Provided by Bigger Pockets
The question is asked all the time: How can I estimate average rehab costs? Well, there is no average rehab cost because there is no average rehab.
Some properties will need major structural modifications; others just a lipstick approach. Some may have a recently remodeled kitchen, and others may have a 1950s galley kitchen.
But since this is such a popular topic, let’s see if we can try to make it at least (a little) feasible for a newbie to the construction world.
Ways to Go About It
First, there are several ways to get a price range for needed work on a property:
- Have a general contractor walk the property.
- Have a home inspector give you a report and use that to put together a budget.
- Develop a square footage cost per square foot for the whole project.
- Develop a square footage cost for each trade, like tile and drywall.
- Use an online calculator.
- Ask friends for help—ones that have had a recent remodel or may have some kind of construction experience.
Who to Work With
Of course, the best and by far the safest way, in the beginning, would be to use a veteran general contractor (GC) to walk the property and throw a rough number at the necessary and/or desired repairs or improvements. This is certainly possible, but most contractors will expect to be paid, and they cannot always fit such a small task (for them) into their schedule because you have a deadline due to escrow.
And note that I used the term “veteran” in describing this GC. It does you no good to use a new or young contractor fresh out of the exam room. You need someone with decades of experience, who can throw out a semi-accurate price just by looking at a property in an hour. They must have done dozens or hundreds of projects to be able to throw out an accurate price after a one-hour walk-through a house they have never seen before.
Note: You can (and many do) find a good general contractor who will walk every property for/with you and always give you a good, solid number. But be mindful that everyone—even this veteran old GC—can and will be wrong on occasion. Or sometimes, there are surprises hiding in the house that you will not see until demo is complete, or the building inspector makes his first visit to the property.
You can also use a home inspector to gather a list of information on needed repairs and deficiencies. You will (and should) use a licensed home inspector to inspect the property that you are considering purchasing. You do this once you have an accepted offer on the property, it is under contract, and you are within the inspection period.
But they can’t and won’t be able to throw a number at those tasks for you. It’s just not their job. Home inspectors are specialists, and most will have no true construction background. They might see it as opening themselves up to liability issues or, worse yet, a conflict of interest.
How to Calculate Costs
However, once you have this list, it’s certainly a good starting point. Then, you can use the internet to attach a price to each item on their report. This is a sensible and fairly safe approach.
But what about additional improvements you might want to have done, like adding a bathroom or remodeling the kitchen? Maybe you’d like to open up an old, claustrophobic house and convert the living room, dining room, and kitchen into a great room. Now you’re back to square one.
Develop a square footage cost. This will take longer, but as you complete a few jobs, just do the math and keep track of what you are paying. Does the tile contractor always seem to get about $5 a square foot for his installation? Does the drywall crew always end up at about $6 a square foot? These are real-world numbers that you can rely on.
You can also try to contact various subs and see if they will give you this square foot price. Some will, but many will not want to be bound by it.
There are online calculators out there, even one on the BiggerPockets site. They can be of some use, but I would warn not to completely rely on these. They cannot always account for different areas, or current price fluctuations, or a sudden change in the economy. But they can be very handy in assisting you get together a well-priced scope of work.
Ask people that you know and trust about their recent projects. Maybe you’ll get a good price on kitchen cabinets from one friend, and another will let you know what she paid to have her bathroom retiled.
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How to Customize Your Approach
I would suggest using a different approach for different sizes and types of projects. For example:
- You find a house that needs a complete remodel, right down to the studs. This will absolutely demand that you hire a GC to go to the site and walk it (with you there to watch and learn) and give you a rough price. You cannot be off by 20% on a $150,000 remodel project—there goes your profit, and that might actually turn into a loss. That’s not why we got into the business.
- You’ve found a nicely priced older home that has been well cared for, but nothing new or modern has been done to it in 30 years. It needs a modern kitchen, two new bathrooms, new flooring and paint, and a new roof. That’s maybe $45,000 worth of work. Once again, you can call the GC, or in this case, you can call subcontractors yourself and ask for prices on each trade. How much is the cost of cabinets? How about paint, tile, flooring?
- For a small job, $10,000 or so, possibly needing only paint, carpet, and new appliances, measure (very carefully) and go shopping yourself. Don’t forget to include all costs like taxes, delivery, installation, and the like.
It can be a sound approach to use a variety and combination of these possible choices until you find the most comfortable way for you to come up with a price range that you are willing to invest.
And it must be noted that, as you would expect, prices vary greatly by region, from state to state, and even city to city within a state, i.e., San Diego versus Los Angeles or San Francisco, or New York versus Buffalo.
Final Thoughts
The more you get your hands dirty and invest some of your own elbow grease in this process, the better you will get at estimating prices. It’s not easy, and yes, you can make mistakes that can cost a lot of money. But it is absolutely invaluable to be able to walk through a prospective fixer-upper house and put a pretty firm number on your construction costs. This will set you apart from your competition and should help you become profitable—there is a lot of money to be made in fixing up distressed houses!
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By Lauren Wingo
Dealing with an outside AC unit not turning on can be frustrating. Here are a few reasons why it could be happening and how to handle it.
Q: Living in a Southern state, we have the AC on for much of the year. But when I went outside earlier, I noticed that the outside AC unit wasn’t running. Why is my outside AC unit not turning on, and how can I get it working again before my house becomes a sauna?
A: During the hot summer months in particular, homeowners rely on their AC unit to stay cool. So, when an outside AC unit isn’t turning on, it’s essential to figure out why and find a solution as soon as possible.
Even the best air conditioners can have mechanical issues from time to time. If the AC unit has a split cooling system, two pieces allow the AC to turn on: an indoor evaporator and an outdoor compressor or condenser. If both pieces aren’t operating in tangent, the AC won’t turn on or produce cool air. Whether the AC outdoor unit turns on and you can’t feel it working, or it’s not starting at all, don’t worry—there are a few different things to try to get it working again. And if all else fails, you can contact one of the best HVAC companies (such as One Hour Heating & Air Conditioning or Aire Serv) to come out and fix the issue ASAP.
1. Make sure the thermostat is on, set to cool, and working correctly.
If the air conditioner is not cooling or isn’t even turning on, the first thing to do is examine the thermostat and see what temperature it has been set to. Someone else in the household could have raised the indoor temperature or turned the thermostat off entirely.
If it’s off, simply turn the thermostat back on, ensure it’s set to cool, and change the temperature to five degrees lower than what the ambient temperature of the room feels like. If the room starts cooling down, there most likely isn’t an issue with the outside AC units.
If it still doesn’t seem to be working and the thermostat is battery-powered, try replacing the batteries with fresh ones. Contact a specialist to examine if the wiring has gotten crossed or pests have chewed through the wires inside the wall.
2. The shut-off or emergency switch might be flipped.
Several sources of power an AC unit has that could have been accidentally turned off if the air conditioner is not turning on. Since the air conditioner outside unit has a different power source than an indoor AC unit, go outside to where the unit is located. Next to the unit, there should be a place that houses an emergency or shut-off switch. Someone could have left this switch in the “off” position accidentally. Ensure everything is plugged in and switched to the “on” position before going inside to see if the problem has been fixed.
There also may be a reset button on the outside AC unit that can be pushed. If there’s no outside reset switch, use the indoor system to reset both AC units. Turn off the breaker or thermostat and wait at least a minute before turning it back on. After it’s been reset, check to see if the outside unit powers back on and the room is cooling down.
3. Check the circuit breaker and see if there is a blown fuse.
There could have been a blown fuse to the circuit breaker that caused the outside AC unit to stop working correctly. A blown fuse is caused by an overloaded circuit breaker, which can happen if the AC unit is overworked or the wires are loose and aging.
Head to the home’s circuit panel and check to see if any breakers have tripped. Next, turn them off then back on again. There may be an electrical problem if the breaker immediately trips once it’s turned back on, in which case an electrician will need to assess the situation. It’s important not to turn the circuit breaker back on again, as it could further damage the outside AC unit or other household appliances.
If the home has a fuse box, replace any fuses that appear to have blown. The home’s AC unit may also have its own shut-off box. If the fuse is blown there, an HVAC contractor will have to replace it.
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4. The capacitor might be failing.
A capacitor holds the energy that the AC unit outside needs to power on. There may be a buzzing noise coming from the outside AC unit if the capacitor fails because the AC condenser fan is trying to spin without power from the capacitor. An AC unit has two capacitors: a run capacitor and a start capacitor. A start capacitor provides the first push to spin the condenser fan. A run capacitor varies between two subtypes, a single run and a dual run.
No matter which capacitor a home’s AC unit has, they age and wear over time, causing it to fail. Overwork, extreme heat, or power surges can speed up this process.
To test whether the capacitor is failing, attempt to spin the condenser fan using a thin piece of wood to avoid pinching fingers. If it’s a dual-run capacitor and the AC fan starts spinning, there may be debris or dust in the AC fan motor, or the AC fan motor is damaged. With both single and dual capacitors, if the AC fan doesn’t spin at all, the capacitor has most likely failed.
5. There might be a problem with the condensate drain line.
An AC condensate drain line works by eliminating the water built up when the AC’s evaporator converts refrigerant from liquid to gas. If it’s not cleaned, algae and grime can build up in the drain line.
A line can also get clogged due to high humidity. Once it’s clogged, the line will trip a safety switch that turns the air conditioner off. To unclog the condensate drain line, turn off the HVAC unit and use a wet/dry vacuum to clear what’s clogging the drain. If the problem persists, seek a professional’s assistance to minimize damage.
6. The unit may be low on freon.
Freon is a chemical refrigerant that cools warm or hot air from the outside before entering the home. Freon usually runs through a closed loop within the home, meaning that there’s most likely a leak within the system if the unit is low on freon. This can cause the AC to stop working. Signs of a leak include ice buildup on the outside unit, only warm air coming out of the vents, and a hissing noise near the AC, signifying a more extensive leak. Since refrigerants can be dangerous to handle, the Environmental Protection Agency (EPA) requires a licensed professional to purchase and handle refrigerants.
While there are many reasons why an outside AC unit may not be working correctly, there are steps to pinpoint the problem. Once the issue is discovered, be sure to consult a professional who can assess the damage and safely restore the system to normal. In the meantime, consider investing in one of the best portable indoor air conditioners to stay cool while the AC is not functioning.
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Source: Apogee Capital
Ever since we started investing in real estate, we had friends approach us and share how they too were interested in investing in this type of asset class. After a number of these interactions, we began to see a pattern in the conversations.
Someone would begin the conversation about how they had heard about the benefits of real estate but they did not have the time to manage a property, patience to deal with difficult tenants or knowledge to identify a profitable deal.
Having been landlords of single-family homes ourselves, we understand firsthand the challenges these individuals were considering. We have seen many people who have made a real estate purchase that did not turn out as they expected either because of problems with the property or tenants. This resulted in them not achieving their expected returns or simply being more stressed and frustrated than what it is worth.
One alternative to this dilemma is passively investing in real estate deals.
There are numerous ways to do this, but we want to mention just a few of the benefits specific to passively investing in a commercial multifamily property. First, you have the economies of scale that come as the result of investing in multiple units. When you are invested in say 50 units instead of 1, should one of the units be vacant for an extended time or a large expense come up you still have 49 other units producing income during this time. This means that you are losing 2% of your income instead of the 100% that you would lose if this happened with a single house.
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Secondly the acquisition, management and disposition of the property can be handled by knowledgeable professionals. When you are flying in a plane and suddenly enter an area with large turbulence, you do not start saying “I sure wish I was piloting this plane right now!” Why not? Perhaps because the plane is being flown by a pilot who has the knowledge and experience to successfully navigate this difficult scenario and your safety is truly best placed in his hands.
While investing is certainly not too difficult for any individual to learn, there are strong merits with placing your hard-earned money in the care of those who best know how to handle the turbulent situations that are sometimes encountered in real estate investing. Multifamily investing employs a team of professionals that includes not only the syndicator but also the property manager, real estate attorney, CPA and others.
Finally, multifamily offers the opportunity to passively invest in a recession proof asset class. Based on a CBRE research report, “multifamily rents have outperformed those of the other major property sectors during and after the 2008-2009 recession in three ways. The sector experienced the lowest level of rent decline, the fastest recovery to pre-recession peaks and the longest post-recession period of rent growth.”
We know that people have to have a place to live which supports the demand for attainable housing regardless of economic conditions.
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Written by Emily Koelsch for EZLandlordForms
Master Your Craft: Top 10 Must-Read Real Estate Investing Books
Whether you’re just getting started as a real estate investor or are a seasoned investor with a thriving portfolio, it’s part of the investor job description to always be learning. Real estate markets and trends are constantly changing, and the best investors appreciate that learning is simply a part of real estate. Here is a run-through of our top 10 real estate investing books in 2024.
Hands-on experience and working with other Landlords is an important part of developing as an investor, but it’s important to couple this experiential learning with reading and some intentional professional development.
There are lots of real estate investing books out there to help you do this, but with so many resources available it can be hard to know where to start. Here are 10 of our favorites that we recommend you add to your reading list this year.
1. The Book on Rental Property Investing by Brandon Turner
Written by investor and BiggerPockets.com VP of growth Brandon Turner, The Book on Rental Property Investing provides readers with a guide to using real estate investments to generate cash flow.
One feature we really like about this book is that it also outlines the biggest mistakes rental property investors make and provides tips for avoiding them. We’re all about learning from mistakes, but it’s awfully nice to get the chance to learn from the mistakes of others.
This is a good read for an introduction to investing and to get relevant tips that you can put into action right away.
Get Your Copy: The Book on Rental Property Investing
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2. The ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits Most Investors Miss by Ken McElroy
This book is a must-read for investors that are new to real estate. It provides readers with a good overview of important investing skills – like finding properties, negotiating deals, and getting the most out of property management tools. If you’re interested in getting into real estate to generate cash flow and build long-term wealth, read this book before getting started.
Get Your Copy: The ABCs of Real Estate Investing
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3. Buy It, Rent It, Profit!: Make Money as a Landlord in ANY Real Estate Market by Bryan Chavis
Written by Landlord Academy founder Bryan Chavis, Buy It, Rent It, Profit! is a good read for investors interested in acquiring multi-family properties. Chavis provides a step-by-step guide for readers to locate, purchase, and manage rental properties. It covers nitty-gritty details and big-picture strategy. For investors focusing on a buy-hold strategy or those looking to expand their portfolio, this is a helpful read.
Get Your Copy: Buy It, Rent It, Profit
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4. One Rental at a Time: the Journey to Financial Independence Through Real Estate by Michael Zuber
Michael Zuber is a real estate investor who built a real estate portfolio one rental at a time. His goal is to help others start investing with the goal of acquiring four rental properties. His premise is that having at least 4 rentals will change an investor’s financial life in profound ways, and he wants to help others get to this goal.
Think of this book as a mentoring session with an experienced investor. You’ll get practical tips and the encouragement you need to get started.
Get Your Copy: One Rental at a Time
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5. Build a Rental Property Empire by Mark Ferguson
Mark Ferguson is a successful entrepreneur and real estate investor. In Build a Rental Property Empire, he offers a guide for both new and more experienced Landlords. The book offers real-world advice and helpful case studies. This is a good read for both the buy/hold investor and the investor looking to flip properties.
Get Your Copy: Build a Rental Property Empire
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6. What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli
This is a long-time classic that has been updated with new information and case studies to keep up with changing markets and real estate trends. It covers some essential premises of real estate investing and offers relevant advice about evaluating new opportunities and long-term profitability. Written by a Columbia professor, What Every Real Estate Investor Needs to Know About Cash Flow helps any investor “crunch numbers like a pro” to make good long-term investing decisions.
Get Your Copy: What Every Real Estate Investor Needs to Know About Cash Flow
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7. The Millionaire Real Estate Investor by Gary Kelle
In The Millionaire Real Estate Investor, Gary Keller collects wisdom from over 100 millionaire real estate investors. Think of this book as an overall guide to how to build wealth through real estate. Because it includes such a broad range of investors, it offers many different perspectives and a comprehensive look at strategic real estate investing. And, while it’s told largely from the perspective of millionaires, you don’t have to be a millionaire to benefit from it.
Get Your Copy: The Millionaire Real Estate Investor
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8. The Book on Estimating Rehab Costs by J Scott
One of the keys to good real estate investing is finding ways to get properties at a discount. One way to do this is to buy a fixer-upper. However, this requires some unique skills, as it’s necessary to accurately evaluate the cost of fixing up, restoring, and maintaining your investment properties.
The Book on Estimating Rehab Cost helps investors make good decisions about fixer-uppers, breaks the process of estimating costs down into manageable chunks, and offers checklists to guide investors through the process.
Get Your Copy: The Book on Estimating Rehab Costs
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9. Emerging Real Estate Markets: How to Find and Profit from Up-and-Coming Areas by David Lindahl
Another way to buy a property at a discount is to buy in up-and-coming locations. If you can find emerging areas or areas with lots of construction, you can often get a deal on a property that will have above-average appreciation and rent increases in the years ahead.
That said, finding those markets is easier said than done. In Emerging Real Estate Markets, David Lindahl provides practical tips on how to look for and find areas that are on the rise.
Get Your Copy: Emerging Real Estate Markets
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10. The Book on Flipping Houses by J Scott
Investors that are interested in flipping houses – as opposed to a buy, rent, and hold approach to real estate – should definitely read The Book on Flipping Houses. Written by professional flipper J Scott, it provides a step-by-step approach to house flipping, covering everything from evaluating potential markets to listing the finished product for sale.
Get Your Copy: The Book on Flipping Houses
What are the key things you learned from reading real estate investing books?
There are several real estate investing books on the market, and each one offers its unique perspective on the industry. If you’re looking to invest in real estate, it’s important to read up on the subject so you can make informed decisions. What are the key things you learned from reading real estate investing books? Here are three tips to get you started.
1. You don’t need a lot of money to get started in real estate investing
2. Location is key when it comes to real estate investing
3. There are many different ways to invest in real estate
4. Real estate investing can be a very lucrative endeavor
5. Always do your research before making any investment decisions
How has reading real estate investment books helped you become a better landlord or rental property owner?
Being a landlord or rental property owner can be a great way to earn some extra income. However, it’s not always easy. You have to deal with tenants, repairs, and all sorts of other issues. That’s where real estate investing books come in. They can help you learn about the ins and outs of the business, from finding the right property to managing it effectively. In addition, they can provide valuable insights into the real estate market, which can help you make better decisions about your investment. So if you’re looking to become a better landlord or rental property owner, don’t forget to give real estate investing books a try.
FAQs:
- What are real estate investing books, and why are they important?
Real estate books are written resources that provide valuable insights, strategies, and knowledge about investing in real estate properties. They are important because they offer guidance for beginners, as well as advanced techniques for experienced investors, helping them make informed decisions and navigate the complexities of the real estate market. - How can real estate investing books benefit beginners?
Real estate investing books serve as comprehensive guides for beginners, covering fundamental concepts such as property valuation, financing options, and risk management. They provide step-by-step instructions and practical tips to help novices build a solid foundation and avoid common pitfalls in their real estate investment journey. - What criteria were considered in selecting the top 10 real estate investing books?
The top 10 real estate investing books were selected based on their relevance, credibility, reader reviews, author expertise, and the depth of insights they offer. Each book provides unique perspectives and valuable information that can benefit both novice and seasoned real estate investors. - Are these books suitable for investors at all levels of experience?
Yes, the selected best real estate books cater to investors at all levels of experience. Whether you’re a beginner looking to learn the basics or an experienced investor seeking advanced strategies, there’s valuable content in these books to suit your needs and help you achieve your investment goals. - Can these books help investors navigate different types of real estate investments?
Absolutely! The top 10 real estate investing books cover a wide range of topics, including residential, commercial, and multifamily real estate investments. They delve into various strategies such as flipping, rental property investing, and real estate syndication, providing comprehensive guidance for investors interested in diverse investment avenues. - How can reading the best real estate books contribute to success in the industry?
Reading real estate investing books exposes investors to different perspectives, strategies, and case studies that can broaden their knowledge and enhance their decision-making skills. By learning from the experiences of successful investors and industry experts, readers can gain valuable insights that contribute to their success in the real estate market. - Are there specific real estate investing books recommended for specific investment goals?
Yes, within the top 10 best books on real estate investing, there are titles that cater to specific investment goals such as generating passive income through rental properties, flipping houses for quick profits, or mastering the art of commercial real estate investing. Each book offers targeted strategies and techniques tailored to different investment objectives. - How can readers effectively apply the knowledge gained from these books to their real estate investment endeavors?
To effectively apply the knowledge gained from real estate investing books, readers should take a proactive approach by implementing the strategies and techniques discussed in the books. This may involve conducting thorough research, networking with other investors, and seeking guidance from mentors or professionals in the field. - Are there any additional resources recommended to supplement the information provided in these books?
In addition to reading real estate books, investors may benefit from attending seminars, workshops, or online courses, as well as subscribing to industry newsletters and publications. These supplementary resources can provide updated information, practical insights, and opportunities for networking within the real estate investment community. - How can readers access these top 10 real estate investing books?
Readers can access the top 10 real estate investing books through various channels, including online bookstores, local libraries, audiobook platforms, and e-book retailers. Whether in physical or digital format, these books offer valuable resources for investors seeking to enhance their knowledge and skills in real estate investing.
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Provided by AAOA
The current rise in application fraud is alarming. As a result of it, alert landlords now routinely request bank statements to determine cash flow and pay stubs to verify employment and income.
Unless a person is extremely well versed in computer technology, it is difficult to get creative with a bank statement, so they are usually dependable. On the other hand, a pay stub is fairly easy to counterfeit. There are even websites that will create custom pay stubs for use as proof of income using an online pay stub generator.
But when confronted with a counterfeit pay stub, how is a landlord or property manager to know that it is not real?
Obvious Red Flags
The most obvious red flag when looking at a fake pay stub is when the formatting is off. Look for a variety of fonts and columns that are not properly aligned. Spelling, awkward language and grammatical errors are sure signs of counterfeiting. Inspect the stub for blurry or pixelated elements.
Next, look for missing information that would typically be included on a pay stub:
- Employer’s logo, name and address.
- Employee identification number.
- The pay period’s start and end dates.
- Total hours worked.
- The total amount earned before taxes (gross pay) and the amount left after deductions (net pay).
- Deductions, such as amounts withheld for taxes, health insurance, retirement funding and other programs.
- Other non-taxable additions, such as expense reimbursements and paid time off (PTO).
Check the Numbers
If you carefully examine the numbers on the pay stub, there are some sure giveaways that the stub is not legitimate:
- Amounts are rounded up to zero. As an example, the net pay may be listed as a rounded number, such as $2,300 instead of $2,296. After deductions, it would be unusual to see a perfectly rounded figure.
- When the letter “O” replaces the number “0”, it’s a strong indication of a fake pay stub. Companies employing payroll software rarely make this oversight. Authentic documents often use a slashed zero “Ø” to avoid confusion.
- If the numbers don’t add up or if deductions don’t seem to correlate with the gross pay, take caution. You may be dealing with fake pay stubs.
Inconsistencies
One of the easiest signs that someone has submitted a falsified pay stub is inconsistent data. Watch out for the following examples:
- Miscalculations regarding a pay period, uneven totals or discrepancies between gross pay and net pay are sure indicators of a fraudulent pay stub.
- Deductions for Medicare taxes, Social Security taxes, insurance deductions and retirement contributions are always included on a legitimate stub. Federal, state and local tax rates should be cross referenced if the amounts don’t appear to be accurate based on the stated income.
- Is the applicant’s income as reported on the pay stub consistent with the industry standard for his stated job title or is the pay stub displaying exceptionally high earnings or bonuses for that position?
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Employment Verification to the Rescue
Artificial Intelligence software and machine learning are becoming more popular and will make generating pay stubs easier, making it more difficult to spot a counterfeit pay stub.
Although third-party verification services have access to databases with real-time employment data and can confirm the accuracy of an applicant’s employment with ease, they are also very expensive to use.
Fortunately, you have easy access to AAOA’s Employment Verification service. For a modest fee, AAOA’s experts will contact the employer directly and ask the questions you want to know:
- Is the applicant employed at that company?
- What is (was) their title?
- When did they start? Are they still employed there? If not, when did they leave the company?
- What kind of an employee were they? Did they get along with their co-workers?
- Would you hire them again?
By using this service, You don’t have to guess whether the applicant actually works at the company they claim they do.
Employment Verification can be ordered at the same time you order an AAOA rental credit report and/or tenant background check or on its own as an individual report.
Don’t be a victim of application fraud. It’s critical that you recognize the red flags to safeguard your investment.
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Provided by Fair Housing Institute
In the fast-paced world of property management, HUD complaint notices are not just another administrative task. They are a ticking time bomb that can detonate your operations if mishandled. This article exposes three common pitfalls property management professionals encounter when dealing with HUD complaint notices and offers a strategic roadmap to navigate these challenges effectively.
1. Misjudging Your Case’s Severity
One of the most common errors in handling a HUD complaint notice is underestimating its seriousness. It’s easy to dismiss the urgency of these notices with thoughts like, “It will take ages for an investigator to look into this, so it can wait.” This type of thinking can be dangerously misleading. Every HUD complaint should be treated with immediate attention and gravity, as neglecting the early stages of the investigation can spiral into more significant issues later.
Immediate Action is Crucial: The initial response to a HUD complaint should involve a thorough review of the allegations, alerting your insurance carrier, and considering a consultation with legal counsel, especially if the potential for liability is high. Legal experts can offer a preliminary assessment of the risks involved and guide the following steps, including collecting specific documentation and preparing for interviews with all parties involved. In less complex cases, while upper management might handle the situation, the nuances of HUD regulations may require legal expertise.
2. Lack of Evidence: Before and After the Complaint
Before the Complaint: Proper documentation is the backbone of effective property management. A robust documentation strategy supports operational efficiency and serves as critical evidence in disputes. Unfortunately, many property managers maintain inadequate records, which can severely weaken their position when a complaint arises. Essential documents include lease agreements, resident communications, maintenance logs, and formal complaints and resolutions. These documents are necessary to avoid unfavorable judgments and costly settlements.
After the Complaint: The initial complacency often extends to the post-complaint phase. Some managers delay vital investigations, such as in-depth interviews with staff and residents, and hesitate to collect necessary evidence promptly. This procrastination can lead to a scramble when deadlines approach, resulting in poorly gathered and presented evidence. To counter this, beginning a structured evidence-collection process is crucial immediately after receiving a complaint. This includes securing all relevant documents and digital communications, as well as preparing a list of potential witnesses and interviewing them. Also, a thorough review of your company’s policies and procedures is warranted. This way, you can see if there are any gaps and determine if they were properly executed by staff. These steps ensure you are better prepared to respond to the inquiry and defend your practices or provide relevant material to your legal team.
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3. No Post-Mortem Analysis of the Complaint
Whether a complaint is resolved in your favor or not, each case presents a unique learning opportunity that should be noticed. The absence of a structured post-mortem analysis is a critical oversight many property managers make. Reflecting on handling each complaint can reveal significant insights into operational weaknesses and areas for improvement.
Learning from Every Outcome: Successful complaint resolution doesn’t necessarily mean the approach was flawless. Similarly, an unfavorable outcome isn’t just a sign of failure but an opportunity for critical adjustments. Conducting a detailed review of the process, decisions made, and the effectiveness of the evidence presented can help refine complaint-handling procedures. This review should involve all stakeholders, including legal advisors, and result in actionable policy and practice changes where necessary.
Key Takeaways: Lessons Learned from Handling HUD Complaints
Proactive Management: The ultimate goal is not just to manage and resolve complaints but to prevent their recurrence through proactive management and continuous improvement of practices. Property managers can significantly mitigate risks and enhance service quality by understanding the gravity of HUD complaint notices, ensuring comprehensive documentation before and after complaints, initiating swift and thorough investigations upon receiving complaints and engaging in continuous learning from each case.
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This episode is all you need to know about what protections they have, what amenities they are looking for, and all the odds and ends landlords need to know about having this age group as tenants.
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Provided by Bigger Pockets
Key Takeaways
- Real estate gurus often charge high fees for advice about real estate investing.
- These courses may range from several hundred to thousands of dollars. Some might offer value, but others could be a rip-off.
- If they promise get rich quick or no-risk strategies, these could be major red flags.
Guru programs are notoriously difficult to assess in terms of quality or outcome for their students. Some students rave about their gurus, while some complain about how they got ripped off by a fake guru.
Six Signs Your Real Estate “Guru” Might Be a Rip-Off
There are a few patterns that raise yellow and/or red flags that I want to call out that are concerning and should make you skeptical when deciding whether to spend thousands (or sometimes tens of thousands) of dollars on guru training.
1. They have a celebrity connection that they never stop talking about
Gurus will typically flaunt a network of connections that include a celebrity that they have “invested” with or promise will be involved in their course or seminar. Chances are the celebrity will not make a live appearance, and the closest you’ll get to the celebrity is a recorded video of them discussing all the massive benefits of real estate that will surely turn you from the “average Joe” to a rock star owning a yacht.
2. You will get rich quick! Or will you?
Real estate investing and wealth building is a very long-term game that requires significant capital, education, and risk. Real estate is a very slow, long-term investment that includes cyclical markets that can take years to recover from.
Putting in no money, spending no time on education, and relying on a course to help you get your first deal is the best way to increase your risk and start off on the wrong foot. No and low-down payments are very common practices you will hear to get you started but let this be your warning that if you have no money, you should reconsider investing in a course or your first deal.
Additionally, speaking to the “no money needed” advice, you will be surrounded by advice that will teach you “why” you should invest in real estate instead of “how” to actually invest in real estate. Do not get shiny object syndrome, and definitely do not let the redundancy of FOMO (fear of missing out) affect your decisions to invest in real estate.
Here are a few very common phrases that should ring alarm bells that you should definitely avoid:
- “How to invest in real estate without doing any actual work!”
- “Make a fortune in real estate with this secret!”
- And, of course, my personal favorite: “Automate your portfolio and travel the world while your tenants pay your mortgage.”
3. There’s no money-back guarantee
Legitimate programs offer a money-back guarantee if you are not satisfied with the product. A big way to increase your risk is to join a program, group, or seminar that comes with an intro fee but does not mention a money-back guarantee in its description.
Expectations should vary based on the duration of the programs as well. If you are 14 weeks into a 15-week program, I would not expect you to want a refund on your payment. But a two-week program? I would definitely expect some form of a money-back guarantee.
4. You will be surrounded by upselling
You’ll be inundated with content about how the guru was just like you before they became ultra-wealthy. You will find that the seminar is focused on the benefits of why you should invest in real estate, how your day job is holding you back from becoming a successful entrepreneur, and, of course, opening your wallet to pay for an advanced course.
You will likely see that there is a massive discount on the advanced course if you sign up during the free webinar, driving even more FOMO. Do not be pressured into making a decision on a deal that sounds too sweet. If it is a great deal while you are in the webinar, it should absolutely be a great deal tomorrow as well.
5. There is no risk or downside to real estate!
All investments come with risk. So, when you’re told of “guaranteed methods to get rich,” run in the other direction.
You are flat-out being misled if you do not think there is any risk associated with investing in real estate. Like any investment, real estate can go up or down. You can earn a big payday when you research and make a sound investment, but you can just as easily lose big if you don’t know what you’re doing. That’s not to mention factors that are unexpected or completely unknown that can ruin a deal.
6. Overwhelmingly positive testimonials and reviews from students
The “reviews” for a guru come exclusively or overwhelmingly from individuals who create accounts on BiggerPockets with seemingly no other purpose than to dispense undying love and/or personal loyalty to the guru, with lengthy commentary about the complete life turnaround that spending $5,000 to $100,000 had in a very brief period of time, rather than a rational assessment of the pros and cons of the program and their outcomes achieved so far.
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Tips to Avoid a Fake Guru
Now that you have seen some of the most common tactics used to get you hooked into the trap, you are likely wondering: How do I avoid this?
I grew up in the digital age and can attest to the fact that it is extremely easy to fall into the “guru trap” with how accessible online education has become. Aspiring to become a real estate investor takes numerous hours, days, and even years in your educational phase, and to be steered away from get-rich-quick habits in this business will only benefit you in the long run.
I have paid for courses and programs that I did not receive the expected value in return, so please let the following tips to avoid the trap save you time, energy, and hard-earned capital.
Use our trusty friend Google
This will take you five minutes and will give you a wealth of information about a particular guru from multiple sources. You will certainly find positive and negative feedback and likely a few golden nuggets about the pricing of additional programs that would come later down the road. One step further than Google, I’d add, is to check the Better Business Bureau website to see whether consumers complain that the company hasn’t followed through on its services or promises.
Ask questions in the forums
I am going to beat this drum as long as I live. There are numerous ways you can find out information about a guru before you inquire about their offering directly from the source. This is not a shameless plug for the BiggerPockets forums, but I will guarantee you that our community will steer you away from these types of traps.
There is likely not a question about real estate that our community has not answered in detail over the many years of existence on the forums, but you should never let that hinder you from asking again and seeking additional information. We have an extremely dense population of investors who have either had the same question or have gone through a negative experience that will be shared and bring more light to the situation.
Test free subscriptions and services
Very commonly, you will see that you need to upgrade to the next tier to unlock a basic service, tool, or platform that you will likely be able to use for free! Do not upgrade to anything extra if you have made no money in the “free” service. If you have made no money in a free program, why would you make money in the advanced program?
This is a business—treat it like one
As emotional as you think investing in real estate is, it all boils down to your numbers. I will guarantee you that talking to a guru will make you feel like you are on the sidelines and that you will be missing out on the most golden opportunity of a lifetime.
Automating a system, subscribing to tiered communities, paying for coaching calls, taking online courses, and paying for a private networking trip (AKA a vacation) all sound amazing and feel like something an investor would do daily nowadays. However, this is not true, especially for a beginner. There is no secret in the sauce except for taking consistent action.
Here are some action items:
- Attending local meetups
- Analyzing deals daily
- Listening to podcasts
- Talking with agents and property managers for leads
- Networking in free communities online
- Shopping rates with various lenders
- Sharpening your personal financial habits
- Paying much smaller fees for books
And there are so many more things I could list that I could list that would benefit you more.
Final Thoughts
I have been lucky enough to stumble upon BiggerPockets at a very early stage of my career, and being able to ask questions to a trusted community saved me hundreds, if not thousands, of dollars on education alone.
Do not make the same mistakes that we see recurring on a consistent basis, and always do as much research as possible until you feel comfortable moving forward with your endeavors. I have made mistakes in the past and will continue to make mistakes in the future, but these mistakes will certainly be insulated and far less expensive due to the guardrails of the trusted network I am extremely proud to be a part of.
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By Jordan Teicher
Discover how rent reporting can incentivize on-time payments, strengthen relationships with renters, and streamline rent collection.
In the United States, approximately 26 million people are “credit invisible,” lacking a history with credit bureaus. This makes it hard for them to get approved for things like credit cards, car loans, or even their next home. However, renters and landlords alike both have an easy opportunity to help address this issue.
Zillow’s rent reporting feature, which debuted in 2023, gives renters a way to build their credit history and possibly boost their score by reporting their on-time rent payments to Experian and Equifax. For landlords, having renters opted in to this feature can also lead to several major benefits.
Encouraging timely payments
The prospect of building credit may incentivize renters to pay their rent on time. Zillow’s feature, which is free for all renters, only reports on-time payments and is designed to encourage renters by contributing to a positive credit history with each punctual payment.
For landlords, this could mean fewer late payments and less time spent chasing down rent, improving cash flow and operational efficiency. To get paid more reliably, set up Zillow Payments for your properties. Rent collection is free for your business, and there’s no fee for renters who pay with ACH transfers. (There’s a small fee for them to pay rent with debit or credit cards.) When your tenant completes the Zillow Payments enrollment process, they’ll be able to opt in to rent reporting.
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Streamlining rent collection
Rent reporting and the rest of the Zillow Payments platform can help streamline how you collect rent and manage your business. Renters receive automated reminders and can set up autopay, so you always know when to expect deposits. Our 2024 Rentals Consumer Housing Trends Report revealed that 69% of renters indicate they want to pay rent online, but only 60% typically do. This system also keeps a documented history of payments, which can be beneficial for tax preparation and resolving disputes.
Strengthening renter relationships
Offering rent reporting can improve your relationship with renters. Less than 5% of renters have their payments included in their credit history. However, over 80% of renters want on-time payments to impact their credit score, according to Fannie Mae. So, there’s a large untapped market of renters who would likely appreciate a landlord who understands the advantages of reporting and gives them the opportunity to build credit. Happy renters may be more likely to renew their leases, reducing turnover and the costs associated with re-renting properties.
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