Discover the 4 Biggest Mistakes, Out-of-town Real Estate Investors Make – When Buying Tampa Rental Properties – And How To Easily Prevent Each One
You’ll Save Tens of Thousands Of Dollars…In Equity…Repairs…And Time On Each Rental Property You Purchase
Here is the FREE Report you requested. Inside, you’ll discover why “Out-of-Town Real Estate Investors” wind up buying Florida rental properties that they wish they could just give back. Instead cashing rent checks each month, these investors end up coming out of pocket to cover losses. It doesn’t have to be this way.
These new real estate investors are just missing a few key insights, if applied from the very beginning, could turn disaster into victory.
Hello my name is David Lowrey, and I am a real estate investor and owner of Stress Free Property Management here in Tampa, Florida.
Over the last 12 years, I have managed over 1,873 houses, apartments, and condos in the Tampa Bay area
Therefore, I have managed every type of rental from low income duplexes, to middle class single family homes, all the way up to ultra luxury executive mansions. Which means, I have experienced just about every conceivable problem (in property management) you can throw at someone, and I’ve managed to successfully get the job done. In fact, my first property management company made Inc Magazine’s “Inc 500 List” for the 500 fastest growing, privately owned companies in America, in 2004 and 2005.
After eight years, my business partner, Chris Mercer and I, sold that business to a national company. We decided it was time to relax…but unfortunately, we got extremely bored. (I did at least try golf -- even bought the clubs and shoes) So, we started another company: Stress Free Property Management.
Here We Are A Little Over Two Years Later, Managing Over 322 Rental Properties In The Tampa Bay Area. Most Of These Properties Are Owned By “Out-Of-Town” Real Estate Investors Like You.
And I am back doing what I love: managing rental properties. Which I’m sure you would agree is quite an odd profession. I think I’m a part of a dying breed of individuals that actually enjoys managing tenants.
In addition, Chris and I also spend about ½ our time searching for high quality yet under-valued rental properties that can be acquired for the right price. A core group of out-of-town real estate investors purchase these deals from us because they see the clear value. Sure, most of these properties need some repairs and clean-up. But, once we get in there and whip them into shape and rent them out, the cash flow is outstanding. Not to mention, these investors realize they are sitting on a huge amount of equity once the market recovers to just a reasonable level.
I still find it hard to believe… that we can routinely buy these properties at 1/3 the price of what they sold for in 2005. I keep telling people that I will be really depressed, when all the foreclosures are repurchased in the next few years. There is no doubt in my mind that we will never see this kind of buying opportunity again… in this lifetime.
In any case, we identify these investments by inspecting hundreds of available foreclosed properties. By using our years of experience buying rental properties, renovating them, and renting them out, Chris and I can identify the best deals quickly.
In fact, We have created our own unique system for identifying the best of the best rental properties in the Tampa Bay area which I nicknamed “Diamond Properties” System.
This system was developed from years of trial and error, and consistent relationship building with Realtors and Banks. We have developed very close relationships with some of Tampa’s top Realtors that represent Bank foreclosures. And from years of helping banks with property management on properties they took back, we have earned the right to buy some of them, before they are even offered to the general public. Not to mention, Chris scours little known but highly profitable property auctions.
As a result, we are able to get some of the best properties under contract before anyone else.
We take these properties and renovate them (if needed), find a quality tenant, and provide on-going property management services. Once everything is complete, our investors enjoy a steady cash flow and an excellent return on their money.
Since we continue the relationship with our investors, after their purchase (as the property manager), our financial interests are aligned. Both the investors and I succeed because my company ensures their rental properties make money. You could have the best rental properties in the world, but still lose money hand over fist, if you don’t have a competent, experienced property manager overseeing them.
This has worked out very well for both the investors and my company. At last count, Chris and I have bought and sold over 178 rental properties for this select group of out-of-town real estate investors. 159 of these properties we still currently manage because our investors love the cash flow.
We have also bought well north of 35 rental properties for our own portfolio. This by the way, I think is a very important distinction. Unlike most Realtors or Property Wholesalers, Chris and I believe so much in the unique opportunities found in Tampa, that we have invested most of our net worth buying rental properties.
After all, if I don’t believe in the opportunity enough to put my own money into it, why should you?
Something to think about…
As you can tell, my background has given me a great chance to study how out-of-town real estate investors succeed and mess up, More importantly, I personally made tons of mistakes on my own rental properties over the years. I too have experienced the pain of my properties sitting vacant for months… tenants completely trashing them out… and the joys of dealing with evictions.
The rental property business is tough, no doubt about it. Your dues can be quite expensive and painful, unless you are working with someone with the right experience… who knows what to do and more importantly…what not to do.
My experiences as an real estate investor and property manager (for myself and my clients) has allowed me to pinpoint the most common mistakes in buying rental properties in Tampa. Helping me and my new clients avoid them all together – right at the beginning.
Alright, let’s dig into the FREE Report now. Oh and by the way, you’re probably going to want to jot down some notes, so take a second, and grab a pen and some paper…
Ready? Okay, let’s begin
1st Mistake: Buying a Rental Property Without The RIGHT Market Knowledge!
What do I mean by the RIGHT Market Knowledge? I mean finding out how the property will perform in the real world. Will you be able to rent it quickly and for how much? Would you be better off buying a 3 Bedroom/2 Bath House, or a 2 bedroom/2 Bath Condo? What neighborhoods would suit your personality and investment criteria?
The challenge with acquiring this knowledge is you are mostly listening to salespeople – who usually don’t have it, and even worse, believe they do. Why do I say this?
Well, have you ever noticed that Realtors and Property Wholesalers can make a lot of properties sound great? But…the decision to purchase a rental property should not be made based on some beautiful pictures, and a theoretical amount you might collect in rent. It really is irrelevant if the property looks beautiful on the inside because of the new carpet. It doesn’t matter that the house has great curb appeal because of the mature oak trees. Don’t get me wrong. Those things are a plus and do have value, but they are not the types of information critical to making the right investment decision.
You see, a salesperson can paint a very compelling story about how great the property looks or how easily it will rent for X amount of dollars. But at the end of the day, it is just a story based on guesswork and not real world experience.
When you buy a property, the profits are made or lost in finding decent tenants, collecting rents, and dealing with repairs, not to mention the quality of the neighborhood and school districts. Plus, does the rental meet the needs of a large segment of the tenant population (in terms of square footage, quality, and number of bathrooms)?
The Realtor really has no idea how well the rental property (he or she is selling to you) will perform, and more importantly, how much cash (if any) the property will put in your pocket each month. Real estate salespeople are guessing because they aren’t experienced property managers AND real estate investors. You need both areas of expertise, in order to pick the right rental properties that will give you the “Biggest Bang” for your buck.
Frankly, Chris and my experiences as real estate investors are a big reason why our property management companies have been so successful. We made the Inc 500 list for the fastest growing companies in America not because we are good salespeople, but because we have unique skill sets as real estate investors, property managers, and trained entrepreneurs.
Okay, Here is a Specific, Critical Mistake Investors Make Because They Lack The RIGHT Market Knowledge
Town N Country is a decent middle class neighborhood in West Tampa. Although it’s not as fancy as Carrollwood or the Citrus Park communities to the north, the rental rates are very reasonable, it has decent schools, and there is a huge demand for 3 bedroom houses.
If you jumped into your car and drove 7 miles to the east, you would arrive in the Temple Terrace neighborhood. While it is a very similar community to Town N Country, it is nowhere near as popular with tenants.
How come? I’m glad you asked. Temple Terrace is located right next to several low-income neighborhoods, with much higher crime rates. Rents are typically lower, tenant credit is often shakier, and turnover is higher.
After 12 years as a Property Manager and Real Estate Investor, I learned to stay away from certain areas in Tampa because of these reasons.
For Example, Never Invest in Neighborhoods Like This…
They are very low income communities with high drug usage and crime. There are in fact, three specific neighborhoods scattered around Tampa that are so bad that we refuse to buy anything in them. You can still rent places in these areas, but ultimately you lose money because the tenants are so irresponsible, don’t pay the rent, and trash your rental. And tons of out of state investors get snookered into buying in these areas, because the cash flow LOOKS so good on paper.
You can’t find this information from a typical Realtor or Property Wholesaler. The ONLY place you can get this “Insider’s Knowledge” is from a very experienced property manager who has been working the Tampa Bay market for many years.
Let me give a sampling now, of the types of Insider’s Knowledge I’m talking about.
There Are 6 Questions You Must Answer Before Buying Any Rental
- Which neighborhoods rent faster because of schools, location to employment centers, and area amenities such as parks and community centers?
- What is the minimum square footage that tenants will accept for a 2, 3, or 4 bedroom home so you don’t buy a house that is either too big or worse…too small to appeal to most tenants?
- Which floor plans (# of bedrooms and baths) are the most popular and attract long term, quality tenants, and which ones you should avoid at all cost?
- What is the real monthly repair cost you should expect over the course of a year?
- How long does it actually take to find you a qualified tenant, and the RIGHT rent amount to charge for your property?
- What are the area demographics and crime rates? Rest assured this has a huge impact on vacancy, repair costs, and how much cash you get to keep at the end of the month.
And the list goes on and on…which is why I provide the following:
You Receive This 26 Point “Profitability Profile” On Any Properties I Have You Look At
It will of course include the answers to the 6 questions I just mentioned, plus 20 additional ones. All of them are critical insights you need to make the RIGHT decision, for your next rental property purchase in Tampa.
By the way, I should mention this Assessment will be tailored to the type of rental properties YOU prefer. In other words, I analyze a property based on your goals, such as passive income, property appreciation, quality of neighborhood, or all the above.
Is there any charge for this Profitability Assessment?
No, I provide this type of research to all my investors to demonstrate the reasoning I am using in recommending certain rental properties, over all the rest. Obviously, you live out of town, and do not have the time or experience to easily track this information down. Once you see this Assessment, you’ll immediately recognize that there is a sound methodology being used in determining what is a good deal and what is not.
2nd Mistake: Not Having An Experienced Property Manager Inspect the Property to Ensure It Is Not Functionally Obsolete
What do I mean by this? Well, the house could have the following -- influencing a tenant’s decision to rent your property or not -- that only an experienced property manager with a thorough understanding of tenants’ needs and issues -- could point out:
- The bedrooms or living room are too small for most people’s furniture.
- The square footage of the house is too small OR too big.
- The ceilings are too low which most women find extremely unappealing.
- The bathroom and kitchen cabinets and fixtures are completely out of date, for the type of tenant you would prefer in your property.
- The home is just too dark, because of small windows, trees, or other buildings blocking out the natural light.
- The size of the lot would not be appealing to a family with kids.
- The absence of a fence turns people off because of the amount of traffic on the road out front.
Without a doubt, the above issues (to name just a few) will have a negative impact on your property’s performance. You want to avoid these challenges -- before you buy -- and not have to suffer the consequences after you purchase the wrong property. Have a good property manager analyze the property and give you their professional opinion about the desirability (to tenants) of the rental, before you buy it.
Keep in mind, no rental property is perfect and most good deals don’t show up in pristine condition…
Learn Why Buying A Property Needing Repairs Can Often Make You The Most Money
Did you know that there are loads of foreclosed houses available that have been trashed by an irate owner or tenant? These houses typically need tons of trash removed, new flooring, paint, appliances, etc.
Keep in mind, some issues can’t be overcome such as the bedrooms being too small, but many of them can -- with proper renovations and attention to detail. A couple of good examples are replacing bathroom and kitchen cabinets, or installing attractive ceramic tile throughout the whole house. As long as you build the price of these renovations into the purchase price, you can buy a “diamond in the rough” (do a bit of polishing) and have a very profitable investment.
To address these very real tenant concerns,
You Get A 21 Point “Tenant Attraction Scorecard” For Each Property We Recommend
This will show the good, the bad, and the ugly from a tenant’s perspective. We developed this Scorecard from our property management experience in dealing with thousands of tenants, over the years.
As you can well imagine, this information on the Scorecard is very valuable and gives you a huge advantage over other buyer’s in the market, who are just looking at a few pictures and listening to a sales pitch from a Realtor or Property Wholesaler.
I do not offer this information at any price… except to the group of select out-of-town investors who buy their rental properties from me. Our “Tenant Attraction Scorecard” is easily worth $500 to $1,000 per property because it keeps you from buying the functionally obsolete rentals. These properties may be very cheap and look good, but unfortunately, the actual tenants who want to live in that neighborhood…HATE.
Real Estate Investing Myth: Buying a Bigger Rental House is a Better Investment
Most new investors feel if they can buy a bigger house, at a good price, that it will be a more profitable rental. Nothing could be further from the truth, and here is why: the most “rentable” 3 Bedroom/2 bath properties typically range from 1,000-1,500 square feet.
You really don’t want a 2,200 square ft house, because the rent will not increase proportionally. Yes, the rent will certainly be higher than say, a 1,100 square ft home, but not twice as high. Not to mention, your target tenant may not be able to afford the higher electric bill on all that extra square footage. And if you are NOT getting the extra money, why do you want to BUY the extra room?
3rd Mistake: Buying Your Investment Property From Someone, Who Has NO Vested Interest In Your Long Term Success
Look, when you are dealing with commissioned based salespeople, – no matter how good their intentions are, -- they are very enthusiastic about making the sale. And the other problem is that they don’t know… what they don’t know. So they will say things to you based on what they do know: selling the “sizzle” and not the “steak.”
These salespeople are not landlords or contractors. They are typically Realtors or Property Wholesalers. And don’t know what is involved in selecting the right property that is going to be most appealing to tenants, rent quickly, and have minimal on-going repairs. They don’t know which properties are functionally obsolete or will require a huge amount of YOUR money in renovations that you won’t recoup.
There is a smarter way.
Find Yourself A Sharp Realtor With Experience Acquiring Rental Properties. And The Realtor Must Be A Capable Property Manager, Who Is Willing to Manage Your Rental Properties.
This person makes the most sense… in terms of the short term transaction of acquiring the property, and the long term need for quality property management.
Why is this so important? GOOD question.
A capable Realtor -- who is an effective property manager -- is better because he has to live with your purchase and the type of tenants it will attract, for the long term. He doesn’t want the extra stress and aggravation of trying to rent a property in poor shape, with small bedrooms, or in a terrible neighborhood. Therefore he does have a “vested interest” in making sure you buy the RIGHT properties in decent neighborhoods that will rent out easily to quality tenants.
Obviously, the better the rental properties are, the easier his job is to manage them, and the more money both of you make. And the other benefit is accountability. You now have someone with a vested interest, ensuring repairs are completed within budget, the home is rented to decent tenants, and you make a good return on your investment. This type of long term, on-going relationship also helps the Realtor avoid something very painful…
The Sheer Embarrassment He Or She Would Feel
From Steering You Into The Wrong Property
It is kind of like buying a car from a salesman who goes to your church. He has got to face you every Sunday--and knows it -- so he has a definite long term interest in making sure you buy a quality vehicle and not some beat-up “clunker.”
One of the things that have allowed Chris and I to build rock solid, long term relationships (with our clients) is we absolutely aren’t looking for the “quick buck.” We aren’t chasing the next real estate commission. Sure, we want to find and sell rental properties and make money. But more importantly, we want to manage those properties we sell to you for years to come because you are receiving the profits you expected. Why is this so important to us?
Because Long Term, Consistent Business Is Every Businessman’s Dream
As a business owner, I can tell you it is a heck of a lot less stressful to know I have steady, predictable business (each and every month) with little or no turnover. This is why I can say our financial interests are aligned. Therefore, I’m automatically looking out for your long term success because, our wagons are hitched together. I make money only when you make money.
Needless to say, if you’re making excellent money with your rentals, you’re going to buy MORE properties from me. And I get to manage all your properties forever, or at least, till you cash out at some point down the road with a hefty profit. It is a win/win for both of us.
This is not the scenario you enjoy when buying properties from a Realtor or Property Wholesaler, who is only working with you on a one shot deal. This is something you should think about before making your next purchase.
4th Mistake: Hiring the Wrong Property Manager to Manage the Property
There are actually a ton of mistakes, which you can make, if you are NOT working with an experienced and motivated property manager. Someone who really understands how to get the most profits out of your rental investments. Let me briefly touch on the two of the biggest mistakes in terms of property managers:
# 1 - Allowing a property to sit vacant for 3, 5, or even 7 months, hoping for a good tenant to come along, without taking action. Let me be the first one to tell you:
Hope…Is Not A Good Business Strategy!
I see this mistake all the time. So, here is my “cardinal rule” for property management: IF your property is sitting vacant for more than a month, there is at least one thing WRONG that must be fixed, and I have NEVER found an exception. And YES, this is true even in today’s economy.
Quite often, the rent is just too high and has to come down a bit. Right now, tons of people are sitting on empty rental properties, because they’re trying to get a rent high enough to make their mortgage payment.
I too know first-hand the pain of mailing a check to the bank, for more than I collected in rent. Unfortunately, because of all the foreclosures, rents have dropped by $100-$200 a month (across the board) in the last 12 to18 months.
Therefore, it’s critical your rental rate is competitive with similar properties in the surrounding area. Your property manager must be honest, and give you a no B.S. assessment of what you can realistically rent your place for, quickly. And you should be willing to drop the rent a bit below that price (if necessary) to start getting cash flow rolling in. Without question, in this economy, renters will negotiate rent. And the reality is, the property owner who is flexible will get the best tenants for the longest amount of time.
Which Is All The More Reason Why, You Must Do The Proper
Research Before You Buy Your Next Rental Property
Anyone can tell you the property will rent for $1200 a month – and maybe it did…in 2006, but if the actual “real-world” rent is $1050, you could be in for an unpleasant surprise.
Or… something goes wrong inside your rental after it was painted and cleaned. Let me tell you a strange story about this. One month, there was a dead cat in the driveway of one of the houses we had available for rent.
What are the odds? We were wondering why no one was calling us back, after looking at the home.
So, one of us got in our car and drove out to see what was wrong – a very good technique by the way. Sure enough, once we removed the “dearly departed,” both houses rented within 2 weeks.
Or sometimes, bugs will suddenly show up. Not to be gross but a few dead roaches on the floor will scare away just about anyone. Other times, the roof, toilet, or sink might suddenly start leaking, and anyone who visits starts wondering what else might be wrong with the home. So, these tenants pass on your property because they think if the owner missed these “obvious” repairs, it is just the tip of the iceberg and there is probably a hell of a lot more things wrong they can’t see.
The key is to get feedback from tenants after they look at your rental, so you can spot this stuff early and fix it. We are constantly quizzing tenants who visit one of your properties to find out why they didn’t rent. Based on their feedback, we make any necessary adjustments to your rental, immediately.
Although this may sound very simple, this is extremely uncommon in the property management industry. I think it is because most of them don’t own rental properties of their own, but who knows for sure.
# 2- Your Property Manager is not responsive to people calling about renting your property, and learn how to easily confirm -- if this is a problem -- with just a few phone calls.
Let’s face it, finding quality, responsive professionals in any service business is an up-hill battle. And in today’s economy, your property manager BETTER be hungry for business, answer their phones and return messages quickly, OR people will go elsewhere.
Here is the simplest way to find out if your property manager is responsive: Call them up at different points in the day, and see if they actually answer the phone.
If You CAN’T Get Someone On The Phone (Consistently)
Neither Can A Possible New Tenant!
Let me put it this way: if more than half the time your phone calls go straight to voicemail, you are losing a boat load of tenants that could have rented your property. Why? Because when a tenant calls in to get information, they are in the mood, RIGHT NOW, to get some answers and go look at places to rent!
When that voicemail turns on, half these people just hang up the phone and call the next landlord on the list. You just lost…your next tenant… and your home continues to sit vacant, with cash flowing OUT of your wallet, instead of INTO it.
And here is an even scarier thought: If your property manager cannot be counted on to answer their phones consistently, can you count on them to put up rental signs? Or run quality classified ads? What about doing proper background checks, or making potential new tenants feel valued and important?
What I am trying to say is (from general experience in business) when someone is doing a couple of things wrong…they are generally doing loads of things wrong. And, there is no way you’re ever going to know because you’re not there. You live out of town. You can’t easily check up on them, and therefore, they have no real accountability to you.
The Solution To This Problem Is Pretty Straight Forward:
Find a Property Manager that enthusiastically responds to any Tenant inquiries about your property!
At our company, we answer 97.3% of our phone calls within the first 3 rings. When we are closed, our phones are forwarded to a 24 hour (live person) answering service. These messages are than emailed to us, and we respond back the next business day.
How do we know this? We have quality control procedures in place to check our most important systems on a regular basis. Tenant calls drive our entire business, so we don’t leave that sort of thing to chance.
By the way, we have dedicated cell phone numbers on all of our advertisements. This way, any person calling about renting your home reaches my leasing staff, directly. Even after we close, my leasing staff continues to answer these tenant calls until 7:00pm, 7 days a week.
This is a major focus of our business because a tenant is a “HOT” lead for only a short period of time. If you wait too long, he or she forgets all the details about your property or winds up renting something else. You must move fast to catch a prospective tenant while everything is still fresh in their mind.
In addition, we also work very hard to keep you, the owner, informed on ALL our efforts to rent your place.
You Receive A Weekly Email Update From Us On Tenant Interest In Your Property
Each week, you’ll be told how many people called in to inquire on your rental, how many actually toured your property, the status of any rental applications submitted, and the feedback from some of the tenants who didn’t like the home. Not to mention, we will offer suggestions of things, which might have to be fixed or changed, based on this tenant feedback.
This way, you don’t have to guess or stress out about what is going on with your property. Every week, like clockwork, you get a detailed update. No one, I repeat “No One” in the Tampa Bay area provides this service except my company.
Remember, I DO NOT just put out a rental sign, run a few newspaper ads, and cross my fingers and hope for the best. I have established a very proactive, step-by-step process for getting your property maximum exposure, which gets your home rented within a month, 85% of the time. The remaining 15% (that take a bit longer) receives a laser-like focus to find out why the tenants are not interested, and adjustments are recommended to you immediately.
As I mentioned before, my company Stress Free Property Management currently manages over 322 rental properties. We also specialize in acquiring high cash flow, rental properties for a core group of out-of-town real estate investors. To date, we have acquired for these investors 178 different rental properties -- most of which, we still manage for them today.
As you can see, our property management and real estate investing services are quite unique. We couldn’t possibly provide this type of service to everyone that comes through the door, without stressing out systems to the breaking point. Therefore, I limit the amount of new investors we work with to about six, each month.
So, if you are interested buying more rental properties in the Tampa Bay area,
First, by filling out this application, you show us you’re serious about investing in the Tampa Bay area. Second, I can get a better understanding of what type of properties meet your investment criteria. Finally, the information in the application will help us both come to a mutual decision as to whether or not this is a fit.
My business partner, Chris or I will respond back to you within 2 business days. But remember, we work on an application process only.
Once you become one our investors who is actively investing in rental properties in the Tampa Bay area, you will receive the following for every property we recommend before you make a purchase:
- 26 Point Profitability Profile - This report will give a thorough understanding about the local rental market, vacancy rates, expected repair costs, and if we feel this property would make a good investment.
($225 Value for Each Property Reviewed)
- 19 Point “Tenant Attraction Scorecard” that will score the property based on feedback we have received from thousands of tenants on things they like and hate about rental properties in all shapes, sizes, and locations. You will also get at least 20 different, high resolution, wide angle, digital photos of the unit (inside and out)
( Value for Each Property Reviewed)
All this information is critical when you’re evaluating rental properties to purchase. Without question, you can’t find a single one of these items offered by a Realtor, Property Wholesaler, or a Property Manager, anywhere in the Tampa Bay area.
Okay, that about does it for this Free Report. I hope you enjoyed reading it, and learned some valuable insights into how new investors can accidentally find themselves in a whole lot of trouble, quickly. I look forward to speaking with you. Talk to you soon…
Stress Free Property Management, Inc.
Licensed Real Estate Brokerage
P.S. - If you’re really interested in investing in Tampa rental properties, you might as well do it the right way. As I’ve illustrated, it is very easy to buy the wrong property, and own a rental that winds up costing you money every month, instead of em>generating cash (like it should).
P.P.S. – All our proprietary checklists and scorecards are incredibly valuable and give us a huge competitive advantage over our competition. Therefore, you will have to sign a non-disclosure form, whereby you promise to keep this unique information strictly confidential.