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AMP Properties

AMP delivers a full suite of industry-leading rental property management services. All of our services are specifically developed to capitalize on providing maximum occupancies, reduce capital expenses and growing the investment value of your rental properties, individual units, apartments or multifamily properties

  • 10/17/2013

    My Tenant has not Paid the Rent . . . Now What? (Part 2)

    In some circumstances an acceptable resolution may be negotiated with the tenant without having to utilize the legal system and or engage the services of an eviction attorney.
    Most people have heard the term eviction but many have an incomplete or inaccurate understanding of what the term really means.  Eviction is defined as the act of dispossessing or depriving a person of the possession of land as a result of the judgment of a court: to recover property from a person by legal process.  In California that process is referred to as an Unlawful Detainer Action lawsuit.
    If a tenant is told that they have to pay rent or vacate a property and they leave in the middle of the night they have not technically been “evicted”. The property must be recovered via a specific legal process – the unlawful detainer action lawsuit.  In the unlawful detainer action the owner may see only to recover possession of the property, not the unpaid rent.  Unpaid rent must be recovered in a separate legal action.
    The legal process of removing a tenant from a property begins with proper service of notice to the tenant – a legal demand for payment of rent utilizing the three day notice to pay or quit document.  It is highly recommended that an approved form from a reputable source such as the California Apartment Association be used.
    The service of notice will formalize your intent to collect the rent and, in many cases, prompt payment of delinquent rent. The notice must be completed according to strict guidelines and can only demand payment of unpaid rent not inclusive of late fees or other monies owed to the landlord.  It is not possible to move forward with an unlawful detainer action without proper service of a three day notice to pay or quit.Although a landlord may deliver notice directly to a tenant, according to the process of service guidelines, it may be advisable to engage a Process Server to serve notice.
    Also, acceptance of only partial payment of rent due nullifies any prior three day notice served.  A new three day notice to pay or quit must be re-served for the collection of any remaining delinquent balance of unpaid rent.
    While the unlawful detainer action can be filed directly by a landlord or owner there are many potential pitfalls that can cause costly delays.  For those who opt to proceed with an unlawful detainer action it is highly recommend that the services of a qualified eviction attorney be engaged. The costs to engage the services of an eviction attorney are moderate in uncontested cases and are often far more cost effective than doing it one’s self.
    The unlawful detainer action lawsuit is the only means of legally removing a tenant.  Landlords are barred from physically removing tenants, changing the locks, shutting off utilities or removing doors or windows in attempts to force a tenant out of a property.  The use of such unlawful methods can result in the owner being responsible for a tenant’s actual damages as well as penalties of up to $100 per day for the period the landlord was using such unlawful tactics.
    In conclusion Landlords and managers must take action quickly, maintain clear communication and be decisive in how they wish to address non payment of rent by a tenant.  The Unlawful Detainer Action remains the only legal means of getting a non paying tenant out of a property.  Once the tenant is out of the property the owner or manager will need to determine how they will collect past due monies owed and potentially deal with remaining personal property a tenant has left behind

  • 10/17/2013

    My Tenant has not Paid the Rent . . . Now What? (Part 1)

    It is not uncommon for owners who are self-managing rental property to eventually encounter some problem with a tenant or tenants who do not pay their rent.  One such self-manager recently contacted our office.  They owned a local, single family home rented for $2,500 per month.  The tenant was four months behind in his rent but the owner had no idea how to go about collecting the rent or how to remove the tenant from the property.  Quick to claim he could not afford a professional property manager or pay for legal counsel, this owner was now in a position if mishandled or inadvertently prolonged, would easily cost thousands and likely tens of thousands of dollars.  This owner was stuck in the “penny wise, pound foolish” approach to self-managing his own investment.
    Thorough screening of potential tenants can drastically reduce the likelihood of non-payment changing circumstances due to employment issues, health problems and changes in familial make up can lead to non-payment of rent and become one of the most challenging scenarios for any landlord.  Should this situation arise, the final outcome and the landlord’s decision about how to proceed depend upon several factors:  the relationship to tenant(s), economic hardship, fear of vacancy, costs to rehabilitate the property and the likelihood of future payment problems.
    When faced with the issue of non-payment of rent it is always best to initiate immediate contact with the tenant(s) to ascertain the reason for non-payment. Depending on what is discovered and/or if direct, personal communication is not effective; a written Three Day Notice to Pay Rent or Quit notice should be delivered as soon as practicable.
    Once this notice has been delivered and receipt acknowledged one must then assess the likelihood of collecting the rent within a reasonable time frame.  Depending, a business decision must now be made; should the tenant(s) be accommodated and delinquent payment(s) accepted or should the tenant be removed from the property?
    Establishing clear and pragmatic communication with the tenant is critical.  If direct communication is ineffectual, it is likely best to begin the eviction process to remove the tenant from the property.  This process CAN be halted once begun.  Conversely, it is impossible to regain possession of the property until the process has been initiated.  Any delay in initiating this process can be detrimental and costly.
    A great deal of time, energy and money can be spent removing a non-paying tenant from a property.  If the decision has been made to remove a tenant there are guidelines that can significantly mitigate this cost.

  • 10/17/2013

    20 of the most important morals a business can have

    • People become successful the minute they decide to be. A goal is a dream with a deadline.
    • People don't plan to fail, they fail to plan. It’s easier to prepare and prevent than to repair and repent.
    • Practice makes perfect … not true. You have to add one word – Perfect practice makes perfect. Amateurs practice until they get it right. Professionals practice until they can’t get it wrong.
    • They don't pay off on effort . . . they pay off on results. A lot of people work very hard but never seem to make any headway. Always keep an eye on the finish line.
    • Knowledge does not become power until it is used. There are plenty of people who know it all but have never bothered to do any of it. Ideas without action are worthless.
    • I know that you don't know . . . but you don't know that you don't know. Ignorance is not the problem – it’s not knowing we are ignorant that causes difficulty.
    • Your day usually goes the way the corners of your mouth turn. The most powerful single thing you can do to influence others is to smile at them.
    • Time is free, but it’s priceless. You can’t own it, but you can use it. You can’t keep it, but you can spend it. Once you’ve lost it, you can never get it back.
    • The single biggest tool in any negotiation is the ability to get up and walk away from the table without a deal. Smile and say no, no, no, no, no, no, until your tongue bleeds.
    • If I had to name the single characteristic shared by all the truly successful people I’ve met over a lifetime, I’d say it is the ability to create and nurture a network of contacts. You don’t have to know everything as long as you know people who do.
    • It’s never right to do what’s wrong, and it’s never wrong to do what’s right. You cannot do business without trust.
    • People go around all of their life: What should I buy? What should I sell? Wrong question: When should I buy! When should I sell! Timing is everything.
    • When a person with money meets a person with experience . . . here is what happens: The person with the experience winds up with the money and the person with the money winds up with the experience. Enough said.
    • You will never get ahead of anyone as long as you are trying to get even with them.Helping someone up won’t pull you down.
    • The biggest room in the world is the room for improvement. If you think education is expensive, try ignorance.
    • The best place to find a helping hand is at the end of your arm. Self-explanatory.
    • There will always be a place in the world for anyone who says, “I'll take care of it,” and then does it. Remember the 10 most powerful two-letter words in the English language: If it is to be, it is up to me.
    • Failure is no more fatal than success is permanent. You don’t quit trying when you lose; you lose when you quit trying.
    • People don’t care how much you know about them once they realize how much you care about them. Caring is contagious – help spread it around!
    • We are judged by what we finish, not by what we start. And this seems like the perfect place to finish.

  • 10/17/2013

    Five factors that are influencing your credit score

    Your credit score is based on 5 factors. Not surprisingly, paying your bills on time is the largest piece of the equation, but things like type of credit (mortgage, personal loan, etc.) and how many times you apply for new credit also have an impact.

    1.  35% punctuality

    Regularly paying your bills is imperative. Something as seemingly small as late fees at the library or an unpaid $20 parking ticket can impact your credit score. The best way to avoid being penalized (not to mention paying monstrous late fees): pay one-time bills like tickets or medical costs as soon as you receive them. You can also set up automatic bill pay if it’s available or create reminders in your calendar for recurring bills.

    2.  30% amount owed

    While owing money on lines of credit doesn’t automatically lower your credit score, you could be in trouble if the amount you owe is close to your credit limit. When you’ve used up most of your available credit, it leads creditors to believe that you’re spending beyond your means and less likely to pay your bills on time, if at all.
    The real trick is to strike a balance of amount available versus amount spent. According to personal finance website Mint.com, “Consumers should aim to carry balances that are no higher than 30 percent of their credit limits — and the lower, the better.”

    3.  15% longevity

    The amount of time you’ve had credit opened in your name also plays a role in your credit score. Obviously, without a flux capacitor, you can’t go back in time and open a line of credit sooner, but it’s a good thing to remember when you’re debating closing an old account.
    Of course, this doesn’t mean you should run out, open 8 credit cards, and get 2 personal loans just to keep them open for the next 10 years (we’ll cover that in number 5). It simply means that a lengthy history of a few responsibly managed accounts is likely to reflect well on your credit score.

    4.  10% types of credit

    All different types of credit (mortgages, credit cards, etc.) play a role in determining your credit score. While having a variety can boost your number, you shouldn’t open an account just for the sake of having it.
    Having a few different types of credit that are well managed helps lenders feel at ease about your ability to pay bills. If you’ve never had a credit card, you may be considered high risk simply because you haven’t had to manage daily spending with a line of credit before.

    5.  10% new credit

    As I mentioned, running to the mall and opening 10 new credit cards isn’t going to do you any good. In fact, it’s far more likely to hurt you. Whenever you open a new account, the average length of your credit history drops. Also, requesting a lot of new credit in a short amount of time can make lenders worry about your financial stability.
    But don’t worry, it’s not all bad news! If you’re weighing your options while looking for an auto or home loan, getting a few quotes typically won’t affect your credit score, so you can do your homework without being penalized.

    The rewards of a quality credit score

    When you know what goes into it, managing your credit score can be a lot easier. Although you may not feel the effects day to day, having a good credit score can be a huge advantage when you’re taking a major step (like buying a home, starting a business, or even applying for a big promotion).
    Another potential reward of a high credit score? In some states, you could get lower insurance premiums. Pretty cool, huh?

  • 09/12/2013

    AMP Property Management, LLC Referral Partner Program

    Attention Bay Area Real Estate Brokers & Agents!

    AMP Property Management's Commissioned Referrals Program for Licensed Agents and Brokers is the Most Generous, and Lucrative in the San Francisco Bay Area.

    For any referrals that enter into management agreements, and properties that lease, we pay:

    - 1% of Collected Rents for the Entire Life of Our Relationship with the Property

    - One-time Referral Fee of $100 Paid for Monthly Rents of $1,999
    - One-time Referral Fee of $150 Paid for a Monthly Rents of $2,000+
    - One-time Referral Fee of $200 Paid for 1 to 4 Unit Residential Properties
    - One-time Referral Fee of $250 Paid for 5+ Unit Residential Properties

    - Partnering With AMP Property Management

    In partnership, AMP Property Management will manage your client’s single-family homes, town homes, condos, and small multi-unit apartment buildings. We will NEVER list or sell a client property that has been referred to us, and signs a management agreement. We guarantee there will never be a conflict of interest with you. When the client is ready to sell, we will prepare and turn the property over to you for listing.

    - Property Management That Makes Agents Look Great

    Refer to a specialist. We have been managing rental properties for ourselves, other owners and investors for over 30 years. We are full time property managers that fully understand the property management business. We make certain that your clients are always satisfied.

    - Refer The Client to AMP, - We’ll do All the Dirty Work

    We typically find that the Brokers and Agents whom find themselves in property management have done so in order to keep their clients happy, and ultimately protect future listings.  With our referral program, you have new options. Think of us as an extension of your all-star real estate team. We will take over the property management, so you can focus on growing your core real estate business.  

    Visit our Website for details, email me at christopher@amppropertymnagement.com, or call me at 408-624-0837.

  • 06/11/2013

    Questions You Cannot Ask a Prospective Tenant

    By Erin Eberlin,

    When interviewing prospective tenants, you want to make sure you get the best tenant for your property, so naturally, you want to ask them as many questions as possible. You have to be careful however. There are many questions which you are legally not allowed to ask tenants. Learn what not to say when interviewing a prospective tenant.

    1. Questions That Violate Fair Housing Laws

    Never ask anything that could be interpreted as discrimination under the Federal Fair Housing Law or under your State’s Fair Housing Law. The Federal Fair Housing Act protects seven classes: race, color, religion, sex, national origin, disability and familial status. In addition, many States have additional protected classes such as marital status and sexual orientation.

    Examples of questions/statements that could violate the Federal Fair Housing Act:
    • What race are you?
    • Are you Chinese or Japanese?
    • You look Italian. You should consider renting in the next town over, there are a lot of pizza places around there.
    • You would love the area, a lot of minorities live here.
    • You have very dark skin, are you white or Hispanic?
    • You’re very pale, I don’t know if you’d fit in here.
    • You have dark skin, I don’t know if you’d feel comfortable in the neighborhood.
    • I’m not Christian, so I don’t want you to put up any Christmas decorations in my building.
    • There aren’t a lot of temples around here, I don’t know if you’d fit in.
    • Are you Buddhist? Don’t go turning one of the rooms into one of those meditation places.
    Sex (Includes Gender and Sexual Harassment):
    • Having someone who looks like you as a tenant would definitely make me check on the building more often.
    • I don’t feel safe renting to a woman on the first floor.
    National Origin:
    • In what country were you born?
    • Where were your parents born?
    • What is your first language?
    • Are you disabled?
    • I don’t allow animals, so I will not allow your service dog.
    • Are you an alcoholic?
    Familial Status:
    • I don’t rent to people with kids.
    • Are you pregnant? I don’t want a screaming baby disturbing the other tenants.
    To be safe, you should also avoid questions about marital status, sexual orientation, source of income, age or any other possible protected class in your State.
    • Are you married?
    • Are you divorced?
    • Are you gay?
    • (To a man:) I think having your boyfriend visit will make the other tenants uncomfortable.
    • You’re going to have to pay a higher security deposit because your income is from unemployment and I’m afraid I might have to evict you in the future.

    2. Have You Ever Been Arrested?

    You cannot ask a prospective tenant if they have ever been arrested. There is a big difference between being arrested and being convicted of a crime. You can ask the prospective tenant if they have ever been convicted of a crime. This is something that can be readily discovered by running a background check. Keep in mind that in many states, such as California, you cannot discriminate against a person because they have been convicted of a crime. The crime would have to influence their ability to be a good tenant, such as an illegal drug conviction or a history of violent offenses which could put other tenants at risk.

    3. Any Question That Is Not Part of Your Normal Qualifying Standards

    You must have the same qualifying standards for all prospective tenants. It you do not follow the exact same procedures for all tenants, you could be accused of discrimination. For example, while it is legal to perform credit checks on tenants as long as they consent to it, if you only perform credit checks on African American tenants, this would be considered discriminatory. Another example would be if you asked people who were not necessarily well dressed questions about their eviction history or criminal convictions, but ignored such questions for people who were well dressed. This would also be discriminatory. You should set a list of questions that you will ask all prospective tenants to “qualify” them as potential tenants.

  • 05/24/2013

    The ABC’s Of Raising Rents And Keeping Tenants

    According to the latest Bureau of Labor and Statistics Report, the rent index is rising at an annualized rate of 3.6%. Is it time to raise your rents?
    Probably. But generating increased rental income without suffering significant tenant loss can be a tough balancing act. It doesn’t have to be if you follow these common sense ABC’s.
    AssessStep one is to do your homework on two fronts: the current rental market in your area and the value of your specific tenants. Ask these questions as you develop your plan.
    • Market – How do your current rates compare to other similar properties? If you have generally higher rates already, do the amenities you provide justify the difference? What is the demand for rental units? What are the current vacancy rates? What are you personally seeing for requests for rental units? Should you increase rates only on units more in demand than others (one bedroom vs. two bedroom, for example)?
    • Tenants  – When was the last time you raised rents? Which of your tenants are most valuable? Are you willing to risk losing them? Would you consider excluding these high-value tenants from the increase to ensure that you keep them?
    Back UpOnce you’ve announced your increase, be prepared to address negative feedback with legitimate justification for your action.
    Understandable reasons include increased property taxes and fees, higher utility costs, and an increase in janitorial, repair and maintenance costs. You might also be planning capital improvement projects for the property that will enhance your tenants’ living spaces.
    Also note the length of time since the last increase, especially if you haven’t raised rents for an extended period.
    CommunicateThis is the most important component of your plan. No tenant is happy with a rent increase, but you can reduce the potential conflict with clear, professional communication.
    Make sure you adhere to the specified advance notice requirements in your leases. Announce the increase in a typed notice on company letterhead using concise, understandable language. Consider including some of the backup justification to address complaints before they occur.
    Finally, no one likes surprises. Plan ahead for your next increase by building it into your leases. You can tie increases to a generally accepted measurement like the consumer price index to make them more predictable. This gives your tenants significant notice and allows them to budget for the increase well in advance.
    Raising rents can be stressful both for you and your tenants. Following a structured process will allow you to get through it successfully.

  • 05/21/2013

    Rental Property Numbers so Easy You Can Calculate Them on a Napkin

    by ALI BOONE on JANUARY 19, 2013
    Real Estate Analysis
    The numbers. In this industry, you must love the numbers. Love them like they are part of you. For good or for bad, ‘til death do you part, never leave the numbers.
    One of the biggest questions I’m asked is how I go about a property once I find it. What do I do, what do I look at, how do I know if it’s “the one”? There are several things I do and look at with any new property potential, but the most important is the numbers. If the numbers aren’t good, I walk. Save yourself some time and before you do anything else, run the numbers and see if they work. If they don’t, awesome, you didn’t waste time on other stuff.
    What numbers do you run? Well, what should any investor care most about? Cash flow. What determines cash flow? Income and expenses. Simple. People make running numbers out to be so complicated sometimes it’s a no wonder more people aren’t involved in real estate. In fact, the numbers can be one of the easiest parts of shopping for a property. Unless you are a trained psychic on the crystal ball, then predicting appreciation may be easier for you than estimating cash flow.

    Numbers for the Napkin

    1. Figure out the Monthly Income (Gross Income): This will either be rent the current tenants are paying, the asking rent (confirm this number is realistic), or if you have neither of those you can  talk to a local property manager or real estate agent who can give you a market rent value for the property.
    2. Calculate the Monthly Expenses: These include property taxes, insurance, property management fee (if applicable), mortgage or financing (if applicable), homeowner’s association fee (HOA) (if applicable), vacancy and repairs. Don’t forget vacancy and repairs! They are a real part of any property investment and they can drastically affect the cash flow. Yet so many people don’t think to include them in the expenses.
    • Property TaxesScreen Shot 2013-01-18 at 9.05.44 PM- Look on Zillow or another online source for the most recent annual tax amount and divide by 12.
    • Insurance- Get a quote from an insurance provider.
    • Property Management Fee- Usually around 10% of the monthly rent.
    • Mortgage- Use an online mortgage calculator to calculate the monthly payment. Confirm with your lender what your down payment and interest on the loan will be to ensure you are using accurate numbers for your calculations.
    • HOA- This can be tough to find sometimes. The seller or agent may know the number already, but if not you will have to call the HOA of the neighborhood. If you only know the annual fee, divide by 12.
    Don’t skip out on finding out what the actual HOA is! The HOA can absolutely kill a property’s cash flow.
    • Vacancy- I conservatively estimate 10% of the monthly rent towards vacancy expenses. In situations where you have a rockstar property manager or your tenants are under a lease option, the actual % should be much less. I still use 10% no matter what just to be sure I have a conservative margin.
    • Repairs- Again an estimate but should not be left out. Just like with vacancy, I err on the side of conservative. If a house is a turnkey property or recently rehabbed and gets a good report from the inspector, I use 5% of the monthly rent. If the property is not in top shape, conservative could mean closer to 25%. Use your judgment on deciding what % to use for your estimate, but don’t overestimate the quality of your property and estimate too low.
    3. Subtract the Monthly Expenses from the Monthly Rent (= Net Income): This is your monthly cash flow. Yay! Hopefully it’s positive. If it’s not positive, run.
    4. Calculate the Returns: Two numbers I want to see on any property I evaluate are the Cap Rate and the Cash-on-Cash Return.
    • Cap Rate- This gives you an idea if you are buying the property at a good deal. It basically compares the return on investment (ROI) to the purchase price.
    The Cap Rate equation:
    Net Annual Income / Purchase Price = Cap Rate
    NOTE: I don’t include the mortgage payment in this calculation.
    The lowest cap rate I would ever want to see for any property, whether residential or commercial I don’t care is 6%. The lowest I would want to see on a residential rental property in this market is 8% and even then, there better be a good reason it’s that low (property in a “sexy” market, highly desirable area, etc.). Anything over 8% and you are doing well in my opinion.
    • Cash-on-Cash Return- This number is how much return you are getting on the money you invest. If you pay all cash for a property, this number will be the same as the Cap Rate. If you are financing, this number is the most accurate way to see the actual return you are getting on your cash-in and the leverage. Here is the equation, and remember to include the mortgage payment since this one is totally focused on financing:
    Net Annual Income / Total Cash Invested = Cash-on-Cash Return
    Understand the difference? One is a measure of how good of a deal you are getting on the purchase price and the other tells you the exact return on your money you are getting. They are the same for an all-cash buy but can be very different for a leveraged purchase.
    If you compare the Cash-on-Cash Returns of an all-cash buy versus a financed buy. You may quickly see the benefit of leveraging! Way more bang for your buck! Try it out on a napkin sometime.
     Practice Problem, on an Actual Napkin
    Apply these steps to an actual property? On a real napkin? You got it. Even more fun, I’m going to use a property that I bought for myself just a few months ago in Atlanta.
    What do you think? Good deal? Absolutely! I’m pocketing $358/month in cash flow (the actual number when there are no vacancies and repairs is $558!), the Cap Rate is 9.7% and the Cash-on-Cash Return is 17.97%. Not only are the returns great, but the tenants are under a 3-year lease and the property is in a great area. Score!
    Running the numbers on a potential rental property purchase is easy. If you can remember what numbers you need to know it will take you no time at all to do this for every property you look at. Jot down the list of expenses on a scrap sheet of paper, fill in the numbers, and calculate your cash flow. Done. I’ve done this on multiple napkins in the past. Write everything out and look for positive cash flow. If it’s not there, ditch the property and move onto the next.
    The only trick to this version of running numbers is that it doesn’t include any expenses for rehabs or any work that may have to be put into a property once you purchase it. I usually only deal with turnkeys which are fully rehabbed when I buy them, so this formula works great because there is no work required on the houses.
    At the end of the day, numbers are just that- numbers. The reality of a property after you buy it may turn out to give you far different numbers than what you initially calculated. For instance, Detroit. Oh Detroit. On the surface, the numbers are out of this world. In reality, because of several key market factors, those initial numbers often turn out to be so far from reality (in a bad way) you wouldn’t believe it. If you are a Detroit investor, rock on and I wish you well. It’s just not my thing. Or, another example, I have another Atlanta property that had two back-to-back evictions in only six months, so my initially calculated 32.1% cash-on-cash return most definitely didn’t pan out that year. Point is, don’t ever just go off the numbers on a property, but the numbers are the most important. If you don’t have solid reason to believe you will be getting positive cash flow consistently out of a property, don’t bother with it.

  • 05/21/2013

    Investment Property Management: What Metrics To Track And Why?

    by CHRIS CLOTHIER on AUGUST 8, 2012
    property manager
    We Improve What We Measure
    Whether you manage your own investment portfolio, or hire a property management company to manage your investments, there are key metrics to track and measure if you want to truly find success.  Any two real estate investors will define success differently, especially when it comes to property management.  If you follow on-line forums dedicated to real estate, you will notice heated arguments on the merits of using property management companies as opposed to do-it-yourself management.  So this is not a topic that has a lot of, let’s just say, agreement!
    Before listing the metrics I suggest you track, I will caution you that I leave a lot off of this list.  Many of the traditional metrics and numbers that you see quoted by property management companies such as vacancy rates, are not going to be on this list.  That is because my company was not built from the mold of traditional property management companies.  At least, not as real estate investors have defined them.  As of this AM, my company manages 1,317 properties in Memphis and an additional 32 in Dallas.  We are currently adding roughly 40 properties a month to those portfolios and each of those is owned by passive investors.  Why is that important?   Operating a successful property management company that is growing is not easy in today’s investment environment.  It requires doing thing differently.  It requires measuring things, differently…

    Metrics to Measure & Questions to Ask Your Property Manager

    Much of the argument you read on-line against using property management revolves around a lack of trust on the part of investors and a very poor reputation as a service industry on the part of the management companies.  That is why tracking traditional metrics ONLY should not matter to management companies, and investors should be digging deeper and asking different questions when deciding if using a management company is the right route for their portfolio.
    So this is written as advice for both property management companies and real estate investors and I make two very general assumptions:
    1. All business people want to be truly great at their business
    2. All investors want to be profitable investors
    I realize that those are extremely general assumptions and, to all of our amazement, there are actually business people who could care less if their company is great as long as they make money, and there are real estate investors who clearly don’t care if they make money or not.  But let us not digress – here is the list.

    What percentage of your management portfolio do you rent each month?

    Taking the number of closed rental contracts by the last day of the month and dividing it by the number of properties under management on the first day of the month will measure this metric.  As an example, if you entered the month managing 200 properties and rented 10 properties by the end of the month, your percentage would be 5%.  This is a very quick way for a management company and a prospective investor using the service to measure the average length of stay.  A very quick and unscientific way!  If you average renting just 8% of your management portfolio each month, which you would think is a relatively small number, then you rent roughly 100% of your portfolio each year.  Your average length of stay is 12 months, regardless what the marketing material or any other websites say.  Measuring this metric gives you a very quick look at length of stay, specific to that management company.
    For a management company this is very important for you to internally measure how good your service is to the tenant.  It also helps you to pinpoint areas for improvement.  The reason for measuring end of the month contracts against beginning of the month portfolio is that it allows you to account for properties you rent in the month that did not exist in the portfolio at the beginning of the month.  When you have 12 consecutive months of activity, you have a consistent metric and any anomalies caused by a growing portfolio are addressed.
    For investors, this metric is important for obvious reasons.  The longer the average length of stay, the lower the holding costs are over time.  As investors, we should be striving to develop a consistent portfolio performance and knowing these numbers can help us make a decision on whether a particular management company is going to help us get there.  It also allows you to have an independent metric that applies to a company more than it applies to a market, so it is therefore helpful in evaluating companies side by side.  Unfortunately, many companies make a lot of statements in their marketing that may not be true.  This is a great way to determine length of stay and then compare back to the answer you get when you ask that question.  This comparison should also quickly address whether or not you can trust that company to know what they are talking about and give it to you straight!

    Do You Charge A Maintenance Fee? If So, How Many Dollars Do You Collect Each Month?

    Let me say right up front that I think this is a vital charge for successful management companies, provided that they have the proper structure inside their company.  There should be a dedicated person or persons whose only responsibility is operating an on-going maintenance department.  From answering tenants calls, to determining which calls require immediate attention and even which calls are the responsibilities of the tenant.  But the job description does not stop there.  This department should be following up with contractors to make sure the work is done properly and then with the tenant to make sure they are satisfied.  IF that is the way a maintenance department is set up, and I realize that is a big IF, then a nominal maintenance charge is certainly warranted.
    This number is important to investors because it gives a quick indication of how much deferred maintenance occurs each month and what percentage of a portfolio requires work.  Again, is it very unscientific, but provides a fairly accurate picture of the business climate in a company.  I will use the same 200 home management company above to illustrate this metric along with two more numbers.  The first is average rent of $1,000 and a maintenance fee of 15% of the bill.  If a company collects $10,000 in fees in a given month then they are billing clients for $77,000 a month in maintenance.  On 200 properties at an average of $1,000 per property that is a whopping 33% a month in maintenance costs for investors!
    If you didn’t follow the math on that calculation, here it is -  $67,000 in maintenance and $10,000 in fees (which is 15% of $67,000).   A number like this would not only be astronomically high, it would point to a company that absolutely generates maintenance fees as a revenue provider.  A company that is able to keep maintenance costs at below 10% of collected rents, as opposed to the 33% in this article, is a company that is working hard to help investors make money on their portfolios.
    As an investor, you get this number by knowing how many properties a company manages, what their average rent is and the fact that they have a maintenance fee on each bill.  All you have to ask is how much do they collect on that fee monthly.  If they do not track that number, then they cannot tell you how to properly predict what your future maintenance costs will be.  Even worse to me is the fact that they are not able to tell you how they are working to hold down your future costs!

    Are Rents Rising or Falling

    A lot of property managers who have approached us for mentoring from around the country have said very similar things when we ask them this question.  They all say that they “feel’ like rents are going up or they “think” that rents are holding steady.  This is not a number that management companies need to rely on “feelings” and conjecture when giving an answer.
    Investors should also be very wary of a company that cannot give concrete data that show rent trends for their particular company.  Again, it does not matter what Zillow or any other online aggregating company says is happening with rents in a city or even zip code.  What matters to investors and what a management company should be measuring is what is going on in that particular management company’s portfolio.
    Two numbers that are easy to track and give you an idea of not only where rents are going in a zip code, but also an exact neighborhood are rent trends on existing properties and rent trends for new properties in a portfolio in a zip code.  A management company should be able to tell you how many properties they rented each month.  On those properties, they need to know how many were first time rentals and how many were re-rents on existing properties within the portfolio.  Next, how many of those re-rents were above, equal to or below the previous rent?  In what zip codes were each of those properties going up, even or down located?  How do those numbers coincide with the number of new properties rented in those zip codes?  Were the new properties rented above, even or below the rental average for that zip code?
    This is the data that an investor needs to determine if a management company is working to improve rental rates or simply taking the first and often lowest rental offer to fill a property.  It also alerts an investor to a critical piece of data about areas to invest in.  If rents are trending upwards both for new properties coming on the market and existing properties in a particular area, then an investor has a critical piece of data for where to buy.

    Measuring Move-Outs & Resigns

    How many properties go vacant in a given month within a management company.  This is different, but ties directly into the number of properties a management company rents each month and average length of stay.  There are two key metrics for a management company to track and an investor to understand in these numbers.
    The first metric is how many properties go vacant in a month and you want a management company to be able to break those down into how many fulfilled a lease and how many broke a lease early.  I should not have to explain how important those two numbers are and how an investor should be looking for low percentages when compared to a portfolio out of each of these metrics.  It is a great measurement of a company’s ability to be responsive to tenants needs and their ability to keep tenants happy.
    The other metric is how many properties were re-signed into a lease extension during a given month.  I believe strongly that this is a direct reflection of a management companies’ ability to communicate and connect with tenants, which in effect, is the second client in a management scenario.  The first is the investor and in order to perform for the investor you need to recognize and work to satisfy the second client.  A tenants’ willingness to re-sign a new lease, is a great indication of a management company that is operating the right way.
    The amazing thing about metrics is that two similar companies can have completely different performances in a market and every management company should be driving to improve and separate from every other competitor.  As an investor, this data is critical to your decision-making –not only decision making about using a management company or not, but which markets, which areas of particular markets and even which management company is going to help you achieve a maximum return on your investment.  There will always be those who tell you to never use a management company and they may well have a horror story to tell you.  Most will not admit to their mistakes, but if they did, they would tell you that they paid no attention to these key metrics to see if a management company had any idea of how to help them be successful.
    If you choose to use a management company, be sure to push past the hype and the marketing and dig into the company.  Get the details and ask the questions that will reveal how well the company is run.  If you are a management company, turn the mirror inward and take a look at how you are operating.  Begin measuring and tracking things you’ve never thought of before and always prepare to get better.
    We improve what we measure!

  • 05/20/2013

    This guide is a authoritative step-by-step guide teaching the process to get your property rented to great tenants

    Add caption

  • 05/15/2013

    To Manage or Not to Manage: 5 Important Considerations To Ask Yourself

    by KEN CORSINI on MAY 15, 2013
    For many investors, the idea of managing their own rental property seems crazy. Why would you bend over dealing with tenants when you can pay somebody else to do it for you? On the other hand, there are those investors who shun the idea of giving away 8-10% for someone else to process a monthly check and take a few phone calls throughout the year. Regardless of which side of the fence you are on, determining whether or not to manage your own investment properties is an important exercise.
    There are many reasons why an investor might choose to use property management rather than self-manage. Making this decision takes careful consideration. Here are some points to deliberate when analyzing whether or not you should hire a property manager for your investment properties:

    1.) Do you have margin in your daily routine?

     For many investors, the question of whether or not to use property management comes down to available time. While many people think of property management in terms of processing checks, it can involve much more.  Property management often also involves dealing with bounced checks, phone calls about late payments, leaking toilets, angry neighbors, etc.  When you decide to manage a property yourself, you are essentially deciding to set aside time to deal with any and all issues arising from that property. It’s important that an investor take an honest assessment of their available time before taking on this responsibility.

    2.)Are you able to take emergency calls and coordinate repairs?

    Along the same lines as having margin during your day to manage a property, are you comfortable taking calls at night and on weekends in the event of an emergency?  One of the benefits to using a property manager is the comfort in knowing somebody else will deal with the flooded basement in the middle of the night.  In addition, a property manager has the resources and connections to get repairs done quickly.

    3.)What is your proximity to the property?

    With many investors investing out-of-state or in other local markets, the idea of self-managing becomes even more impractical. While some investors are able to do it, I find it somewhat difficult to manage a property that you don’t have the ability to drive to quickly.

    4.) Are you comfortable screening potential tenants?

     Before you can even begin the management process, you have to screen potential tenants to live in the property.  It’s important to have a method for screening tenants as well as a framework for what factors would disqualify a potential tenant from getting approved.

    5.) Do you mind dealing directly with your tenants?

     This may seem like a silly question, but I think it’s actually one of the most important questions to ask yourself. In my opinion, it takes a certain amount of thick skin to manage your tenants well.  Many renters are well versed in the art of manipulation, truth bending and excuse making to pay rent outside of the agreed upon due date . I’ve seen many investors with bleeding hearts get taken advantage of by tenants who knew which strings to pull.  One of the great things about using property management is that you don’t have to get personally involved. Sometimes it’s better to let a third party manager be the “bad guy” when things go south with your tenant.
    Don’t get me wrong, I actually do believe in self managing investment properties. However, I know many investors who simply don’t have any business managing their own investment properties. 8-10% really isn’t that much to give up if it can free you up to pursue other ventures or investments.

  • 05/15/2013

    The Benefits of Launching a Crowdfunding Campaign

    By Paul Esajian

    Why would a real estate investor launch a crowdfunding campaign, even if they didn’t need the extra capital?

    Crowdfunding has increased in popularity and visibility in recent years. A surging number of web-based crowdfunding platforms have been delivering massive of amounts of seed money and working capital to real estate related ventures.
    Real estate investors on the cutting edge of this trend, and ready to leverage it, have found it extremely beneficial. It can be an incredibly easy path to raising capital fast, funding a down payment, attracting funds, eliminating risk or preventing the need to jump through hoops.
    However, whether you need the extra cash or not, launching a crowdfunding campaign can do a lot for your real estate investing business. And the additional capital can certainly be put to work somewhere, somehow.
    Running a successful (or sometimes even unsuccessful) crowdfunding campaign results in PR opportunities, list building, increased awareness, better positioning positioning, and can be a powerful tool for cultivating loyal fans.
    So yes, it can deliver more working capital, but that’s just the tip of the iceberg. Enhanced visibility can open many doors; from strategic partnerships to direct leads.
    However, the real power of this strategy lies in the ability to generate more business. Crowdfunding campaigns can net big rewards in the short term, while preserving wealth over generations.

  • 05/14/2013

    Investors Opportunity - Americans exit the housing crisis with a new appreciation for renting

    Written by:HomeUnion

    Invest, Rent versus Own“There’s been a seismic shift in renting versus owning. Some 57 percent of adults believe that buying has become less appealing, and by nearly the same percentage (54 percent), a majority believes that renting has become more appealing than it was before, producing a net shift of 60 percent.” - Source: UPI.com
    The above quote is from an article titled “Americans exit the housing crisis with a new appreciation for renting“ on UPI.com.  Another key finding as reported in the article is that cutting across all barriers of political beliefs, 3 in 5 Americans surveyed believe that the government housing policies should address and both homeownership and rental markets equally.  Nearly half of current homeowners see themselves renting at some point in the future.   This presents opportunities for Real Estate investors!
      Freddie Mac Rate
    Fannie Mae’s March 2013 National Survey reported that consumer confidence in the housing recovery remains steady despite other fiscal concerns.  Though the March employment growth data was mixed, National Association of Home Builders reported that the home building sector added 14,800 jobs. Home building sector is expected to remain a bright spot contributing to economic growth as the recovery continues to gain momentum.
    Freddie Mac’s 30-year fixed rate mortgage averaged 3.43% for the week ending April 11, 2003, and the 15-year FRM averaged 2.65%

  • 05/07/2013

    Benefits of Hiring Investor Friendly Property Managers

    Benefits of Hiring Investor Friendly Property Managers

    property management for real estate investorsIn order to be successful in real estate investing, you will need every possible advantage in managing your real estate investments. If you have income properties or cash flow real estate investments and don’t want to manage them an investor friendly property manager would be vital to your real estate investing business.
    As a real estate investor, you should learn to leverage your time by carefully selecting qualified people to work with on your real estate deals or to help you maintain your investments. A key person that should be on your “Power Team” is a specialized Property Manager for investors.
    Investors can learn a lot from investor friendly property managers, such as vacancy rates for the area and what the going rents are for specific types of properties. Sometimes, they will alert you when an investor they are managing properties for is thinking of selling or looking for a partner. They may also be able to give you a referral to a good handyman – a good investor friendly property manager can be invaluable.

    5 Benefits of Investor Friendly Property Managers

    #1 – They will meet you at your Investment Property

    • They will provide you with sale and rental comparables
    • Written presentation and contract for their services given
    • Property will be Assessed & Rental Property Marketed
    • A property assessor will be sent to your home to take a detailed assessment of the interior and exterior condition of your property along with photos. Items for repair report will be sent to you.
    • A Lockbox will be placed at entrance of the property for licensed real estate professionals and servicemen to use for gaining access to the property for showings &repairs before the property is leased.

    #2 Rental Marketed

    • Your rental or income producing real estate investment will likely be placed on several real estate websites: Zillow, MLS, Craigslist, etc.
    • For Lease or Rent sign will be placed in front yard

    #3 Tenant Screening

    • Potential renters and tenants are thoroughly screened: employment, credit, rental history, and criminal checks are performed.
    • Usually all acceptable applicants are only then sent to you for approval.

    #4 Lease Signing & Initial Move-In:

    • Property Managers will confirm that all utilities have been transferred from your name to the new renter’s name(s).
    • First month’s rent & the security deposit will be collected.
    • Property manager will go over to your property and take video/photos  and fill out a final walk thru report to have documented the condition of the home prior to the new renter(s) moving in. They will also remove all lock boxes from the property at that time.
    • The new renters are given a copy of all keys; and copy of lease.

    #5 Services Performed By Property Managers for Investors

    • A property manager and sometimes with a handyman visits your property and ensure that the property is in good condition every quarter.
    • Any and all items that need repairs are attended to in a quick and efficient manner. They work with trusted servicemen you can trust to enter your property. Many have 24hr -emergency service response. Even after business hours the office line can be called, and will be answered.
    • Timely rent collections and distribution of funds to owners. Some even offer you a monthly statement via email and a direct deposit of rents.
    • Any tenant postings that may be needed due to late or non-payment, these are sent with a certificate of mailing.
    • You also will receive a year end itemized statement and a 1099.

     Choosing a Property Manager for Investors

    Look for a investor friendly property manager that works with rentals or cash flow properties. Ideally you would want someone who is creative, hard working, aggressive, knows your target area well, performs tenants screenings, has the ability to collect rent and enforce fines, has connections to handymen, service repair men, and up-to-date on current market conditions and rents and of course has experience in rental property management and dealing with investors.

    Finding Investor Friendly Property Managers

    Most real estate full service agencies or realtors often offer property management services for investors. Often times they are real estate agents or real estate assistants to brokers who specialize in managing commercial and residential investments for real estate investors.
    Working with investor friendly property managers may be as simple as calling up your realtor and asking them do they also manage properties or can they give you a referral to an investor friendly property manager.
    And then there are full-service property management companies that 100% of their business consists of grounds keeping, managing tenant occupancy and leasing, handling residents that are part of a HOA, maintenance of common areas and responding & fixing tenant repairs.
    There are many real estate agents who advertise online as “investor friendly property managers” and they at times specialize in income properties like duplexes and understand how to work with tenants, repairmen, and long distance owners. Lastly, ask for referrals from other investors in your REIA or local real estate clubs for Investor Friendly Property Managers or do an online search for “Property managers for investors”.

  • 05/07/2013

    Want My Trust? Then Risk Your Arm First

    By Keld Jensen

    We’ve all been burned by being overly trusting at least once during our careers. But we carry past prejudices to our own detriment, being distrustful and closed off to those we don’t know or completely understand.
    For decades, my firm, MarketWatch Centre for Negotiation, has studied the impact of trust on business transactions. We’ve found that negotiators typically lose up to 42% of a deals’ potential value due to distrust and a zero-sum (I win when you lose) mindset. Conversely, when trust is high, transactional costs go down, the sales cycle shortens, and profits increase. Trust has real economic value which we refer to as Tru$t Currency™.

    Consequently, trusting others is of the utmost importance to both personal and organizational excellence. Yet, many find it difficult to do, especially with people from different cultures, departments, levels of management, outside venders and suppliers, and organizations. When personal differences become impediments to valuable business, you must rise above and take initiative to show a sign of confidence in the other party. In other words, you need to create your own Door of Reconciliation.
    Many years ago I was on a business trip when I walked past Saint Patrick’s Cathedral, one of the biggest and oldest cathedrals in Dublin. I was admiring the fascinating architecture when suddenly I found myself in front of an old door with a big hole in the middle. There was a sign above that read “Door of Reconciliation.”
    The story goes that in 1492, two Irish families were in the midst of a bloody feud. They waged war until many were seriously injured or killed. As the fighting progressed, the Butler family started to feel the strain and sought refuge in the Chapter House of the cathedral.
    The FitzGerald family followed them to the door of Chapter House and concluded that the feud was ridiculous. Everyone lost, and there were dead and wounded on both sides. How could they end this battle peacefully?
    The leader of the FitzGerald family yelled to the Butlers, “Let’s ceasefire and discuss how we can live without violence. This feud is destroying both our families.” The skeptical Butler family responded, “I don’t trust you and your people. You will slaughter us if we come out. This is just a crafty plan to out maneuver us.”
    Understanding the distrust behind Butler’s refusal, FitzGerald decided to cut a hole in the door, stand up against it, and stretch his right arm into it as far as possible. When his arm was completely exposed, he shouted, “Look – this is my sign of trust to you. Will you do the same for me by entering into a conversation of ceasefire?”
    It would have been easy for the Butler family to take a sword to his arm. Apart from it being his right weapon bearing arm, he would have died from loss of blood. But the Butler family accepted it as a sign of trust, laid their down their weapons to end the feud, and shook hands through the door to make peace.
    Building trust in the 21st century business world requires us to risk neither life nor limb. But it still demands that we make ourselves vulnerable by being open and honest, giving others the benefit of the doubt, and communicating transparently even when delivering bad news. These actions can cause gut-wrenching feelings similar to the ones you experience in actual physical danger. We fear the emotional pain of embarrassment, rejection, or shame. However, in a time when 82% of people do not trust business leaders to tell the truth, these abilities have never been more important.
    As the history of the “Door of Reconciliation” reminds us, to create trust we have to put ourselves on the line. Trust may not be necessary for immediate survival, but it’s vital to our long-term future. As FitzGerald did by cutting the hole, it’s up to you to determine the middle ground between blind naivety and total distrust. Don’t keep the door shut in your work relationships. But don’t leave it completely open either. Just risk your arm first, and you’ll discover that your bravery, leadership, and vulnerability pay off big time on the road to professional success.

  • 05/07/2013

    Where to Hide $9 Billion in Real Estate Investing Profits

    By Paul Esajian

    Where’s the best place to hide your billions of dollars in real estate investing profits?
    No one enjoys paying ridiculous amounts of taxes on their hard earned real estate investing profits. Nor do they want to worry about losing their money to equally frivolous and malicious lawsuits.Knowing where to store real estate investing profits can facilitate increased wealth and security for your earnings. So where is the best place to hide all of the money you worked so hard to earn?
    The more successful you are, the more important it is to protect what you have. Perhaps that’s why recent estimates figure there is about $32 trillion hiding offshore, with less than 100,000 individuals responsible for one-third of that amount.
    Soaring taxes, financial collapses and lawsuits have attributed to the recent exodus of funds to offshore accounts. Impending threats have forced the rich into finding a new place to store their wealth. However, are offshore accounts really the best option?
    As more governments become desperate for cash, and others have had to request bailouts, the advantages of switching to an ‘offshore’ savings account appear less lucrative. It doesn’t cost much to file an offshore corporation, but the protections afforded are minimal compared to what they were a decade ago.
    In fact, most real estate investing pros will find that forking out outrageous attorney fees and structuring mazes of shelter corporations is more wasteful and distracting than profitable.
    Trying to evade the IRS and other entities can actually make things a lot worse for CEOs of successful real estate investing companies. Remember the difference between ‘evading’ (bad) and ‘avoiding’ (encouraged). Knowing how to secure your real estate investing profits can mean the difference between legal and illegal.
    There are advantages to using corporations, trusts and investing money abroad. However, neglecting to disclose everything or being dishonest will net poor results. If you don’t want to go broke because of the IRS, move offshore. If you satisfy the time requirements, set up residence abroad and get the exemption, you are likely within the parameters of the law.
    However, for those that see having too much money lying around as a liability, there are other options. Look for ways to invest it in companies and more real estate; but make sure it is still working for you and you are diversified.

  • 05/07/2013

    Judgment Investing

     by ANKIT DUGGAL on MAY 6, 2013
    Did you know that you could buy real estate for as little as a $1,000? This is not an infomercial – rather, I am talking about “judgment investing” as a unique investing strategy to purchase real estate.
    Judgment investing is achieved through court ruling that gives a creditor the right to take possession of a debtor’s real property if the debtor fails to fulfill his or her contractual obligations. Sounds a lot like mortgage investing but it is different.

     What is Judgment Investing?

    A judgment is memorialization by law that money is owed but a judgment alone cannot force anyone to pay the creditor.
    Let’s illustrate through a simple example:
    Let’s say Sam lends $10,000 to his friend Jill to help her pay bills and remodel the bathroom. Even though they are friends they write up an agreement stating that Jill will repay Sam on a set payment schedule until the $10,000 is paid off. Everything is going good for a few months and then Jill stops paying Sam. Sam wants his money and Jill is MIA. So, Sam takes Jill to court and shows the judge the contract that he signed with Jill .The judge reviews and confirms that Jill needs to pay Sam. A judgment is really just a ruling in a court of law. Now Sam has a judgment against Jill and he requests payment but she still wont pay.

    What can Sam do to get his money?

    This is where a lien comes into play. A judgment gives Sam the right to place a lien on all of Jill assets to help recoup the money owed to him. A lien is a claim of a specific value against certain property.
    Sam can tie this lien to Jill’s house and other assets as he or his lawyer deem appropriate.
    This is all great but when does the real estate investing piece of this come into play.

    Patience is a Virtue to Judgment Investing…

    Before we jump into the real estate lets do a quick recap:
    • Sam has a $10,000 judgment against Jill that he used to place a lien on Jill house (I wonder if this friendship will last?)
    • Jill owes Sam $10,000 and her house now has an involuntary lien placed on it.
    Now that the lien is on the property; Jill cannot sell, refinance, or bequeath her house without paying off all liens on her property, which includes Sam lien. How can you as a real estate investor get involved?

    Here is Where a Real Estate Investor Can Step In:

    Sam gets tired of waiting for his money and wants it now but Jill is not paying so he decides to sell the lien to an investor. You can be that investor and buy out the lien. Typically you should look to buy out the lien for less than 10 cents on the dollar given the risk associate with investing in this strategy  (those are covered in the section below).

    How to Make Money With This Strategy?

    You can make money in judgments depending on how aggressive you want to be.
    Active: You can search for uncollected money judgment, research defendant assets through a skip trace or asset search service, buy the judgment from the creditor, record them so they’re a lien on the defendant’s real estate, and then you can actively reaching out to the debtor (within the guidelines of the Fair Debt Collection Act) and offer to buy out the property using a subject-to or other creative real estate strategy using the leverage associated with the judgment lien.
    Buy the judgment for 2 to 5 cents on a dollarSecure judgments onto real estate assetsCosts associated with filing and perfecting the judgment through lienTime and effort associated with locating the defendant assets
    Passive: You can search for liens associated with judgments on properties at the county records, market to the lien holders, buy the liens from the creditor, and then wait for the debtor to either sell their property or refinance at which time the settlement agent will give you a call to satisfy your lien.
    Buy the judgment closer to 10-15 cents on a dollarHigher buy point costs associated with buying the lien v. judgment.Uncertainty of pay off timeline

    Risks Associated with Strategy

    As with any strategy there are risks associated with implementing any strategy. Below are the key risks that are associated with this strategy:
    Foreclosure: when a debtor is behind on their obligations then they are more likely to be behind on their mortgage. This can lead to the mortgage holder to foreclose on the debtor asset, which can put the judgment lien in jeopardy. To mitigate this risk, you should keep tabs on the foreclosure records associated with the asset and secure your lien against other assets owned by the debtor if applicable.
    Bankruptcy: if a debtor claims Chapter 7 bankruptcy then your judgment lien can get wiped out and your invested capital can be a total loss risk. Hence it is important to not over pay for a lien or judgment, as your capital can be a total loss. You can mitigate this risk by not overpaying or diversifying your investment capital across multiple liens.
    Judgment investing can be a great investment tool that can be used for high yield returns and/or real estate acquisition strategy. This investing technique comes with the risk of total loss with high  upside return potentials.
    Do you have any other creative investing methods or experience working with Judgment Investing? Share below?
    Happy Investing

  • 05/06/2013

    The 20 Best Markets to Buy Single Family Rentals, Did Your City Make the List?

    by BRANDON TURNER on APRIL 4, 2013
    What’s your market like?
    If you are located in one of the hot areas around the country, you might be wondering where all the good deals have gone to. Are the hedge funds really buying up everything and causing prices to skyrocket to unmanageable levels everywhere? Not according to a new study released today by RealtyTrac that looks at the top 20 markets to buy single family homes in today, based on cap rates and cashflow. In fact, there are some areas where significant cashflow is still achievable.
    In a statement released by RealtyTrac, VP Daren Blomquist discussed the problem and what they’ve found:
    “Buying single family homes as rentals that actually generate good monthly cash flow has become more difficult over the past year as institutional investors crowded into the market, snapping up tens of thousands of properties in 2012 alone,” said Daren Blomquist vice president at RealtyTrac. “But there are still opportunities for the more conservative, individual investor to buy rental homes that generate a healthy return on investment — it often just takes persistence and willingness to pass on bad deals. The top 20 markets we selected represent the best chance to buy rental homes that generate good cash flow, but opportunities are available in most markets across the country given the combination of relatively low prices, low interest rates and a strong rental market.”
    The 20 Best Markets for Single Family Homes
    According to their findings, Memphis, TN leads the pack with a “cash-purchase cap rate” averaging 10.38%, followed closely by Saginaw, MI and Toledo, OH. The following charts offer more details into the study:

    For more information on the study by RealtyTrac, click here

  • 05/02/2013

    How to Avoid Landlord Burnout: @AMPPropertyMgmt

    Hire a Great Property Manager

    Simply put, - hand the job to a property manager. But beware: you can’t just turn over the responsibility to a manager and then forget about it entirely. You need to “manage the manager.”

    You’ll need a competent, hardworking property manager who’s skilled at their job — otherwise you’ll lose even more money and time in the long-run.

    Get recommendations from other investors in your area. See which managers they recommend. And don’t skimp on quality. I’d rather pay a high-priced property manager who is fantastic at her job than a cheap property manager who slacks off.

    That said, don’t assume there’s always a direct correlation between price and quality. You might find bad managers who are also expensive, or you might find managers who work cheaply who are fantastic. But all other things being equal, choose quality over price when it comes to picking a property manager.

  • 04/30/2013

    Why Do You Invest in Real Estate…No, Really…WHY??

    When we start to do anything in life there is always a reason WHY. Now stay with me here…we have many simple “WHY’s”. Take breathing for example, our “WHY” for breathing is to live! Our “WHY” for going to school is to get smart (or because we are forced to!). Our “WHY” for getting a job is to earn an income. Our “WHY” for having children is to? go insane?? I think you get the point. It is our “WHY’s” that drive us to do what we do, day in and day out. The “WHY” always comes before the “HOW”.
    For the sake of this article, let’s stay focused on Real Estate Investing. After all, isn’t that why we are all here? Why do we get into real estate investing? I think for many of us it is the same, but see if any of these “WHY’s” are a good fit for you:
    • Extra Income
    • Financial Independence
    • To be Wealthy
    • Control your own destiny
    • Fire your boss and not have a 9-5
    • Residual Income
    • Set up for Retirement
    • Time Freedom
    • Leave a legacy for your Family
    • Feeling of owning assets you can see, feel and touch (Pride)
    • Because we love Bank and FHA Regulations?
    • Because we love the absurd requests of first time home buyers in this market?
    • Because we just love tenants?
     Ok, so the last three were to make sure you were still paying attention!

    Once You Have Your “WHY” Your “HOW” Will Take Care of Itself.

    There are so many ways we can all reach our goals using Real Estate investing (the HOW’s). Personally, we primarily use flipping and wholesaling, while others use buy and hold strategies. Others buy and sell notes, some only invest in commercial and on and on. Not one is better than the other, they are all vehicles to an end goal (listed above). Once you know what you want and more importantly WHY you want it, you will figure out your HOW. The strength behind your “WHY” is the most important. Once you determine what you want and you really want it deep in your soul, you will figure our “HOW” to make it happen.

    How Strong is Your WHY? Will it Push You to Do What You Need to Do?

    I like examples to illustrate a point. Again, stay with me and I think this will make sense to most of you. I am a parent, all of us parents know that feeling of complete and total love for our children. There is nothing you would not do for your child, am I right? Imagine this for a minute. Your child is kidnapped (I know, the hair on the back of my neck is standing up just writing this!!) You get a call from the kidnapper saying your child is alive and safe, but before he/she is returned to you, you must buy a house at a discount, renovate it, and sell it for a substantial profit. I never said he was a SANE kidnapper! But seriously, take a minute to imagine if that were indeed the case and you HAD to do it to ever see your child again. Do you think, that even if you NEVER flipped a house, that you could find a way to do it for the sake of getting your child back safe and sound? It’s a fictitious story to illustrate a point, but think about it! I know that all of you reading would do it to save your child in a heartbeat. I would imagine you’re holding time would be the shortest in history!!
    How about one more that may hit close to home for many of us, I included. You want to lose weight, eat right, and exercise daily, but you never really do it like you should because basically you feel ok. One day for no reason you have a chest pains and are rushed to the hospital. You really truly believe this is it! You come within seconds of losing your life. The doc says, “Listen, if you want to live to enjoy your family, you need to lose 20 pounds, eat a balanced diet, and get some regular exercise”. How motivated do you think this near death experience makes this person? How strong did his “WHY” just become?
    What is my point to all this? Look, Real estate investing is not usually a life or death situation. However, you can use these extreme examples to drive the point home. If you’re “WHY” is strong enough or let’s call it your motivation, you will always figure out the “HOW” on your way to accomplishing your goals. So as you decide “WHY” you want invest in Real estate, take the time to really think about your motivation. Make sure it is something that is so solid and concrete that it becomes a MUST, not a wish. You are going to have days that really stink. Some days you will even want to quit! Hey, what we do can be lucrative, but it is NOT easy! You need that “WHY” to drive you through the tough days, but getting through the tough days is the key to long term success. If you’re “WHY” is something that you truly believe you MUST have, you will figure out the rest and find yourself doing things you never thought you were even capable of!
    Remember the “WHY” comes before the “HOW”. The stronger the “WHY”, the more successful you will be.

  • 04/29/2013

    How to Find True Financial Freedom Through Real Estate Investing

    We hear the phrase “Financial Freedom” thrown around, but what does it really mean? Is it just having or earning a lot of money? I know people who earn $800,000 a year and they are far from free! They are in businesses or jobs that own them. I also have met two different billionaires, one of whom owns about 250 businesses and has more time freedom than most. Do you want to eventually be very hands off from your business and have true financial AND TIME freedom? Seeing that time is our most valuable commodity, why not make the most of it? If you are interested in obtaining both, please read on…
    How We Are Creating Freedom In Our Business
    We started investing a little over 4 years ago. Our business is now doing about 15 full renovations at any given time, and we are on target to do over 60 flips in 2013, Sound busy? Well we are, BUT, not as busy as we used to be doing 20 flips per year.
    How is that possible?
    We decided last year to start implementing strong internal systems to begin to give us some personal freedom. Has it worked? Well, not totally yet, but we are well on our way. One of the keys to having freedom is to OWN the business and NOT let the business own you. That is the mistake of so many of us small business owners. We let the business own us. We don’t mean to when we start out, but in a short time that is what happens if we don’t make a conscience effort to avoid that trap. If we fall into it, we have no time for anything other than business and surviving!
    There is a better way to live and a better way to run your investing business. It became apparent when I learned how one of the billionaires ran his 250 companies. He didn’t run them!! He invests, and finds the right people to run them. That it. Is it really as simple as that? Not quite! To have companies run smoothly, you must develop systems. We don’t have time in this blog to cover everything, because it is pretty extensive. Go read The E-Myth by Michael Gerber. It will enlighten you of how to OWN your business instead of it owning YOU!
    How Can You Create Freedom In Your World?
    It can be as simple as hiring a property management company to manage your real estate, or hiring contractors to do the work you have been doing yourself on your flips. This will provide freedom! Yes it costs money, but what can you do with the new time that you have found? Whatever you want! Vacation, spend time with your family, build your business, buy more rentals, flip more houses, again, it’s your time, do what you will with it.
    Our business changed when we hired an administrative assist who eventually became our office manager. We now found the time to go and flip more houses. We grew even more when we hired on an inside agent who now handles all of our selling of finished houses (that was one of my main roles so it was very hard to release control). Next, we hired on 3 more agents, so now we have 4 inside agents who are running leads and bringing us houses to buy.
    A few weeks ago, we hired on a project manager, and it would seem we finally have all of our chess pieces together. We have designed systems for each process and procedure and we are currently working to document and design a manual so if we need to replace any one person, the company doesn’t shut down. If you can treat your business like McDonald's treats a hamburger (Read their story to understand more about systems), you will be amazed at how your business will change.
    We could go on forever with the details, but we won’t. There are plenty of resources for you to get some great information on systemizing your business. Bottom line is that systems will provide you with financial and time freedom if you manage the process correctly. Even simple ones to start should be done ASAP as your life will start to look very different.
    One Of My Best Days Ever!
    In closing, let me tell you what inspired me to write this post. This past Friday was a school day. When we woke up that morning, I took my 13 year old son to school. I then returned home to take my 8 year old princess to school. Well, I decided I had a different idea. I like having what we call “Daddy Dates” with my kids, and it was time for my daughter and I to spend some time together.
    Instead of school, I took my daughter to an inside water park here in Upstate NY (don’t call the truant officer!!) We spent the entire day together. I shut off my phone and became an 8 year old again for the day. We went on all the rides, and I quickly remembered I was 44 after going up and down 4 flights of stairs over, and over, and over! Plus, being twisted around in all the rides was making me a little dizzy! We spent an amazing day playing together, bonding, and just loving each other. It was just she and I, and the lines were very short as most kids were in school and most parents had to work. It was the kind of special day that neither she nor I will forget for many years, or possibly the rest of our lives.
    On our way home as she slept, I checked my messages to find out what went on while I was out. All on this same day, we sold another wholesale with about an $11K profit, our largest renovated home just went under contract for $362K, and we were featured on the front page of the local Business Review publication here in our area with a 4 page spread all about us and our success on the inside. Wow, what a day! And all of this while I was at the water park having a wonderful day with my daughter.
    As VISA says:
    Gas to get to the park: $25
    Tickets to get in the park: $62
    Lunch in the park (because you must by their food) $25 :-)
    Having a very positive article written about you: Very Humbling
    Having two large deals go under contract in your absence: Great Feeling
    Creating an amazing memory with my beautiful daughter while my business ran without me….

  • 04/26/2013

    The Very 1st Question Any New Real Estate Investor Needs to Ask Themselves

    Written by CLAY HUBER
    Pick out the question below that you believe is the very first question any new aspiring real estate investor should ask themselves.
    A) “What type of investor do I want to be? What will my exit plan be?”
    B) “Do I know how to analyze a property to determine if it is a deal or not?”
    C) “How well do I understand the market I am looking to invest in?”
    D) None of the above.
    If you chose D, congratulations. I have either a smiley face sticker or a gold star sticker I will send you. All you have to do is ‘Like’ my Facebook page… (I’m pretty sly huh? See that shameless self plug???)
    Those above questions are certainly important and ones that need to be asked near the beginning of your quest to become a real estate investor; however, there is one that seems to get overlooked quite a bit but is just as important. In fact, I would argue that it is THE most important question.
    Before I get to the question though, I want to first give you the context of my viewpoint. While I won’t go as far as saying this is the case 100% of the time, I feel very comfortable saying that 95% of the time, you will need money upfront to get started investing in real estate.
    Now, if you are striving to become a real estate investor and you already have cash to work with, then this question really doesn’t pertain to you since you already have cash on hand. But, if you are like the majority of people who are entering into real estate, you have very little capital to work with or none at all.
    The Unavoidable Real Estate Costs
    Yea, yea, yea. I know about all those “no money out of pocket” real estate strategies. Bottom line, nothing is free and nothing can be done without $0 cash. Let’s take a look at some of these costs…
     $ for Marketing. You need to find the properties right? Direct mail, bandit signs, flyers, etc. All cost $$$. Even if you plan on using lease options, Sub-2 or whatever “no cash out of your pocket” strategy, you still need to locate these properties.
    $ for Protection. If you are okay with losing your home and personal possessions, then skip over this bullet point. Creating a LLC is something that needs to be done. Besides the whole personal protection aspect, it also just makes you look that much more professional.
    $ for Marketing. Make people want to work with you. If you think you will be saving money by simply going to your local real estate group networking events in order to find deals and investors, think again. When they ask you, “Can I get your card?” and you say, “I don’t have one, let me scribble down my name and number on a napkin!” ask yourself, do you really think they are taking you seriously and will keep you in their “call this person” folder?
    $ for Transportation.  Car. Bus. Boat. Horse and buggy. These things cost money. Whether you are driving to see a property that your marketing has located or driving to your local real estate investing group, transportation is not free. Gas prices only trend in one direction, and it isn’t ‘down’, so you better be ready to spend money to keep your fuel tank full. (or, if  you are using horse and buggy, make sure you are buying plenty of food to feed those horses!)
    $ for Marketing. This slot is for all the other marketing costs that pop up that I’m forgetting about right now. If you haven’t made the connection yet, marketing is THE most important part of any real estate strategy.
    The Good News…
    You will notice there is no category for “education”. No guru courses required. I will go into more of this later on, but now let’s get to the question…
    The All Important Real Estate Question
    If you are thinking of getting into real estate and have very little or no capital, then ask yourself…
    How does my month-to-month budget look?
    As I’ve established, the only way you are going to get your feet off the ground and have any success as an investor is with cash. The only way you’re going to get cash is by saving money. And finally, the only way you’re going to save money is by looking at your budget.
    Don’t have a budget? Unless you are the United States government, this is not good for you. To be brutally honest, you better create a budget, or just don’t even try the business of real estate. If you have no motivation or desire to understand your personal (family) finances, then you have NO CHANCE at success in real estate. Considering real estate is all about budgeting and numbers, the business wouldn’t be catering to your strengths/desires.
    Alright, if you are still reading, I’m assuming you fall into one of two camps. You either already have a budget, or you are going to sit down and draw one up.
    Time to Go Hunting
    Put on your hunting hat. Put on your camouflage. Grab your red pen. It’s time to do some slashing. You are looking for cost-savings. You need to get some money.
    The fastest way to do this is figure out what costs you can live without. Go through your budget…
    Mortgage Payment – need that… no cut.
    Groceries – need that… no cut.
    Insurance Payments – need that… no cut.
    Cable TV with HBO… hmmm…
    Friday Night “Fun $”… hmmm…
    Netflix Subscription… hmmm…
    Lottery Tickets… hmmm…
    Date with Husband/Wife $… negotiable…
    New Video Game/Movie $… hmm…
    Hopefully you are getting the point. How much do you spend on things each month that aren’t required? Now I’m not saying you slash it ALL out of your budget, but I am suggesting you slash some of it.
    How much do I slash? That’s a question only you can answer. The reason I can’t answer it is because I don’t know “how bad/fast you want to succeed”. The more slashing you do, the fast the money adds up. The faster the money adds up, the quicker you can start marketing and getting things rolling.
    A Realistic Scenario and Suggestion
    To reiterate again, only YOU can answer how much you slash, but I wanted to put some numbers to my logic so you at least have a baseline.
    Let’s say you slash $100 worth of unnecessary costs per month. As Benjamin Franklin said, “A penny saved is a penny earned.” so now that you are “saving” $100 per month, you just increased your monthly income by $100. You are now putting this $100 into a new category, “Real Estate Start-Up”.
    Remember that good news about education not being an expense? Here’s where it comes into play. While you save up money, you get an education. Where? The internet! Create an account. Start reading. Ask questions. There is so much knowledge here, and the best part is it is unbiased knowledge. No one is trying to sell you a $997 course, they’re just helping you out.
    The ONLY cost associated with this education is time. That’s it.
    Let’s recap. You are making $100 per month (via cost cutting) and getting educated.
    Do this for 6 months.
    You now have a boatload of knowledge and $500 worth of start-up money. My math is not off. The reason this is NOT $600 is me trying to keep things realistic. You probably spent $100 or so on real estate related stuff during this 6 months. Maybe you…
    Bought a book on Amazon for additional motivation. $ well spent!
    Drove to a couple local real estate events. Fuel cost money, however, $ well spent!
    Purchased some preliminary marketing material.
    Whatever the expense, let’s just say you now have $500 left at the end of 6 months. Let’s look at the numbers a bit closer.
    LLC Formation (do this online!) $175
    Business Cards – $50
    Stamps & Direct Mailing Supplies – $150
    Fuel – $50
    This all amounts to $425.

    So now let’s recap where you stand…
    You are now protected with an LLC. Not to mention, you look extra professional!
    You can now begin marketing via direct mail (or whatever method you choose).
    You can now pull out a business card and hand it over at your networking events.
    You can have no worries about driving to check out properties because “gas prices are high”.
    You still have $75 sitting there waiting for you to put it to work.
    You are educated since you’ve spent the last 6 months on Bigger Pockets asking questions and soaking it all in.
    Your Real Estate Dreams Are All on YOU

  • 04/26/2013

    The Roles of a Landlord

    Learn the Many Hats That a Landlord Wears
    Written By Erin Gleason
    Dictionary.com defines a landlord as “a person or organization that owns and leases apartments to others.” In actuality, it is hard to truly define what a landlord is, because a landlord wears so many different hats. Here are some of the roles that a landlord plays.
    The Role of a Realtor
    As a landlord, you are responsible for getting your apartments/ properties rented. When you are trying to fill a vacancy, you will often play the role of a Realtor. You will have to advertise your rentals, set appointments with prospective tenants to view the rentals and make yourself available to show the rentals.
    Landlord as Salesperson
    While attempting to get tenants to move into your units, you will also play the role of salesperson. You will have to explain why your property is more desirable than any other unit on the market and convince prospective tenants to rent from you.
    Landlord as Detective
    When trying to select the right tenant for your property, you will play the role of detective. You will have to gather information about the tenant by speaking to their former landlords, their employers and by running a credit check. You will then have to analyze all the information you gather and rely on instinct to determine if the tenant will be the right fit for your property. Things to look for include someone who is going to pay their rent on time, sign and abide by a long lease (at least a year), be respectful of their neighbors, be clean and not complain often.
    You will also play the role of detective when handling tenant disputes. You will need to investigate to find the truth of what the dispute is about.
    The role of detective will also fit when you are searching for the root cause of a maintenance problem. If you have a roof leak and no noticeable roof damage, you will certainly have to play detective to determine where the leak is coming from.
    The Role of Negotiator
    A landlord’s next role is that of a negotiator. When hiring outside contractors or repairmen, the landlord must negotiate to get the best price, as well as negotiate to get the person to come to the property as quickly as possible.
    If a landlord has more than one unit, they must negotiate when buying materials to get the best price for buying in bulk. For example, if a landlord is going to buy four stoves from a store, it is reasonable to ask for some type of discount.
    A landlord must also negotiate any contract they sign, whether it be the terms of a lease with a tenant, a mortgage with a bank or a contract with an electrician to hardwire smoke detectors.

    The Role of Debt Collector
    A landlord will play the role of a debt collector when they collect rent from their tenants each month. This role will intensify if a tenant is late on their rent or does not pay at all. The landlord must then enforce late fees or file to evict the tenant.
    Landlord as Repairman
    Even if a landlord does not have extensive construction knowledge, they will be called on for maintenance requests. A landlord will be called to fix broken doorknobs, blown out light bulbs, malfunctioning smoke detectors or to turn on the pilot light of a boiler.
    As a landlord, it is a good idea to educate yourself on some maintenance basics. This will help save you from spending a lot of money to hire plumbers or other repairmen for a job that you may be able to easily fix yourself, such as a leaky faucet or toilet that will not stop running.
    Landlord as Therapist/Counselor
    Your tenants will often confide in you about very personal issues. They will call you in hysterics saying they can’t pay their rent because their roommate moved out or they broke up with their girlfriend. They will call you at two in the morning in a state of panic because they have a leak in their bathroom. In these situations, you will play the role of therapist or counselor as you try to calm the tenant down and work out a solution that benefits you both.
    The Role of Supervisor/Watchdog
    As a landlord you will be the supervisor of your units and of your tenants. You will need to provide a clean, quiet, safe and fully functioning environment for all to enjoy. You will need to perform preventative maintenance to keep your property in top condition and to keep your tenants happy.

  • 04/19/2013

    Hurray! I have one of the top 1% most viewed @LinkedIn profiles for 2012!

    I am an Open Networker on LinkedIn. Let's Connect! http://www.linkedin.com/pub/profile/9/000/1b6

    You have one of the top 1% most viewed LinkedIn profiles for 2012

    Hi Christopher E. Johnson
    Recently, LinkedIn reached a new milestone: 200 million members. But this isn't just our achievement to celebrate — it's also yours.
    I want to personally thank you for being part of our community. Your journey is part of our journey, and we're delighted and humbled when we hear stories of how our members are using LinkedIn to connect, learn, and find opportunity.
    All of us come to work each day focused on our shared mission of connecting the world's professionals to make them more productive and successful. We're excited to show you what's next.
    With sincere thanks,
    Deep Nishar
    Senior Vice President, Products & User Experience

  • 04/19/2013

    Join Our Referral Program

    If you are selling properties to owners, or investors that need professional property management, we want to partner with you. 

    At AMP Property Management, our focus is 100% property management. Many of our clients were referred by agents that want their valued investment clients to be expertly represented after the sale. 

    We will pay participating licensed agents and brokers highly aggressive referral commissions of up to $500 for every property owner you refer, and signs a property management agreement with us. 

    -         Partnering With AMP Property Management. 
    In partnership, AMP Property Management will manage your client’s single-family homes, town homes, condos, and small multi-unit apartment buildings. We will NEVER list or sell a client property that has been referred to us, and signs a management agreement. When the client is ready to sell, we will prepare and turn the property over to you for listing.

    -         Property Management That Makes Agents Look Great. 
    Refer to a specialist. We have been managing rental properties for ourselves, other owners and investors for over 30 years. We are full time property managers that fully understand the property management business. We make certain that your clients are always satisfied.

    -         Refer The Client to AMP, - We’ll do All the Dirty Work. 
    We typically find that the Brokers and Agents whom find themselves in property management have done so in order to keep their clients happy, and ultimately protect future listings.  With our referral program, you have new options. Think of us as an extension of your all-star real estate team. We will take over the property management, and you can re-focus on growing your core real estate business.

    -         Are You Tired Of Late Night Tenant Calls
    WE WILL BUY YOUR MANAGEMENT ACCOUNTS. Do you just want to focus exclusively on selling real estate?  Give us a call, we will buy your management accounts. Any inquiry or discussion will be kept 100% confidential.

    -         Let Us Serve You and Your Referrals 
    We will provide highly efficient, state of the art professional property management to your clients. For more information about AMP Property Management, our property management services, or a copy of our Agent and Broker Referral Agreement, call me anytime at: (408) 624-0837, or email me at: christopher@amppropertymanagement.com.  Our website is: www.amppropertymanagement.com

    California real estate law prohibits (a) a broker from paying compensation for licensed activity to anyone other than (i) a broker, (ii) a salesperson. n who is licensed under the compensating broker or (iii) a broker of another State and (b) a salesperson from paying compensation to another licensee for licensed activity, except through the employing broker. Federal law prohibits giving or accepting a fee or other thing of value for a referral involving a federally related mortgage loan (most residential one to four property transactions) unless pursuant to a cooperative brokerage arrangement.