A rental landlord’s obligations don’t end with providing a home for your tenants and picking up the rent each month. Their welfare, as well as the safety of their belongings, is partly your responsibility, not to mention your rental’s security.
You need to make sure you put into effect all necessary measurements against burglary and break-ins. Providing a space where your tenants feel safe will probably result in them settling there for a longer period. Here are a few tips on how to keep the burglars at bay and your tenants satisfied.
Fix what needs to be fixed
Take a turn around the house and analyze the potential risks – are there any places that can give burglars easy access? If you know that the window latch in your bedroom is faulty, don’t wait another minute to replace it. Are there any bushes which can provide good cover for an uninvited guest? There are things we know that ought to be dealt with but somehow, we get used to them and forget that the particular state is not common. However, ignoring the possible risks is careless, so it is vital to do all that we can to ensure the safety of your rental and your tenants as well.
Add more light
Common sense tells us that a well-lit house is not an eligible target for a thief. Without the cover of darkness to hide their criminal activity, they will not be able to sneak up on your tenants. So, investing in additional outdoor lighting is probably one of the most practical ideas to provide a clear view of what is going on around your house. Motion-sensor lights are bound to scare off any unwanted visitors, and if the tenants aren’t fast asleep, it will also be a type of an alarm for them that allows them to know that someone is prowling around the house.
Take out an insurance policy
If you want to be completely certain that everything will be taken care of in the case of some event, you can opt for an insurance policy. However, mind you, you need to read the small print to know for sure what the policy covers. To be safe, always choose more comprehensive policies, such as Youi home cover landlord insurance, which encompasses natural disasters as well as damage caused by people. It even covers the content of the property, so you can be at peace even if your keys get stolen or any furniture or furnishings are damaged due to the insured event.
Secure doors and windows
For better security, equip your door with a double-cylinder deadbolt, especially if your doors have glass panels or windows that are close by. This kind of deadbolt cannot be opened from the inside, so it won’t be easy for a burglar to break the glass and reach inside. As for the windows, you can go with locks, which will probably make the perpetrator re-think whether to attempt to get in by breaking the window. Naturally, if you had an unpleasant situation and you had to evict the tenants, don’t forget to change the locks, just in case.
Keep private
Curtains and blinds are not there just to protect you from the sunlight. They also serve as protection from unwanted attention, so advise your tenants to keep the curtains drawn, especially when they are not at home. When the property is not being rented, it is advisable you keep the blinds down. Shielding your privacy in this manner will prevent the burglars from spotting any valuable items that you or your tenants might keep in the house. Also, don’t disregard gossip: if you have any valuables in your rental property, don’t inform the neighbors since you never know who that information may reach.
Renting your real estate can be quite a profitable scheme but it is also a responsible one. Every landlord wishes to have a long-term relationship with their tenants – nobody wants to have shady people marching through the house every month or so.
In order to achieve this rapport, you need to communicate openly but also to ensure their safety. This includes securing doors and windows, installing external motion-sensor lights, and also taking out an insurance policy. By protecting your rental property, you are protecting your tenants and your relationship with them.
In past decades, many people have been trained to think that a 30-year fixed-rate mortgage is the only way to go when it comes to getting a mortgage. They look negatively on adjustable rate mortgages because they fear the adjustable part. But there are advantages to having an ARM and times where a long-term fixed-rate mortgage doesn’t really make as much sense.
Lower Rates and Payments
An ARM, or adjustable rate mortgage, is similar to a 30-year fixed-rate mortgage in that it is also amortized over a 30-year period. But it’s usually for shorter-term situations and generally carries a lower interest rate than fixed-rate mortgages. So if you’re trying to keep your interest rate and payment low, an adjustable can be a sensible choice. And since it’s a short-term mortgage, it’s useful to have a lower rate and payment if you know you’re only going to be in your home for less than 10 years–especially when most American families generally move within nine years or less.
Some adjustable rate mortgages give you even more financial flexibility if they are available with interest-only payments. During the interest-only period, you decide if you want to pay interest plus principal or just interest alone. The rest of your money can go elsewhere, say, toward other bills or just extra spending money.
A Closer Look at ARMs
Many people tend to shy away from ARMs for the fact that the rate is adjustable. However, there are a few caveats to this:
- While ARMs do have an adjustable rate, the rate is fixed for six months, one, three, five, seven, and sometimes even nine years, depending on which term you choose. The rate doesn’t begin to adjust until after the fixed-rate period.
- Although the rate can adjust up, don’t forget that it can also adjust down as well.
- Most people who have an adjustable rate mortgage usually refinance it when it’s time for the rate to adjust. That way, they have some control over their interest rate.
Caps and ARMs
If you have an adjustable rate mortgage and can’t or don’t want to refinance when it’s time for the rate to adjust, it’s important to understand what happens to the rate after the fixed-rate period.
When the rate on an ARM adjusts, there are limitations on how much it can increase or decrease. These limitations, called “caps” include the “initial cap”, the “periodic cap”, and the “lifetime cap”. The initial cap is the limit on how much the rate can adjust the first time it adjusts. The periodic cap is the limit on how much the rate can adjust after the first adjustment. The lifetime cap is the limit on how much the rate can adjust over the life of the loan. Different ARMs carry different caps, depending on the program.
Let’s say your ARM has caps of 5/2/5. The first five is the initial cap; the second number is the periodic cap; and the third number is the lifetime cap. If your rate is 6.5 percent, then the initial cap says the first adjustment is your rate plus or minus five percent–so it can go as high 11.5 percent or as low as 1.5 percent (though it’s pretty unlikely that rates would change that significantly). The periodic cap says the second and subsequent adjustments are your rate (6.5 percent) plus or minus two percent–so no higher than 8.5 percent and no lower than 4.5 percent. The lifetime cap says the rate can never go higher or lower than your rate (6.5 percent) plus or minus five percent.
There are times when you’d want to refinance and times when you don’t. So why would you not refinance your ARM when it’s going to adjust? Well, as we said, rates can go down as well as up. There are some people who are not afraid of risk and are willing to gamble that their rate could go down. To be somewhat savvy, it’s wise to follow what’s happening in the market to know whether short-term rates will go up or down. The Federal Reserve is usually the entity that affects short-term adjustable rates. They meet eight times a year and decide whether to increase, decrease or maintain short-term rates as a control measure over inflation.
Deciding whether you should get an ARM and/or whether to refinance it is really your own decision. But if you can answer a few questions–whether or not you want a lower rate and payment; whether or not you’re only going to be in your home for less than 10 years, and whether you can stand a little risk in terms of the interest rate–then, you’ll be closer to making the right decision. Either way, you should confer with an experienced mortgage expert to be sure you’re making the right decision.
Some people may say yes!
Upward sloping yield curve. It’s important to understand that due to the time value of money and inflation, the longer you borrow the higher your interest rate. If you borrow money from me today to pay me back tomorrow, I won’t charge you interest. But, if you want to borrow money from me today, to pay back over the next 30 years, you better hell believe I’m going to charge you an interest rate above inflation to counteract inflation, make some money, and bake in some risk of default.
Average length of stay. First of all, the average duration one lives in and owns a home is 7 years. If that’s the case, what on earth are you doing borrowing a 30-year fixed rate mortgage for? A 23 year + overestimation of ownership is a serious miscalculation based on the statistics at hand. With a 5/1 ARM, your underestimation is only 2 years, but you already have baked that in.
Match fixed rate with length of stay. If you plan to live in your house for 10 years, take out a 10 year fixed rate (amortizing over 30 years) as the most conservative loan duration. A 10 year fixed rate is cheaper than a 20 year or 30 year fixed rate. It is only logical that you match your mortgage fixed rate with your expected duration of stay. Sure, you might stay longer, but you might also stay shorter as well. If you know you plan to stay in your house forever, it’s more justifiable to take out a 30-year fixed, but I still wouldn’t because 1) You will likely pay down your loan faster than 30 years, and 2) The spreads are unjustly high in this environment.
Adjustable rate loans have an interest rate cap. People think, thanks to fear mongering by the media and mortgage officers, that once the adjustable rate loan period is over, your mortgage rate will skyrocket and make things super unaffordable. This is not the case because everything is relative and rates are capped. I’m refinancing to a 5/1 ARM at 2.625% with all fees included, and after 5 years, the interest rate can reset one time to a maximum of 7.25%. Whoopdee doo! After 5 years, if I don’t pay any extra principal, my principal mortgage amount is about 10% less. A 7.25% mortgage rate on a 10% lower principal amount is very digest-able.
If rates rocket higher, you will be celebrating. Things don’t happen in a vacuum. The 10-year yield is a reflection of inflation expectations. If the 10-year yield, and therefore mortgage rates are skyrocketing, that means inflation expectations are at the very least skyrocketing. However, you don’t have inflation expectations going higher unless demand for real goods and services going higher. Higher demand is a reflection of a stronger economy, and your real assets (property), by very definition or inflating! So what if inflation rises from 2% to 5%, causing your mortgage to reset to 7% due to the 2% spread? If your home is now inflating by 5%, and you have a 80% loan-to-value ratio, your cash on cash return is going up by 25%!
0 years in a row of deflation. Look at the historical 10-year treasury yield. Rates have gone down for 30 years in a row. That’s right folks. THIRTY YEARS! Are you telling me there’s no trend here? Are you saying that we are going to see massive inflation spikes on the way (which are fine as I just wrote) all of a sudden? In these 30 years, we’ve become a much more efficient society who enacts monetary and fiscal policy in anticipation or with shorter lead times. Yes, there will be occasional upward blips in pricing, but I highly doubt there will be a 5-10 year continuous ramp in inflation, which means your 5-10 year ARM is just fine.
Get The Best Deal on A Home
While buying a home can be a stressful process, it can also provide you great sense of achievement and satisfaction. Here is some helpful advice for you to consider when trying to get the best deal.
Vacant Properties are a great way to get good deals. Properties that are vacant do not have anyone living in them and are not making any money for the seller. Often, sellers are very willing to enter negotiations to get these properties off their books. This can be a great negotiation point for you, the buyer.
Do not underestimate the value of a fixer upper! While it may not be the most attractive house on the block today, it very well may be tomorrow. New carpets, a coat of paint and landscaping can turn a seemingly dilapidated old shack into a sparkling new home. Try not to get distracted by things that are easily fixed. If the home has no structural issues and matches your needs, consider the potential when making your decision. Often, homes that are not initially aesthetically pleasing, will turn out to be the customized home of your dreams!
Get an accurate idea of how many homes in the area you are considering, truly match your needs. Having a solid idea of this number will help you determine your negotiating power. The more homes there are that match your needs, the greater your ability to negotiate. Your agent can help you find this information.
Survey the area’s schools. Just because you do not have children now does not mean that you will not in the future or that you should not consider the schools. Schools can be a great negotiating tool, as well. Good schools are an indication of property value that is underlying and potentially long-lasting. Not-so-good schools in the area can give you another bargaining chip when entering negotiations with the seller.
Have a flexible touring schedule. Often, and especially in this market, sellers rent their properties while they are trying to sell them. This means that there may be tenants living in the property, or perhaps there is no lockbox and tours may be on an appointment basis only. While this may seem burdensome, consider this. A home that is not often viewed, is not often made an offer on. As a result, your offer may be taken more seriously. Minimally shown homes do not pull in offers the way open houses do, so the seller may be more willing to entertain and negotiate your terms.
A common point of contention between buyers and sellers is the closing date. Buyers are often eager and want to close as soon as possible to meet their own personal deadlines, be it the opening of school or beginning of summer or recently after a wedding. Sellers are often eager for many of the same reasons as well. However, it would be beneficial to the Buyer to determine the Seller’s deadline when making the offer. This way, the seller may be more likely to accept the offer.
Using this advice and help from the right agent, you’re sure to get the best deal possible!
