How to excel at managing your property

- [Instructor] Property management. Whether you're buying rentals locally or in remote markets, it's best to find a competent property management company to handle all of the ongoing tenant placement, rent collection, property maintenance, and repairs for you. Find out what these companies typically charge in the area. This is a monthly expense to include in your profitability calculations. Make sure to choose a property manager with a substantial track record, with experience and referrals. And don't forget to check them out. Let's talk property profile, the key factor that defines your buying criteria. Documenting specifics for your target properties, your ideal property profile, makes it easier to enlist the help of others, especially realtors and wholesalers, and to focus your efforts. So what makes a good rental property profile? Here are some guidelines to consider: neighborhoods that are mostly owner-occupied, neighborhoods that are stable or improving for better tenants and higher rents, then location, location, location because tenants want to live in nice areas with desirable amenities too. Single-family homes with three to four bedrooms and two baths are ideal. These are actually my targets for good rentals. Tenants who rent single-family homes are more likely to sign two to three-year leases, and that means less turnover and potential vacancies. Think about the resale value of the properties you're looking at. For example, choose floor plans, the size of the home or square footage, available parking, and lot size that homeowners will also find attractive or appealing. Now, the resale value depends on your exit strategy or how long you plan to hold the investment property and whether your goal is to eventually sell to retail buyers. Look for homes with materials that are easy to maintain or inexpensive to replace. As an example, I don't recommend real hardwood flooring in rentals. Too much potential damage and expense to resurface or replace it. Your property profile also includes how much you're going to pay, the purchase price dollar range, the amount of your deposit, which is your buyer equity or skin in the game, the size or amount of your mortgage loan, and monthly rents you expect to get. With this information, you can focus on potential properties that fit your financial requirements. Here are my recommendations. Don't pay more than 80 to 120,000 to purchase a property. Now, that may seem unrealistic in your local market, but we are looking for strong cash flowing markets that fit this profile. You'll need about 25 to 35,000 of out of pocket capital for your down payment and a $90,000 mortgage loan to complete the purchase. The monthly rent should be somewhere between 900 and $1,200 a month. Just remember, these properties are the most competitive types of properties to acquire, so you may need some patience. The final key factor is this: bottom line, if a property cannot produce a positive cash flow, do not buy it. I'm serious about this, and you should be too. Make absolutely sure you have positive cash flow from day one. Don't target areas for their appreciation. Cash flow is the ticket. Appreciation is the icing on the cake. And never buy a property simply for the tax benefits. Without positive cash flow, all the tax benefits in the world will not make up for the money out of your pocket each and every month to cover your holding costs and expenses. With that said, I'm going to walk you through an amazing tool to show you exactly how to evaluate an example single-family rental property.