to avoid discovery. Every appliance was beyond repair. The nearly new washer/dryer was missing, as was all the carpet downstairs. Holes in nearly every wall, some the size of a head. The carpet looked as though it hadn't been vacuumed in 11 years. Disgusting!

So the big question is, how do we keep this from happening? Inspections! Every home we manage is inspected every time we renew a lease. On a six-month lease, we'll inspect at the end of six months, whether the tenant is moving out or extending their lease. Same with a one-year lease. If a tenant is problematic with paying rent on time or if they have lease violations, we can also schedule an inspection. Because problems in one area often indicate problems in other areas.

The best part? Our new inspection software allows us to complete an inspection (with pictures and notes) and then publish it to our Owner Portal and Tenant Portal where they can view/print/download the complete report 24/7. We hold tenants accountable and owners hold us accountable. Everyone benefits!

If you want to learn more about inspections or any other aspect of Property Management, please contact us at (307) 587-9608 or email office@americanwestrealty.com and we'll be happy to talk. We promise to answer your questions without any high-pressure sales pitch!