How to Calculate ROI on an Investment Property

ROI is a key metric for determining whether a property will yield a good return. Understanding what makes a good ROI for an investment property is not a one-size-fits-all process. The notion of a “good ROI” depends on factors such as location, market conditions and risk tolerance, some of which are not in the investor’s control. What one investor considers good may be subpar for another.

For example, some investors consider a 6% to 10% return on investment good. However, aggressive investors who rely on high-risk, high-reward strategies often aim to exceed the 10% ROI.

The ROI formula for rental properties involves three basic numbers. The net profit is divided by the total investment and then multiplied by 100.

Let’s say you have a single-family home and want to determine the probable ROI:

• You purchase a property for $250,000.
• The closing costs and the agent’s commission total $25,000.
• Insurance and property tax, plus other expenses, equal $5000 annually.
• The projected annual income is $30,000.

First, calculate the total investment, which will be the cost of the property plus the closing costs. The sum is $275,000.

Then, calculate the net profit by subtracting the annual expenses from the annual income. The answer is $25,000.

Now, divide the net profit by the total investment and multiply by 100.

ROI = (25,000/275,000) x 100 = 9.09%

With this example, you can expect a return of 9.09% annually. However, this percentage will look different depending on your financing option. The above example focuses on a cash purchase. But if you are leveraging debt, you may have a significantly lower upfront investment and a higher ROI.

Tips to Maximize ROI

Although ROI is subject to factors outside the investor’s control, like market conditions, you can implement several methods to improve your ROI.

• Optimize rental income: Make strategic property upgrades and add amenities that justify higher rent.
• Minimize vacancies: Invest in real estate marketing services to increase your property’s exposure.
• Partner with a property management company: Work with a professional company with the resources and experience to help you adhere to legal requirements and increase your property’s appeal.
• Invest in a tenant experience: Host events to foster community and be responsive to tenant requests.

Choose Elevated Management Group, LLC

As a leading property management company in New Mexico, we offer our clients local expertise backed by years of experience. From marketing to rent collection and mortgage payments, every aspect of your rental property will be in good hands.

Contact us to get started with renting out your property.

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Upkeep is essential to maintaining the property’s value, attracting more tenants and staying compliant with state and local regulations.

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Creating a Rental Property Maintenance Checklist

Basic routine maintenance includes tending to landscaping, picking up trash and keeping the property clean and tidy. The landlord is also responsible for ensuring the property’s structures, such as the roof, walls, driveways and sidewalks, are in good condition. Repairing these features can be expensive, so you should conduct routine inspections to fix minor issues before they become costly problems.

These tasks can feel overwhelming for a property owner, but breaking them down methodically into weekly, monthly and quarterly schedules can help you stay on top of your management routine.

For tenants’ safety and comfort, here are a few key things for landlords to keep an eye on:

• Smoke detectors.
• Water leaks.
• Heating, ventilation and air conditioning (HVAC) systems.
• Water heaters.
• Garbage disposals.
• Electrical work.
• Toilets.
• Drywall.

Conducting Seasonal Inspections

Seasonal maintenance depends on the location of the property and the local climate. Regular inspections allow you to identify issues early and address them to maintain the appeal and value of your property. Seasonal inspection reduces maintenance costs and extends the lifespan of various components. Each season comes with specific tasks.

Spring

As the weather warms up, check the property for any damage that may have occurred over the winter, such as freeze-thaw damage to stucco or concrete. Inspect HVAC units and replace filters as needed. Assess the landscaping and prepare for any spring or summer blooms.

Spring tends to be the time of year when the winds pick up in New Mexico. Inspecting your rental property after high-speed winds is essential for finding potential damage early.

Summer

Summers in New Mexico can be extremely hot. Inspect fans and the AC units. Check windows and doors for air leaks, gaps or cracks that require maintenance. Monitor irrigation systems and adjust watering schedules to conserve if necessary. Implement pest control measures and maintain lawns and gardens to keep your property looking its best.

Fall

As temperatures cool, inspect roofs for imperfections like missing shingles or leaks. Prepare the HVAC system for chillier weather. Check for any cracks or gaps in the building’s exterior that may allow cold air or pests — like ants, cockroaches or rodents — to enter.

Winter

During the winter, check heating systems and insulate exposed pipes to prevent freezing. Check and seal all windows and doors to prevent heat loss. Clear snow and ice as needed. Inspect walkways, steps and handrails to ensure they are in good condition.

Rental Property ​Maintenance Costs and Budget Allocation

Since maintenance is inevitable when you own property, you should have a dedicated budget. To determine what percentage of rental income goes to maintenance, consider applying one of these rules:

• The 1% rule: This entails taking 1% of your total property value and setting that aside annually to cover maintenance costs. This rule is effective because both factors depend on the price of materials and labor. If house prices go up, so will the cost of maintenance.
• The 50% rule: This rule stipulates that you should devote 50% of your rental income to maintenance costs, taxes, insurance, utilities and other expenses.
• The 5X rule: This rule states that the maintenance cost should be the monthly rent multiplied by 1.5.
• The square footage rule: This rule calculates maintenance costs at $1 per square foot of your property.

While it’s impossible to anticipate a repair emergency, successful property managers have systems in place to handle repair requests swiftly and efficiently at any time of day.

Choose Elevated Management Group to Conduct Maintenance for Your Rental Property

When you choose Elevated Management Group, you don’t have to worry about responding to tenants’ maintenance requests. Tenants can direct all maintenance requests to our office by phone or through the online portal. A qualified service person will arrive at their home as soon as possible to handle their issue. Contact us today and take the stress out of property maintenance and other aspects of rental property management.

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Legal Responsibilities of Rental Property Owners in New Mexico

Landlords have the right and responsibility to collect payments when they’re due, maintain a safe, peaceful living environment for tenants and neighbors, and collect and use security deposits to cover damages as needed.

New Mexico landlord-tenant laws are mainly regulated by the state’s Uniform Owner Resident Relations Act. Understanding these regulations is important to protect the rights of both parties.

Here’s a general overview of the rights, protections and responsibilities of both landlords and tenants.

Health, Safety and Repairs

In New Mexico, every landlord must keep all rental unit appliances in safe, functional condition. These include electrical, heating, air conditioning, plumbing and ventilation systems. The landlord is responsible for providing units that comply with local safety and health codes. If requested by the tenant, the landlord must have any issues in the unit repaired accordingly. If they don’t respond to these requests within seven days, the tenant can pursue legal action against the landlord.

Tenants have a responsibility to keep the property in a habitable condition, pay rent on time, make minor repairs when required and not disturb other people near the unit. Similarly, a landlord can seek legal action against a tenant for a breach of lease terms, property damage or unpaid rent.

Right of Entry

Landlords have the right to enter a rental unit to handle repairs requested by the tenant. However, they can only conduct inspections if they have a valid reason to do so.

Disability Accommodations

Under the Fair Housing Act, landlords may not discriminate against tenants based on gender, race, religion, national origin or disability. Tenants with disabilities have the right to request reasonable accommodations from landlords, such as having a service animal in their unit or adjusting rent due dates to align with benefit payments. Landlords also have the right to request documentation from the tenant’s medical provider.

Protection for Victims of Domestic Violence (DV)

The Violence Against Women Act (VAWA) protects tenants who are victims of DV by providing federally subsidized housing. In New Mexico, landlords of subsidized housing must follow VAWA protections. However, VAWA doesn’t cover private, market-rate housing unless the landlord accepts a Section 8 voucher from the tenant.

Security Deposits

Security deposits provide a safety net for landlords, allowing them to cover unanticipated costs like property damage and unpaid bills. Once a tenant moves out, the landlord usually gives them back the security deposit fee unless the tenant:

• Has caused damage to the property beyond normal wear and tear.
• Is behind on rent payments.

Typically, the landlord must return the security deposit within 30 days of the tenant vacating the property. The tenant can take legal action if they don’t receive the deposit within this time frame.

Notices for Termination or Eviction

New Mexico allows multiple types of eviction notices:

• Material noncompliance
• Nonpayment of rent
• Substantial violation notice
• A 30-day notice at the end of a lease term

Written Lease and Walk-Through Inspection

Before finalizing the rental agreement, the landlord and tenant should do a walk-through inspection of the unit together and record any issues or damage. Both parties must also sign a written lease agreement for it to be legally binding.

Navigating Real Estate Investment Laws in New Mexico

As a first-time real estate investor preparing to rent out your property, familiarizing yourself with the state’s investment laws is critical. Below are some essential factors and information to consider as you take on this new adventure.

Tax Laws for Rental Property Owners

In New Mexico, local counties oversee property taxes, meaning tax assessments may vary depending on the rental property’s precise location. Counties determine property values and generally reassess these numbers annually. A landlord should keep track of their property’s assessed value since it directly impacts their owed taxes.

Additionally, rental property tax rates in New Mexico vary by state and local regulations. These rates are applied to the property’s assessed value to calculate the property taxes owed. Rates differ between areas, so landlords should stay up to date with any changes in tax laws that could impact their property taxes.

Other key considerations include:

• Deductible expenses: Landlords can deduct many expenses associated with their rental property, including property maintenance and repairs, mortgage interest, and insurance.
• Depreciation: Depreciation allows landlords to deduct a portion of the rental property’s cost over its useful life, decreasing their taxable income.

Understanding tax laws and eligible deductions can be complex. Consider hiring a qualified tax professional who can provide personalized advice based on your unique situation.

Property Inspection, Upkeep and Maintenance Tips

Regularly inspecting and maintaining your rental property is a must to attract and retain quality tenants and protect your investment. Keep these best practices in mind:

• Conduct regular inspections: Periodically inspect the property to detect potential issues early on. Inform the tenant of any problems you encounter as soon as possible.
• Perform repairs promptly: When a tenant submits a request for a repair, respond quickly to prevent this issue from escalating.
• Implement a preventive maintenance plan: A comprehensive plan is important to keep the property in good condition. This should entail tasks like roof inspections, HVAC system servicing and gutter cleanouts.
• Hire a professional property manager: Managing a rental property on your own can be challenging and time-consuming. Consider hiring a professional to handle these day-to-day responsibilities, including tenant screening, rent collection and maintenance requests.

Common Questions About New Mexico Rental Laws

We’ve answered some FAQs to help you better understand landlord and tenant rights and responsibilities.

1. How Do Property Maintenance Laws Impact Landlords and Tenants?

New Mexico landlord-tenant laws are designed to protect both parties and ensure a transparent rental agreement. They outline landlords’ responsibilities to maintain habitable, safe living spaces, as well as tenants’ obligations to treat the property responsibly. Understanding these regulations is essential on both sides for a successful tenancy.

2. What Are the Rental Property Inspection Laws in New Mexico?

During an emergency, such as a flood, gas leak or fire, a landlord may need to enter the unit immediately. Under New Mexico law, a landlord does not need permission to enter a rental unit in emergencies where the property and lives are at stake.

In nonurgent situations, however, landlords are required to provide at least 24 hours’ notice and get consent from the tenant before entering the unit. Written notice can be an email, a letter delivered to the residence or even a text message.

3. What Should a Rental Agreement Include?

Rental agreements should typically include the following information:

• A description of the property
• Rent conditions, including payments, late fees and grace periods
• Information regarding all parties involved
• Person responsible for utility bills and repairs
• Subleasing terms, if applicable

Remember that under the Uniform Owner Resident Relations Act, leases longer than one year require a written rental agreement. That being said, having a written agreement is always a good idea, regardless of the lease duration.

Get Support Navigating Rental Property Rules and Regulations

If you’re looking to partner with an experienced property management company, Elevated Management Group is ready to work with you. We serve property and rental property owners all over New Mexico, offering the following services:

• Assistance with property sales and purchases
• Rent collections
• Rental application processes
• Maintenance requests
• Bill and mortgage payments
• Marketing

Our team can also support you in navigating complex landlord-tenant laws and understanding your responsibilities. Contact us today and let us know how we can serve you!

The post Guide to New Mexico Rental Laws for Owners appeared first on Elevated Management Group.

Understanding the Basics of Maximizing Rental Income

You need to know six basic concepts to understand strategies for boosting rental income:

• Supply and demand: These are the main factors driving how much you can charge for rent. When only a few properties like yours are available and many renters are interested, you can set a high price. If more properties become available or fewer renters are in the market, the price has to drop to secure tenants.
• The local market: When analyzing supply and demand, focus on the neighborhood around your property. How many properties like yours are around? Find out if they are vacant or occupied and what their prices are. Stay updated on any new or planned developments that could affect future demand.
• Target renters: Identify the kinds of people looking to rent in this neighborhood. Are they young, single professionals? College students? Young families? Retirees? Think about their incomes, lifestyles and tastes. Decide what local market segment your property can appeal to and let their priorities guide your pricing, renovations and other decisions.
• Operating costs: Calculate the costs of owning and renting out your property. These include your mortgage if you’re still paying off the home, anticipated repair and maintenance costs, renovations, insurance, and taxes. They also include the time costs of managing the property if you do that yourself. Your costs impact how much rental income you need to get a worthwhile return.
• Property features: Your property’s features and any renovations you do will influence which renters you can target and how much they’ll be willing to pay. Features include bedrooms, bathrooms, an HVAC system, security features, a yard, a pool and anything else that distinguishes your property.
• Rent pricing: Considering all the factors above, you can work out a range of reasonable rental prices to charge for your property. Within that range, lower prices make it easier to attract tenants, but going toward the higher end will maximize your returns.

Value-Adding Renovations to Boost Rental Income

Renovations allow you to upgrade your property’s features, enhancing its value to your target tenants. This is an effective strategy to maximize your returns because a one-time renovation with occasional maintenance can translate to more income every month. Some of the best value-for-money renovations for boosting your rental income are:

• Kitchen and bathroom upgrades: Upgrading the kitchen and bathrooms can tangibly improve your tenants’ quality of life. Upgrades can include new appliances like a dishwasher, cabinets and countertop finishes. These are some of the highest return on investment (ROI) renovations because the increase in rent price they justify can cover the costs within a few months.
• Paint and lighting: A fresh coat of paint and good lighting can enhance your property’s impression on potential tenants. Energy-efficient lighting can save them utility costs, justifying a slight rent increase.
• Flooring: Replacing old carpets with durable, attractive flooring and repairing damaged floors improves your property’s interior aesthetics and value. Popular materials for rental properties include luxury vinyl plank (LVP), tiles and laminate flooring.
• Landscaping: A well-mown lawn, potted plants and other exterior features can enhance your property’s curb appeal for an inviting first impression.

The Most Effective Pricing Strategy for Maximizing Rental Income

In general, you maximize your rental income by setting the rental price as high as possible while attracting enough tenants to keep the property occupied. From there, a reasonable increase each year to keep up with market rates in your neighborhood is normal. Most tenants will be happy to pay a little more each year to avoid having to move.

Analyze the market in your neighborhood to inform your pricing. Rental properties similar to yours can give you a good idea of how much to charge. If they’re well-occupied, you can probably charge a similar rent or slightly higher if demand is high. If the market has a lot of vacant rentals, you may need to consider lower pricing. If a tenant moves out during a lower demand period, you may have to reduce the rent to get a new tenant. You can always increase it again when demand goes up. Keeping your pricing adaptable to fluctuating demand is called dynamic pricing, and this is one of the most effective strategies for maximizing rental income.

Along with your pricing, consider which lease intervals you’ll offer. Long-term leases are ideal for stable income. Short-term rentals require more work and have a higher risk of vacancy but allow you to charge more per day and can be lucrative in high-tourism areas.

Strategies for Long-Term Tenant Retention

A tenant who pays on time and respects your property is one you want to retain to keep your cash flow stable. Apply these property management tips for tenant retention:

• Let them know how and when they can reach you and which numbers to contact for emergencies outside those hours.
• Be prompt and helpful in responding to any concerns.
• Schedule routine inspections and maintenance to minimize the need for repairs.
• Incentivize lease renewals by offering a discount on the rent you would charge a new tenant.

Maximizing Rental Property Income Through Property Management

As the owner, you can choose to manage your own property. Management involves duties like:

• Marketing the property.
• Screening tenants.
• Responding to tenant calls.
• Arranging renovations, maintenance and repairs.
• Collecting rent if a tenant is late to pay.

You can also hire a reputable property manager to handle these duties for you. While managing the property yourself lets you keep all the income, you must also do all the work. Hiring a property manager turns your real estate into passive income for a reasonable fee. This arrangement allows you to relax and spend time on your top priorities while receiving passive earnings every month. If you want to build your real estate portfolio for maximum income, hiring a property manager makes it possible to reinvest in additional properties to earn more without it requiring more time or effort.

Maximize Your Rental Property Income With Elevated Management Group, LLC

Renting out your single-family home could be your pathway to lasting wealth. However, maximizing your income can be challenging when you have limited time available for property management duties. If your property is in New Mexico, Elevated Management Group, LLC can help optimize your potential for lucrative, passive returns.

Elevated Management Group, LLC is New Mexico’s premier full-service property management company. From tenant applications to maintenance and rent collection, we handle all the work of managing your property while you enjoy the returns. And when the time comes to expand your portfolio, we can assist with your next acquisition. We offer discounts to owners of multiple homes, so your ROI can improve as your portfolio of passive income real estate investments grows.

Contact us today for single-family home property management services to maximize your income.

The post How to Make Money on Your Rental Property appeared first on Elevated Management Group.

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Understanding the New Mexico Real Estate Market

Real estate inventory in much of the southwestern United States has been tight relative to demand recently. This situation means keen-eyed investors ready to seize an opportunity can generate lucrative returns on their property investments.

New Mexico stands out for long-term income investors. The combination of a healthy job market, a growing economy and a high population of potential tenants drives demand for rentals. Strong population growth in and around cities like Santa Fe and Albuquerque further stimulates rental demand and prices. While New Mexico’s cities have thriving rental markets, the normalization of remote work supports the demand for cost-effective suburban rentals, too. Here are a few statistics to help you understand why rental property investments in New Mexico are alive and well:

• In 2023, New Mexico saw one of the highest real GDP growth rates of any state at 6.8%.
• The state ranked 16th in job growth based on Bureau of Labor Statistics data.
• Also in 2023, New Mexico had the 16th lowest rental vacancy rate of any state at 5.68%.

New Mexico Real Estate Investment Opportunities

New Mexico’s real estate market offers various residential property types to consider as investments, including:

• Single-family homes: These stand-alone homes give owners the most control over value-adding renovations. They are the most popular homes in New Mexico, making up a larger share of the state housing market — about 65% of all homes — than the U.S. nationally. Demand for single-family homes is highest in suburban areas. Three-bedroom housing is New Mexico’s most popular home size.
• Multifamily townhomes: While the value of these connected properties is very responsive to economic shifts, the cost of entry is relatively low. Demand for multifamily rentals is expanding, thanks to steady growth in the state’s economy and urban job markets. Demand for these units in Albuquerque and Santa Fe is especially underserved, making multifamily rentals a compelling investment opportunity.
• Condominiums: Condos offer an affordable entry point into real estate investing and are popular among young professionals in urban areas. Economic hubs like Santa Fe and Albuquerque are especially favorable for condo investors. A condo is generally easier to acquire than a single-family home and lets you make an informed decision by looking at occupancy rates and pricing trends within the same complex.
• Apartment complexes: Apartment complexes allow investors to acquire several units in one location. This opportunity can help you build a stable and growing income stream.

New Mexico Real Estate Laws and Regulations

New Mexico’s laws and regulations are friendly to investors, but the state has some regulatory requirements you should know before investing in rental properties, including:

• Brokers’ licensing regulations: If you buy a property through a brokerage or hire a property manager to look after it for you, these professionals must have brokers’ licenses in line with the Real Estate Brokers statute.
• Zoning and land use policies: Zoning laws and land use restrictions vary by county and city. If you’re considering investing in a specific location, check the local zoning map to make sure you’re allowed to use the property you buy as you intend. For example, if you purchase a property in an area reserved for industrial use, you may not convert it to a residential rental property. A real estate professional who knows the area can help you understand these regulations.
• Landlord-tenant laws: If you aim to invest in rental property, you must follow the Uniform Owner-Resident Relations Act (UORRA) and other laws and regulations governing the landlord-tenant relationship. The basic landlord duties in the UORRA include maintaining a habitable environment for your tenants, complying with local health and safety laws and providing at least a month’s notice before amending or terminating the lease. A qualified New Mexico property manager can help you fulfill all legal obligations.

New Mexico Landlord Tax Laws

Property taxes in New Mexico vary between counties, but the state has some of the lowest average effective property taxes nationwide at around 0.67%. Most of this annual tax goes to supporting local schools. The state has no transfer taxes, though you may have to pay capital gains taxes when selling a growth investment property. As an income investor, you’ll pay tax on your rental income but can deduct depreciation, mortgage interest and other expenses.

Is Albuquerque, New Mexico a Good Place to Buy Investment Property?

Albuquerque is one of New Mexico’s best real estate investment markets. It’s the state’s largest city, with a large job market keeping rental demand high. Plus, with a $345,000 median home value, the market is more accessible to new investors than many other major U.S. cities. The city’s cultural history and picturesque mountain views add lasting value to its properties.

Depending on your goals, you can explore many established and emerging neighborhoods in the city and its surrounding areas. These neighborhoods cater to diverse residents, giving you access to a wide range of market segments and steady rental income. For example, Ventana Ranch and Nob Hill boast high rental rates with low vacancies, while Downtown and South Valley are accessible markets that attract young residents.

Whether you’re acquiring a new rental property or turning your home into an income investment property, Albuquerque is an outstanding market for real estate investors. For a seamless investment experience, consider partnering with a local property management company. Albuquerque real estate professionals can handle many of your landlord responsibilities on your behalf while you collect the bulk of your rental revenue as passive income.

Streamline Your Property Investment With Elevated Management Group, LLC

New Mexico real estate can offer lucrative returns, especially to an income investor who knows their local market. However, owning a rental property comes with responsibilities, like finding and screening tenants, collecting rent, and responding to maintenance requests. A reputable property manager can tackle these duties for you, allowing you to enjoy passive returns and expand your portfolio if desired. That’s why you should partner with Elevated Management Group, LLC.

We are a full-service property management and sales company serving Albuquerque, Santa Fe, Bernalillo and other residential real estate markets in New Mexico. Our services include:

• Marketing
• Rental applications
• Collections
• Maintenance
• Bill and mortgage payments
• Acquisitions and sales

Our licensed property managers know New Mexico real estate and are here to help streamline your income investment. Contact us to discuss your investment goals today.

The post New Mexico Real Estate Guide appeared first on Elevated Management Group.

There are many benefits of owning a rental property, but drawbacks exist, too. Below, you’ll learn more about the pros and cons of rental real estate and how to decide whether you should own an income property.

Pros of Owning an Income Property

Owning a property and renting it out to tenants is an excellent business venture. There are numerous advantages to owning a rental property or renting out your home, including the following:

• More renters: Today, more people are renting than buying their own homes for various reasons. As a result, landlords have plenty of potential tenants to choose, meaning you can be pickier about who you want to rent your property. You can check potential tenants’ backgrounds and rental histories to get the best tenants possible.
• Increased monthly income: If you charge tenants more than the price of your mortgage, you’ll generate a monthly income. Remember that if you’re going to be charging more than your mortgage is worth, you’ll need to make sure it’s worth it for them, so your property should be clean and well-kept. This means cleaning the interior, ensuring all appliances work, handling landscaping and fixing anything that could impact your rental property’s value.
• Tax benefits: When you own an income property, you get valuable tax benefits. For example, you can claim business-related expenses on your taxes each year, such as upkeep costs and depreciation. The process can be complicated, but you can always hire a tax professional to ensure you get all the benefits of owning a rental property.
• Potential to build equity: You can build equity on rental properties, especially if the market conditions are in your favor and you can rent out your units to make up for mortgage and maintenance costs. You can also make upgrades to your property, such as installing new appliances or renovating the interior, to increase your property’s value, allowing you to increase rent prices once the current lease term expires.

Cons of Owning an Income Property

While there are numerous benefits to owning a rental property, there are also some drawbacks to consider, including:

• Troublesome tenants: While you’ll have some great tenants staying at your rental property, you’ll likely also have some tenants that will be more bothersome. Some may refuse to pay rent on time or destroy the property despite losing their security deposit. These tenants can be challenging to handle, especially if it comes to the point where you have to evict them. The damage they cause to your property could also cost you down the line once they move out. You can do background and rental checks to avoid this issue.
• Landlord responsibilities: Landlords have plenty of responsibility when they own a rental property. Landlords must fix broken appliances, handle pests, collect rent, do background checks and more. Being a landlord is a considerable responsibility. Before becoming a landlord, you must understand these requirements, so you know what you’re getting into.
• Capital requirements: Buying a rental property requires a lot of capital. You’ll have to put a downpayment on the property, but you’ll also need liquid assets to handle unexpected repairs and plenty of emergency funds. Tenants will expect you to manage repairs quickly, which doesn’t leave a lot of time to save money. You’ll also be responsible for purchasing different insurance since standard homeowners insurance only covers properties the owner resides in.
• Potential risks: Rental properties are an investment, so there will always be some associated risks. You’re consolidating many — if not all — of your assets into your rental property. If something unexpected happens and the value of your property decreases, you can lose a significant amount of money. There’s also no guarantee you’ll always have your property rented out, meaning you won’t always make money off your property.

You can prevent many of these disadvantages by researching, hiring professional help and making the right choices to remedy any situations you encounter.

How to Decide if You Should Own an Income Property

Now that you know the pros and cons of owning a rental property, it’s time to decide whether it’s the right choice for you. Owning a rental property is an ideal investment for many people, but you have to be sure you’re ready to take the leap. Consider the following to determine if you’re prepared to own a rental property:

• You have a clear investment strategy: Having a set investment strategy ensures you can achieve your goals. If your goal is to rent out your property to make a passive income, then your investment strategy is buy-and-hold. This means you purchase a property or use your own, make the necessary repairs and upgrades and then rent it out to tenants. Understanding your goals will also help you determine what type of property to invest in.
• You have the necessary capital: Getting into real estate requires money, so it’s essential to ensure you have the appropriate funds — at least around one-third of your intended purchasing price. Having plenty of savings ensures your bank will approve your loan, and you can put down the required money. You’ll also want to have liquid assets to ensure you can make your mortgage payments, even if your main form of income takes a hit.
• You’re ready for the responsibility: Owning a rental property requires plenty of time and dedication. If you’re willing to spend time finding and screening tenants, dealing with maintenance, balancing budgets, managing schedules and keeping up with other responsibilities, then you’re ready to own a rental property.
• You’re willing to work with a team of professionals: You’ll want a reliable team on your side to ensure the success of your rental property. For example, you’ll need to consult with real estate professionals, work with maintenance and repair contractors and hire cleaning services to clean open units. You can also hire a property management company to handle your landlord responsibilities to reduce your time commitment if you want your income to be more passive.

Trust Elevated Management Group, LLC as Your Property Manager

After reviewing the pros and cons of renting your house out to tenants, you’ve likely decided whether owning a rental property is right for you. While there are many responsibilities involved with being a landlord, you can take them off your plate with a property management company that will handle the work, including screening tenants, managing repairs, working with contractors and handling all other responsibilities associated with owning a property.

Elevated Management Group can help you professionally manage your property in New Mexico. We handle the rental application process, maintenance requests, rent collections, marketing and other property management services. Contact us today to learn more about how we can help you manage your properties and create a truly passive income!

The post The Pros and Cons of Owning an Income Property appeared first on Elevated Management Group.

Rather than keep up with the responsibilities yourself, a property management company can help. These qualified companies can handle the day-to-day tasks of running a rental business and provide you with more time to focus on other endeavors. Learn why hiring a property management company can be right for you.

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What Is a Property Management Company?

Managing a rental property comes with many overhead responsibilities to ensure that the business runs smoothly. A property management company helps rental property owners handle the day-to-day management so you don’t have to, including upkeep, maintenance and security. They’ll oversee all the management responsibilities on your behalf to maintain a steady cash flow from your investment.

Property managers can help owners of all types, whether they’re investors looking for a passive income or those who want to be more hands-on but are inexperienced or overwhelmed by the number of tasks.

What Are the Responsibilities of a Property Management Company?

The responsibilities of a property manager include the day-to-day tasks that would usually fall on a landlord or property owner. A property management company is responsible for:

• Property maintenance and repairs: Rental properties require continual maintenance to ensure the property is well-maintained and up to standards. Tenants need repairs when appliances malfunction, and common areas need constant upkeep. Maintenance and repairs can take a lot of time for property owners. A property management company can take over these responsibilities themselves or hire a vendor. Maintenance and repairs include HVAC repairs, pest control, exterior cleaning and landscaping.
• Advertising and marketing: Marketing is essential for owning a rental property since tenants come and go regularly. Property managers have the experience and tools necessary to market your property and fill vacancies. They can promote the best features of your property and obtain responsible tenants who can pay their rent on time and care for the property.
• Setting and collecting rent: Property managers are experts in the field and can properly assess the value of your rental property. Based on market trends and conditions in the neighborhood, they’ll set fair rent prices that won’t discourage potential tenants while still ensuring a profit. Property managers are also responsible for collecting rent from tenants on time.
• Screening tenants: Tenants’ background checks are an essential part of the renting process to ensure they are responsible enough to pay their rent on time, follow lease terms and have a solid rental history.
• Enforcing lease terms: A property manager will go over lease terms with potential tenants before signing the lease agreement. The agreement should include policies that outline how management handles lease violations. The property management company will enforce any of the consequences for rule violations.
• Managing complaints: Tenants sometimes have complaints, which can become time-consuming. Handling complaints on top of other responsibilities can be too much for a single landlord or property owner. Property management companies can handle these complaints efficiently using their vast knowledge in the industry. They may even use tools like an online portal to sort complaints and streamline the process.
• Handling evictions: Handling evictions can be a long and tedious legal process, especially for property owners unfamiliar with the process. A property management company is familiar with the eviction process and knows to follow the proper steps to prevent the eviction from being thrown out in court.
• Property inspections: Regular inspections help property owners recognize things that need maintenance or repairs and ensure tenants comply with required maintenance. Inspections also cover move-in and move-out, seasonal inspections and drive-by inspections. Property management companies will handle the inspection responsibilities so you don’t have to, saving you time to focus on other projects.
• Property owner communication: When you work with a property management company, they’ll communicate with you regarding the performance of your property. Communication includes reviewing rent increases, informing owners about repairs or maintenance or discussing legal matters.
• Acquiring proper licensing and insurance: A property management company is responsible for obtaining the appropriate licensure to meet each state’s requirements. These companies also handle the insurance requirements, which help protect the business, tenants, properties and clients and prevent unnecessary lawsuits.
• Preparing units for rent: Each unit must be prepared for new tenants before you can start collecting rent. Preparation includes inspections, maintenance, repairs, upgrades and other time-consuming requirements. A property management company can help property owners handle all the tasks and prepare units for rent quickly and efficiently.
• Record-keeping and documentation: Record-keeping and documentation are essential for running an efficient and organized business. Property owners need to track lease agreements, income and other crucial documents for tax season and smooth business operations.

With a full-service property management company, you can rest easy knowing that they’ll handle all the tasks associated with running a successful property rental business. The right property manager has vast knowledge in the industry to help you sustain a passive income and quality reputation as a rental property owner.

Do I Need to Hire a Property Management Company?

Some property owners don’t need to hire a property management company, but a landlord might need a little more help if some of the tasks of managing a property become overwhelming. Hiring a property management company might be beneficial to you if you:

• Manage many properties: The more rental properties you own, the more responsibilities you’ll have. There will be more maintenance, vacancies and complaints to manage as well. You’ll also need to consider the costs of traveling between each property. A property management company can help you manage the responsibilities at your multiple properties to take much of the responsibility off your shoulders.
• Live far away from your rental property: If you live a substantial distance away from your rental property, it can be challenging to manage this property from your primary residence. You’ll have to travel constantly and may not be able to respond to emergencies promptly. Collecting rent on time can even become a challenge. A property management company can help you manage your property, no matter where you are. You may even save money by hiring a property management company since you won’t have to pay for travel as much.
• Need hands-off management: Many landlords invest in rental properties to make a passive income. A property management company can provide you with hands-off management to focus on other endeavors and handle all the day-to-day tasks of owning a rental property.
• Have limited time: Managing a rental property can be time-consuming, quickly turning into a full-time job. If you already have a job or have outside responsibilities that keep you from giving your property the attention it needs, a property manager can help you successfully run a business without a hefty time requirement. You’ll be able to spend more time exploring other investments, working another job or taking care of outside responsibilities while resting easy knowing that your rental property is taken care of.
• Can afford the cost: Property managers charge a monthly fee to help you manage your property. The average monthly fee typically ranges between 4% and 10% percent of your monthly gross income for the property. The more units you have, the lower the fee percentage. Some management companies may also charge tenant placement fees, which is additional pay for securing a new tenant in a vacant unit. Assess your finances before hiring a property management company to determine if you can afford the cost.
• Limited experience with managing properties: If you don’t have a lot of experience managing a rental property, making mistakes as you’re trying to learn can hurt your potential profits and reputation. For example, you might take too long to prepare a unit for rent, leaving a rental vacant longer than necessary and losing out on potential income. You may also be accused of discrimination if you are unfamiliar with the Fair Housing Act. Hiring an experienced property management company can help you overcome these challenges, keep your cash flow intact and improve your business’s reputation.
• Experience high vacancy rates: If you’re finding it challenging to find or keep tenants, a property management company can help. They have plenty of experience finding and screening tenants promptly. They’ll fill all your vacancies and ensure each unit is up to standard to ensure you have a steady flow of income.
• Own a property that is part of an affordable housing program: Participating in an affordable housing program can quickly get complicated, especially if you don’t have much experience in rental property management. Landlords in these programs often receive financial assistance for agreeing to rent to tenants below a specific income. Landlords must comply with a particular set of rules to continue receiving this assistance, which can become complex and tedious. A property management company will have experience with these programs and can help you navigate the uncertainty with ease to ensure that your property continues to qualify for financial assistance.

Hiring a property management company can be the right choice for you if you’re overwhelmed by the day-to-day tasks or simply want a hands-off approach to renting. Property managers can provide you with a passive income to focus on new investments or additional endeavors.

How to Find a Good Property Management Company

If you’ve decided to work with a property management company, you’ll want to do your due diligence to ensure you find a highly qualified and experienced property manager. You can do this by:

• Visiting their properties: On-site visits can help you evaluate the quality of a property management company. Keep an eye out for any piled-up debris, trash or need for repairs. These can be signs that the property management company is falling behind on its responsibilities. You can also reach out to tenants who live on these properties to determine if the company handles their complaints in a timely and appropriate manner and whether they’re happy living in the community.
• Interviewing property owners: You should interview multiple property owners to ensure you’re finding the right fit. Question other owners about the management company’s experience and knowledge of local and federal law, their fee structure and their services, such as the specifics of their property maintenance and the procedure for collecting rent.
• Getting referrals: Referrals are one of the best ways to find a reliable property manager. Talk with your real estate agent, friends or other property owners to see who they would recommend. Once you get a few referrals, conduct thorough research to ensure the property manager is properly licensed and has no complaints against them from other property owners. You can also ask the person who gave you a referral about the company’s strengths and weaknesses and what it was like to work with them.
• Checking licensing and certifications: Your state’s real estate commission and the Better Business Bureau can help you check the licensure and certification of the property manager you’re considering working with. Ensuring that property management companies have the proper licensure and certification can help you sort through your options and choose a qualified company to help you run your business.

Another part of finding a good property manager includes reviewing and asking questions about the tenant lease agreement. The tenant lease agreement is a binding contract that outlines the requirements of management and tenants and the procedure for handling disputes or complaints. Ask the property manager specific questions to ensure the tenant lease agreements they use are up to standard, such as:

• What is the security deposit for new tenants?
• How much is the rent, and what is the length of the lease?
• How do you handle late rent, and is the procedure outlined in the lease agreement?
• What are the responsibilities of the tenant included in the lease agreement?
• What consequences do tenants or management face for breaking the lease?
• Who can the tenant contact for questions versus maintenance or repair requests?

Finding the right property management company can take time, but making an effort can prevent you from working with a company that does more harm than good. Hiring a property manager is an investment, so you want to ensure you get the most from your property management company.

Choose Elevated Property Management Group for Your Property Management Needs

Hiring the right property management company can take many of the responsibilities of owning a rental property off your shoulder while still generating a stable income. An experienced and qualified property manager can help you stay on top of day-to-day management tasks and reduce your liability.

Elevated Property Management Group is a qualified property management company based in Albuquerque, New Mexico, looking to help our local communities thrive. We offer various property management services, such as maintenance requests, marketing and rent collection. Contact us today for a free consultation and learn more about how we can help your property flourish.

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Benefits of Renting Out Your Primary Residence

Making your home into a rental property can be a rewarding experience for the following reasons:

• It gives you a reliable source of passive income: Renting out your primary residence allows you to make some additional money and strengthen your investment portfolio without having to do much work. Consider how much money you spend on your mortgage each month. If you’ve paid off your mortgage or you’re moving into another home, you can charge a similar monthly amount to potential tenants.
• Save time on relocating: You might want to rent your primary residence if you want to move into a new area. By renting your home, you can save the time that you would’ve spent waiting for your house to sell.
• Move out of your home temporarily: You may need to relocate for a few months to take care of a sick relative or pursue a work project out of town. When you rent out your property, your tenant can temporarily watch over your property as you provide them with a place to live. While your tenant pays rent, you can continue to pay your mortgage with the supplemental income and know that your home is still in excellent condition.
• Conveniently downsize: If you live alone, you may not need your spacious house. Instead of selling it, you can rent or buy a smaller property while making additional income on your primary residence.
• Wait for the housing market to improve: If your property’s value has dropped, you might want to rent your property and make some extra money until the housing market recovers. When you wait to sell your property after moving until its value has increased, you can profit from the sale of your house.

What to Consider Before You Convert Your Home Into a Rental Property

Before you make your home into an income property, you’ll need to take care of the following items:

• Evaluate your existing mortgage: If you recently moved into your home, you might not be able to rent it yet. Your mortgage company might require you to stay in your residence for at least a year before you consider moving. Otherwise, you’d be committing mortgage fraud, and the lender could put your house into foreclosure. Consult your mortgage company about your loan’s policies and stay in your home while you can until you’ve met the requirements for your mortgage.
• Consider HOA requirements: If your home is in a neighborhood with a homeowners association (HOA), you’ll have to determine whether you can rent it out. Some HOAs don’t have rental restrictions, while others only allow specific properties within the community to become rental. Contact your local HOA department to discover what you’ll need to do to rent out your primary residence legally.
• Review your financial situation: Before you rent your home, you’ll need to consider your relocation plan. If you still owe money on your primary residence, you might not be able to afford to take out a second mortgage. Your lender should be able to inform you about whether they take your rental income into account when they decide if you can afford your new mortgage.
• Upgrade your property as needed: If you want to make your home into a rental property, you’ll need to treat it like a business. Compare your rental property to others like it in your local area. Updating the exterior paint or replacing worn-out fixtures makes your home more appealing to potential tenants.
• Understand what it means to be a landlord: Converting your primary residence into a rental property will make you money, but you’ll also have more responsibilities than you did as a homeowner. You have to abide by the Fair Housing Act and become familiar with your local and state landlord-tenant regulations. Consider whether you’d want to take on the burden of renting your property yourself or hire a professional property manager to help you.

New Obligations and Responsibilities

Instead of renting your property by yourself, you can trust a property management company to help you handle the following obligations you now have.

HOA Regulations

When you rent out your property in an HOA community, your tenants will also have to follow the guidelines. You’ll have to enforce the rules and make sure you stay informed about all your neighborhood’s regulations so you can continue to rent out your property legally. It helps to consult a professional property management group that’s familiar with the local area. A reputable local company understands your community’s laws and guidelines so they can help you remember and comply with them.

Taxes

When you first rent out your property, you’ll need to consult a CPA or tax professional who can teach you about the new policies you’ll have to follow as a landlord instead of a homeowner. As a landlord, you’re also eligible for the following tax deductions:

• Utilities, if you pay them
• Mortgage interest on your rental property
• HOA fees
• Property taxes
• Landlord insurance policy
• Repairs you pay for on the house

Talk to a professional in the tax industry about how much tax you’ll have to pay on your rental income. You may also want to ask your tax advisor about the homestead exemption you might have on your current home. If you work with a local property management company, they’ll keep track of the tax documents and income data you’ll need to file taxes.

Homeowners Insurance

If you make your home a rental space, you’ll need to upgrade your traditional homeowners insurance policy. A landlord insurance policy protects your house from financial loss and specific responsibilities that only pertain to landlords, such as legal fees and liability charges. You must change your homeowners insurance policy before you start renting, or your provider could deny a claim you make for your rental property. A local property management company can help you keep track of your insurance information and documentation.

Financial Standing

Confirm that you can afford to keep both residences before signing any lease agreements with your potential tenant. If you realize you can’t afford to buy a second house, you may end up without a living situation. After your tenant moves in, you’ll need to keep track of all the money you make on rent and spend on maintenance and operation costs. A property management company can collect rent and provide periodic financial statements to review, so you know how much profit you’ve made.

Contact Elevated Management Group for Help Renting Out Your Primary Residence

If you’re renting a property for the first time, you might need some assistance navigating all the details. As a professional property management company, Elevated Management Group can help you oversee your rental property. We’ll find and screen potential tenants, collect rent and maintain your property for you. For more information about the services we offer to care for rental properties in the Albuquerque area, reach out to us online or call 505-257-6090.

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Reasons to Hire a Property Manager

Here are our top 10 reasons why you should consider hiring a property manager for your rental properties:

1. Property Managers Understand Laws, Regulations and Compliance

There are many different laws and regulations to know about property rentals, including federal, state and local regulations. Property managers have the knowledge and experience to ensure each property complies with these various laws, as well as other regulations such as fair housing acts and the Americans with Disabilities Act (ADA) compliance. A good property manager is licensed and will keep your property up to date and in compliance with all applicable laws.

2. Property Managers Know the Area and Can Set the Right Rental Rates

Figuring out how much rent to charge for each of your properties can be a delicate balance. You want to make sure the rate is low enough to be fair for the area and attract potential renters, but also high enough to maximize your profits. It can be tough to find just the right rate for your property. A good property manager will have an extensive knowledge of the area, conduct thorough market studies and be able to set the best rental rates for your property.

3. They Collect Rent Payments

Property managers can also collect and process rent payments for you. Collecting rent can be a difficult and time-consuming chore. Property managers have efficient systems and methods in place for rent collection, and they can ensure it’s done in a timely manner. Rent payments can also be organized, combined and deposited into your account, making rent collection efficient and headache-free for you.

4. They Provide Tenant Screening

Tenant screening is another task many rental property owners care about. You want to be sure you get quality long-term renters who will pay their rent and take care of your property. A property management company can take over these duties so you don’t have to worry about them. Property managers have the experience and tools to properly screen tenants, and they understand what they can and cannot ask of potential renters. They can also collect and file any necessary documents including ID, background reports and more.

5. They Provide Tenant Management

Beyond finding the right tenants for your rentals, a property manager can also handle everything related to the landlord-tenant relationship, from move-in to move-out. They can handle emergency and routine maintenance requests as well as regular inspections. They can also coordinate lease renewals, tenant disputes, neighbor disputes and any other issue that crops up.

6. They Take Care of Maintenance Coordination and Needs

When you have a property management company working for you, there’s no need to handle those late night phone calls from tenants with maintenance emergencies. A property management company can handle all the maintenance requests for your building. They usually have a trusted list of vendors and repair companies to coordinate, so you’ll never have to worry about finding the right plumber or electrician, either.

7. They Know How to Market Your Property Properly

If you’ve been listing your rental property on just one website, you may be missing out on reaching potential renters. A property management company knows how and where to market each property. They will often market the property through multiple channels, ensuring your rental has maximum exposure to those who are looking. Property managers also know how to write compelling descriptions and advertising materials that showcase your rental’s best features.

8. They Will Inspect and Check in on Your Property

A few different types of routine inspections are part of property ownership, and a property management company can handle these for you. A thorough walk-through inspection at both move-in and move-out dates are a good idea to avoid any disputes about the condition of the property. Additionally, occasional city inspections are to be expected, and a property manager can be there so you don’t have to be. If you have a larger multi-unit property, a manager can also regularly check in on common areas and grounds, making sure everything is in good condition.

9. They Save You Time

Owning and managing a rental property can become time consuming, but a management company can save you a lot of hassle and free up more of your valuable time. Because you can be more hands-off in the day-to-day management of your property, you can enjoy the extra time to pursue other investments, work on your career interests or whatever else you want to do. You don’t need to worry about unexpected phone calls for maintenance or trying to schedule showings and other appointments. You can go about your day with the assurance that your property is being handled by professionals.

10. They Have Access to Knowledgeable Industry Professionals

When you hire a property management company, you are getting the benefit of a whole team of professionals who will care for the details of your rental property. These are people who have experience in the business, as well as plenty of professional connections with other rental managers, realtors, plumbers, electricians, contractors and other professional experts who can help with any issue.

Property Management Services From Elevated Management Group, LLC

In the Albuquerque, New Mexico area, Elevated Management Group, LLC is your go-to for all your property management needs. The 10 reasons above highlight why you need a property manager, and the benefits you can enjoy when you hire us as your professional property management company. Elevated Management Group, LLC is a full-service brokerage, and we can help you with every step of the process in rental investments.

Let us handle the day-to-day details of your rental property, so you can spend your time how you want. With us, you can rest assured your property is being taken care of and your profits are being maximized. Contact us today for more details or to get started with our property management services.

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