Appeal the Tax Bill

As an owner of apartment buildings you have the right to appeal your tax bill. I have heard of owners that appeal their tax bills every year. I don’t do that. However, if I disagree with the tax bill I appeal the tax bill. The process is fairly simple. You fill out the forms requesting a hearing, and usually you will include documentation to substantiate the reduced pricing of your property. In the current down economy it makes a lot of sense to appeal your tax bill. Values have dropped. You could save thousands in taxes by taking the time to appeal your tax bill. By doing so you will not only reduce your costs, you will also increase the value of your apartment building.

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Buy in markets where the median income is increasing

When you are looking to buy an apartment building one of the criteria that you should have is to buy in a real estate market in which the median income is increasing. If the median income is not increasing, most likely you will have a difficult time increasing rents. If you want to increase the value of your apartment building, the best way to do so is to increase rents. An easy way to see if the median income is to go to the state housing finance commission website and check to see over the last year what is happening with the median income in the county in which you are interested in purchasing.

Low Risk Real Estate Investing

If you can eliminate the downside when investing, the upside is great! When it comes to any kind of investing the first rule is to not lose your original principal invested. The beauty of real estate investing is that you can use leverage. Lenders will loan usually somewhere between 50-80% of the purchase price on commercial investments.

Different real estate classes have different risk levels. According to a survey by the American council of life insurance’s mortgage loan portfolio hotels/motels have a default rate of 0.86, mixed use 0.83, retail 0.62, industrial 0.32, apartments 0.29, 1-4 single family homes 0.28, and lowest rate of foreclosures is tax credit properties at 0.03.

Affordable housing has the least chance of being foreclosed upon when compared to all real estate classes. So if you don’t want to lose your original investment, where should you invest? The answer is affordable housing.

There is difficulty owning and managing affordable housing. Affordable housing is built usually with low income tax credits. As a result there are restrictions that apply to the property. Owners and managers that operate low income tax credit properties have to stay in compliance with the restrictions or there are serious consequences.

A real estate investor that wants to take advantage of the low risk investment of affordable housing can partner with experienced managers/owners of low income tax credit properties. Preferred Capital Management, Inc. owns and operates affordable housing in the western united states. If you are interested in learning more about the opportunity of investing in affordable housing, please contact Darrel Dickson with Preferred Capital at 1-888-441-7355.

Paying down debt is a Good Investment

If you have outstanding debt one of the safest investments that you can make is to pay down the principal outstanding loan balance that you owe. If you currently are only making 1% off of a CD from a bank, and you are paying a lender around a 6% rate, paying down debt is a great investment.

It is like getting a 6% return on your investment because you are paying less interest. The money you save is money that stays in your account.

Sometimes the best investment you can make is to pay down debt. You want to make sure that you have a good amount of reserves. Once you obtain a comfortable amount in reserves, if you can’t find an investment you feel comfortable making, then start paying down outstanding debt.

Hiring onsite Managers that will work on Saturday

There is only seven days in a week. Many prospective tenants like to look at properties on Saturdays, because it is there day off. Yet often managers are hired to work Monday through Friday with Saturday off. A more productive schedule would be to give one of your managers Sunday and Monday off, and have them work on Saturday.

Keeping a high occupancy is important is raising revenue and increasing the value of your apartment building. By having a manager available on Saturday’s to show units will increase your showings, and your likelihood of renting units and having a higher occupancy.

The law of averages will work on your side by having your manager work on Saturdays. The more showings will translate into more rentals. More rentals will translate into higher revenue and an increased value to your property. After your apartment building is filled you will then be able to start raising rents. Raising rents will also increase the value of your apartment building.

Look to purchase properties that have ease of access

I have been looking for apartment deals for so long that when I do find a deal it is a gut response. I know it is a great opportunity, and I act quickly. One of the many parameters that I filter through my analysis is the ease of access to a property. An apartment building that is hard to find, is also going to impact your ability to rent.

Look for apartment buildings that are on main streets that have easy access to the apartment complex. Ease of access to your apartment complex is going to make your property easier to rent. Higher rents will ultimately result in greater value.

Buy with little or no competition

I prefer to buy apartment buildings with little or no competition. Properties that are on the open market are usually overpriced or they are bid up. I prefer to write offers on properties that are not listed. I have found that I get a better price on the properties. Recently foreclosed properties present a great opportunity to write an offer. You know the lender is going to want to sell the property. Why not contact the real estate owned department of the lending institution and see how much they want for the property prior to it being listed. If you can save the brokerage fee you may have just cut 6% off the purchase price.

Also follow who is selling properties. If you notice a particular owner is actively selling. Do a little research. Find out what else they own. Find a property you are interested in purchasing. And then contact the seller regarding your offer.

A property not exposed to the market will typically result in a better price for the buyer. Investments in real estate are all about buying at the right purchase price, at the right time, and in the right location. Purchasing a property that is not exposed to the market will help you obtain a better price.