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By John Souerbry | Broker in Palo Alto, CA
  • Getting Started As A Real Estate Investor

    Posted Under: Rental Basics in California, Rentals in California, Investment Properties in California  |  December 5, 2013 10:24 AM  |  827 views  |  No comments

    Getting Started As A Real Estate InvestorI’m often asked “what is the best method for getting started as a real estate investor?”  Most often, as an investor in small residential properties.  Since every potential investor has a unique educational background, skills, strengths, weaknesses and goals, there is no one-size-fits-all answer.  There are almost as many ways to make money through real estate investment as there are different types of investors.  Finding your most profitable – and possibly enjoyable – niche takes a little up-front self-examination and continued growth throughout your real estate journey.

    Here are a few basic things to consider if you’re thinking about entering this exciting and potentially rewarding line of business.


    Active or Passive Real Estate Investing

    Do you want to be an active or passive investor?  Passive investors typically buy stocks or other financial instruments offered by real estate development companies, management companies, syndicates, trusts or holding companies.  They don’t participate in day-to-day management of their investment.  Active investors typically buy specific properties and actively participate in the management or development of the property.  There are many differences between the two, most notably the time commitment, level of product and market knowledge required, and tax treatment for profits and losses experienced by the investments.

    If starting out as an investor in small residential properties – homes, condos, or one to four unit multi-family – you will most likely be an active investor.  This could be true even if you hire a property manager to assist with operation of the business.  You will probably form and operate your own real estate company – even if you are the only employee.

    If you plan on being a passive investor, you can do so by purchasing publically traded shares of real estate investment portfolios or by being a “silent partner” in various real estate projects closer to home.  Like all investments, it’s a good idea to discuss your investments with a qualified financial advisor to make sure they are a proper fit within your overall financial plan.


    Real Estate Investing and Real Estate Speculating

    There are many ways to generate income through real estate investment.  The two most common approaches are investing and speculating.   Investing typically produces a steady stream of cash flow to you in the form of net operating income.  Speculating is profitable when a property is purchased and then sold for a higher price that is more than the total amount invested, thus producing a net capital gain.

    If you prefer short term projects with a specific start and end, you will most likely be more comfortable speculating in real estate.  Typical projects are site development (buying land and building on it) and “flipping” rehabilitated properties.  Many speculators buy land and merely hold it until market conditions improve and the value increases.  The key to speculation is the basic investing strategy of buy low, sell high.

    If you prefer to buy and manage rental properties for an undefined period of time, you are an investor.  Your profits come from managing the business wisely, controlling expenses and maximizing revenue.  The steady flow of net operating income is your return on investment.


    Educational Preparation For Real Estate Investing

    There are hundreds of books available that cover every aspect of active real estate investment, from Real Estate Investment For Dummies to Trump Strategies For Real Estate.  Browse Amazon.com and your local book store to find books that best fit your plans for real estate investing.

    There are also hundreds of seminars available that offer training for every type of real estate strategy.  Beware!  Most workshops and seminars are marketing presentations designed to get you to sign up for expensive products or coaching that you probably don’t need.

    If you would like to take some general business foundation courses, here is a starter list of subjects you might want to consider:

    College courses:  Accounting 101, Finance 101, Marketing 101, Business Writing, Business Law, Architecture 101

    Real estate courses: real estate principles, federal & state housing law, agency

    Mentoring: see “Build A Team” below

    You can find these courses offered in the classroom and online from two or four year colleges and from real estate training schools.


    Identify Real Estate Investment Resources

    Investing is trading something of value for something else that should produce a profit for you.  What do you have to trade?  Cash is the most valuable commodity an investor can have.  When starting out, you may not have enough cash to fully fund your own deals, so you’ll need to bring in other investors or borrow against other assets you may own.  You can bring resources other than cash to the deal, such as the work you put into finding the investment and a plan to make it profitable.  Many real estate investors don’t own a majority share of their first few investments.  But they keep doing profitable deals and build their cash resources until they are able to finance deals on their own or become investors in deals put together by others.


    Build A Real Estate Investment Team

    New investors should do a self-evaluation to determine what they can do for themselves and what they should hire others to do for them.  These decisions are not just based on the amount of time an investor has available to work with their investment, there also needs to be an honest appraisal of the investor’s skills and abilities.  Here are a few basic service categories that should be represented on your team.

    Mentor:  If you can find one or more experienced investors who are willing to share their experience, either individually or as part of an investment club or group, take advantage of their experience and meet with them regularly.

    Financial planning:  Whether you are investing your own funds or borrowing, check with a qualified financial planner first.  Each investment should fit properly into your total family financial plan.

    Lenders and Investors: If you are providing only part of the funds to be invested, cultivate additional funding sources – either lenders or potential co-investors – BEFORE you need the money.  In most markets, good investment properties sell fast and you want cash or credit already available so that you can act quickly when you find one.  Cash deals with short escrows and no loan or appraisal contingencies go to the top of the pile when sellers review offers.

    Real estate attorney:  Attorneys have a lot of good uses, from creating custom purchase contract clauses to evictions.  I’ve found that many are also good negotiators or negotiating strategists and can help with that facet of acquisitions and sales.

    Real estate broker:  Some investors become licensed real estate brokers, many prefer to stick to investing and work with a broker who understands their business and can help evaluate markets and acquire, manage and sell their properties.  Some brokers even participate in investments, accepting equity in lieu of a commission as long as there is an exit strategy for them (e.g. trading all or part of their commission for equity at time of purchase in return for getting their equity out when they sell it for you).

    Tradesmen:  These include everyone from the simple handyman to architects, plumbers, electricians, roofers, painters, carpenters, flooring specialists, pool cleaners, carpet cleaners, cleaning services, landscapers, lawn care providers, home inspectors, property managers, and pest control companies.  Most investors are loyal to their team, but always keep the phone number of a back-up ready if needed.

    Investment Scouts:  Many investors build a network of real estate brokers or other investors who let them know when an investment is on the market (often called “bird dogging”).


    I hope you found this information about getting started as a real estate investor helpful.  If you have questions about any of the topics covered or real estate in general, drop me a line using Contact Us.


    John A. Souerbry & Associates     (CalBRE 01370983)

  • More Tips For Selling A Rental Home (Part 2)

    Posted Under: Home Selling in California, Rentals in California, Investment Properties in California  |  November 14, 2013 8:43 AM  |  405 views  |  No comments

    More Tips For Selling A Rental HomeMore Tips For Selling A Rental Home

    Earlier this year I published a few tips to help make the sale of rental property easier and more profitable ("Tips For Selling A Rental Home").  Today, let's peel back another layer of the onion and look at a few more tips for selling a rental home that will help us achieve better results from the sale.

    Rent Increase Timing

    The ability to raise rents soon after purchasing a property is an attractive feature for rental investors.  If it's been awhile since you've raised the rent on your property and the market supports it, raise the rent before listing the property for sale.  This has two positive effects: 1) it improves the value of the property based on cash flow or net income and 2) it gets the clock ticking on the earliest possible date that the new owner can make another increase.

    Lease Expiration Timing

    A landlord's ability to raise the rent amount is, of course, dependent upon the lease contract with the tenant.  If the lease is annual, landlords typically can't raise the rent until the lease expires.  Some landlords include quarterly or semi-annual rent escalation clauses in their leases, but in most lease agreements the rent is locked for the period of the lease. If we are planning to sell our rental and we believe potential buyers could be investors OR someone who intends to occupy the property, we should consider putting the tenant on a month-to-month lease agreement.  This provides flexibility for making future rent adjustments or for buyers to cancel the lease with just a couple months notice if they intend to occupy the property.


    If we intend to sell several rental properties, we can sometimes wring more value from the sale by packaging two or more properties together.  A common packaging strategy is to require that an investor purchase an attractive investment property concurrent with the purchase of a second property that might be difficult to sell if it was marketed on its own.


    These are just a few strategies to help increase the back-end return on investment on your rental property.  Check out my original article -  "Tips For Selling A Rental Home."  For help buying, selling, trading or managing California rental property, please contact me today.


  • Silicon Valley Apartment Properties On The Market This Week

    Posted Under: Rentals in California, Investment Properties in California  |  November 4, 2013 2:39 PM  |  349 views  |  No comments

    Silicon Valley Apartment PropertiesThree northern Silicon Valley apartment properties were placed on the market during this past week - all in Redwood City.  Click on the address of the listings below for additional information on each.  You can also CLICK HERE to view all the multi-family properties currently on the market in this area.

    Silicon Valley remains a strong rental market, thanks to the increase in demand for tech and other workers plus the overall market value improvement in the local housing market.  Conditions are good for profitable operation of well managed residential rental properties.  Contact Us for help with analysis and purchase of northern Silicon Valley apartment properties.


    Silicon Valley Apartment Properties On The Market This Week


    $6,099,999 25 Units

    $4,300,000 17 Units

    $2,390,000 10 Units

    Looking for property management support?  We can help, just click on >>> Silicon Valley property management.

  • Property Management Tips: When A Tenant Stops Paying Rent

    Posted Under: Rental Basics in Palo Alto, Rentals in Palo Alto, Investment Properties in Palo Alto  |  July 23, 2013 7:58 AM  |  1,118 views  |  3 comments

    When A Tenant Stops Paying Rent Most rental property owners eventually face this question – what to do when a tenant stops paying rent?  Rent problems often start with several months of late payments or partial payments, and if left unresolved may escalate to no payments at all.  Even tenants who are behind on their rent have rights, so it’s important for landlords to take action as soon as possible and as prescribed by law to protect their investment.

    Here are a few tips for dealing with the unfortunate situation of when a tenant stops paying rent.

    1.    Contact a local attorney.  Landlord/tenant laws and regulations often vary from town-to-town.  Have an attorney who practices in the town where the property is located explain local rules for late rent collection and eviction and help you develop a plan of action.

    2.    Communicate in writing.  Regardless of tenant’s rights laws and the specific collection or eviction process you use, avoid “he-said, she-said” verbal misunderstandings and mistakes.  If you end up in court, you’ll need a paper trail that documents how you complied with regulations and delivered proper notices to demand payment.  Even if you’ve had a cordial relationship with the tenant in the past, late or non-payment of rent is a game-changer.  You may want to hire a professional property manager who is familiar with these situations to deal with the tenant on your behalf and support your attorney until payments are caught-up or the eviction process is concluded.

    3.    Continue to abide by the lease.  Until the tenant has vacated the property, they retain all the rights granted by the lease and the law regardless of whether or not their rent is paid current.  Do not disconnect or discontinue landlord-paid utilities or services, such as water or lawn care.  Make timely repairs when requested.  Do not harass the tenant or disturb their “quiet enjoyment” of the property.

    4.    Inspect the property.  Unfortunately, when a tenant stops paying rent it is common for them to abuse the property.  It is also common for tenants undergoing eviction to claim that the landlord has failed to maintain the property or make repairs when requested.  Unless otherwise advised by your attorney, schedule a thorough property inspection as soon as rent problems start.  Confirm there is no deferred maintenance that would make the property uninhabitable or violate the terms of the lease.  Be sure to give the tenant proper notice of the inspection and document everything with photos and/or video. NOTE: Many landlords make the mistake of photographing only items that need repair.  It is equally important to document that the property is in good condition and that systems and appliances are working properly.  If possible, ask the tenant to sign the inspection checklist stating that there are no problems with the property.

    5.    Follow your attorney’s advice on resolution.  Whether you want to evict the tenant or merely get the tenant caught-up on rent payments, follow your attorney’s advice and follow the steps prescribed by law to reach the desired conclusion.

    6.    Reduce the risk of future tenant problems.  Learn from problem tenant situations and implement strategies to reduce the risk of future occurrences.  Thorough tenant-applicant screening is generally considered the most effective method of reducing tenant problems.  Some landlords prefer annual leases rather than month-to-month or collect rent at the property personally so the tenant knows they are always watching them and the property.  Find strategies that work best in your situation.

    7.    Help other landlords.  A service that property owners and managers can do for others in the rental property business is to give honest responses to tenant screening inquiries.  If a tenant has been late on payments, disclose that when the tenant applies to rent another property and you receive an inquiry from the potential new landlord.  You’d want that landlord to do the same for you.  Just make sure that all inquiries and responses are in writing and can be supported with documentation.

    NOTE: This article is not intended to offer legal advice.  Consult with an attorney whenever faced with lease compliance issues.

    If you have questions or need help with property management or taking action when a tenant stops paying rent (or other problems), read about our Property Management Services or drop me a line:  Contact Us.


    John A. Souerbry & Associates/Real Estate   (CA BRE 01370983)

  • Five Property Management Services That Owners Should Outsource

    Posted Under: Rental Basics in Palo Alto, Rentals in Palo Alto, Investment Properties in Palo Alto  |  June 10, 2013 3:01 PM  |  1,122 views  |  No comments

    Five Property Management Services That Owners Should OutsourceReal estate investors often juggle full time jobs or businesses with providing property management services for their own rentals.  Thanks to innovations such as online rent payment systems and online tenant maintenance requests, many administrative tasks have been streamlined and more units can be managed with less effort.  Unfortunately, there are still a few unpleasant and time-consuming tasks that can cause a lot of aggravation and eat up a lot of a property owner’s time.  For these situations, we recommend outsourcing the task to professionals who can resolve the problem quickly.  Here are five property management services that we recommend owners outsource.

    1.    Periodic Inspections.  Regular inspections are effective deterrents to tenant abuse and neglect.  They also help to spot small problems before they become big.

    2.    Special Circumstance Inspections.  Tenant complaints regarding broken appliances, under-sink leaks, odds smells and trees blown over in strong winds are examples of issues that can arise suddenly.  A preliminary inspection will help to determine the right skills needed for a cost-effective solution.

    3.    Problem Tenant Investigations.  When tenants abuse the property, bother neighbors, violate terms of their lease, or might be conducting illegal activities on the premises, a preliminary investigation helps to determine the right steps an owner will need to take to resolve the problem.

    4.    Late Rent Collection.  Reminding tenants of the need to pay a late fee or confronting a deadbeat tenant face-to-face to collect back rent could be time consuming and uncomfortable.  Relationships with otherwise good tenants can become strained.  Having an outsider handle these situations often leads to faster resolution and reduced tension between owner and tenant.

    5.    Lease Termination/Preliminary Eviction Activities.  When it’s time to terminate a lease or initiate the eviction process, it helps to have a professional doing the paperwork and tenant contact to ensure that both the landlord’s and tenant’s rights are respected.

    These are just five of the more difficult management tasks that can place a heavy burden on rental property investors and should often be outsourced.

    If you have questions or need help with either complete property management services or just those discussed here, please drop me a line:  Contact Us.


    John A. Souerbry & Associates      (DRE 01370983)

  • Silicon Valley Multi-Family Properties For Sale

    Posted Under: Market Conditions in Palo Alto, Rentals in Palo Alto, Investment Properties in Palo Alto  |  June 7, 2013 7:53 AM  |  681 views  |  No comments

    Silicon Valley Multi-Family Properties For SaleInvestors, here are current listings for Silicon Valley multi-family properties for sale.  The rental market throughout the Valley remains strong and good properties in the better areas don’t stay on the market long.

    Click here to see the list > Silicon Valley multi-family properties for sale – including photos and detailed information for each property.

    Need property management help?  We provide complete property management services for Silicon Valley rental properties plus, on an as-needed basis:

    ·           - Annual/special property inspections

    ·          - Problem tenant investigations

    ·          - Past-due rent collections

    ·         -  Eviction support

    ·         -  Pre-purchase operating and financial analysis

    ·         -  Profit improvement analysis

    Contact Us for help with Silicon Valley multi-family properties or buying and selling Silicon Valley investment real estate.


    John A. Souerbry & Associates Call John direct: (650) 815-6182  (DRE 01370983) 

  • Napa Valley Multi-Family Rental Properties For Sale

    Posted Under: Market Conditions in Napa County, Rentals in Napa County, Investment Properties in Napa County  |  May 24, 2013 10:01 PM  |  964 views  |  No comments

    Investors, Napa Valley multi-family rental properties continue to be in short supply as most owners are holding on to profitable units.  But a few good properties are coming on the market and are worth a look.

    Click here to view the list of >>> Napa Valley multi-family rental properties <<< now listed for sale.  Click on a property’s Address to view photos and details.  The list is updated daily, so bookmark this page and check back for new listings.  If you would like to receive new listings automatically by email, click here:  Set-Up Napa Valley Investment Property Email Alerts.  Or send a note using Contact Us with a description of what you’re looking for and we’ll set up the alerts for you.

    Click to search the local MLS for properties of all types >>> Wine Country MLS (this MLS serves Napa, Sonoma, Solano, Marin and Mendocino Counties).

    Contact Us for help with Napa Valley multi-family rental properties buying or selling Wine Country real estate.


    John A. Souerbry & Associates    Call John directly: (707) 317-0280    (DRE 01370983) 

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