Rental Property... What now?

I used to think I owned rental property. It was fun to work "about the task of building a portfolio." Endlessly cutting around town - never a dull moment... Buying rentals is great... I love it. If you've done it aggressively, you know what I mean. And you'd probably agree if you've done it for any length of time that: If we're worth an "ounce of salt" in this business - we all are. We're all good at it. You didn't get this far being silly or uneducated. You've gotten this far because you work at it, and you work at it hard. Hard.

Working tenaciously to acquire rental property is a delightful task. The deals were abounding (then very much so, but now more than ever) and I was "just eatin' it up" how my day to day business life felt as though it was growing in depth everyday. The hustle was finally getting a little bustle and I was getting into a groove. Building a rental portfolio is exhausting work - As I'm sure many of you know. You're doing everything you do (to keep doing what you're doing as a dentist, house-flipper, school teacher, etc.) and yet, you're picking up a new assignment with every hour:

• Pay this insurance bill
• Transfer this amount to your "Property Taxes Account" - (more on this later if you don't have one)
• Field applicants for tenancy

Even if you don't have rental property yet you can imagine how overwhelming this could be. You're dropping the hammer everyday in whatever it is you do every day, and yet your days are drowning you. You must endlessly be doing something. You're always at Lowes. You're always drafting a notice "of change of utilities." You make u-turns in traffic to put out "For Rent" signs, and then when you get to the house you endlessly search for a sharpie somewhere in your truck to scribble your number on the sign only to realize as you drive away... that you can't even read your cell number on it. You keep driving, because you've got something else urgent to do... because some tenant called (as you were hammering in that sign in the yard) about how "their sinks' been drippin' for 2 rr 3 monssz an itz rottin' the cabinet out." All this, and you've been unable to work on anything that would make you any money.

Sound familiar?

What? You think you're days aren't drowning you?

Are you at a place where you think you've virtually got it all under control?

Well, then just think of all the task you aren't accomplishing... How many things didn't get done today. Better yet, skip an interval. How many task weren't accomplished this month? I'm not kidding. Stop and think about it.

This is a huge business. It's enormous, and if you don't have any help you can't make it.

So, now you ask "What should I do?"

Well - find a property manager. Even if you don't use my property management business then please use one of the many management companies that are available. Search them out. In fact, if you need a list that could help you then click here to send me an email. I'd be happy to help you.

Don't loose heart. Jackson, Mississippi is still rated by the Wall Street Journal as the 10th best place to purchase single family residential investment real estate in the US (email me if you want that article). Hold to it - I can help you do it, because I'm living in it.

Keep your chin up.

Google Analytics

If you have a website(s) and you aren't using Google Analytics - Wake Up. Google Analytics (GA) is a Google product that analyzes the traffic at your websites. It is the "meat and bones" of how visitors search for, locate, navigate through and truly convert on your sites. And, remarkably, like most things Google, it is free. Think of harnessing the power about "what other people think about your web presence." GA pulls back the veil and lets you see what the masses think about how you're doing business on the web. Once you begin to use it - it will blow your mind, simply because it answer questions you didn't even know you had. How does Google do it? It's amazing. Absolutely amazing stuff.

You now have the opportunity to see what your conversion rate is without having to subscribe to a consulting's service. GA is user friendly (and of course it's geared to get you buying more and more adwords), but it can change how you present information on the web - and it doesn't cost you anything. Did I mention that part?

If you're interested click here, but before you do please read this very small illustration: On my property management website www.jxnhousing.com I use lots of video for various reasons

• Video tours of available property
• Education
• Introduction of ideas, ie. our application process, etc.

So, by using GA I'm able to quickly see that the visitors who arrive at the squeeze page (where you will arrive by clicking the jxnhousing.com link above) stay on the page for an average of 96 seconds. Adversely, I have a video on that squeeze page that is only 28 seconds long. Now, not because of GA, but because of web-marketing research I thought that I only had 30 seconds or so to speak to those people. What did GA show me?

Wrong.

I was dead wrong. I now know have an extra have an extra 68 seconds to speak to the masses who visit my website that I didn't know I had. I now have the ability to actually articulate what it is that this property management business does.

Do you know how much info you can fit into 68 seconds?

Now, I'm a fast talker and I could probably cram a lot into a minute plus, but imagine the possibilities because of this one piece of info... What if I spent the time to make it a funny video, or beautiful, or winsome. Just dream up the possibilities when you realize that you have an additional 200% + of the amount time you thought you did to be in front of a possible customer/client? (Stop and go back, read that last sentence again. Really, please go back and read that again.) How business growing; game changing is that? So, whatever it's worth - check out GA. What could it cost you, 96 seconds?

Phantom Income

In today's market, more and more investors are selling property on land contracts or through seller financing. Now, I believe that considering the present market condition - it is a great idea. Savvy investors will especially evaluate these two options this time of year for several reasons. 1) It's the way to "build a little warmth" in the time of year when the market goes cold. By using the LC (land contract) or SF (seller financing) you're able to generate that small piece of cash on the front end, at closing. In this time of year, it can be very helpful to generate even the smallest piece of downpayment cash in order to hold out for the warmer seasons when more properties are moving. 2) Investors with large asset loads and potentially large debt loads are looking down the barrel of that creepy part of the year know as Property Taxes. Boo. Ahh... These tax bills have probably started to roll in, and investor's are scratching their heads as to how to tackle them. Often times, if former years were lean, then they are trying to figure out how to cover more than just one year's tax burden. So, all in all, it is a very useful tool to have both the LC and SF in your quiver of real estate tools, but you need to be aware of one particular item: (But first, my disclaimer:)

***My disclaimer: I am not a tax professional, and this isn't advice. It is simply info for you.***

If you sell a house on an LC or SF you could possibly create for yourself a taxable event at the point of sale. As I'm sure you're aware, this event is most often referred to by investor's as "Phantom Income." Check in closely with your CPA about this, but here's how it works.

If you sell the house on a land contract or if you seller finance it you will be taxed on the the entire amount of your profit from sale in the same year that you close. You will also be required to pay capital gains tax since you did not live in the home as a personal residence. Illustration: If you've owned the property for over a year, you have 50K invested in it and you sell it on a LC or you SF to an owner for a purchase price of 80K - then you would be required to pay taxes on the $30K in profit (which is considered phantom income) even though you did not collect 30K. You wouldn't have collected the $30K at point of sale, because the buyer (in today's market in JXN) would have only put down probably some smaller amount like 2.5 or 3.0% at the closing table. It's something you need to be very careful about - especially if you plan on doing this with 10 or 15 houses all across the nation.

Lastly, there is one loop hole. You can sell this house on a LC or SF it and break up the experience of a taxable event if you sell the house on an installment sale. Ask your CPA about this. You can break up how you receive the profit to better line up with how you will be taxed in passing years.

I'm sure you're aware of these principles. I just wanted to be a helpful reminder of what to watch for. Now, If you need some help or you have a house you'd like to sell using these tools please contact me. I've packaged quite a few deals like this for my clients, and using my website (www.jxnhousing.com) it makes things easier. Contact me if I can help you. I welcome the call.

The Time Has Come

Considering that this blog has no followers, I begin this journey like I have begun most of my real estate endeavors - with a quiet decision to do so. I begin it with a clear vision for the future and strangely uncertainty about exactly how to get there. I begin this blog with the intention to only sharpen myself and to further the grow and develop that which I pursue. It may or may not be read, but I'm (at least at this point) only interested in forcing myself to narrate my "travels" down this road of Real Estate Entrepreneurship. By writing it down it will keep my constantly evaluating the past and the steps I've taken each day to pursue my ever-growing vision in Jackson. Clearly noting the past not only shows us our successes and failures, but it helps us figure out the next step to take. Quite honestly, I'm amazed at what the last 5 years of single family residential entrepreneurship have brought me through. It amazes me with ever increasing opportunity. The opportunity I see in the next five years is overwhelming. If the last five have been like this - the next five will be twice as much fun. It's amazing - thank You, Lord. So, readers (if you're out there) thanks for dropping by.