In high-priced areas of the country, site value can easily account for more than 50 percent of a property's total value. When you find better ways to use the property's site, you immediately boost the property's value. Walkways, fencing, landscaping, driveways, storage, and redevelopment may all offer promise for profit. As an alert, entrepreneurial owner, you will think through a dozen or more potential ways to enhance site value.
Here's a simple example to illustrate the potentially significant benefits of this strategy. You purchase a fixer-upper for 275,000 that becomes your principal residence, and then over the next 24 months you invest 25,000 in improvements (paint, landscaping, appliances, decorator items, and so on) and you also invest the amount of sweat equity that suits your skills and wallet. You now have one of the nicer homes in the neighborhood, and you can sell this home for a net price of 400,000 after your transaction costs. With your total investment of 300,000 ( 275,000 plus 25,000), your efforts have earned you a 100,000 profit completely tax-free. Thus, you've earned an average of 50,000 per year, which isn't bad for a tax-exempt second income without strict office hours. (Note that many states also allow you to avoid state income taxes on the sale of your personal residence, using many of the same requirements as the federal tax laws.)
If the property has a swimming pool, landscaping, or other facilities, there will be monthly maintenance expenses to pay. Check out home warranty companies. There are some that will cover your property, which relieves you of unexpected expenses and the hassle of finding contractors to take care of the maintenance problems.
I Service and vendor contracts Review all service and vendor contracts to make sure that you have the right to choose or discontinue the services. These types of services may include, among others, maintenance, landscaping, or laundry. Review and keep records of any equipment warranties and guarantees.
Front yards. The front street view is most important. Reseed lawn areas, plant inexpensive shrubs and trees for improved looks. (Pyracanthas are one of the best shrubs for front yards, because they grow fast, they're inexpensive, they're colorful, and they have thorns which keep kids from pulling them up.) Repair, if possible, or rebuild existing fences. Back yards. Cut and water grass and that's it.
For example, a national landscaping company may be the only one of its kind that's publicly traded. There aren't ten publicly traded landscaping companies that IR can analyze to determine relative valuation. Creativity or outside help from Wall Street is needed here. In this example, IR might re alize that the landscaping company has a national infrastructure that services individual homes, which is similar to that of Rollins, Inc., the parent company of Orkin Pest Control, and also similar to The Brinks Company's division for household alarms, Brinks Home Security. These companies, presumably of the same size (give or take 100 million in value), are very much alike and have the same capital needs and similar margins they are good comparables. Wall Street tends to give these businesses similar multiples.
Don't forget all of the other operating costs for your property, including your outside vendors that provide services. You may have landscaping, pest control, parking lot sweeping, cleaning and janitorial, and other services. Contact each firm for pricing and put these services out for competitive bids when you feel that the pricing and services offered aren't the best values.
Tenants and homebuyers alike love a manicured lawn, flower-lined walkways, mulched shrubs, and flower gardens. With landscaping, you can turn an ordinary building into a showcase property. With landscaping you can create privacy, manufacture a gorgeous view looking out from the inside of the units, or eliminate an ugly view. Especially if you're looking at a holding period of three to five years (or longer), put in those small plants, shrubs, flower gardens, and hedges now. When you sell, those mature plantings will easily earn you a return of at least 10 for each 1 the landscaping cost you.
One of millionaire investor Bob Guest's best deals was on a lease option. The woman who leased his home for a period of two years took amazing care of the property. She landscaped, painted, and improved. As with many lease option tenants, she considered herself the owner of the property even though she had not exercised her option. At the end of the contract she decided not to purchase and control of the property reverted to Bob. In the end, he had two years of strong cash flow from a great tenant and a more valuable property that had been cared for lovingly.
Mow and edge the lawn, pull weeds, fix any cracks in the pavement, and sweep up after yourself. Lay fresh mulch and plant fresh flowers (if in season) and keep them watered. While you're at it, put the garden hose away and hide the garden gnomes.
To attract tenants who will treat your property properly and stay for a long time, be sure that your grounds and exterior areas are sparkling clean and the landscaping is well maintained. Renovating the grounds by removing trash, junk, and weeds is an inexpensive task. A nice green lawn, healthy shrubs, and shade trees enhance any investment property. Make sure that the building structure is presentable and inviting. Some specific exterior improvements to consider are ground level or hanging planters, brass address numbers, awnings, fresh paint, landscaping, and cleanup.
Fixer-upper properties that are found in pleasant areas of town, but that have been overly run down. You know that this kind of property usually is owned by a owner who may be experiencing difficulties with finances, health issues, age related problems, unable to deal with the required management, or a combination of all of these circumstances. These properties often stand out like sore thumbs because of the overgrown landscaping, which hides the buildings and creates an overall distressed look to the property. A lot of plants and trees can actually do a property harm. The leaves clog gutter drains, accumulate on roof areas and rot. Roots crack foundations and the dark damp conditions create mold algae can turn pools into penicillin ponds, stain drives, walks, and patios, and so on. All this becomes a nasty situation when you see it. Yet, it is also an opportunity. You start down your checklist of things to do, and one of them is to find out if there is any green in all that green. In...
Get to know two or more landscapers in your area as part of developing your comfort zone. It is important that you obtain some basic information early about the cost in landscaping. You will find that maintaining shrubs and plants is one of the best ways to improve the value of a property. However, the larger and more mature the plant, the more costly it is. You can buy a small plant for 2.50 that will be worth 150 in a few years. Many landscapers have price lists that they provide to real estate developers and contractors. 3. Buy a book on landscaping. Get one that has photographs or illustrations of plants that are available in your area. Check the values of those plants by visiting retail outlets to give yourself a general idea what kind of profit the wholesaler can actually make. Always use the wholesale price since that is the maximum price you will get from a landscaper.
So what exactly does this strategy mean It means that you're improving the raw land so a builder can come in and build on the property. The developer often provides roads, sidewalks, underground utilities, and landscaping, but this isn't always the case. On one of the projects we're selling, for example, we're putting in infrastructure on one side but on the other one, we're not. We're just getting the final map showing approved lots about 43 lots altogether. Each one will have its own separate title. So we've done all the approval process and then it's up to the builder to put in the road, sidewalks, and utilities. You can do it either way.
We've mentioned depreciation a few times already in this chapter. In this section, we dig a little deeper and explain how depreciation can save you tens of thousands of dollars in taxes. Depreciation, as you may know, is the tax term that lets you pretend that all the improvements made to the raw land in commercial real estate properties are wearing out. Think of the improvements as the buildings, the roads, the landscaping, and so on. But remember that you can only write off or depreciate the improvements on a property. This includes the building and other improvements but doesn't include things that don't wear out like the land itself. Depreciation allows you to write off or deduct a portion of the value of all the improvements according to the schedule below
INCLUDED IN THE PURCHASE The property shall also include all land, together with all improvements thereon, all appurtenant rights, privileges, easements, buildings, fixtures, heating , electrical, plumbing and air conditioning fixtures and facilities, window shades, venetian or mini blinds, awnings, curtain rods, screens, storm windows and doors, affixed mirrors, wall to wall carpeting, stair carpeting, built in kitchen appliances, bathroom fixtures, radio and television aerials, landscaping and shrubbery, water softeners, garage door openers and operating devices, and all utility or storage buildings or sheds. The property shall also include the following items
Cash flow activities are commonly categorized as either operating, investing, or financing activities. Cash inflows from operating activities as they pertain to income-producing properties include income collected from rents, deposits, utility income, laundry and vending income, and interest income. Essentially, any source of cash that flows through the income statement under the heading of operating revenues qualifies as a cash inflow from operating activities. Cash outflows from operating activities includes expenditures made, such as those for management, repairs and maintenance, landscaping, property taxes, insurance, and payments to suppliers. Essentially, any source of cash that flows out of the business under the heading of operating expenses qualifies as a cash outflow from operating activities.
As for daily operations, the property owners will rely heavily on you for this portion of the workload. You'll have to contract on the owner's behalf for items such as utilities, landscaping, and security. If work needs to go out for bid, you'll be responsible for attaining those bids and selecting a bid winner. Monitoring the contractor's work is also your responsibility.
One of the most cost-effective ways to increase the aesthetics and curb appeal of any type of property is through landscaping improvements. Often you can simply replace dead plantings. If you want to do more, have your landscaping maintenance firm make suggestions or contact a landscape architect. With the water becoming more expensive every day, be sure to look into the installation of an automated, water-conserving, drip irrigation system.
Improvements should allow you to increase the rent or add to the property value so that you receive a return of 2 for every 1 spent on the improvements. The best fixer-upper properties for most novice real estate investors are those with simple fixes Painting, landscaping, and minor repairs generally offer excellent results for only minor costs. These simple repairs are also within the skill set of most real estate investors, who may have developed and perfected their talents by maintaining and upgrading their own homes.
The first area where Millionaire Real Estate Investors narrow their search is location. Picking a geographic area not only keeps the process manageable and affordable, it also allows you to become an expert quickly. It's about focus. It's about specializing in a neighborhood, subdivision, or area of town until you have a clear understanding of all the factors that determine local property values and rental rates. Those values and rates are ultimately comparative. If an area consists primarily of single-family brick homes with three bedrooms and two baths, it's important to know if a house with two bedrooms and one bath with siding tends to sell or rent for less. This kind of comparative pricing runs all the way from major features such as bedrooms, bathrooms, and square footage to smaller details such as vaulted ceilings and desirable landscaping. Picking an area helps you master this information more quickly so that you can make informed decisions about the properties you find there.
Housing starts - Housing starts measure the number of residential units on which construction is begun each month. Home builders don't start a house unless they are fairly confident it will sell upon or before its competition. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises and income will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture and landscaping are just a few things new home buyers might spend money on, so the economic ripple effect can be substantial especially when you think of it in terms of a hundred thousand new households around the country doing this every month. Trends in the housing starts date carry valuable clues for the stocks of home builders, mortgage lenders and...
I Be ready for the Saturday drive-by and visit. Put on a good first impression for the person who's just driving by. Make sure the grounds are clean and well landscaped, keep your signs and buildings painted, and have convenient parking. It's a lot easier to lease up your property if you can get potential tenants to come through the front door or call the number on the sign outside. We can't overemphasize enough how important it is to have the completed fixer-upper look dazzling from the outside in.
Research state and local government laws regarding rental property management, because these vary greatly from one area to another and definitely affect your bottom line. Find out about business licenses, property taxes, special tax assessments, rent leveling calculations, and other laws, as well as restrictions concerning landscaping, exterior color schemes, parking, curfews, and so on.
Grounds and Landscaping directly employed by the entity operating the rental property. Related expenses include payroll for office personnel, maintenance and grounds employees, payroll taxes, workers' compensation, state and federal employee taxes, and benefits such as insurance and 401(k) programs. Payroll expenses should not include any costs for work performed by subcontractors, even though you may furnish all of the materials and pay the subcontractors only for their labor. These types of expenses fall under repairs and maintenance. Make-readies for apartments, contract services, security and patrol services, general repairs and related materials, and landscaping services should all be included in repairs and maintenance. Utility expenses consist of all disbursements related to a rental property's utility usage, such as electric, gas, water and sewer, trash removal, cable services, and telephone expenditures. In many instances, these costs are passed on directly to the tenants and...
It's the property manager's job to maintain the landscaping, paint the apartments and the buildings, make sure all the appliances within the rental units are in good working order, and do everything including change the light bulbs in the common areas. This is all the routine stuff that makes an apartment building look like a great place to live, if it is done right, or a dump if it is neglected. It's all in the details when it comes to maintenance.
Homeowners Guide To Landscaping
How would you like to save a ton of money and increase the value of your home by as much as thirty percent! If your homes landscape is designed properly it will be a source of enjoyment for your entire family, it will enhance your community and add to the resale value of your property. Landscape design involves much more than placing trees, shrubs and other plants on the property. It is an art which deals with conscious arrangement or organization of outdoor space for human satisfaction and enjoyment.