It’s a Great time to buy a rental property in Brevard County

The record low interests rates as well as the low sales prices for properties, makes it a great time to invest in a rental property in Brevard County, Florida.  The need for rental homes has increased in the last few years, with all the unfortunate foreclosures and short sales. 

Many people, who are considering taking advantage of the opportunity to get a cheap investment property, may be wondering where to start.  They may ask themselves “Should I buy a really cheap property that needs a lot of work?” “Should I buy one for more money, but could potentially have a tenant in sooner?”  “Should I buy one with a tenant already in place?”

The most important thing to do to start is to work the numbers on paper first.  Then you should weigh all of the options. Which is the best type of house to buy?  What are the plans for the future?  If the numbers don’t work, don’t even go to look at the property. It’s not about buying the prettiest house on the street. It’s about buying the house that brings the most money on the initial investment. How much cash flow will the house bring each month?  You will need to understand the rental market in the area and what similar rental properties rent for. A few years ago, investors would buy properties for their potential appreciation and were not too worried about cash flow. Now that appreciation is probably nonexistent in the foreseeable future, purchases must be made on the basis that they will at least cover their own costs with the rent received.

Sometimes it may be better to pay a little bit more for a property, than spending months fixing it, while it sits empty. Buy one that doesn’t need a major overhaul, but perhaps just some elbow grease and a coat of paint. Get the work finished in a couple of weeks, and get a tenant in as soon as possible, so there’s money coming in. For some people, it pays to save the headache of trying to do the work themselves. They’ll save in fix up expenses and many extra months of holding costs.

Why not buy a house with a tenant already in place?  Collect rent from day one. The tenant will be paying the mortgage, taxes and insurance. If the tenant is in place, money won’t always need to be put in immediately for fix up. If you choose this option, keep in mind when negotiating the contract, to include a clause that states,  that the tenant’s security deposit is to be transferred to the buyer, at closing and last month’s rent (if there is any). Consider what date your closing will be, for a closing in the middle of the month  (provided rent is due on the first), that the seller will have to credit the buyer with a prorated amount of  rent at closing.

Keep in mind, that from finding tenants to fixing faucets, renting out a home can be a lot of work. Yet perhaps the biggest reward for being a landlord isn't the rent checks, but rather the considerable tax deductions for rental homes.

The tax code permits most owners of residential rental properties to offset income by writing off numerous rental home expenses. IRS Publication 527, "Residential Rental Property," has all the details.

Remember, all rental properties are not the same. Location and age of property are key considerations. Renting older property will mean landlords will likely incur higher maintenance expenses. A property for rent in a high crime area will likely require more safety precautions than say a rental in a gated community.  Working with a knowledgeable property manager, who is familiar with the areas,  the rental market, and the current laws could make the difference between a successful investment and a bad investment. 

How's Your Credit Score?

Your credit score is a review of your years of credit history.  The scores range from 300 to 850, the average credit score is about 600.   Unfortunatley, more people these days are experiencing job loss, short sales and foreclosures which adversely affect their credit scores. Some of the other factors that affect your credit score include:

• Credit Inquiries — Do you have too many open accounts?
• Types of Credit — Do you have a healthy mix of loans and credit cards?
• Payment History — Do you pay your bills on time each month?
• Credit to Debt Ratio — How much do you owe versus your available credit?

In reviewing your credit history, you'll find that you actually have three reports. Experian, Equifax and TransUnion, each uses a slightly different model to develop your score. You have a credit score with all three of the bureaus. At Wolters Rentals, we use Trans Union to pull credit.

Most people want a stronger score, but how do you get there? Building your credit score takes time. At Wolters Rentals-A Property Management Company, LLC, we know it's difficult to make a large-scale change in your number with just small, simple changes, but your score can improve in a year or two by keeping tabs your credit report and by using your credit wisely. The best way to do this is to know your credit score. You'll improve your credit score by using these helpful hints:

• Correct any errors on your credit report: If you find incorrect items on your credit report, contact the bureau requesting that the item be removed. If you have a common name or the same name as a family member, you'll want to pay extra attention to make sure the activity reported is correct.
• Even out your debt: At first, this doesn't sound like a good idea. But, you want to avoid of having one card that is maxed out and have your remaining cards at a zero balance. It's better to have each of your cards at an even balance than to have all of your debt sitting on a single card. 
• Use Your Credit Cards: Keep your cards in rotation. Whether you're just getting started with credit, or if you've got older cards, be sure to use your cards so that your accounts maintain an active status. But, pay them off in no more than two or three payments.
• PAY YOUR BILLS ON TIME!   How often you're late with payments greatly affects your credit score. It's one of the reasons people who have recently been unemployed see the biggest hit in their credit score. Yes, it takes longer to build up your credit with payment history, but it's the surest way to prove that you're responsible enough to make payments to a bank.

If you have no credit

• Apply for gas station cards or retail credit. For those who have no credit or less-than-stellar credit, department store credit cards and gas credit cards are ways to repair credit, increase your credit limits and have a solid payment history, which will raise your credit score. Just beware of maintaining a large balance for more than a couple of billing cycles because these types of cards normally have a larger interest rate.

You can learn more about credit scores at www.myFICO.com, Fair Isaac's informational site and once per year, for free, you can review all three of your credit reports at www.annualcreditreport.com.  this gives you your report, but not your acores.  You can get your scores, for a small payment from each bureau on their websites: www.equifax.com, www.experian.com and www.transunion.com.