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There are numerous options for investing your money. Owning a rental property in addition to your primary residence can be a way for you to build wealth. You may ask yourself, “What makes real estate a money-making machine?” Let’s talk about everyone’s favorite topic first. Cash Flow Rental income is real money, and it comes in the form of monthly rent. There are, of course, several things to consider when calculating money going into your pocket. It’s not quite as simple as collecting monthly rent and depositing it into your account, unless you own the property free and clear. Here’s an example: Let's say rent is $1500. The PITI is $900. If we subtract $900 from $1500, there’s a profit of $600. Pretty good, right? A great start, but remember a landlord should be prepared to pay for vacancies and maintenance issues. A good rule of thumb is to sock away 5% for vacancy and 5% for maintenance each month. So in this case, the landlord would save $150 per month, bringing the $600 profit down to $450. Property Appreciation Appreciation is another way to make money in real estate. Real estate appreciation is the increase in the investment property’s value over time. A rental property can appreciate while at the same time creating cash flow. Investors need to hold on to the property for approximately 10 years to see significant appreciation. At that time, they have the option to sell and make a notable profit. Keep in mind that location, inventory, and mortgage rates also affect appreciation. You’re the Decision Maker Most people find being the boss an exciting benefit of owning rental property. You alone get to decide which property is a good fit for you, where and how much to spend on a rental property, how much to charge each month, who will live in your property, how to handle maintenance issues, and who will manage the property if not you! Tax Deductions When in doubt, hire a professional who knows accounting with a focus on real estate investing. Preferably, one who invests in real estate themselves. Every expense associated with rental properties is deductible. Keeping a detailed expense report is of the utmost importance, including records of interest on your mortgage, insurance, interest on credit cards used for property purchases, property taxes, maintenance, repairs, and professional fees. You may also be able to deduct travel to and from the rental property, your home office, and legal services. See Nolo.com for a comprehensive list: NOLO Tenants Will Pay Down the Mortgage With every year of owning a rental property, the tenants are paying down the amount you owe on the property. The longer you hold the property, the more of the loan principal your tenants are paying down and the more wealth you are creating for yourself. Take the standard 30-year loan. The entire 30-year loan will have an interest rate that stays the same. At the beginning of the loan, significantly more money is paid to interest than to principal, but by year 15, it is nearly a 50/50 split.  

Is It Better to Sell by Owner or a Realtor? Or maybe the better question is, is it worth doing for sale by owner? The Denver Metro is one of the hottest real estate markets in the country right now. So, with it being such a hot seller’s market, you might be asking yourself if you even need a real estate agent. Well, there is not really a straight answer to this, as there are so many different circumstances that factor into the outcome. I am writing this to help you understand what the best decision is for you based on your situation. Although selling your home by yourself without using a listing agent may seem like the perfect way to save money on commission fees, the statistics show us that most FSBO sellers will ultimately end up regretting this decision. According to the National Association of Realtors (NAR), FSBO sales accounted for only 9% of all home sales in 2020. FSBO sales seem to have been declining over the past decade from a 2004 peak of only 14%. Bottom line, the FSBO Market Share is shrinking. Now, let us discuss some of the more critical aspects of what it takes to sell your home in today’s market. How to Determine the True Market Value of Your Home? With all the apps and websites available to us today, it can be easy to go online and see what other homes nearby have sold for, but are you aware of how a detailed comparative market analysis is accomplished by a professional real estate agent, or more importantly, a licensed appraiser? An experienced Realtor can conduct a unique market analysis that considers not only your home’s location, size, condition, and any improvements you have made, but can also produce an up-to-the-minute indication of how the current market condition affects the sale price of your property. How to Market Your House to Prospective Buyers? Most FSBO sellers believe that all you need to do is put a “FOR SALE” sign in the yard, list the house on Zillow, and the buyers will follow. Unfortunately, the sign just does not work in today’s tech-fueled housing market, and even though you listed online with Zillow, your house is still not really on the market. The FSBO market is more like a wholesale market and will be treated as such. When a licensed agent puts your house on the MLS and syndicates it to hundreds of websites, you are now on the retail market. This is where you will get the greatest amount of visibility to active, interested, and qualified buyers. Should I Hire a Real Estate Agent or Sell Myself? I will say that some FSBO sellers do end up selling their homes on their own. If you are thinking of selling your home on your own, consider a few things, as discussed above, pricing and marketing are important, yet there is so much more. Today, we must consider the health and safety of ourselves and any potential buyers who enter your home. The paperwork, sure, you can attempt this on your own as well, but do you know what it takes to protect that contract and make sure that you get to the closing table? Negotiations, maybe you are in sales, and you are confident, an experienced agent is a consultant, not a salesperson. An agent’s job is to protect your interests and has a fiduciary responsibility to get you the best possible outcome using transparency and integrity along the way as they help you accomplish your goals. Protecting your interests and equity is our highest priority. I can go on and on. By the way, once your home is put on the wholesale market as FSBO, just be aware that most of the calls that you will be fielding are from, yep, you guessed it, real estate agents. This can be a viable source of business for real estate agents as the vast majority of FSBO sellers end up listing with an agent after a fair amount of frustration and lost time. Whatever you decide to do is fine by me, just be prepared. Okay, I am almost done. If you started down this path of for-sale-by-owner, I am sure your intentions were good. You simply wanted to save money, right? Or do you want to net as much money as possible at the end of the day? The data does not lie; FSBO sellers have historically sold for significantly less than similar homes sold on the retail market. If you want to get the highest possible price for your home in a reasonable time frame based upon our current market conditions, give me a call, and I will help you make the best decision for you and your situation. It can put more money in your pocket. If you need to sell your home to buy your next home or not, my team and I can provide you with direction. Consultations are free of charge. Cheers and have a great day! Author: Joe Chavez

“When it rains, look for rainbows; when it’s dark, look for stars.” — Oscar Wilde Ah, love. It’s hopeful, excited, and full of potential. And it’s on full display every February 14th. But when pandemic protocol makes a romantic night (or day) out challenging, there are still plenty of ways to enjoy Valentine’s Day in and around Denver while staying safe and distancing from the masses. Here are five ways to enjoy a virtual, yet romantic, Valentine’s Day with your sweetheart. Bake a Piñata Cake Denver-based Chefate is hosting a virtual cake stuffing party, where participants can connect online as they create culinary masterpieces (or something close). Perfect for couples who enjoy chemistry in the kitchen, it’s also a great opportunity for those flying solo to make virtual friends as they show off their pastry prowess. Or you can attend without your mate to create a tasty surprise for Valentine’s Day. Chefate’s founder, Chef Nakia, notes on her website that a non-perishable food item will be donated for each person who attends the Surprise Your Sweetie event. Sign up here for the event, which occurs Saturday, Feb. 13th at 9 am MST. Watch a Show Littleton’s Town Hall Arts Center is offering a streaming version of Almost, Maine, “a vignette of nine short plays that explore the love and loss in a remote almost-town called Almost, Maine.” Tickets are just $15 and can be purchased here. The show will run Friday and Saturday, Feb. 12th and 13th, at 7:30 pm MST. Enjoy the Opera Pittsburgh Festival Opera’s “Some Enchanted Evening” will feature performances from classic operas including La Boheme, Pagliacci, and Samson and Delilah, with additional selections from The Phantom of the Opera, West Side Story, and South Pacific. At just $10 for an online download, it’s an economical way to get your special someone in the Valentine’s Day mood. The event will occur at 7:30 pm EST (that’s 5:30 p.m. Colorado time), and tickets can be purchased here. Paint a Masterpiece Or something close. LoDo’s Painting with a Twist is offering several in-person classes on Valentine’s Day, but for those couples who want or need to stay in, there are at-home kits designed to foster shared creativity and fun. Choose the whimsical “Adorned Llamas” set or the moody “A View For Two” set, which includes online video instruction. Pick up on site. Prices start at around $70 per set (which includes materials for two). Check out your options here and note that there are even Daddy (or Mommy) and Me sets for a family-friendly Vday experience. Give (and Get) a Massage. Enjoy a spa day at home with a massage. Cryptotherapy UK’s Nathan offers a free video teaching you how to Give Your Partner the Perfect Massage for Valentine’s Day. Create your ambiance with a few scented candles, mood lighting, and soft music, and don’t forget a soothing massage oil. Following the video, you can give and receive a lovely massage in less than an hour. Check it out here.

Winterizing your sprinklers is an important task that Trinity Team Management will coordinate for its owners. Here in Colorado, we generally schedule blowouts for the first week in October. We hire professionals to complete the job to ensure the pipes do not freeze. If you forget to winterize your sprinklers, you run the risk that water will freeze in the irrigation valves, pipes, and sprinkler heads. When water freezes, it expands, causing the parts of your system to burst and destroying your sprinkler system The cost is approximate (generally a $75-90 charge for our companies to take care of winterization). Some of the smaller vendors use a compressor that is not large enough, but they are less expensive. This runs the risk of breaking the blow-off valve/vacuum breaker if the compressor they use is not large enough. All the companies we use will use the correct size compressor. Hence, the old saying, you get what you pay for.

Ultimately, the decision is up to you, the owner. In our experience, we have found that 80% of applicants have a pet. When you’re renting out a single-family home, as opposed to a townhouse or condo, dogs are typically part of the equation. If you decide not to allow pets, it may take longer to find a tenant, but it is possible. There are a few things to consider when accepting pets: Service and Support animals are legally not considered pets. They are an extension of their owner, who needs their help for day-to-day activities. You can not deny them rental status or charge them a pet fee. Pay attention to zoning laws. Some cities do not allow pit bulls, and some do. Does your tenant want to keep chickens in the backyard? Does that HOA allow chickens? Trinity Team uses PetScreening.com. We collect information regarding the pet, and the website gives us a FIDO score (so cute). This score lets us know how we feel about accepting the dog. We learn about shot records, past aggressiveness, age, breed, etc. The Trinity Team typically does not accept cats. Be sure to implement a pet agreement and collect extra money each month for “pet rent.” With so much to think about, it’s comforting to know that Trinity Team Management has your back. We have the knowledge and experience to do this kind of thinking for you!  

What is the most difficult aspect of managing your property? We at the Trinity Team believe it’s the landlord/tenant relationship. As a landlord, we want to start the relationship off on the right foot, and we take pride in our rental property. Generally speaking, new landlords are overly trusting when meeting potential renters. They want to see the best in them, believe in them, and go the extra mile for them. The truth is that the landlord/tenant relationship is the most challenging, yet most critical aspect of successful property management. It’s crucial to follow Colorado state laws and legalities as well as Fair Housing and HUD guidelines. The best way to reduce risk when finding a tenant is to be choosy, but do it legally. Business decisions must be based on facts and not on instinct alone. You may feel connected to an applicant if they were referred to you, and skip the verification process altogether. You may take their word about credit, income verification, past rental experience, current employment, and criminal history. This is a big mistake; objective rental criteria must be developed and applied to everyone equally, regardless of how you feel about them personally. Understandably, it’s faster and more convenient to skip this process and take the tenant at their word. Why do landlords fall into this pit of deception? They simply don’t have the tools, time, or training. When the landlord is inundated with applications all at the same time, they feel a simple conversation is sufficient to move forward in the process. Failing to follow fair and legal rental criteria is a potential liability. Trinity Team has been managing commercial and residential properties since 2008, and we take the screening of potential tenants very seriously. We do have the time, tools, and experience to avoid the red flags you may not recognize. If you’re ready to find a management company that can properly screen your tenants, give us a call!

As we progress with Landlord Mistakes and Self-Managing, today we’ll visit the topic of landlords allowing squatters on their investment property. A squatter is a person who unlawfully occupies an uninhabited building or unused land. They essentially settle on a piece of land without title, right, or payment of rent. The Trinity Team had this happen recently, and it’s not as easy to get a squatter off your property as you might think. This individual parked a dilapidated ambulance on a property we manage. He was living inside and would not vacate the property. In this situation, we had to call the police, who said they couldn’t do anything, to treat it like an eviction. Our manager had to post an eviction notice on the ambulance and then follow the next legal steps to remove him from the property. This could be a tumultuous situation if you are self-managing. You’re exposing yourself to risk when allowing a squatter to remain on your property without your consent and without signing a legal lease. Squatters come in different forms, and a visitor who stays more than two weeks and casually “moves in” is also considered a squatter. This individual should be added to the lease with the owner’s consent. They, too, would go through the vetting process in terms of income verification, credit score, criminal background check, and past landlord verification. You should reap the financial benefits of renting your property. Squatters can be intimidating, but do not allow them! Trinity Team Management is here for you and will help you seamlessly own an investment property without the headaches that are associated with managing one!