Tag: Real Estate Investment

Categories
Landlords

How and Why You Should Set Up Recurring Rent Payments for Your Tenants

A mobile phone with an online payment showing on the screen.
Source: Photo by Mika Baumeister on Unsplash.

Collecting rent can be one of the biggest hassles of owning rental property. Not only do you have to keep track of when rent is due, but you also have to chase down tenants who are late on their payments.

Wouldn’t it be nice if there was an easier way to collect rent? Well, there is.

You can set up recurring rent payments so that your tenants’ rent is automatically deducted from their bank account each month. Not only does this make things more convenient for both you and your tenant, but it can also help ensure that you always get paid on time.

In this blog post, we’ll explain how to set up recurring rent payments and the benefits of doing so. By the end, we hope you’ll see just how easy and helpful an automatic rent payment system can be.

Why Set Up Recurring Rent Payments

As a landlord, having a reliable, predictable source of income is essential. That’s why automating recurring rent payments can be so beneficial. Here are a couple of benefits:

  • On-time payments: Your tenants will have their rent deducted from their bank account automatically each month. This means that you won’t have to worry about chasing them down for late payments or collecting checks in person.
  • Electronic processing: All payments are made electronically and on the same day each month, saving you the hassle of manually entering tenant information into your accounting software. Most systems can handle automatic payments for you with just a few clicks.
  • Incentivize recurring payments to encourage sign-up: Some payment processing providers include a discount function so you can offer incentives to your tenants for signing up for recurring payments. This can be a great way to encourage more people to use the system, making rent collection easier for you.

Protect your cash flow, and you’ll protect your investments—isn’t that the only thing that matters?

How to Set Up Recurring Rent Payments

Setting up recurring rent payments is relatively easy, and it’s worth taking the time to do so. Here are the steps you’ll need to follow:

  1. Choose a payment processing provider: Decide which payment processor you’d like to use. Some popular options include PayPal, Stripe, Square, and Apple Pay. Each company has its own set of fees and features, so take some time to compare them before making your decision.
  2. Set up an account: Create an account and link it to your bank. This will allow payments to be transferred directly into your account on the rent due date.
  3. Collect tenant information: Collect some basic information from your tenants, such as their name, address, bank details, and rent payment amount. Ensure that all information is accurate and updated before proceeding with the setup process.
  4. Set up automatic payments: Set up automatic payments for each tenant in your system. This typically involves entering their bank details and setting the payment amount and frequency (e.g., monthly).

Once you’ve completed these four steps, you’re good to go. Sit back and wait for the payments to come flowing in. Your well-deserved cash flow is on its way.

Best Tools for Recurring Rent Payments

We recommend the following payment processing providers for their ease of use and excellent security:

  • Avail: This landlord software is owned by Realtor.com and helps you streamline rent collection (even if you don’t work with a property manager). Avail allows upcoming payment scheduling by automatically reminding tenants before the due date. Tenants who split the rent with their roommates can also divide the bill accordingly.
  • Apartments.com: Previously known as Cozy, this tool automates rent collection and monitors all rental payments from one dashboard. You’ll see everything in one glance. The platform also sends reminders to tenants, just like Avail.
  • Buildium: If you have 50 or more properties in your rental portfolio, Buildium is your best bet. The software can set up recurring and one-time payments for tenants to pay online or offline, where the funds are transferred in a few minutes instead of a few days.

There are others, too, like Zillow Rental Manager, Rentec Direct, TurboTenant, PayRent, and ClearNow. Whichever platform you choose, you can rest assured that rent collection will take care of itself.

Automatic Payments, Automatic Cash Flow

Setting up recurring rent payments is an easy way to make collecting rent more convenient for both the landlord and the tenant. Not only does it help ensure that your rental income is always on time, but it can also save you time and money in the long run.

We hope this blog gives you a better understanding of how to set up recurring rent payments and why it’s a good idea to do so.

If you have any questions or need help getting started, join us as a REIA member today  and attend our upcoming meeting ! We also have a newsletter, so you’re never out of the loop.

Categories
Short Term Rentals Shortterm Rentals

Should You Invest in Airbnbs? 2023 Short-Term Rental Real Estate Forecast in Detroit, MI

Beautifully decorated short-term rental studio unit
Source: Andrea Davis on Unsplash

What accommodation did you book for your last vacation?

We’ll bet $100 that you Googled something like “tiny home” or “farm stay” instead of the usual hotel room!

The US real estate market is filled with short-term rental market opportunities, where people gravitate towards cozy, picturesque rentals instead of cold, clinical hotel rooms. Millions of listings sell an excellent guest experience, and the market for unusual Airbnbs grew tenfold during the pandemic.

Still, some hotspot, short-term housing markets like the City of Detroit remain overlooked. Many investors focus on the likes of San Francisco, California, and miss out on the goldmine that’s largely still untapped in Michigan.

So, in this article, we’ll go through market trends and statistics that prove the potential of the Detroit short-term rental property market in 2023 and beyond.

Short-Term Property Statistics in the City of Detroit

Let’s start with the numbers. How is the Detroit real estate market performing in 2022?

Understanding the data behind the average Detroit property investment will give you an idea of the city’s short-term rental capabilities, so you’ll know what returns to expect. Besides handling renters and maintaining the property, financial viability will always be the driving factor in every good investment.

So, here’s a snapshot:

  • Affordable properties: The median price is $85,000 with 7.6% increases year-over-year, making it an affordable city. And with a price per square foot of $75 (less than half of the $222 national average), you’ll easily find Detroit properties that fit your investment budget.
  • Excellent cash flow: The rent-to-price ratio is roughly 1% to 1.5%, depending on which Detroit neighborhood you choose to invest in. With this range of ratios, you’ll easily generate strong cash flows that’ll help pay off the initial investment and start pocketing returns.
  • Profitability with short-term rentals: The average rental income for short-term rental investing is $2,246, which is a huge difference from the already-profitable traditional Detroit investing where rental income is around $979.
  • High occupancy rate: Average Airbnb occupancy rate is 50%, whereas most US markets have an average of roughly 20% to 40%.
Source: AllTheRooms

Still, be aware that the City of Detroit only allows short-term rentals in your primary residence or owner-occupied properties with two to four units. You can read more about this rule from the local government’s website to ensure that you comply accordingly.

2023 Forecast for Short-Term Rentals in the City of Detroit

As an investor, looking at market forecasts is almost as crucial as checking historical trends. So let’s take a closer look at the forecast for short-term rental properties in the City of Detroit, to help you decide if renting a Detroit home in 2023 is worth your time and money.

According to Zumper, 302 short-term rental properties are currently listed in the city. This figure may seem small compared to the literal thousands of long-term rentals you’ll see on Zillow, but it still indicates a growing short-term rental market in Detroit neighborhoods, as we’ll see in the statistics below.

1. Growing Average Rent Prices

Average rents dipped in major cities across the nation recently. But Metro Detroit as a whole is faring well, where the fastest growing rent year-on-year in the area is in Ann Arbor, where average rent has gone up 23.5% since last year—that’s a 16.1% rent increase.

The chart below shows a 20% rent increase for three-bedroom rentals in the past year:

Source: Zumper

Increasing rent means increasing cash flow for you as the investor. Combine rent increases with the impressive 50% average occupancy rate we mentioned, and you’re looking at excellent returns in the City of Detroit.

2. Increasing Property Values and Appreciation Rates

Detroit properties are increasing in value, which means you’ll get to reap excellent equity gains if you hold onto them for the long haul. Zillow reported that Detroit home values are is at $69,330 (very affordable), and Norada said the values increased by 23.7% in the past year (very valuable):

Source: Zillow

The latest forecast announces that Detroit median home prices will rise by 2.1% from 2022 to 2023.

The city’s real estate also appreciated 89.7% in the past decade, placing it in the top 30% of all cities nationwide for property appreciation. In the last 12 months, its rates have remained among the highest in the country, which explains why short-term rental investors continue to find success in the city.

3. Improving Tourism in the City of Detroit

Michigan’s Motor City has had a unique culture, distinctive architecture, and revitalization renewal efforts for the past years The city is now a prominent tourist destination, called by Time Magazine a “newfound glory,” where travelers are playing a role in its vibrant economic growth.

Eating alone is becoming a real treat in the city, where one can experience Indian cuisine in the Midnight Temple near the Eastern market, immerse themself in Chef Maxel Hardy’s rosemary-filled Rosemary cafe then stray into the adjacent cigar lounge, Byrd. Or, chow down fresh seafood boils straight from the Great Lakes at What’s Crackin’.

The city has dramatically been revitalized from “dangerous” to vibrant and impressive. Today, people are saying, “I didn’t expect the city to be like it is, it’s really amazing!” and “We got the chance to see the city and I really would recommend [coming] here.”

Owner of Multilingual Detroit Motown Tour, Dildora Damisch, shares, “This year, I cannot believe, I am booked every single day! And people coming from all over the world! Unbelievable.” And why wouldn’t she, with more than 2 million international visitors in one year alone?

Accommodations are wildly increasing in the City of Detroit to serve the influx of travelers. There are over 500 new hotel rooms currently in development, including the 158-room Cambria Hotel opening in late 2022 (with golf simulators, Bluetooth mirrors, and the  Detroit Taco Company Bodega), and ROOST Apartment Hotel is set to open in early 2023 in Book Tower, a restored iconic Detroit building.

Your short-term rental could easily leverage the city’s growing tourism industry.

2023 is a Great Year for Detroit Short-Term Rentals

Without a doubt, 2023 is an excellent year to either expand your portfolio or start investing in the City of Detroit’s short-term rental property market. With growing average rent prices, increasing property values, and improving tourism in the city, impressive historical trends will likely continue their upwards direction for years to come.

Want to learn more about Detroit real estate? Join as a member, subscribe to our newsletter, and attend our upcoming meetings! We’re doing everything we can to ensure that you’re prepared, equipped, and confident enough to reap great returns from Metro Detroit.

Categories
Landlords

Marketing a Rental Property: Why & How Landlords Can Brand Their Rentals

: A young designer developing new branding styles
Source: Photo by Faizur Rehman on Unsplash

What do you think of when someone says “electric car”?

I bet you’re thinking of Tesla. And you’re not alone—most people will think the same.

Tesla has established itself as a high-performance energy automaker with a futuristic outlook. Tesla’s branding is so strong the company aptly grabs premium position in every market it’s entered—from solar panels to batteries, the big T is the front-row storyteller.

Wouldn’t it be fantastic if you could use the same strategy for your rental property business?

Good news: You can, and you should. Branding is a powerful marketing tool that enables you to put your business in any position you choose, regardless of whether you want to be known as the “best bang for your buck” apartment unit or the “most exclusive luxury” rental mansion.

Let’s discuss why and how you can brand your rentals to increase your property’s appeal.

Why You Should Brand Your Rental Property

Giving your rental units a brand helps them stand out from the competition, giving you an edge that gets the attention of potential tenants. Unique branding can especially improve your property’s recognition in areas with rentals similar to yours, like if you own one unit in a large apartment building, for example.

Here are three benefits you’ll get from branding your rentals:

  • You’ll attract more tenants. A recognizable brand boosts marketing efforts. Your reputation will spread, tenants will advertise word-of-mouth to their friends, and even when you’ve reached full occupancy, the fact that you’re “fully booked” increases the value of your rental and its demand. You’ll unlikely run out of prospective tenants to keep your vacancy rates low.
  • You’ll attract better tenants. Marketing to the needs of your target demographics proves successful when you attract the very tenants you want. Better tenants maintain the home well and are less likely to move out for trivial reasons, protecting your assets and returns in the process.
  • You’ll be able to charge higher rent and fill vacancies faster. You can potentially charge higher rent if you brand your rental as a premium place. There’s also the concept of perceived value, where tenants pay more for a distinctive experience—even if you didn’t necessarily spend more for the rental property. They’ll be hesitant to leave and likely to justify the higher rent.

The advantages of branding only becomes more apparent if you put yourself in your tenant’s shoes. If you’re choosing from various units to rent, and one of them provides an incomparable experience that’s just your style, wouldn’t you bet all your marbles there? Exactly.

How You Can Brand Your Rental Property

Branding goes beyond creating fancy logos and a unique color scheme for your walls. To brand is to create a compelling story that drives emotion and encourages prospective renters to join the experience.

The key to successful branding is authenticity and trust. Your goal should be to show your potential tenants that your business is valuable to them because they are valuable to you. Caring about your target demographic means showing up for them by offering properties that accommodate their styles.

Here are the best practices for a unique rental branding that’s one of a kind:

  • Communicate a clear message. What do you want your tenant pool to remember about your property? If Tesla is about high-powered and clean electric machines, what’s your rental’s selling point? Make your message memorable, impactful, and novel.
  • Connect with your tenant’s values. What does your tenant pool want out of a rental? What kind of lifestyle are they dreaming of? Prioritize what they prioritize by understanding their perspective. Tesla’s audience prefers luxurious comfort that’s fun. What does your audience care about?
  • Motivate potential renters to act. Branding is marketing, so be clear about what you want your tenant pool to do. Are you looking to fill units quickly? Do you want to make reservations for future openings? Or do you just care that the tenants you fill in are in-tune with your movement to, say, be sustainable or promote mental health, and 100% occupancy isn’t really the goal?
  • Create a sense of belonging. We all crave the feeling of being “home” with like-minded individuals. Create an atmosphere of support and transparency to gain the trust and loyalty of your tenant pool. They’ll see your rental as a safe haven—not just another roof over their heads.
  • Be consistent across all touchpoints. Ensure that your branding bleeds across everything you do and produce—from listing descriptions to how you talk with applicants and take care of your current tenants. Imagine if Tesla suddenly releases a budget-level electric motorcycle for delivery services. That’d be so jarring you’d doubt its entire branding altogether!
  • Stay updated with any changes in the tenant pool. Your target audience’s needs change. Keep a pulse on their demands and behaviors to ensure your branding stays relevant.

The goal is to set yourself apart from competitors to attract the best tenants into your rental business and keep occupancy high. Listening to one “secret sauce” to all successful brands, which you can apply to one or all of the homes in your portfolio.

Good Branding: The Not-So-Secret Ingredient to Business Success

Just because your rental business isn’t as big as the giant Tesla corporation doesn’t mean that good branding won’t work. In fact, branding is what makes a business grow to unprecedented heights.

So, craft a compelling message, connect with your target market’s needs and values, motivate them to do business with you, create a sense of familial belongingness, be consistent with your promise, and stay updated to remain relevant.

The more you understand the decision making process of your tenant pool, the more you’ll see the opportunities for using branding as a real estate marketing strategy.

Join our upcoming meeting for more investment tips! We are a growing community of like-minded individuals sharing our learnings in the real estate space. Subscribe to our newsletter as well and become a member to become the best property investor you can be.

Categories
Flipping

How to Flip Commercial Properties

Source: Nastuh Abootalebi from Unsplash.

With 80% of office stock built in or before the eighties, many commercial spaces in the market have a huge flipping potential for real estate investors like you.


Large floor, concrete and glass commercial properties are tempting to reinvent from the ground up, as starting fresh may better meet the market’s demands. Even after the industry taking a big hit due to Covid-19, the industry is still trying its best to stay afloat.

Flipping commercial properties shouldn’t involve much hassle and should land you impressive profits… If done right. Before you invest, consider the top factors to ensure a successful commercial property conversion that results in profits—not stuck with a property nobody wants.

Let’s discuss all that below.

Know Commercial Property Types and Uses

Consider the needs of each property type and use. Different commercial property types have different purposes. Before you decide how to flip a commercial property, ask yourself, “Does this property have all the features and factors that’ll make it attractive to buyers?”

For example, office spaces are typically leased for businesses, and retail properties are used as storefronts. Industrial properties are ideal for warehouses or factories, while vacant land is perfect for development projects. Multi-family buildings are often associated with residential housing but can also include spaces for restaurants and local businesses.

If you’re flipping a property for office use, does the property have sufficient parking spaces? If it’s a retail space, can it accommodate heavy foot traffic (if there’s any nearby)? Think of what the end-user will prioritize, because that’s what the buyer will focus on—and so should you.

Moreover, take a look at the trends of each commercial property type. For instance, office spaces became risky investments over the pandemic, where companies implemented hybrid and remote work setups. The trend brought the vacancy rate of office spaces up to 15.4% in Q3 of 2022. In contrast, industrial properties and multi-family buildings only have 4.4% and 6.0% vacancy rate, respectively.

So, take advantage of properties with low vacancy rates or located in areas with limited space for new developments. Those spots offer a good supply and demand situation for your investment, where low-supply, high-demand markets make flipping commercial properties to sell at a high price easy.

Calculate Property Values & Demand for Accurate Pricing

There are several ways to determine a property’s value. You can run with one or be a perfectionist by using each method (we recommend the latter!). Ultimately, you’ll want to choose the methods that make the most sense for your project goals.

By calculating property values, you’ll know how much the property is worth when you sell it. In return, you’ll know how much you should spend to acquire the property and flip it.

#1 Determine the After-Repair Value Using Sales Comps

The After Repair Value (ARV) of a property represents the estimated retail price once it’s renovated. By determining the ARV of a property before purchase and renovation, you’ll know how much you can sell it and see if it’ll generate enough profits.

Now, the easiest way to figure out the ARV is by analyzing comps. To run comps, check similar properties within a quarter to half-mile radius. Identify at least three properties that have sold in the last six months that are comparable in size, type, features, and year built to ensure the most accurate valuation of your potential commercial property.

Next, calculate the average price per square footage of the comps you’ve identified. See how much per square foot they cost, and use that rate to estimate how much your property can charge. Here’s the formula for determining the estimated ARV using comps:

ARV = Average Price per square foot of comps multiplied by the square footage of your property

$1,440,000 = 120 per square foot x 12,000 square feet

In the above example, your commercial property will likely sell for roughly $1,440,000. Is that enough, considering how many renovations you’ll do? Determining the ARV allows you to decide if the property will generate enough returns for you to make a flipping profit.

#2 Capitalization Rate

Capitalization rates (or cap rates) allow you to estimate the return of investment (ROI) of a property. Your buyers will use the cap rate formula to see how much they’ll earn in relation to how much they’ll spend to purchase and operate the commercial space. The higher the cap rate, the more the buyer can earn from it, the more you can potentially charge for the commercial property.

Here’s the cap rate formula to see how much income the property will bring to the owner per year:

Cap Rate = Annual Net Operating Income divided by Price or Value

10% = $150,000 / $1,500,000

There’s no one ideal cap rate because there are a lot of factors that affect a property. However, analysts say a “good” cap rate is around 5% to 10%. Anything below that range is a less risky investment, as it’ll take more time to recover the investment cost—buyers wouldn’t want that, and neither should you.

#3 Estimate Flipping Costs

When planning a renovation, it’s essential to get an estimated repair cost (ERC) so you don’t go over budget and deplete your margins for good flipping profits. After all, no buyer is going to invest in an overpriced property, even if you’ve added all the best features and used the best materials.

To get the ERC, obtain cost projections from professional inspectors and establish a range for the total expense. Don’t just work with one inspector, too. Like how we’d get second opinions from doctors, get multiple opinions from inspectors to have a clear view of the rehabilitation spent.

Here are some tips:

  • Two estimates: Ensure that contractors take unforeseen repairs into account. They should also give two price scenarios, so there are fewer surprises during the flipping process.
  • Accountability: Hold all subcontractors accountable for the prices they provide. Don’t allow them to change mid-way, or it defeats the whole purpose of estimating your flipping costs.
  • Final walkthrough: Conduct a final check with each subcontractor. Double check to ensure that they didn’t leave out any potential cost overruns that’ll dig you into a financial hole.

Unless you’re a contractor yourself, work with licensed contractors to get detailed breakdowns of the cost and a timeline to finish the project. Doing so will ensure that you have a comprehensive budget in place and an accurate timeline that makes sense with the market behaviors to maximize your profits.

Repositioning Commercial Properties for Excellent Flipping Profits

With the expectations that office rental vacancies are going down this 2023, it presents an opportunity for investors to take that leap and flip. Still, it’s crucial to make informed decisions about which properties are worth putting your time into to reap the rewards and avoid the pitfalls of a hasty investment.

There are still a few risks when it comes to investing in commercial real estate (or any investment for that matter), but you can challenge the curve by doing your research and preparing before any purchase. Reposition them if necessary to meet the market’s demands!

Ultimately, choose the right property, anticipate the possible renovation costs, and read the market’s behavior, and you’ll maximize your profits in the end.

Are you interested in flipping commercial real estate and want to know more about it? Join us as a REIA member and attend our upcoming meeting! We also have a newsletter, so you’re never out of the loop.  

Categories
Short Term Rentals

What Are Airbnb Guests Dreaming of in 2023 & How can You Benefit?

Checking out Airbnbs for an upcoming trip.
Source: Pexels (cottonbro)

In recent years, short-term rentals (STR) like Airbnb have become a popular choice for travelers. What began as a small start-up has turned into a global phenomenon, with millions of people booking rooms on the platform—especially after the COVID-19 pandemic, where everybody avoided hotels.

But what exactly are people looking for when it comes to their Airbnb accommodations? Just because travelers are back doesn’t mean it’s the same as pre-pandemic times. You need to know what’s trending and if people are after something luxurious or more relaxed and homey experiences.

Knowing that is crucial because it will help you create an Airbnb that guests will want to revisit repeatedly, decreasing your vacancy rate and ensuring that profits keep coming in. So let’s take a look!

6 Trends That’ll Make You the Ultimate Airbnb Host in 2023

Here are six trends to boost your bottom-line profits and increase your occupancy rate. If you’re an Airbnb host or an STR owner, make sure your rental has all the amenities guests are looking for to stand out.

1. Business Travelers Are Back: Make the Space Work-Friendly

Given the COVID-19 pandemic, the business travel industry took a big hit and left it uncertain. Luckily, things are opening up, and business travels are expected to increase this 2023. There’s also anticipation for an increase in business travel spending. This increase means you could receive an influx of professional guests hoping to find comfortable workspaces.

So consider offering amenities that business travelers appreciate, such as multiple plugs and ports for easy charging, fast Wi-Fi, and a spacious desk. You might also want to include a safe where they can store their valuables—anything to make the space feel like a work-home hybrid spot.

2. Travel Is 24/7: Don’t Force Guests to Stick to a Strict Schedule 

People travel around the clock and frequently encounter unexpected situations along the way, so make your check-in time flexible. They can’t control what life may throw at them, so they’ll surely appreciate it if their accommodations can flex along with them.

For instance, suppose a guest’s flight was due to arrive at 9 p.m., but because of aircraft maintenance, they were delayed by two hours. If you listed your Airbnb check-in time as until 10 p.m. with no exceptions, then you’re making everyone’s lives difficult—especially given that 20% of US flights at airports saw delays last year.

So put up a lockbox so that guests can self-check in. Offering options make your listing more appealing to those trying to limit contact with others and increases convenience and safety for all parties.

3. First Impressions Matter: What Will Guests Think?

What will your guests think when they walk through your short-term rental door? Will they notice the badly-lit hallway with peeling paint and crooked frames or the cozy space that feels like a home away from home?

Guests likely won’t spend much time in the entrance area, but this serves as their first impression of your property—don’t miss the chance to wow them right from the start.

Some Airbnb hosts repaint their front door every season, while others opt for more sophisticated features, such as outdoor lights with motion detectors. The goal is to ensure that the “wow factor” is there when the guests arrive, and that the feeling will stay with them throughout their stay.

4. Hotels Aren’t Cool: Turn Your Airbnb Into a Home

People book an Airbnb because they want to feel right at home, as some studies have found. Even when exploring places they’ve never been to before, guests wish for a quiet space to relax. So, to make their stay homey and enjoyable, consider providing these amenities:

  • Toiletries (e.g., shampoo and conditioner)
  • Bath towels and fresh linens
  • Local snacks and drinks (including drinking water)
  • Simple office supplies
  • Don’t forget coffee & tea!

Additionally, you can invest in a Smart TV so they can stream their favorite films and shows, similar to how they probably spend their extra time at home. Moreover, you can go the extra mile and provide a local guidebook to help them explore the area, especially if you get many out-of-town travelers.

5. Minibars Are Useless: Stock the Kitchen with Essentials 

Like most travelers, Airbnb guests will most likely order delivery or grab some take-out for their meals. But one advantage that most short-term rental properties have over hotels is a fully working kitchen, where guests can opt to cook as they do at home.

Of course, they won’t expect your property to have cupboards filled with fresh groceries and a refrigerator stocked with milk and cheese. But there are certain things they hope they won’t have to buy, such as cooking utensils (e.g., pots and pans) and pantry basics (e.g., salt, pepper, sugar, and cooking oil).

Providing a kitchen with all the essentials ensures that your guests have a positive experience in your Airbnb, where they get the comforts of a home beyond that of a hotel room.

6. More Than a Place to Stay: Offer an Experience

You can offer more than a place to stay by offering an experience, too. Add value to your listing and leave your guests with a special memory by sharing a talent or passion of your own. You might decorate with a collection you’ve built over the years or paint the home like your bright, Latin American childhood house.

Integrate activities into your rental house by focusing on one of the 3 categories of Airbnb Experience: culture & history, food, or nature & outdoor. For example, you might focus the vibe of your rental on how to cook like a local, guided hike, or yoga. Whatever activity you choose to focus your style on, ensure its hands-on. Airbnb also has rules for these experiences to be approved, so don’t forget to check them out.

Leaving your guests with a lasting memory (not just that they booked a place to sleep) makes them more likely to recommend and return, which means a chance to earn more cash.

Give Guests Their Dream Airbnb Stay

Airbnb isn’t going anywhere. And with the travel industry starting to return to its pre-pandemic levels, you’ll likely see more and more guests booking your property. Ensure it has everything they’re dreaming of—whether that’s a homey space or world-class amenities—so your rental property investment is always booked. The more you offer, the more they’ll return!

Looking for someone to handle your Airbnb property? Our team of expert property managers are here to help you out. With more than two decades of experience, they’ll take your listing to the next level.

Get in touch with us today to find your perfect partner.

Categories
Landlords

What’s Happening with Rental Amounts in the City of Detroit?

Source: Photo by Andre Taissin on Unsplash

We’ve all seen the headlines—average rent prices are falling for the first time since the latter part of 2020 when COVID was the culprit. For those invested in Detroit rental properties though, the news isn’t as bad as in other parts of the country.

Let’s look at what happened in the Detroit market, for you to stay updated and vigilant in protecting your investments. (TL;DR? Don’t panic! It’s real estate market dynamics.)

Nationwide Rents Decline in Major US Cities

As the graph below shows, the August national average rent price, according to Redfin, was up 11% year-over-year from 2021. If you compare it to past trends, this figure is the smallest recent annual increase we’ve seen—down from a 19% gain in March 2022.

Even if we were to look at the month-on-month growth, the median rent only moved slightly by 0.4%, which is the slowest growth since late 2021 and a drop from the 1.6% increase last year.

Source: Redfin

“Rent growth will likely slow further as the Federal Reserve continues to raise interest rates. Higher interest rates impact the rental market because they put a damper on spending power in the economy as a whole, including renters’ budgets,” Taylor Marr, Redfin’s Deputy Chief Economist, said.

Rent Trends in the Detroit Housing Market

We can’t confirm if the data below only covers the City of Detroit or the entire Metro Detroit area, but we see that the market is included in the top rent price drops nationwide in August 2022:

Source: Apartments.com

Moreover, executive director of Detroit Future City, Anika Goss, shared, “During the pandemic… people living in the bottom quadrant of the income scale were not being supported. If rent softens and people are back to work in 2022, we might see an evening out… in a year or two years.”

Should Detroit investors lower their rent to attract and retain tenants? Fewer people are purchasing homes but they still need a roof over their heads, so they rent. But it seems like Detroiters in the lower demographics are struggling to pay rent, even with the supposed decline in rent average.

Then again, the data above might only reflect rent decline in the City of Detroit—excluding the rest of Metro Detroit which includes far more affluent areas like Oakland County. As we know, these areas aren’t as affected by economic downturns compared to lower income zones.

In fact, based on our observations as a property management company in Metro Detroit, rent averages have flatlined (not declined). The reason why reports show dropping rent averages in the City of Detroit is likely due to an increase in vacant properties instead.

Looking at recent statistics and trends, the city is actually doing pretty well:

  • The city still has exceptionally low home prices with a median sales price of $100,000—a growth of 38% from late 2021 to 2022. In terms of rent, it’s also the fastest-growing city in the metropolitan area, where rent averages are said to have increased by 32% from 2021 to 2022.
  • The average rent for a one-bedroom apartment in the city is $1,000, which is a 4% decrease compared to a year before (February 2022). For a three-bedroom though—which is more popular in the housing market—the median rent is $1,200, which is a positive 9% year-over-year change.
  • Plus, looking at Zillow data, the City of Detroit saw an  increase in average rent, where investors are charging $20 higher rent than last year:
Source: Zillow

The data above is good news for Metro Detroit investors. And if you do have tenants struggling to keep up with rent payments, we suggest that you reevaluate by asking the following questions:

  • Are you charging above neighborhood rent averages?
  • Are your tenants struggling with rent payments?
  • Are they paying on time and in full?

If you screened your tenants well, they might not have financial problems. But if the economy’s downturn caused them to lose their jobs that affected their income, you might need to help them out.

“Gas prices are coming back down, but rents are going up 10, 12, 15%. And rent can end up taking 40% of these households’ income,” Bank of America CEO Brian Moynihan said.

Ultimately, your cash flow depends largely on your tenant’s ability to pay rent. As much as you want to generate top dollar from your rental properties, you won’t get any returns if the renters themselves can’t afford your home in the first place.

Finding the Sweet Spot for Rent Prices in the City of Detroit

The City of Detroit (and certain areas of Metro Detroit) remains to be a landlord’s market, with rent prices increasing despite the economic downturn. It presents an opportunity for investors willing to lower their rents to attract more tenants than ever before, although doing so requires careful financial evaluation.

Screen your tenants carefully and keep an eye on the economy, and your rental properties will remain profitable even with all the market shifts happening. Your goal is to secure capable tenants while generating a healthy return on investment—find that sweet spot for a win-win solution.

Do you want more tips and guidance on navigating the Detroit market?

Sign up as a member, subscribe to our newsletter, and join us in our upcoming meetings. Let’s share information and expert tips to ensure that our investments adjust and adapt to the market.

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Landlords

Pros and Cons: Should You Rent to Section 8 Tenants?

Source: Photo by Jem Sahagun on Unsplash

Section 8 tenants are individuals the government has approved for housing assistance. This program is for low-income families, the elderly, and the disabled to afford safe and clean housing. To be eligible for Section 8 assistance, a family must meet specific guidelines that show they require financial help.

Now, of course, there are pros and cons to renting to Section 8 tenants.

Some landlords may hesitate to do so because of the extra work and paperwork or because they have heard stories about problematic tenants. However, there are still benefits to renting to Section 8 tenants, as you’ll realize below.

We’ve listed all the pros and cons to help you make a good decision.

Pros of Renting to Section 8 Tenants

While most information online (especially in forums) list difficult situations with renting out to Section 8 tenants, there are advantages to accepting them that may change your mind. Here are 4 of them to consider if you’re a landlord:

1. Generate Stable Cash Flow

When tenants have Section 8, the government agency pays their rent directly to the landlord or property owner. This means you’re more likely to get paid on time and in full. In addition, the government will still cover the cost if the tenant does not pay their portion of the rent (usually 30%).

2. Increased Tenant Options

When you open your units up to Section 8 tenants, you may have a larger pool of potential renters. This can be beneficial if you live in an area with a tight housing market or if you’re having trouble finding suitable tenants in the area.

3. Opportunity to Help the Needy

By renting to a Section 8 tenant, you’re getting a good deal and helping someone in need.

Families who receive assistance through this program often have low incomes and would otherwise struggle to find affordable and safe housing. As a landlord or property owner, you can make a difference in their lives by providing them with a place to call home.

Cons of Renting to Section 8 Tenants

Of course, there are also some disadvantages to renting to Section 8 tenants—as with any type of rental agreement. Still some concerns are unique to this type of tenant. Here are 3 of them that you’ll need to consider before taking the leap:

1. More Paperwork and Regulations

Renting to Section 8 tenants requires more paperwork and regulation compliance. For example, you’ll need to keep detailed records of your unit and ensure that it meets all the housing standards set by the government. In addition, you may have to deal with inspections regularly.

2. Limited Options for Termination

If you end up with a troublesome tenant, getting them out of your unit may be difficult. The government has strict rules that protect Section 8 tenants, so you’ll need to have a good reason for wanting to terminate their lease.

The increased complexity of contract termination can be time-consuming and frustrating, especially since it’ll be on top of your already-difficult situation.

3. Possible Lowering of Rent

Contrary to the point earlier, if you live in an area with a lot of Section 8 housing, you may be required to lower your rent to stay competitive. In addition, if the government changes its regulations or funding levels, your rent could decrease as well. This may lead to financial problems down the road.

Find Quality Tenants—Section 8 or Not

There are pros and cons to renting to Section 8 tenants. So weigh all your options carefully before deciding. If you decide to rent to them, be prepared for the extra paperwork and regulations involved. You’ll increase your tenant pool, but you’ll need to know the caveats that come with it.

Do you need help finding good tenants? Join as a REIA member today!

We have regular meetings and newsletter that you can greatly benefit from as a landlord. Don’t miss out on this opportunity to further your investment knowledge and reach your investment goals wisely.

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Landlords

How to Evict a Tenant in Michigan in 2023

Source: Sandra Davidson Real Estate Agents

No matter how well you screen your tenants, you’ll inevitably come across problematic ones who are more trouble than they’re worth. In addition to tenants that stop paying their rent for various reasons, some could be running a liability nightmare or shady business out of your property (putting you at risk of legal consequences), while others may be slobs turning your beloved unit into a garbage dump. You’ll have to evict these problematic tenants before they negatively affect your investments.

But evicting tenants is time-consuming and complicated, requiring you to understand all the regulations involved.

In this article, we provide an overview of the Michigan eviction process to ensure that the ordeal goes smoothly. We also give some information for you to navigate the court system if your tenant contests.

The 5 Steps to Evicting a Tenant in Michigan

There are many reasons why tenants can be evicted from their rental property in Michigan, but here are a few of the most common ones. Having proof of this behavior is not enough to evict them—you should follow specific procedures before they can be legally forced to leave your property.

Here are the steps to evicting your tenant in Michigan:

Step 1: Identify the Grounds for Eviction

As a landlord, you must abide by Michigan’s landlord-tenant laws, which stipulate that tenants may be evicted from a rental property for the following reasons:

  • Failing to pay rent: Tenants who fail to pay their rent on time without giving you any prior notice may be evicted according to Michigan law. Rental payments are immediately considered overdue when they are paid a day past the deadline. A grace period is sometimes provided.
  • Violating the rental lease agreement: Both parties must comply with the signed rental lease agreement for the tenant’s entire stay. While the specific terms vary from landlord to landlord, it usually includes rental property damage.
  • Conducting illegal activity: Under Michigan’s landlord-tenant laws, illegal activities include theft, violence, assault, and involvement in the creation, distribution, or consumption of controlled substances (e.g., drugs and other illegal substances).

If your tenant does one of these things, start the eviction process by serving the tenant with an official written notice. Each reason for eviction has its own rules regarding the length of notice.

Here’s a quick breakdown of each:

Step 2: File the Complaint in the Appropriate Court

After issuing the tenant an eviction notice , the next step is to head to the justice court where the rental property belongs. There, you must file a complaint, which typically costs $45 in Michigan. You might get additional fees of up to $150 though if your case involves overdue payments or damage fees.

An officer of the court will then serve your tenant with the complaint and court summons at least three (3) days before the hearing. They must do so via first-class mail and at least one of these:

  • Giving a copy to the tenant in person
  • Leaving a copy with the tenant’s family member with a request to deliver it to the tenant
  • Posting a copy on the main entrance of the tenant’s rental property

The officer should also have a return receipt confirming that the complaint was sent via first-class mail.

Step 3: Attend the Court Hearing

The eviction hearing takes place within ten (10) days of the summons being issued by the court. However, the court may sometimes decide to hear the case within just five (5) days.

Tenants may object to the eviction by filing a written letter to the court, but it’s not a legal requirement.

If the tenant fails to show up for the hearing, the court will issue a default judgment in your favor. In some cases, the judge can choose to postpone the hearing for seven (7) days, but if they don’t, then they’ll issue a writ of restitution, allowing the eviction process to continue.

This step of the eviction process is usually over within five (5) to ten (10) days, depending on the court’s rules. But if one party files an appeal against the judge’s decision, it will likely take longer.

Step 4: Wait for the Issuance of the Writ of Restitution

If the court decides in your favor, it will issue a writ of restitution, which serves as the tenant’s final notice to vacate the rental property. It also gives the tenants the chance to remove all their belongings before the authorities forcibly remove them and return the unit to you.

The writ of restitution is usually issued ten (10) days after the court serves its judgment, which gives the tenant enough time to file an appeal. However, if they are being evicted for illegal drug activity or health and safety violations, then the writ is issued immediately.

Step 5: Give the Writ of Restitution to Law Enforcement Officials

You have to give law enforcement officials the writ of restitution within seven (7) days of it being issued by the court. However, state law does not specify how quickly you must act, so that’ll be up to your discretion or the number of other evictions already scheduled.

Some areas have introduced guidelines on how quickly the authorities must carry out the writ of restitution, so be sure to familiarize yourself with your local laws.

After receiving the writ of restitution, check with your area’s laws to see if there are local guidelines on how quickly the authorities must carry it out.

Evicting Tenants in Michigan is Complicated, But Doable

Evicting a tenant takes anywhere between two weeks to two months, depending on your circumstances and the reason for eviction. It takes even longer if the tenant decides to appeal the court’s decision. The eviction process may be complicated, but it’s easier with a trained lawyer and property management company.

Get in touch with our team today to help you with everything—from serving official notices to providing writ of restitutions. You’re in good hands with our experienced, expert team.

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Landlords

Minimize the Learning Curve: 4 Expert Tips Beginner Landlords Need to Know

A young man looking professional in his stylish suit
Source: Photo by Austin Distel on Unsplash

Landlording can be a lucrative business, but it also comes with its own challenges. That’s why it’s essential to minimize the learning curve as much as possible and get tips from those who have been in the business for a while. You don’t have to take the trial-and-error approach if you already know the “secrets” and tricks to landlording successfully!

Read on to know the four expert tips for successful real estate investing.

Make It Difficult for Rental Advertising Scammers

Unfortunately, there are a lot of rental property scammers out there—especially on Craigslist. One of the common scams is where other people will steal your real estate listing, use the property information and photos, and replace the contact details with their own numbers and email addresses.

They’ll then:

  1. Attract interested tenants
  2. Say that they’re “currently out of the country” and can’t turn over the keys to them
  3. Have the tenants hire a locksmith to change the locks themselves
  4. Collect rent money and security deposit

Then disappear into thin air. You’ll be left with clueless tenants you didn’t get to screen, and a rental property you can’t rent out without telling the scammed tenants to go.

How can you avoid these scams?

Be proactive and mark your photos with your phone number and contact information. Scammers won’t take the extra time and effort to remove your watermarks; they’ll skip over your listing and look for other opportunities elsewhere.

Another tip is never to publish the actual address of your home. Instead, use the nearest cross streets to give tenants a good indication of where your property is without revealing the address to scammers.

Be Attentive and Creative in Screening Tenants

The ultimate goal of screening tenants is to ensure they are responsible people who’ll pay rent on time, maintain your property well, and abide by all the clauses in your lease agreement. In other words, the best way to avoid bad tenants is by having a good screening process.

Here are our pro tips on how to screen them:

  • Assess their cleanliness: Walk them to their car. Take a peek at how clean or dirty their car is inside. Chances are, if their vehicle is filled with garbage (like this poor vehicle), they’ll treat your rental home the same way, too. Their car is a reflection of what’s to come for your home. Or even do a surprise visit to their current residence – how it looks is how your property will look after they move in.
  • See if they have pets: Don’t ask if they have animals, because they can easily say no to that. Instead, ask how many animals they have—indicating that you already know they have pets and you only want to know how many of them there are. Make it a bit harder for them to lie.

Moreover, don’t believe anybody who says that their animals will “live somewhere else”. All too often, those animals will only live elsewhere for a while before moving into the home.

In other words, make it slightly more difficult for them to hide secrets from you. By checking their car and assuming that they have pets, you’ll get more honest answers out of the applicants, making it easier to decide if you want to accept them as your tenants or not.

Be Cautious in Accepting Upfront Payments Covering Multiple Months

Receiving upfront rent payments may seem great for you. You get to secure the money earlier without having to chase tenants for payments every month. However, take note of the following:

  • Is it legal? State and landlord laws might have a maximum upfront rent payment allowable, while some will require you to pay interest on it. Ensure that you’re familiar with the laws before accepting any upfront rent.
  • Why can the tenant afford it? Did they come upon some money and want to ensure that it goes somewhere necessary before they spend it irresponsibly? If that’s the case, they might not have a stable income or employment to afford the home in the first place.

Of course, there are exceptions to these situations. If you’re renting out to students, for example, the parents might pay upfront rent so their family won’t have to worry about paying monthly rent anymore.

Have a Thorough Lease Agreement

You may be tempted to use online lease agreement templates so you won’t have to create one from scratch. However, barebones templates won’t do much in protecting you or your investment property.

Plus, there are specific state and local landlording laws that you’ll have to consider in your lease, and other rental-specific rules that you’ll want to have (e.g., regarding smoking, pets, or painting the home’s interior). These are things that generic templates won’t guarantee or cover.

Instead, everything you want the tenants to know should be included in the lease agreement, so use online templates only as a guide to creating your own document.

Once your attorney approves the draft, sit down with your tenant and go through the entire thing. Don’t assume that they’ll read the agreement on their own—most of them will skim through it and call it a day. You’ll end up with tenants that will likely forget your rules, creating many problems down the line that could’ve been avoided in the first place.

Ensure that they know and understand your rules by having them put their initials at the start of every paragraph or sign every page of the agreement as confirmation. If anything unfortunate happens in the future, the tenants won’t have any excuse to say that they didn’t know the rental lease guidelines.

Pro Tips for a Successful Real Estate Investment Business

There are many other pro tips that you can learn from experts. Knowing these secrets is the best way to ease yourself into the rental business, become a great landlord for your tenants, maintain your real estate property, and protect your monthly cash flow for investment success.

Become a successful landlord today! Get in touch with me or my team at Logical Property Management.

We’ve been managing properties for more than two decades now, and have more tips and tricks to share for a thriving rental property business.

Categories
Landlords

Top 5 Areas for Short-Term Rental Investments in Michigan 

Source: Airbnb listing

Websites like Airbnb, VRBO, and Homeaway have made it easy for short-term rentals to gain popularity among real estate investors today. In Michigan specifically, you’ll benefit from the growing short-term property market, generate a higher return on investment compared to traditional rental properties, and quickly find new guests thanks to online booking platforms.

Michigan is one of the hottest real estate markets in the nation today. The only thing left is to know which city to purchase your short-term rental in, which we’ve listed below.

We based our list on two key factors: high cash-on-cash returns and rental income. They contribute the most to your short-term rental investment success, which is why we’ve based our list on the two factors.

Disclaimer: All the figures below come from Mashvisor, AirDNA, and Zillow reports.

1. Traverse City, MI

Traverse City is the largest city in Northern Michigan and the largest producer of tart cherries in the nation. In 2012 alone, more than 3.3 million visitor trips were made to this city, resulting in $1.18 billion in direct spending toward its tourism sector.

Guests come here to see the grapevines at Traverse Wine Coast, swim in deep freshwater lakes, and grab a cold one in many craft beer spots. Traverse City is a rustic, charming small city filled with artists, craftsmen, and musicians that contribute to its rich local communities.

Source: Zillow
  • Typical Home Value: $416,822
  • Home Value Increase: 25.4% year-on-year
  • Cash-on-Cash Return: 7.13%
  • Rental Income: $4,572
  • Rental Growth: -16% quarter-on-quarter
  • Capitalization Rate: 7.13%
  • Occupancy Rate: 65.37%
  • Active Rentals: 1,310
  • Rental Channel: 46% Airbnb, 24% Vrbo, 30% listed on both

2. Grand Rapids, MI

Grand Rapids is one of the fastest-growing cities in the nation, attracting travelers interested in art museums, galleries, and competitions. Its tourism industry has also been growing for ten consecutive years from 2009 to 2019, thanks to economic growth and an evolving, diversified community.

Guests come here to visit the John Ball Zoological Garden, Belknap Hill, Gerald R. Ford Museum, Van Andel Museum Center, Frederik Meijer Gardens & Sculpture Park, and Grand Rapids Art Museum. There are also countless craft beer spots, as craft beer is the leading tourism driver in Grand Rapids since 2013.

Source: Zillow
  • Typical Home Value: $308,077
  • Home Value Increase: 17.6% year-on-year
  • Cash-on-Cash Return: 5.42%
  • Rental Income: $3,029
  • Rental Growth: 4% quarter-on-quarter
  • Capitalization Rate: 5.42%
  • Occupancy Rate: 68.79%
  • Active Rentals: 438
  • Rental Channel: 78% Airbnb, 9% Vrbo, 13% listed on both

3. Lansing, MI

Lansing is Michigan’s capital city that attracts traveling families all year round. The city welcomes around 4.8 million visitors every year which fuels its strong tourism industry.

Here, they can visit the Michigan State Capitol with a cast iron dome, the Michigan History Center that details the state’s past, Potter Park Zoo with more than 160 species of animals, Impression 5 Science Center with interactive exhibits, and the R.E. Olds Transportation Museum for unique and vintage cars.

Source: Zillow
  • Typical Home Value: $142,780
  • Home Value Increase: 14.6% year-on-year
  • Cash-on-Cash Return: 8.66%
  • Rental Income: $2,556
  • Rental Growth: 8% quarter-on-quarter
  • Capitalization Rate: 8.66%
  • Occupancy Rate: 65%
  • Active Rentals: 212
  • Rental Channel: 74% Airbnb, 8% Vrbo, 18% listed on both

4. Dearborn, MI

Dearborn is a historic destination for travelers worldwide. In fact, it is home to Michigan’s leading tourist attraction, The Henry Ford—the nation’s largest indoor-outdoor American history museum and entertainment complex. Henry Ford alone attracts around 1.6 million visitors every year.

Apart from The Henry Ford, guests can also enjoy Greenfield Village, Arab American National Museum, the Henry Ford Estate, the Islamic Center of America, the Automotive Hall of Fame, and more.

Source: Zillow
  • Typical Home Value: $214,291
  • Home Value Increase: 16.4% year-on-year
  • Cash-on-Cash Return: 7.48%
  • Rental Income: $2,469
  • Rental Growth: 19% quarter-on-quarter
  • Capitalization Rate: 7.48%
  • Occupancy Rate: 61%
  • Active Rentals: 63
  • Rental Channel: 64% Airbnb, 22% Vrbo, 14% listed on both

5. Kalamazoo, MI

Kalamazoo is known for being the home of the US Tennis Association Boys 18 & 16 Championships for the past six decades, but it’s also the manufacturing domain of Gibson Guitars, Checker cabs, Kalamazoo Stoves, Kalamazoo Sled, Kalamazoo Corset, and Shakespeare fishing gear.

Guests can immerse themselves in the youthful energy and cultural spots in Kalamazoo, such as the Kalamazoo Institute of Arts, Kalamazoo Valley Museum, Gilmore Car Museum, Air Zoo, Bronson Park, Arcadia Creek Festival Place, and Kalamazoo Nature Center.

Source: Zillow
  • Typical Home Value: $215,027
  • Home Value Increase: 14.4% year-on-year
  • Cash-on-Cash Return: 7.31%
  • Rental Income: $2,759
  • Rental Growth: 8% quarter-on-quarter
  • Capitalization Rate: 7.31%
  • Occupancy Rate: 70%
  • Active Rentals: 151
  • Rental Channel: 78% Airbnb, 9% Vrbo, 13% listed on both

4. Short-Term Rentals, Long-Term Success in Michigan

Take your pick from the list above and start investing in Michigan short-term rentals! All the areas we’ve listed are profitable areas for you to take advantage of local tourism industries.

As long as you conduct property rental investment analysis and create a comprehensive income sheet, you’ll be on your way toward investment success in Michigan.

The list doesn’t end here. We’ve gone ahead and evaluated the rental property opportunities in every Metro Detroit city and neighborhood, too. Head to our Deep Dive series to find more hotspots in Michigan.

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