Hey guys, it’s Steve Rozenberg here with Empire Industries Property Management Services.
Today what we’re going to talk about, a lot of people are always asking me what should they charge in late fees, what’s a good amount. You know, a lot of times, I get investors, new investors that they want to go ahead and charge a whole bunch of money because they want to intimidate the tenant; and that may be something that you think may intimidate them. However, you know, the way I look at it is a tenant that doesn’t pay rent is in one of two categories. The first category is they don’t care; they’re not gonna pay rent; they know the system and maybe they’re going to outsmart you and maybe they’ll stay in your property. and I would go back to maybe vetting the tenants better, and making sure you did the proper background check on them.
The other tenant category would be maybe they just don’t have the money and they can’t pay it. Most people know the first of the month the rent is due. They know that eventually if they don’t pay they will have to get evicted. So trying to scare them with late fees really I don’t think scares them. I think it’s better to instill the fact that you are running a business; you need policies, procedures; and you need to make sure that they understand those. Having some huge amount that’s gonna scare them could actually backfire on you because if you do have these late fees and you don’t enforce them every single time, then you actually could be violating the contract because you did not perform what you were supposed to be doing.
So a lot of people want to put a $250 late fee on rent and $50 a day, well you’re kind of setting up the tenant to fail; and what you have to remember, in my opinion, is the tenant is the client. They’re the ones paying your bills so you can have that property, and it does come down to making sure that you’re trying to create a win-win solution. But they also have to know that there is going to be a penalty just like if you pay your mortgage late; there’s a penalty for not paying that on time. But you don’t want to set them up so that you are making them lose and that they can never get ahead.
So this is Steve Rozenberg. This is how you deal with what you should charge a tenant, make it so that it’s scalable to a certain percentage of the rent and make it so that they get stung by the amount but it doesn’t totally put them out to where they can’t pay that amount. Hope this helps. If you’d like to learn more videos, go to our website http://empireindustriesllc.com. Click on our blog page; you’ll see hundreds of educational videos that we have to help you. Thank you very much.
Hey everyone, this is Steve Rozenberg with Empire Industries Property Management Company located in Houston, Texas.
I get a lot of investors that always come and ask me, you know, they have a deal and they’re asking me, “is this a good deal?” And I don’t really know if it’s a good deal or not because I don’t know what their goals are. So, if you’re trying to get a deal and you wanna know if it’s a deal for you, I would suggest first thing you do is you figure out what your goals are. When I say goals, I mean your 20-30 year goals, and think about where you’re going with this, and how does it look as a finished product.
Now I’m gonna attempt to show you what you do when you’re analyzing a deal and how do I identify if something is or is not a good deal based on your goals. I’m gonna take a basic property. We’re gonna walk through it and I’m gonna give you my thought test on why something could or could not be a good deal.
So, let’s say for example, somebody comes to me and they have a house that is worth $150,000, and let’s say they’re gonna buy that house for $120,000. The cash flow on that property is gonna be roughly, let’s just say, for the sake of argument, $200 per month. So my first question is, when someone asks me is that a good deal, I have to ask them what are their goals. Where are you going with this, meaning do you need money to survive off of, because if you need money to survive off of, $200 a month may not be enough. If you have other goals, long term goals, which we’re gonna talk about, then maybe they are.
So the first thing you gotta think about is a lot of people hang their hat on cash flow, and they always tell themselves I want a property that makes a lot of money as cash flow. And the reality is I was one of the people that used to think that, and it was really just for my ego because I had a career; I had a job. I didn’t need the cash flow. I just wanted to be able to say that I had a cash flow in property.
So first of all, let’s say that you have a property, it’s worth $150, but maybe the motivated seller has something going on in their life that they need to sell it for $120. But the market value is $150 on the property. So right there when you buy the property, you’re gonna get equity capture.; and you’re gonna capture basically $30,000 in what’s called unrealized capital gain, meaning it doesn’t go into your pocket; it doesn’t go into your bank, but it is there because the property’s worth $150, you bought it for $120. So right here is you’re gonna get what is called equity capture. After you get the equity capture of that, let’s say you’re gonna put 20% down on the property, which is going to be $24,000. Okay so you’re gonna put $24,000 down and you are gonna finance $96,000. Now the thing to think about is you know the house is worth $150,000. Statistically if you are living on the West Coast or East Coast of the United States, property appreciates or doubles in value every seven to nine years. In the Midwest, it’s every twelve to fifteen years. Now the caveat to that is land appreciates but you depreciate the structure. So it’s not a straight line doubling of value. But let’s say that you’re a long-term investor, and you’re gonna hold this property for thirty years, okay. Let’s say that this property that you’re holding for thirty years, let’s say if you doubled it, it would be $300 and here in Houston, and then you held it for another fifteen years, it would be worth $600 in a perfect world. But we all know life is not perfect. Let’s say for the sake of argument that thirty years from now, this house is now worth $450,000. And I think we can all agree that that is a realistic number, $450,000.
So, when you bought the property for $120, it is now you put 20% down so you put $24,000 down. So the question is when you now have an asset worth $450,000, did you put 20% down? You didn’t. You really put about 4% down, because it’s 4% of the $450,000. That’s the first thing. Now you have an asset that is producing income every month. Now, once you pay back the rest of your $24,000, your return on your asset is infinite. You’re getting an infinite return because all the money you had invested, the $24,000, is back to you and now you have an infinite return.
Now let’s talk about this mortgage. The bank says, Mister Buyer, you give me an interest rate of 5% or whatever the interest rate is, and I will give you $96,000 that you’re gonna pay me over the course of thirty years. And over the course of thirty years, I don’t care if it goes up in value, goes down in value, you get to depreciate it, none of that matters to me. The only thing that matters to me is that over the course of thirty years, you pay me back $96,000 plus an interest rate of 5% and we’re square. Pretty good deal. Now something to think about: who pays down this $96,000? It’s not you, the tenant pays down the $96,000. So what happens is you get what’s called debt pay down, where someone else is paying down the debt for you. That someone else is going to be the tenant. Now you may have months and times where you’re going to have to put capital improvements in the property when you have vacancies, but that’s okay. You’re still gonna have someone paying down the debt. Now, you’re also gonna get appreciation, like I said, because every twelve to fifteen years, this is gonna double in value. That’s just the historical number. If you broke it down, you could see years in times like we had in 2007-2010, where it’s gonna dip, but historically it will double.
So now, something to think about: you have depreciation. Depending on if you are a W-wage earner or what your financial situation is, depreciation can be something that could be a big benefit for you. So, something to about: you now have cash flow, you have equity capture, you have appreciation, you have debt pay down, you have depreciation. This is all from a property that you bought for $150, no it was worth $150, you bought it for $120, you make $200 a month. Now here’s the thing: when this house is worth $450,000, do you think it’s still going to be giving you a $200 a month positive cash flow? No, because you have a fixed expense of $96,000 mortgage and you have taxes and you have insurance, now these may go up a little bit but they’re not gonna go up much. Is it safe to say that when this house is going through maybe $200 or $250,000 that this property rent is gonna go up as well? They call it the 1% rule, roughly 1%, it depends. It changes in different parts of the country. But they like to use the 1% rule. So if you use the 1% rule and you were even a little conservative, let’s just say you had the mortgage paid off, and now let’s just say the rent is $4,000 a month. Your rent is $4,000 a month, you have no mortgage, you just have taxes and insurance. So the return that you’re getting is much more than $200 a month. My point is that appreciation will always outpace cash flow. Always. But I would tell you, I would look at these 5 things: cash flow, equity capture, appreciation, debt pay down and depreciation, and for your own financial situation, you need to define what is the most important. So what I’d like to think of is I’d like to think of a three-legged stool. I would pick the three things that are the most important to me when it comes to buying property. If I had a good job and I do not care about $300 a month, except for my ego to tell people I’m making a lot of money, I would rather get a property that I’m gonna capture some equity. I’ve got a job so I would like to get the depreciation, and I would like it to have a tenant pay that down. To me, if you can find a deal that fits three of your main criteria, that may be a deal worth looking at. So what you’re doing is you’re basically identifying what you want to buy based on your goals. I don’t need to have $300 a month if I’m looking to retire down the road. I’m looking for depreciation. I’m looking for debt pay down and I want appreciation.
So again, it’s just something to think about that when you are purchasing a property that you really look at all the things that are the factors when you’re coming to buy a property. Don’t get caught up in the $200 a month, because that doesn’t mean anything when it comes to the long play, and the long play is you buy property for $120. It was okay, it was maybe a base hit, it wasn’t great. It’s worth $150 but you have to look downstream of what it would be, and what it would be would be a lot of cash flow, you have an asset that’s still producing income, and it fits your criteria. So hopefully this helps you when you’re looking to buy a property or trying to analyze a deal. This is something that I recommend you do. Put your numbers down. Make it a math computation. Buying an investment property is just math. Make sure you can analyze it based on numbers not based on emotion. This is Steve Rozenberg with Empire Industries Property Management. If you’d like to know more, you can give us a call at 888-866-6727 or go to our website at www.empireindustriesllc.com and we have a lot of video blogs and other educational topics that we can help you with. Thank you very much.
Hey everyone this is Steve Rozenberg with Empire Industries Property Management Company. A lot of people ask us why real estate. Why not buy stocks, why not buy intellectual property, and the answer is there’s really no set answer. First of all, it depends on where your end game is, what is your goal, meaning how do you want your life to look in 20-30 years from now when you retire or whatever it is that you wanna do.
I personally believe real estate is a great asset and it’s a great tool to get me the lifestyle that I want to have. And what you wanna think about is, in real estate or stocks or whatever it is, is how can you leverage? Leverage to me is the key. The more that you can leverage, meaning you could buy a $150,000 house for maybe putting down $25 or $30,000, you get to leverage with the bank the rest of that property; and leverage is the key because when you buy stock in my opinion, if you wanna buy $150,000 of stock, you have to buy $150,000. You can’t just get a loan for the rest of that money, and a lot of people have a hard time understanding that. I think also over time real estate will do a lot better statistically than stock markets or intellectual property because it’s steady, because everyone always needs a roof over their head, because of all these things, these are things that are important to realize that when you want to buy a property, you should be looking at the long-term value.
One of the challenges I had when I was first buying properties is I never looked at the long-term value. I looked at the immediate cash flow, and the reason that was a mistake for me is I didn’t need the cash flow. I had a well-paying job. I wanted the cash flow for my ego to say that I was making a great 60% cash-on-cash return. But what I was missing out on was the long-term appreciation. Appreciation is such a valuable thing when you’re looking at leverage because appreciation will statistically beat cash flow over the long term. Hopefully this helps you. this is Steve Rozenberg with Empire Industries Property Management Company. If you’d like to talk to me directly, call me at 888-8666727 or you can look us up online at http://empireindustriesllc.com. We have a lot of videos that you can look at and hopefully we will be in touch soon. Bye.
Hey everyone this is Steve Rozenberg with Empire Industries Property Management Company. Today we’re gonna talk about a little bit more about the why of real estate, why do we like real estate, why do we promote it and think that that is the best tool.
First of all, you have to understand, especially with single family homes, that real estate is probably the lowest barrier entry, meaning you don’t have to be super educated, you don’t have to be a sophisticated investor, you don’t need to have all the money. Sometimes you can buy a property with nothing out of pocket if you know what you’re doing, and it has a very low barrier to entry. Now that can be good and that can be bad depending on your knowledge level. So one of the challenges you wanna make sure that you know when you’re buying real estate is you may not have to have a lot of money per se but you should have a lot of knowledge. You should make sure that you’re educated, that you know what you’re doing, that you have clear defined goals, when you’re buying real estate. Make sure you have policies and procedures and you know exactly what you wanna buy, what you are willing to accept, what you’re not willing to accept.
In the end when you buy real estate, it really is just math. It comes down to numbers. You may want a certain return, you may want a certain percentage, cash on cash return, return on your investment, cash flow, whatever the thing is, appreciation, but it comes down to a mathematical equation. It is a number. You wanna make sure that that number you are looking for matches, or at least to the best of your ability, by your knowledge and education. Many times people buy properties just to buy properties, and they never have that number. They don’t have that goal, and they buy a deal and then they wonder why it was a bad deal. And I think the answer is it’s not necessarily a bad deal; it may just not have been a good deal for them. So one thing you want to think about is make sure the deal matches your business plan. So lots of times people will come to me and ask me hey is this a good deal? Well, I don’t know if it’s a good deal if I don’t know what your business plan is. I need to know what your business plan is and then we match it to the deal.
So one of the first things I would tell you is when you’re looking to buy real estate, realize that it is a low-barrier entry. It’s easy to get into, but it’s also easy to fail if you don’t know what you’re doing. Make sure that you know what you’re doing. Be educated. Look on our website. We have a lot of videos, education. You can give me a call. We’ll talk to you. We just wanna make sure that you are not making the mistake of going in and doing something without the education. You can look us up online: http://empireindustriesllc.com. We’d be happy to help you out. Look at our many many videos, educational topics, and give us a call. We’d be glad to help you out. This is Steve Rozenberg with Empire Industries Property Mangement. Thank you.
Hey everyone. This is Steve Rozenberg; I’m the owner and co-founder of Empire Industries Property Management Company located in Houston, Texas. Today, part of our education series, we’re gonna talk about why people invest and some of the reasons people invest.
And the number one reason people invest, or I think that they should invest, is for appreciation. Now historically properties will go up in value. Now, real estate by nature will go up, but it also will have its peaks and valleys, and it will go down certain times. But if you looked at it year after year, time after time, it goes up in value more than any other appreciating asset. And if you look at the numbers, there’s no other investing vehicle such as real estate that will go up in value and will appreciate more than real estate does.
So, as an example, I grew up in Los Angeles, okay. The house that my parents bought back in 1962 was worth about $22,000. Now historically real estate will double every seven to nine years on the coastlines, and every ten to fifteen years in the Midwest of the United States. Well, this property being in Los Angeles, basically did that and kept doubling and doubling and doubling, where now that house is well over $1.5 million dollars when the initial investment was $22,000. And if my parents got a loan, which I know they did, and you just put a percentage of that down, that appreciation number goes up even more. So what a lot of people don’t realize is they say oh it’s just so expensive to buy a house now, and what they don’t realize is it’s thirty years from now today, meaning if you start buying properties today, it’s gonna keep going up in value. It will never not keep appreciating. Now there could be times where it may sink and you may have a low or a depression or whatever you wanna call it. If you don’t sell the house, you haven’t lost any value, have you? You’ve just gone… It’s just not worth as much. But if you don’t sell it, it doesn’t matter. And actually if you’re a landlord and, in bad times, actually rents go up. So being a landlord is actually a contrarian type investor, meaning that when times are bad, your rents actually go up because there’s more people in the market looking to rent properties. When times are great like 2005-2006, and everybody was buying houses, as a landlord, you actually had more of a vacancy than you would when times are bad and people lose their jobs and they downsize and they have to start renting. So remember appreciation is a really really good thing, and it is a main, one of the main, one of five main reasons that you should look to invest and buy real estate.
This is Steve Rozenberg. If you’d like to know more, go on our website: http://empireindustriesllc.com. We offer thirty days, love us or leave us, and we’d like for you to come talk to us, see if buying real estate is the right thing for you, and see if maybe having us manage those properties, whether you want us to or not, is a good thing as well. Again, Steve Rozenberg. Empireindustriesllc.com. Thank you very much.
Hi, this is Steve Rozenberg with Empire Industries Property Management Company.
Today, we’re going to talk about a few reasons why people want to buy real estate as part of our education series. So, the first video we talked about was appreciation. Today, we’re going to talk about debt paydown. So when you buy rental property, one thing that you have to remember is that someone else will be paying down that debt for you. So, let’s say you get a million-dollar property or you buy a hundred-thousand dollar property, normally your business model is such that you are gonna have a tenant in that property; and that tenant is gonna be providing debt paydown.
So, in thirty years from now, you’ll never refinance that house. You would have an asset that was basically paid for, essentially by someone else. Now you may have some times where the property could be vacant or you may have to do some capital improvements and things like that, but basically you are gonna have someone in there paying down your mortgage to essentially zero; and you can refinance that property and pull that money out. You can sell the property and take that equity and do something else with it, but you have to remember: if you own stock, nobody is going to be giving you that money back, or paying for that stock. It’s only on dividends or if it splits or does something like that. That’s why real estate is such a great asset.
One of the other reasons real estate is such a great asset, I believe, is equity capture. So when you buy a property, let’s say a house is worth $150,000, and let’s say you find it for $110,000, for sale, because somebody has a motivational reason why they wanna sell. Well, you’re gonna capture that equity. Now it’s called unrealized capital gain, meaning it doesn’t go in your pocket. You don’t get to put it in your pocket, but it’s there. The house is worth $150; you’re buying it for $110 because someone had a challenge in their life that they had to sell it for. So you are signing a contract. You are signing a piece of paper, and after you sign that piece of paper, you essentially put $40,000 of unrealized capital gain of equity in that property. Now, down the road, you can take that, you can refinance it for $150,000 and pull that money out. You can sell it as it appreciates, but you have the money. Again, I don’t know of any stocks or intellectual property that you could buy, sign on the dotted line and instantly get this unrealized gain. So again those are two reasons why we feel that real estate is a great way to buy, and a great reason to buy.
If you’d like to know more, please give us a call. You can go to our website: http://empireindustriesllc.com. We have hundreds of educational videos. We really like educating people and talking to you and seeing what your challenges are and how we can help. So you can give us a call directly, I’d be more than happy to talk to you or just go on our website and cruise around and see some great information. There’s a lot of free downloads and things that you can do. Steve Rozenberg. Empireindustriesllc.com. Thank you.
Hey everyone. This is Steve Rozenberg, owner and co-founder of Empire Industries Property Management Company and Realty Services.
Today we’re gonna talk about, as part of owner education, is cash flow. Cash flow is always the thing that people always hang their hat on, and obviously, depending on their business model and depending on their goals, cash flow could be the most important. I used to think cash flow was the only reason you bought properties, and I came to realize that actually that was more for my ego. It wasn’t really because I was being an investor. I was buying things based on cash flow when I had a very very well-paying job and cash flow did not really matter to me. I want to build assets that were gonna pay me over time, and by doing that, cash flow isn’t always strong in the beginning. So, for example, I have people sometimes that are looking to buy a house and they may see a deal, let’s say a house that’s worth $550,000, and they’ll tell me this isn’t a good deal. I’ll ask them why and they’ll say oh it only makes $100 a month cash flow. Well, first of all, it’s still making you $100 a month for doing essentially nothing, but it’s not good enough for them because they want a higher return on their investment which is fine. However, what they need to look at, depending on their business model, is what is that property gonna do over time. You see, what people do, is they look at a snapshot of what that property is doing today. They’re not looking at what’s it gonna be doing down the road when the property is 30 years from now. So, for example, let’s say this $350,000 property is going to, let’s say in 30 years from now, let’s say it’s worth $450,000. Well now they have an asset that’s now worth $450,000. They only put 20% down on the property, so the 20% down of 150, may be, you know, $30,000. However when the house is worth $450,000, it was no longer a 20% down deposit. It’s probably more like 4% of the $450,000 house value. So that’s the one thing.
The second thing is you had debt paid down, meaning somebody paid that property down to zero for you. That somebody is a tenant, so you put $30,000 out of pocket maybe and the tenant paid the rest of that down to zero. So now you have an income-producing asset that’s still producing income that you only paid $30,000 for and is now $450,000; and it’s still producing money for you.
The final thing you need to think about, and this is the big thing that most people do not think about, is what you think that property will rent for when it’s worth $450,000. Do you think it’s still going to rent for $1400 a month or do you think it’s gonna go up incrementally over time? It’s gonna go up. A $450,000 house at the same ratios of numbers may rent for $3500-4000 a month now. Now what you have to remember is all of your costs are fixed, meaning your mortgage is fixed; your insurance may change and vary but it’s not gonna change that much; your taxes may change a little bit. All of those are fixed so the deal that was a bad deal at $100 could be a $3500-4000 a month cash flow machine down the road. And again, it goes back to what is your business plan, what is your goals and what are you looking for. So I would be very careful when you look at a deal. It may not be a great deal right now, but based on your goals and what you wanna do, I would ask what do you want it to do and what is acceptable down the road, and what is the appreciation. Is it a positive gear or negative gear property, which is what we’ll talk about in the next series. Again, this is Steve Rozenberg with Empire Industries Property Management. Thank you.
Hey everyone. This is Steve Rozenberg. I’m the owner and co-founder of Empire Industries Property Management Company located in Houston, Texas. Today we’re gonna talk about, as part of our owner education series, is positive and negative geared property. a lot of the people in the US are not as familiar with the term. I’ve noticed when I’ve spoken in other countries like Australia, that’s a more common term over there. But essentially what a positive/negative gear property is, a positive property is pretty much your standard cookie-cutter property; it’s a 3-bedroom 2-bath property, and it’s going to cash flow. Maybe appreciation is gonna be standard at 3, 4 5%, maybe 9%. It’s gonna be very basic. It’s gonna be a safe investment for you that you know you’re always gonna rent to a family, possibly in a suburban area; and it’s just gonna be a very standard secure property that you’re not gonna have many problems with. And a lot of people start buying those then they get disenchanted with the whole investing ideology because it’s only making $100 a month. It’s not really doing anything. It’s not going up in value. I don’t know if I like real estate; it’s too slow for me, and that’s fine, you know.
One thing you want to think about: again, I always say you should have a plan, and your plan should match what you’re doing. So what are your goals, what are you doing, what is the end product, what does this look when it’s finished, when you retire, what does it look like? Whenever I had meetings with investors and they want me to help and mentor them, that is one of the first things I ask them is how does this look in 20 years? Give me the picture. Because if you can’t see that picture, how am I gonna see it? How am I gonna help you if you don’t know what you’re looking at? So, if positive property is very basic cookie-cutter, 3-bedroom, 2-bath suburban house.
Now a negative gear property is maybe a property that is maybe in a re-gentrification area or it’s downtown. For example: in Houston, we have a heights area with the medical center; those are up and coming. Now that may be a house you may buy that’s a lot more expensive and you may be negative cash flow, meaning the mortgage is gonna be higher than what you’re gonna make in the rent. And a lot of people say I would never do that, and my question I always ask them is would this be a good deal if you were making $400 a month? And they say yeah that’d be a good deal. It’s ok. Would this be a bad deal if you were losing $400 a month? Oh yeah, that’d be a horrible deal. I’d never do that deal. It’s ok.
Let’s say, in 5 years from now, the house that you were making $400 a month was worth $150,000 is now is worth $175-180,000 because it’s a safe, secure investment. That would not be a bad deal, right? You’re making $400 a month, and it’s not up in value. Two positives. So I would say that’s a good deal.
Now, let’s say the house that you were losing money on, that you said was a bad deal, now that house that was worth, let’s say $350 or $400,000 is now worth $1.5 million because the appreciation is so crazy in that area. Now, would you really care about losing the $400? You wouldn’t care about that at all. So negative gear properties are very very high appreciating properties. They will make the money on appreciation. Why the people don’t want the negative gear properties is, at first, their ego. They don’t wanna tell their friends they’re losing $400 a month. But I guarantee you the day they sell that house for $1.5million, they’re gonna feel like they’re the smartest guys in the world because they bought something for $300-400,000 and now they just sold it for $1.2-1.5.
So obviously you have to have the financial ability to take that negative gear on and a lot of investors will buy a couple of positive gear and maybe one negative gear. And maybe they’ll let that balance out and maybe sell the negative gear or they may keep going. But the true value, believe it or not, is actually in the negative gear properties. That is where you can get the highest appreciation on your properties, and a lot of successful investors use that methodology of having several negative gear and several more positive gear and they keep that balanced. So again it’s just a way that you can invest. There’s no right or wrong way. It just depends on your goal.
This is Steve Rozenberg. If you’d like to talk to me more about this, I’d be happy to help you out. You can go on my website: http://empireindustriesllc.com. We have a lot of video blogs and educational topics. You can take a look, see what fits you, what you wanna learn about and then give me a call. We can sit down and talk about it. Again, http://empireindustriesllc.com. Thank you very much.
Hey, everyone this is Steve Rozenberg with Empire Property Management. Today we’re gonna talk about real estate goals, since the year is coming upon us, for 2017, and a lot of people always wanna know what they should do to start off. I always want to ask them the question of, “What does this look like when it’s finished? What are your end goals? How many properties do you have? And what does the map look like when it’s done?”
A lot of people have this pie in the sky dream of how it’s gonna be. They write it on a piece of paper, they never look at it again. What I would tell you is what you should do is look at the 20-year goal, of how it wants to look like when you retire. Do you want passive income? Do you want cash flow in properties? Do you want to have a value play in selling apartments and houses? What do you want to do? And once you have that end goal in mind of how it’s going to look, then start working it backwards.
If you want to have 20 properties in 10 years, that means that you have to buy so many properties to have them paid off by a certain date, and just start working the map backwards. But I would say the best advice I could give you is start with the end in mind meaning have the finished product and that should be the goal. And then you have the strategy to reach that goal. So hopefully this helps you. Start purchasing properties. Start getting in the game. Start doing something to get to that goal.
This is Steve Rozenberg of Empire Property Management.
Hi, this is Steve Rosenberg. I’m the owner and co-founder of Empire Industries Property Management Company located in Houston, Texas.
Today we’re going to talk about the changing economy and a lot of people wanting to know if they bought a property or they have a property, what do they do if the rents have changed; maybe what they first thought they were gonna buy it at or what it rented for a year ago. Something to think about is the economy is an ever-changing thing. The market, the rental market obviously reflects that. So right now in Houston, current time, we have a lot of vacant properties in the area; and when you have a lot of vacant properties, there’s a lot more to choose from, which obviously draws the rent prices, it drives them down. So when there’s a flooding of the market of a lot of inventory, it’s price and demand. If you have a property and right now you’re trying to wonder why your property is on the market longer, then maybe it’s been, the last time it was vacant or ever been, you wanna remember that you always wanna be ahead of the curve. Meaning I would suggest doing things like maybe offering a rent special, maybe a deposit special. Some owners I’ve seen will offer a free flat screen TV. A flat screen TV could be maybe $250-300 but if you give it to the tenant and it stays with the property, it’s just a capital improvement to your property. So there’s things that you could do that will help you rent the property quicker. Some owners will give a bonus to the realtor so that’s something you could do to entice other realtors to come and market your property. Also, some owners will advertise properties since Houston has a lot of expats here. Maybe advertise the property in other countries that they have a lot of expats coming to Houston to rent.
My suggestion is always be thinking outside of the box. Always be doing things to be proactive and knowing that in a down market, you have to be reactive and you have to do things that you may not always want to do. And maybe prices that you wouldn’t normally accept may be things you would accept now. Just because last year, this would maybe a rent price would be something you would never have done, you may say this time you know what a bad deal is better than no deal. Let me at least take it and stop the bleeding.
For every two weeks that your property is vacant, you lose roughly 2% of your annual revenue. So you want to think about that, that every week that house sits vacant, if you’re not doing something aggressive, that could be hurting you more and more for the long term of your property.
So hopefully this helps. This is Steve Rosenberg with Empire Industries. If you’d like to talk about buying some properties or renting your properties and some solutions, you can give us a call at 888-866-6727 or look us up online at empireindustriesllc.com. Thank you very much.