Navy Fellas Realty Group

Real Estate, Residential sales and purchase

“How To Manage Investment Property While Working Full-Time “

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Most independent rental property owners in the U.S. reportedly work another job on top of being a landlord. That means the overwhelming majority of landlords are attempting to juggle more than they can handle at times. However, there are organizational and strategic concepts that can maximize efficiency and profitability.

Consider the following tips that bring property management tasks under three basic headings: organization, automation, and outsourcing.  

Organization Matters

One of the things that tends to overwhelm landlords is thinking about the rental properties as an extension of home ownership. The rental seems like it involves many of the same tasks such as maintenance and repair.

By rethinking rentals in terms of a small business, the way these and other tasks are approached can become radically different. If this were a Mom-and-Pop store or a corporation, the necessary resources would be brought in to handle niche labor. Organize all of the tasks that the rental unit(s) require under categories that may include the following.

  • Rental Advertising
  • Applicant Interviews
  • Background Checks
  • Legal Documents (leases)
  • Maintenance and Repairs
  • Rent Collection and Bill Paying

Automation Matters

Industries across the globe are moving to automation as a way to increase productivity and lower costs. There is no reason that landlords working other jobs cannot do the same.

While fixing a burst pipe may not be a good candidate for automation, there are numerous tasks property owners undertake that no longer require valuable time.

  • Advertising: Consider a process where an online advertisement is pre-written and posted when a lease expires.
  • Rental Payments: Consider automatic withdrawal from tenant accounts or having them direct deposit.
  • Bill Payment: Consider auto pay for every possible facet of the property, including utilities, taxes, insurance, mortgage, and others.
  • Maintenance and Repair: Consider an online form for tenants to fill out that provides real-time notification.

These and other tools can streamline the amount of time required to manage a rental property without incurring significant expenses.

Outsourcing Matters

People who work regular jobs and also manage rental properties are entrepreneurs by nature. That go-getter personality leads many to take on more tasks than there is time in the day. That’s why outsourcing is so important.

Outsourcing things like accounting or legal services are no-brainer because they require specialized knowledge. But other tasks such as applications, background checks, and maintenance may be good things to put on someone else’s plate as well.

As noted at the beginning of this article, if a small business mindset were applied, many of these tasks would be assigned to a designated resource. Consider operating rental units in this fashion by running a cost analysis and outsourcing.

If you’re ready to invest in a rental property, contact your trusted real estate professional who can point you to the hottest markets in your area. 

 

A Comprehensive Guide to Explaining Escrow Accounts

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Whether you’re a first-time homebuyer or a seasoned homeowner considering a refinance, the term “escrow account” often looms as a source of confusion. Yet, understanding the ins and outs of escrow accounts is crucial for managing your homeownership responsibilities effectively. In this article, we’ll address some common questions and concerns regarding escrow accounts to shed light on their importance and functionality.

What is an Escrow Account?

Escrow accounts, sometimes referred to as “impound” accounts, serve as a financial mechanism to facilitate the payment of property taxes and homeowner’s insurance. Typically, lenders require homeowners to contribute a portion of these expenses upfront, which is then deposited into the escrow account for disbursement.

Who Controls Escrow Accounts?

Lenders maintain complete control over escrow accounts. However, homeowners are entitled to receive an annual statement detailing their escrow balance. Should there be fluctuations in insurance premiums or tax assessments, homeowners can request a review of the escrow account to adjust payment amounts accordingly.

Is Interest Paid on Escrow Accounts?

Federal regulations do not mandate the payment of interest on escrow accounts. When refinancing a home, the funds allocated for taxes and insurance are factored into the overall mortgage payment, with the portion designated for these expenses placed in escrow.

What Happens During a Home Sale or Refinance?

Upon selling or refinancing a home, the escrow account is credited at closing. Homeowners may opt to apply the credited amount towards reducing out-of-pocket expenses or receive it as a direct payment.

Managing Shortfalls and Overages

In cases where the escrow account falls short of anticipated expenses, the lender may request additional payments from the homeowner to cover the deficit. Conversely, if there’s an overage in the escrow account, lenders have the discretion to refund the excess amount directly to the homeowner. Generally, shortfalls or overages of $50 or less are deemed negligible.

The Benefits of Escrow Accounts

For homeowners, escrow accounts offer a streamlined approach to managing recurring expenses associated with homeownership. By spreading out payments for taxes and insurance throughout the year, escrow accounts alleviate the burden of lump-sum payments, ensuring financial stability and peace of mind.

While escrow accounts may initially seem complex, they play a pivotal role in simplifying the financial aspects of homeownership. By understanding how escrow accounts function and their benefits, homeowners can navigate the process with confidence and clarity. Whether mandated by lenders or chosen for convenience, escrow accounts serve as a practical tool for effectively managing homeownership expenses. If you have questions or concerns regarding escrow accounts, don’t hesitate to consult with your lender or financial advisor for personalized guidance.