If you've read this, or are a "trained-up" landlord, you may go directly to sections #7 & 8
& just read the "how-to part" (link >>) skip the intro!
If this not you, before going ahead you might wish to ponder the following thoughts before
becoming a landlord! The Spreadsheet shows what Might be Possible... for Tax/Cash-Flow
situations... the WRITE-OFFS are one of the keys to success and you will need a CPA/Legal
advisor! These are considered "residential" and NOT "commercial" properties so the most important write offs are 27 not 39 years! (This is on the building. Which do you think is better?)
1 Do you have the patience and the mind set to be a landlord and handle tenants?...
While it is NOT a “get rich quick” investment plan, it IS Rewarding and “Interesting!”
If you can make a long-term commitment, GREAT! YOU are then a problem solver!
( Again, do you really, really, really want to be a landlord? )
If you find some rules a bit “ornery,” that is OK, but consider: Where else do you get
someone to pay your mortgage (principal & interest), insurance, taxes, etc., all while
it potentially grows in value? Plus you (not the tenant) get all the write-offs!!!
2 If you still want to proceed, OK! Our best GUIDE lines are:
“Rule # 1” - “Get the RIGHT tenant!” (This is Crucial! - - - “No ifs, no ands and no buts.”)
“Rule # 2” - “Go back and re-read Rule #1!”
“Rule # 3” - “Be both an honest & good landlord to tenants, (agents) & yourself!”
"Rule # 4" - "Maintain (and / or improve) your property!"
"Rule # 5" - "Pay the taxes! Keep the utilities ON! Prospects must "see" a working place!
- - - That is the core of it! Keep it Simple! - - -
3 We have ~ 30 years of investment / leasing experience and have either solved, or avoided, most
problems that tenants or landlords have faced (in a couple of states). We also ASK you to seek
advice from other professional disciplines as needed, i.e.: legal, accounting / tax, etc. ("Advice"
from "friends" can OK but may be "spotty" at best and at worst, have serious liabilities! )
For all of the statutory legal details try the following link to Texas Property Code its loaded
with requirements and this is Great Bedtime Reading!...
Further, if you are one of our clients and you simply need a form to use... we'll email you one.
(We are required to use the latest version in any transaction. These do change at times.)
To our clients, ... "We are there for YOU!"
4 The state of Texas is more of a “Landlord State” than many other states. The laws are also
quite fair to tenants. Owners (& agents) that don't follow them (or are ignorant of them) may
wind up having trouble. Consider, if you will, a “difficult tenant.” Coupled with a "bad situation."
This is not good!... If you can avoid problems, its usually best!
5 Most real estate agents only deal with sales. The few that do leasing, are never paid enough for
their work, (or grief!) To get a handle on this, one might try to do a “FLBO” (that's "For Lease
By Owner!") Then you need do the following things: follow the laws, local, state and federal.
Plus, you need to Advertise, Pre-screen prospects, Show the property (safely one never knows
whom they are dealing with), - Run their Credit / Background check with landlords and employers,
plus keep all the papers "straight' (include guarding the applicant's privacy), then Accept or Reject
them. (A "denial" due credit and/or background problems should be in writing)... Then fill out a
lease if its a "go" and then... Follow up with lock changes, etc! And you must GUARD their Info!
6 Managing a property, vs. leasing, is a different matter…
The Quigley Team does not normally lease nor manage properties that have been procured /
leased by other agents. We believe it is normally best to start a relationship from the beginning!
We also would appreciate having some prior knowledge of the property before any involvement...
We hope that an investor considers a "full service" agent, before buying an investment!
- - - Investing & the ensuing relationships, should be long-term! - - -
7 The spreadsheet is made to give you a view of possible cash flow and appreciation on
a property. Its fairly accurate yet complicated. (We can NOT teach how it works. For insights
you might attend an advanced class on Excel.) Always check the results by other means...
Before proceeding please Save a "golden copy"somewhere on your hard drive,
copy of the golden copy! If find an error or have a suggestion, please send us an email.
We will attempt to investigate, time permitting! Most of the formulae are “hard referenced,”
so moving things around will likely cause the sheets to blow up! (Do NOT "share" this material!)
By following the link to the spreadsheet, You Agree to hold us harmless for any decisions....
8 Now, (briefly) how the spreadsheet works:(Print this box for future reference.) Link down below
Closing costs, lending costs,
etc. can and will, vary "all over the place! The sheets DO calculate principal and interest, et cettera. (We do NOT plan to do an ARM, nor interest only loans, they are... difficult on investors. If there is a special need, ask about us charging for hands-on training...)
(Red $$$ means a loss, or a maintenance expense to be planned for!) Do Not Panic! If you see RED, this may be write-off against taxes! (This is Good!) Your “Marginal Rate” (Not sure about this? Ask a tax person, CPA, Lawyer, etc. for details.) These sheets are intended to show what might be possible, to get the "mental juices" flowing!
|
|---|
GOOD LUCK! Enjoy! And… “It’s a wonderful
life!” Link>>>
Bill Quigley, Realtor© SRES