Month: October 2021

Categories
Landlords

Do You Have to Allow Emotional Support Animals in Your Rental?

Heres what to know if you have to allow emotional support animals into your rental property.
Source: Unsplash

Many landlords don’t allow any pets in their rentals.

Usually, it’s because the pets might destroy the home and jack up property maintenance costs with broken lamps, scratches on the wall, and leaving their smell in the carpets and furniture… These make renovations a hassle for landlords and also eat into the tenant’s security deposit—and nobody wants either of those.

But what about emotional support animals (ESAs) and service animals? Should you allow them in your rental properties? Conversely, is it legal to ban them from your rental properties, if you want to?

The answer is complicated because ESAs and service animals are technically not pets in the eyes of the law.

This doesn’t mean that you need to accept tenants with ESAs and service animals. However, it still prohibits you from denying applications due to animal assistance or implementing pet policies on the tenants.

With many regulations surrounding the topic, this article summarizes the important laws landlords need to know from the three following authorities:

We’ll show you the landlord obligations these governing authorities have and guide you on how to approach tenants with ESAs or service animals.

Laws Surrounding Emotional Support Animals & Service Animals

ESAs and service animals are legal assistants for individuals with disabilities and special conditions based on the FHA. Though they seem similar, there is a nuanced difference between the two animals. While ESAs are companion animals prescribed by a mental health professional, service dogs are assistance animals trained to do specific tasks that help a person with disabilities.

As a landlord, you don’t need to concern yourself over differentiating between the two. The bottom line is that both are considered medical devices instead of household pets, with similar laws that protect them.

Since they’re medical devices, these are some of the implications for landlords:

You can’t discriminate against them.

Rejecting an applicant just because they have an ESA is a type of discrimination. Even if the reason is that they did not disclose their ESAs before your approval (which they’re allowed to do), you’ll find yourself in a lawsuit if you try to rescind your approval.

The only time you can refuse is if the animal poses a direct threat to the health and safety of others. Even then, you’d need to show proof that they are indeed a threat, beyond their breed or size. 

You can’t implement pet policies.

When it comes to tenants with ESAs, you can’t implement pet policies against them, because they’re still medical devices, instead of household pets. So even if you are allowing pets in your rental, you can’t charge these medical devices with extra rent, a pet deposit, or fees to cover possible property damages.

Think of it this way: You can’t charge a wheelchair fee to a tenant just because it might scratch your hardwood floors. Likewise, you can’t charge an ESA or service animal fee, either.

You can’t decline reasonable accommodations.

Regardless of your pet policies, you may have to make “reasonable accommodations” for tenants who rely on their ESAs. The situation is similar to how the ADA requires rentals to accommodate wheelchairs. 

There are a lot of reasonable accommodation requests tenants with disabilities can ask for. Still, one of the most significant impacts to landlords is the obligation to waive any no-pets policies for tenants to live with their ESA or service animal.

The process typically goes like this:

  1. A tenant who is blind approaches a landlord with their seeing-eye dog.
  2. The tenant asks for reasonable accommodations on the rental property, such as lower doorknobs and light switches for their service dog to reach with its mouth.
  3. The tenant waits for the landlord’s response. Landlords must act promptly, as an unjustified delay is equal to failure to deliver reasonable accommodation.
  4. Landlords evaluate requests on a case-to-case basis, but always with the criteria that the accommodations should bring tenants closer to an equal opportunity to use and enjoy the rental.
  5. If the accommodations are reasonable, the landlord is then required by law to grant the tenant’s valid requests.

Another point to note is that tenants with disabilities are allowed to make property modifications for full enjoyment of the premises. For example, they can open the closed patio for their emotional support labrador to leave home and look for help in case of an emergency.

As the landlord, you won’t have much control over justified fixes that help a tenant function better with disabilities. While it might seem inconvenient, think about it this way instead—by making your unit more accessible, you’re actually expanding your potential tenant pool in the future. You’re also within your rights to make the tenant revert the unit back to its original condition upon MoveOut (at their own expense).

Conclusion

After scanning through laws and requirements, it seems that the simple answer is yes—you do have to allow emotional support animals into your rental property. And if you don’t, you could face some unpleasant repercussions. 

The main reasons are that:

  • The law prohibits you from discriminating against and denying tenants who have ESAs.
  • ESAs are medical devices that tenants with disabilities need and rely on every day.
  • ESAs are part of “reasonable accommodations” that landlords are mandated by law to grant.

Stay on the right side of the law and be more compassionate towards people with disabilities by welcoming ESAs and service animals as extensions of their owners—your potential renters.

Do you have any other reasons to allow ESAs and service animals in rentals? Drop your thoughts below!

Categories
Wholesaling

3 Ways to Run Comps for Wholesale Deals

New investors are attracted to real estate wholesaling because it’s an investment strategy that doesn’t need a large amount of upfront capital. Moreover, wholesaling real estate helps newbies become more familiar with the industry and gain valuable negotiation skills.

So, if you’re one of those aspiring beginners, you’re in luck. This article will teach you an essential skill that every successful wholesaler perfects: running comps to price your wholesale deals correctly.

What are Real Estate Comps?

Comparable sales, or “comps”, refer to recently sold houses similar to the property you’re interested in wholesaling. They are similar in terms of:

  • Neighborhood or location
  • Property size (square footage)
  • Property condition and age
  • Property type (e.g., single-house home)
  • Property features (e.g., a garage, swimming pool, and number of rooms)

Real estate comps can either be calculated manually or with online tools, as we’ll discuss later on.

Why is Running Comps Important?

To understand the importance of running comps, we have to review a typical wholesaling process:

  1. A homeowner decides to sell their distressed home to avoid foreclosure.
  2. They approach a wholesaler (or the wholesaler approaches them), and the two of them decide to put the house under contract. The value the wholesaler typically pays is 60-70% of ARV (after repair value), minus the estimated repair costs (ERC)..
  3. After agreeing on the terms, the wholesaler finds an eager buyer to sell the contract at a higher price—that is, at or nearer to market value.
  4. The buyer checks out the house, runs the numbers, and sees that it’s a good deal. They will then  agree to purchase the property, and the wholesaler will assign the purchase contract to them.

The homeowner is glad to have sold their house; the buyer is thrilled to have acquired a profitable fixer-upper project. And, of course, the wholesaler is satisfied to have facilitated the transaction, since they pocket the difference as profit.

So, where do running comps come in?

Running comps is part of determining the ARV or the market value of a fully renovated home. This is important because it helps you price the property correctly.

If the price tag you put on a contract is incorrect, one of these two situations will likely happen: 

  • If you price it too high, it won’t attract or convince any buyers.
  • If you price it too low, it won’t give you the margin needed for a significant profit.

Instead, you need to figure out the ideal selling price for you to find motivated buyers and earn a decent wholesaling profit. With this goal in mind, let’s get into the details of how you can run comps yourself.

3 Ways to Run Comps for Wholesale Deals

We’ll show you three simple ways on how you can pull up comps on the internet. Then, once you’ve done your research, our advice is for you to drive by the comps to verify their details.

Method #1: Using the MLS

A multiple listing service (MLS) is an information database established by cooperating local real estate brokers to provide data on properties for sale. Only licensed real estate agents and brokers that pay a membership fee can access an MLS. That said, if you know somebody who can access one for you (or you’re a licensed individual yourself), it’ll offer you the most comprehensive list of properties in a specific area.

Here’s how you can use an MLS to run comps:

  1. Select your property type.
  2. Enter the address of the property you’re wholesaling.
  3. Define your radius. You can start with 0.5 miles and adjust according to property density (e.g., if there are too many properties within half a mile, narrow down the coverage).
  4. Change the “sold” parameter to sold within six months.
  5. Input the size range of your property (the parameter can be 300 square feet above and below the property you’re wholesaling).
  6. Plug in the city and zip code of the property. You don’t want to consider the properties in another city or state, even if they’re within the radius you’ve selected.
  7. Tap the “count” button, and the comps will show up.
  8. Pull up the map to see if any comps are near a feature or school, as they will likely jack up the ARV—even if they’re only a street away from your property.
  9. Assess the property condition and features of the comps, singling out the ones most similar to your home. Make sure to look around the neighborhood using Google Street View to match its location to yours.

Once you’ve narrowed it down to a couple of comps, you can send the results to yourself via email. 

Method #2: Using Real Estate Websites

If you can’t access the MLS, the next best thing is to use real estate websites. They may not be as exhaustive as an MLS, but they can certainly help in pulling up comps.

Start with these three websites:

  • Zillow: Plug in your property’s address, filter the results to recently sold in six months, find the location of where your property would be on Zillow’s map, and use the same criteria as the ones listed in the MLS process to find your comps.
  • Redfin: You can also pull comps on Redfin based on recently sold houses. They use the data that real estate agents use to estimate the “lowest published error rate” in the market. And, unlike other appraisal estimators, Redfin Estimate considers all the homes on the MLS for an accurate property market value.
  • Homesnap: Yet another option is the Homesnap app, which provides the ARV of the properties listed on their platform. The number they give is usually a mid-price between the highest and lowest value. Homesnap also gives additional information like school ratings, average days on the market, and market scores.

These are just three of the many real estate websites you can run comps in. Others include Trulia, Realtor.com, Property Shark, and RealQuest. It’s best to run comps on more than one of them, so your ARV is based on various properties listed on each website.

Method #3: Manual Calculation

Lastly, if you prefer to run comps yourself, here are the steps for you to do so:

  1. Look at the properties within 0.25 to 0.5 miles from the home you’re looking to wholesale.
  2. Find at least three comps of similar property size, type, and age. The more comps you find, the more accurate the results would be.
  3. Single out the homes that have sold in the last three to six months. The idea is to determine the average purchase price under current market conditions.
  4. With the comps you’ve identified, calculate their average price per square foot.
  5. Multiply the number by the square footage of your wholesaling property. Now you have your estimated ARV or fair market value.

Running comps manually does take more brainpower, but it’s always helpful to keep these steps in mind, even if you’re planning to run comps with online tools.

Conclusion

And there you have it! You now know how to run comps for a wholesaling deal. You can use any or a combination of these methods to identify the ideal price for a specific home—even if you’re not so familiar with the local area’s property values.

By knowing how to pull up comps three different ways, you can adapt to any situation whether the home is in a remote location, volatile market, or has the most unique of features. You’re now equipped to analyze and correctly price any wholesaling deals you come across for a successful investment.

We’ve also done another article on how to get started with wholesaling real estate, should you want to educate yourself further on the foundational pillars of the trade.

Do you have any other ways to run comps? Share with us below!

Image courtesy of Ron Lach

Categories
Shortterm Rentals

Best Practices to Optimize Your Airbnb Listing

Wondering why your short-term rental on Airbnb isn’t performing as well as you hoped? 

You might think real estate knowledge is all you need to run a successful Airbnb, but there’s a lot more to it than that. The secret to having a highly-ranked listing and generating traffic on Airbnb is to use marketing skills, rather than real estate know-how.

But it’s not just about creating impressive listings with all the best features and amenities—you need to know how to rank well in search results. By doing so, more potential guests see your listing, and it’ll land you more bookings. And we all know more bookings mean higher profits.

So, to help you in this daunting task, we’ve listed the top ways to optimize your vacation rentals on Airbnb below. Use these ranking optimization techniques to get more people to choose your short-term rental units and see real results.

Tips for Higher Airbnb Ranking

In general, Airbnb recognizes good listings and rewards them with a higher search ranking. Airbnb does this because it wants the users (i.e. your guests) to have the best customer experience on their platform. After all, if they saw a dark basement suite with 2 stars review first, it wouldn’t reflect well on their own brand image.

As a host, your goal is to check off as much of these things as possible to have Airbnb rank your listing higher:

  • Ask for Positive Reviews: According to Airbnb host Nick Child’s data experiment, the average Guest Satisfaction score that shows up on the first page of search is a whopping 83.7%. This means that the more positive reviews you get, the more visible your rental will be.

So, provide your guests with the best experience and encourage them to leave a review after their stay. You want to have as many 5-star ratings as possible to appear on top.

  • Use Instant Book: Instant Book is a feature Airbnb has been pushing to make booking faster and easier for guests. More importantly, Airbnb confirmed that Instant Book is part of their search algorithm, and 50% of its bookings are via this channel.

Additionally, the Instant Book filter might be turned on by default for most guests. With the filter activated, guests will only see the listings that have Instant Book turned on. In other words, your rental might not show up if guests don’t turn off their Instant Book filter.

  • Respond Quickly: You’ll need to have a 90% or higher response rate to use Instant Book. This means that responding within 24 hours or less will boost your search ranking on the platform.
  • Hasten the Booking Process: Since Airbnb prioritizes ease and speed of booking, you should also gain their favor. The faster it is for a guest to finalize a booking with you, the more priority you’ll get on Airbnb’s search algorithm.

If you’re not sure how efficient your process is, evaluate how long it takes for you to finalize booking with a prospect. If they ask a lot of questions and can’t complete the booking within 24 hours, you need to improve your listing and hasten the process.

Improving your listing by adding all features and amenities offered (e.g., wifi, Netflix, cable, water heaters, etc.). That way you’ll reduce the time spent answering potential client clarifications.

  • Keep Booking Commitments: Because Airbnb prioritizes reliable hosts, you should only accept bookings you can commit to.b Every time you cancel or reject guests, Airbnb will see you as an unreliable host, decreasing your visibility on search pages.

One important thing is to ensure that your listing has all the details and considerations listed. That way, the only guests who’ll book with you are the one who agrees to your terms. It’ll be easier for you to accept them since expectations are all met.

  • Update Your Calendar Regularly: Airbnb checks if you’re updating your calendar regularly because they want guests to have an easy time booking a place. Don’t miss bookings when your unit is available, and remember to update it right away when a booking is confirmed.
  • Post Shareable Photos: We all know that good photos attract guests, but what you might not know is how important shareable images are—the types that guests can send to their friends before booking. The more they share your photos, the higher traffic you’ll get, which results in Airbnb prioritizing your listing on search.

Post photos that highlight the features of your listing, photos that aptly describe the place, and ultimately, have the highest chance of being added to the Wishlist feature or shared on social media.

Issues that Lower Your Airbnb Ranking

In contrast, Airbnb also sees “bad listings” and tries their best not to show these to their audience. Moreover, Airbnb also has some features that, when ignored, will lower your search visibility.

Make sure that you don’t do these things, or else you’re jeopardizing your ranking and preventing yourself from attracting guests:

  • Booking Cancellations & Rejections: As we said already, Airbnb wants to prioritize reliable hosts. This is the reason why they’re constantly pushing hosts to achieve the Superhost designation, and will deprioritize any hosts who have a high cancellation rate.

It’s difficult to stop guests from canceling. However, by updating your calendar and including all important details in your listing upfront, you can significantly reduce the chances of guests canceling a booking due to a myriad of reasons.

You also need to make sure you’re not rejecting guests because it will also make your rank go down. Every action you take on Airbnb factors is tracked and being factored into your performance.

  • Extra Charges: Extra service fees and additional security deposits will affect the amount of traffic your listing receives—especially if you’re charging more than other hosts. Once your booking rates drop, your search ranking will fall with it.
  • Too Strict: Flexibility is another factor to consider. While you might want to limit a guest’s stay to just a few days, like the weekend or weekdays, that excludes a lot of people. If you’re more flexible, you’ll appear in more searches. 

Summary

Use all our tips and tricks to optimize your short-term rental listing on Airbnb and help you generate more profits. When you’re a stellar host, your guests will thank you and appreciate it. While some see Airbnb as a means to make money, it’s also a way to provide others a lovely place to stay and create lasting memories when they visit.

Remember that it all boils down to providing a great experience for your guests. Impress them, and you’ll have plenty of people hoping to stay with you. 

Any other tips we’ve missed? Drop us a comment below on what’s worked for you with your Airbnb listing! 

Image courtesy of Andrea Davis

Categories
Flipping

Top 5 Mistakes Novice Flippers Overlook (And How to Overcome Them!)

Reality TV shows may paint a picture of how easy it is to flip a property, but the actual reality is much more complicated than that. Unfortunately, beginner real estate investors often jump into the business without knowing anything about real estate and how it works!

In a nutshell, house flipping is buying a distressed property that you repair and sell for a profit. It’s one of the best ways to earn money from real estate, whether you do it full-time or only as a side hustle. In fact, flippers can make up to $25,000 profit on a typical house in the City of Detroit (provided, of course, that you follow the right advice). 

But like any business, house flipping takes knowledge, planning, and hard work to be successful. Without the proper guidance, you’ll only lose your hard-earned cash. 

So, here are five common mistakes that novices overlook and how you can avoid them altogether.

#1 No Market Knowledge

There’s more to house flipping than what you may know. One of the biggest mistakes new flippers make is buying a property that falls within their budget but is unfortunately located in an undesirable market. As a result, they end up stuck with a home they don’t need, with all their savings tied to an undesirable property.

Solution: Work with an experienced, local real estate agent who knows the real estate market well and can show you the ropes. Experienced agents will know things such as current market prices, what buyers are looking for, and the latest trends in the neighborhood. Then, continue learning by talking to other investors and following real estate investment blogs (like this one!).

#2 Investing Too Much Time and Money

The whole point of house flipping is to earn a good return on investment. But that is impossible if you spend too much money upfront. Moreover, time is also of great essence in the flipping business. On average, it shouldn’t take you longer than 1-2 months to sell it. The longer a property stays on the market, the more you have to pay taxes and maintenance. This increases your capital expenditure and squashes your potential flipping profit.

Solution: Follow the industry’s 70% Rule, which says you should only pay a maximum of 70% property value minus the repairs. This rule is significant for new investors who don’t have extra money to cover a project that goes sour.

For example, let’s say the property value is $200,000 after $10,000 of repairs. In this situation, you should spend no more than $133,000 to purchase the home ($200,000 – $10,000 x .70 = $133,000). If you spend too much money, you won’t be able to sell it for a significant profit.

On top of this, ensure that you work with a professional contractor before you purchase the property. They can inspect the home for you and provide an accurate repair cost for your budget.

#3 Overestimating Your Skill and Knowledge

Are you tempted to save money and repair the distressed property yourself? Keep in mind that so many things can go wrong if you don’t have the necessary knowledge and experience. It only takes one bad swing of the hammer to do irreversible damages to the home!

Solution: Start slow and look for homes that require minimal repairs (remember the 70% rule). You can gradually take up more complicated projects as you increase your knowledge and experience. Alternatively, work with a licensed contractor to flip the home for you so you won’t have to update the wiring and plumbing on a 60-year-old house.

#4 Miscalculating Cost of Repair

This is the most common mistake! 

One thing that most of the flipping & improvement shows get right is the “unexpected repair”. The demo crew opens a wall that exposes dry rot, termites, a major plumbing issue, etc. 

Miscalculating the cost of repairs can make your expected profits disappear. 

Solution: Look for projects that don’t require much work and talk to a trusted contractor to help you bring the home up to suitable standards. Also, build in 10-20% Cost Overrun in your repair budget. Don’t go overboard!

#5 Overvaluing the House

Finally, one of the classic rookie mistakes is estimating your sales price at the highest price possible. While this does happen, and it’s great when it does, you’re better off being a bit more conservative on your estimated sales price. 

Solution: Consult your real estate agent to land on a realistic price based on market analysis and careful consideration of the competition.  

Conclusion 

Home flipping is still a lucrative gig, provided that you are willing to invest the time and effort. While the concept is as simple as selling for a profit as fast as you can, there are so many pitfalls that can derail your efforts and put you in a financially difficult spot. 

Instead, learn from the mistakes of others! Avoid the top five mistakes novice flippers make to become successful flippers without burning cash.

Need more help in flipping houses? Feel free to get in touch. I’m more than willing to help you in your journey to become a successful house flipper.

Image courtesy of Sebastian Herrmann

Categories
Wholesaling

How to Dominate Wholesaling Houses in Your Area

Wholesaling
How to dominate wholesaling in your area

While you might be tempted to cover areas beyond your local real estate scene, it’s possible that you’re already sitting on a wholesaling goldmine—and you just didn’t know it!

Here are the signs of a market that’s ripe for a booming wholesaling business:

  • Overwhelming amount of cash purchases
  • Abnormally fast sales
  • Houses getting multiple offers
  • Escalation clauses (to avoid getting outbid)

If your local area has all these factors, you’re in a great place to become a wholesaler.

Read along to find out the two-prong strategy that will help you dominate your local real estate market and build a successful wholesaling empire—right where you live.

Search-Optimize Your Wholesaling Business

Aside from doing offline marketing, there is also a world of possibilities online. Not only are geographic boundaries removed, but the internet also enables you to effectively target and reach your audiences with SEO (search engine optimization) tools.

Check out these online marketing platforms for real estate wholesaling:

  • Wholesaling websites
  • MLS (Multiple Listing Service)
  • Online forums and auctions sites

All of these efforts hinge on the fact that we do practically everything online nowadays. Your customers are more likely than ever to search online for new properties.

Your goal is to be visible and easily accessible via an online search. This is where keyword research comes in. By knowing what keywords to target, you can also maximize your reach on search engines, gain valuable traffic, and generate qualified leads.

Do a simple test to see how your business currently ranks in search engines:

  1. Search “real estate wholesaler [location]” on Google.
  2. Look at the top results.

Does your name or business appear? Where do you rank versus your competitors? Who shows up before you do?

Well, you need to beat them.

Optimize your searchability by choosing keywords that your buyers will search for, then incorporate them in your blog posts, listings, and website.

Here are some keywords you can consider:

  • local real estate wholesalers
  • house wholesalers near me
  • local cash buyers in [area]
  • local house sellers in [city]

For in-depth SEO strategies and more information on how keywords work, you should also check out Reibar’s article on keywords that real estate investors should be targeting.

To boost your online presence further, you can also pay to get increased visibility in highly competitive markets. Paid advertising involves platforms such as Google AdWords and Facebook Ads.

Network to Outshine Your Competitors

Given the wholesaling potential of your area, you might be competing with a lot of other investors. It’s definitely not bad for business, but marketing will be a challenge.

In our article on the best places to find wholesaling deals[1] , we mentioned a couple of offline marketing methods such as:

  • Driving for Dollars
  • Bandit signs
  • Direct mail campaigns
  • Networking
  • Newspapers

All of these methods are effective in finding wholesaling deals, but networking is the most important strategy when trying to dominate a market.

The good thing is that all competitive areas have an REIA or two in the community – Metro Detroit definitely does.

REIAs are a great place to start making your presence known—the goal is to establish your wholesaling business to outshine other wholesalers and be the go-to property supplier for the local area. REIAs give you access to a whole group of people for:

  • Building an active cash buyers list
  • Developing strong and reliable connections
  • Boasting your overflowing housing inventory

You can also team up with Bird Dogs or acquisitions managers who are interested in the local market. The more properties they bring you, the more inventory you have to sell to cash buyers.

Conclusion

The key to dominating your local wholesaling market is good marketing—both on-ground and online. By networking closely with the community and optimizing your online presence, you’ll set yourself up for long-term success wholesaling in any competitive space. Ultimately, you want to establish yourself as an expert—and building your credibility with a great online presence and consistent quality service is how you do this.

To succeed even in these uncertain times, go through our wholesaling trends and insights that have surfaced during the pandemic. Get a good grasp of the present and future of wholesaling real estate to dominate the business in your local area—and beyond.

Need help in beating your local competition? Get in touch with us! Our team is more than willing to help.

Image courtesy of Andrea Piacquadio

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