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Get The Most Out Of Everyone On Your Team

One of the keys for any successful business owner is maximizing the abilities of their employees. By squeezing every ounce of effort and productivity your business can be as efficient as possible. As a real estate investor you may only have a few employees but you can also influence the people around you. Every real estate agent, contractor, subcontractor, wholesale investor and even attorney can be influenced by your leadership style. With the right leadership tone your team will be much more inclined to go the extra mile and work as hard as possible for you. Here are five things you can do to get the most from everyone on your team.

  1. Understand What Everyone Does. To be a truly great leader you should put yourself in everyone else’s shoes. You should never demand or expect someone to do something that you wouldn’t do yourself. One of the most common complaints from contractors is unrealistic expectations from the investors they work with. Instead of demanding that a project is done in 30 days you need to understand what it would take to get to that point. This requires you do to a little research on pricing and how long certain tasks take. You don’t necessarily need to do the work yourself but you should know what everyone around you does and how they do it. Find ways that can make their jobs a little easier and what you can do to help them out. You can still have a clear vision and offer a firm game plan but without understanding exactly what the process is you won’t be respected. Instead of having your team work hard for you they may question everything you want to do.
  2. Avoid Excessive Rules. Nobody likes to be micromanaged. As a real estate investor you need to walk the line between ruling with an iron fist and letting your team run all over you. By constantly pushing your team you may end up doing more harm than good. The best strategy is to spend time before any work is done reviewing expectations and deadlines. By getting everyone on the same page prior to the start of a project it decreases the need for you to step in. It is important to keep in mind that you are dealing with fellow professionals. A real estate agent with twenty years of experience probably doesn’t need to be told how to do their job. You can certainly tell them what specific types of properties or deals you are looking for but once you do this you need to step out of their way and let them work. As difficult as it may be you need to let go and trust the people around you. Generally speaking the more rules you have more toxic the work environment.
  3. Ask For Input. The best leaders are the ones that are willing to listen to the people around them. Top head coaches in any sport lean on their assistants for advice and strategy. They are not stubborn enough to think they always know the best way to do things. In real estate you should follow a similar strategy. There are times when your contractor may have a better way to do something in your property. It is up to you to listen to them. The people on your team are at the ground level of their respective professions. They are the ones that actually do business in your local market. Ask them for their advice and if there is a different or better way to do things. A minor tweak in strategy can completely change your business. The more open minded you are the more your team will feel vested in your success and want to do more for you.
  4. Open Door Policy. You want to create a business environment where anyone feels they can talk to you at any time. There is a thought in business that if you tell people exactly what to do they will be more efficient. This may work for certain personality types but is not always the case. Employees that feel their voice is heard are the ones that work the hardest. If people are intimidated to call you there is a chance that you may miss out on future opportunities. Nobody wants their head chewed off simply by making a suggestion or offering a solution. You don’t have to take every suggestion that comes your way but you need to be approachable.
  5. Reward. If your electrician or plumber does a great job you need to let them know. There is nothing more demoralizing for an employee than doing good work without being recognized. You don’t need to throw a party for a job well done but you should do something to let them know you appreciate their efforts. A simple voicemail or text can go a long way. If the job was done in a pinch you can even give a small gift as a sign of gratitude. You also shouldn’t underestimate the value of showing up on a job site with lunch or a box of coffee. Your real estate agent or attorney will appreciate you asking to take them out for lunch or even a quick happy hour drink. Show your team that you truly appreciate their hard work. Seemingly small gestures make a big impact.

Your team and employees have a tremendous impact on your success. Never take them for granted. The little things you do can help you get the most from everyone on your team.

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Timing Your Home Improvement Projects

Many real estate investors and homeowners perceive the ‘what to do’ as the biggest challenge in successful home improvement projects, but timing can be just as critical.

Get the order of your scope of work wrong and you’ll see returns drop, projects taking a lot longer than expected, and of course plenty of increased frustration, if not sabotaging your project altogether.

Budget is a big part of this. If there are big uncertainties about the vastness and costs of a potential item like electrical wiring or plumbing you might want to tackle those early. It would be terrible to paint and put in new cabinets or marble bathrooms and glass enclosed showers only to have to rip everything back out and redo it later because a home’s wiring or plumbing need to be completely replaced.

However, this extends down to smaller things too. For example; painting the roof or the walls first, or when to install flooring, as well as even when to bring new appliances or materials on site when they could be damaged by different contracting teams or even stolen.

There are also frequent debates about when to begin advertising or showing a home for sale when you are rehabbing or making over a property. Some want to wait until everything is complete. This can have its advantages, but so can marketing from day one to capture additional buyers and perhaps sell quickly before more money is invested and holding costs begin to eat away at profit margins.

With this in mind; while some might instinctively feel they ought to worry about cosmetics first; it is often the more daunting structural issues which scare off most buyers and can have the most positive impact on home improvement projects.

In fact, many in the market for buying a home may rather pay a little less for a property and add the finishing cosmetic design touches that really fit their tastes rather than paying for them to be redone as soon as they close on the place. Therefore, it is important to familiarize yourself with the most in demand features.

So before you pick up that hammer or paint brush, place that order, or head off to Home Depot again; make sure your home renovation time line is tweaked and ready to ensure a smooth project, while maximizing potential returns and net proceeds from the sale.

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Do I Really Need A Building Permit?

What home improvements require building permits?

Which remodeling items do and don’t need to have permits? Why do permits even exist? How are many real estate investors sabotaging themselves by ignoring the importance of this piece of paper to their profits?

Home Remodeling Projects that Require Building Permits

Home improvement and renovation projects which often require permit approval include:

  • Aesthetic changes to the exterior
  • Structural changes
  • Demolition
  • Adding sheds and alternative structures
  • Finishing basements and attics
  • Moving or adding outlets or plumbing fixtures
  • New roofs
  • Converting garages
  • Additions to a home
  • Swimming pools
  • New electrical systems, including solar
  • Like real estate, all building codes and permit regulations are local. Each authority adopts its own codes. Some are completely customized, but most simply adopt variations of international standards. Exact codes may vary by state, county, and city.

Why Do Building Permits Exist?

The very first records of building codes date back almost 4,000 years. They were originally created to ensure safety for consumers, and ethics and quality of work among builders. This is still the basis for having building codes, and requiring builders, licensed contractors, and property owners to obtain approvals and live up to them. Some estimates put the average cost of obtaining a permit in the range of $400 and $1,400. Permits also alert taxing authorities to property improvements, and potential tax increase opportunities. So this certainly makes permitting a significant source of income for local government. At their various levels, building codes also preserve the look of communities, and control who can build what, what it can look like, and what materials can be used.

What Remodeling Projects May Not Need Permits?

Popular home improvements which often don’t require building permits include:

  • Painting the inside or outside of a home
  • New kitchen cabinets
  • Changing existing plumbing fixtures
  • Replacing water heaters and AC units
  • New fans and light switches
  • Installing basic alarm systems
  • New phone lines
  • Putting in new flooring
  • Screening existing covered outdoor spaces
  • Recoating driveways

It is important not to assume you won’t need a permit. Some authorities put a maximum dollar amount on improvements which can be made annually without a permit. Low end cosmetic remodels may not trip these limits. Luxury home remodels may go over these limits with just a few square feet of tile or new quartz countertops.

How to Get a Building Permit

Getting a building permit can be a pain. It can appear to add extra time and costs. It can also be easier and less painless than many homeowners and real estate investors expect.

The exact process will differ from area to area, but will generally include:

  • Obtaining the application online or in person at the building department
  • Submitting detailed plans
  • Paying the applicable fees in advance
  • Fulfilling any final inspections after work is completed
  • There are also third party permit services which can help expedite the process. Most contractors involved will also be happy to handle the permit process in order to gain your business.

The Dangers of Buying and Remodeling Properties without Permits

Work done without permits, when they are required, is illegal. Illegal improvements can be catastrophic for property owners. It doesn’t matter who did the work, the responsibility and liability is on the current owner.

The potential penalties include:

  • Code violations
  • Fines and daily interest penalties
  • Liens against your property
  • Inability to sell the property
  • Condemnation
  • Seizure by eminent domain
  • Inability to obtain financing, or withdrawal of loans made

Do not underestimate how severe these penalties can be. Some have faced liens of tens of thousands of dollars against their properties.

Building Permits & Real Estate Investing

Whenever building permits are required, real estate investors need to get them. It is just not worth the risk to forgo them. There may be appealing investment opportunities in properties with illegal garage conversions, and other unpermitted work. Experienced investors with good real estate attorneys may find hidden profits in these deals, but tread carefully.

Permits cost money, can take a month – or several – to obtain, and can trigger increased tax assessments and property taxes. For some investors who hope to fix and flip houses in less than a month, it may be necessary to avoid improvements which require permits. Those with the capital and tolerance for much longer hold times – or who plan to and lease them – may be able to find profits others have to pass on.

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Why Every Real Estate Investor Needs a Will

Do you really need a will? If so, how soon should you draft one after buying a home or starting in real estate investing, and how should you go about doing so?

Writing a will and last testament is often one of the last things on a new real estate investor’s mind. There is so much to do and there is already enough paperwork floating around to re-stock an Amazonian rain forest. However, not having a will often means putting your wealth and the future of your heirs into the hands of lady luck.

Without a written will, virtually anything could happen to your estate and assets if anything were to happen to you. This would mean all of your hustle and hard work could be for nothing. Not only could your family be left in the lurch, but you could be too if you are living but unable to manage your money yourself any longer.

For these reasons, having a written will is a must. However, most homeowners and real estate investors simply don’t feel they have the time to deal with the back and forth with an attorney or don’t want to pay out the big bucks. While the best choice is probably to hire the best (and often most expensive) estate attorney you can find to craft one for you, there are other options available.

There are now plenty of inexpensive options for fill-in-the-blank wills to be found online. If this is your desired route, just be sure to do your research, as there can be some issues with these due to variations between state laws and/or outdated information.

If you don’t think you have the time or energy to write your own, there are other online tools that can help you with the process. For example, is a relatively cheap (under $100) option that guides you through the process in just 15 minutes.

Even the busiest and stingiest real estate investors can’t afford to be without a will. You don’t know for sure what’s in store for you the rest of today, let alone in the weeks ahead. Crafting your own right now even if rudimentary, is a smart start. It can always be updated and revised later, but at least your chances of seeing your desires executed will be a whole lot better.

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Does Is Make Sense To Refinance?

Mortgage interest rates have been all over the place in the past 30 days. One day they drop significantly and the next they are on the rise. If you lock in rates at just the right time, you may be able to time the market perfectly. Before you celebrate your interest rate reduction there are a few things to consider. A lower interest rate may not mean a lower monthly payment. While this sounds hard to believe it is often the case when you refinance. Getting the lowest possible interest rate is great but there are a few other items to consider. Before you start your refinance application here are some things you need to keep in mind.

  1. Appraisal Amount. A refinance for a primary residence and investment property are not the same. With a primary residence you may be able to get away with a loan amount at 80% of the appraisal amount. With an investment property your loan amount may need to be 70% depending on the type of loan you take. Even if property values are up in your area your home may not appraise for the value you think. The appraisal takes a snapshot of what is currently happening in the market. A sale from six months ago will not have the impact you think. The most accurate values come from sales under 90 days usually within a mile from the property. Getting your property to appraise at the value you are looking for is the biggest hurdle in your refinance.
  2. Closing Costs/Property Taxes. Perhaps the biggest difference with a refinance and a purchase is in how the closing costs are paid. In a purchase the closing costs are brought to the closing. With most refinances the closing costs are rolled into the new loan amount. You have the option of bringing the funds to the closing but most people do not. The closing costs are almost identical regardless of a purchase or refinance. The costliest item at the closing will be for the prepaid property taxes. The new lender will restart your escrow account and hold a significant amount of property taxes. Depending on when you close it can be as much as six months of taxes. Between your property taxes and closing costs your new loan will end up being thousands above the amount you currently owe.
  3. Decreased Equity. Your new loan amount will directly impact the amount of available equity. Even though equity may not seem important it gives you different options in a pinch. If you needed to sell in a moments notice equity will allow you to walk away without worrying about your bottom line. It also allows you to possibly refinance and pull cash out down the road. With a higher loan amount and decreased equity you may be more inclined to hang onto the property if the market shifts.
  4. Longer Term. The most common loan term is the 30 year fixed. As the name indicates this loan has set payments for the next 360 months. Before you refinance you should take note of how many years you have remaining on your current mortgage. In most cases you will be adding on years to your term and starting over. If you had 22 years left you essentially have nothing to show for the last eight years of payment. With the longer term you may be able to save money per month but at the expense of extra years. This isn’t to say that all 30 year terms are bad but you need to weigh the added years versus the monthly savings.
  5. Monthly savings. It is possible that a lower interest rate may not equal monthly savings. When you add in the closing costs and property taxes your new loan amount will increase. It is not uncommon for your new loan to be anywhere from $8,000-$10,000 higher depending on the annual property tax amount. The higher your loan amount the less change in interest rate needed to make an impact. A quarter point difference on a $500,000 loan will produce a greater savings than a full point change on a $100,000 loan. Any savings need to justify the increased term as well as the closing costs. You also need to weigh the savings with your long term plans for the property. If you plan on selling in the next few years the savings won’t have as great of an impact.
  6. Shorter term/higher payment. As popular as the 30 year fixed is there are other loan terms available. You may consider refinancing out of a 30 year into a 15 year. In doing this the first thing you will notice is how much lower the rate may be. The 15 year fixed works opposite of a 30. With a shorter term your payment will increase in spite of a reduction in rate. If you are not comfortable with the payment you will eventually run into trouble. One alternative to this is keeping the longer term but making one extra principal payment a year. This gives you the security of a more comfortable payment while still reducing your balance over time.

If you are considering a refinance there are a few initial steps you should take. The first is to find a mortgage calculator online and run the numbers. Add your closing costs to your loan amount to find your new monthly payments. You should use a conservative interest rate with your estimate. The next thing you should do is to get an idea of current property values. Keep in mind that you will need an increased value on an investment property. If the numbers make sense and you think the value is there now may be a great time to refinance.

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