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Jennifer Stoops6 Posts
Jennifer Stoops, MPM®, RMP®, is VP of Industry Relations at PURE Property Management, the fastest growing profitable residential property management and technology company in the U.S. In this role, Jennifer leads PURE’s growth by building relationships with key industry stakeholders while connecting with owners of property management companies. Since its founding, PURE has acquired over 50 property management companies. Jennifer leverages her extensive experience after having grown Park Avenue Properties from a local Charlotte, North Carolina business to a regional company overseeing the management of residential investment properties throughout the Southeastern United States from individual landlords to large institutional investors.
Unlocking the Potential
Single Family vs. Multifamily Investments By Jennifer Stoops Investing in rental properties is a strategic move for those seeking to build wealth through real estate. However, the decision between single-family and multifamily units is not a one-size-fits-all scenario. It requires careful consideration of various factors, including investment goals, risk tolerance, and market dynamics. In this comprehensive guide, we delve deeper into the pros and cons of each option to help you make an informed decision and maximize your returns. Assessing Investment Strategies When embarking on the journey of real estate investment, it is crucial to align your strategy with your financial goals and timeline. Single-family homes offer the advantage of quicker appreciation, making them attractive for investors seeking short-term gains. On the other hand, multi-family properties provide a long-term investment opportunity, with the potential for stable cash flow and sustained growth. Understanding your investment horizon is essential in determining which option best suits your needs. Evaluating Exit Strategies Before diving into the real estate market, it is essential to have a clear exit strategy in mind. For investors looking to capitalize on short-term gains, single-family homes may be the preferred choice. With the right property and a reliable tenant, you can leverage the property’s appreciation to maximize returns in a relatively short period. Conversely, multifamily properties offer a more gradual appreciation but provide a steady stream of rental income over time. Assessing your investment goals and risk tolerance will help you determine the optimal exit strategy for your investment. Loan Requirements Regardless of whether you opt for a single-family or multifamily property, navigating the loan requirements is a critical aspect of real estate investment. Most lenders view rental properties as business ventures, resulting in higher interest rates and stricter lending criteria compared to traditional mortgages. Plan to allocate at least 20% of the purchase price as a down payment and ensure that your investment yields a return of at least 1% of the total purchase price per month to generate a decent profit. Contrasting Property Dynamics Single-family and multifamily properties differ in their valuation methods and market dynamics. While single-family homes are typically assessed based on their property value, multifamily units are valued based on the rental income they generate. Understanding these distinctions is crucial for evaluating investment opportunities and making informed decisions. Pros and Cons of Single-family Homes Single-family homes offer several advantages, including: » Tenant Stability // Properties located in desirable neighborhoods often attract long-term tenants, providing a stable source of rental income. » Short-term Appreciation // Single-family homes tend to appreciate more quickly than multifamily properties. » Lower Acquisition Costs // Single-family homes are generally less expensive to acquire, making them accessible to investors with modest capital. However, there are also drawbacks to consider, such as: » Limited Scalability // Investing in single-family homes may limit your ability to scale your portfolio compared to multifamily properties. » Tenant Dependency // Relying on a single tenant poses income limitations, with vacancies resulting in revenue loss. Pros and Cons of Multifamily Homes Multifamily properties offer unique advantages, including: » Lower Cost Per Unit // Multifamily properties often trade at a lower price per unit, offering better economies of scale and higher potential returns. » Diversified Income Streams // With multiple units, multifamily properties provide diversified rental income streams, reducing the risk associated with vacancies. » Ability to Scale Portfolio // Multifamily properties are conducive to portfolio growth, allowing investors to achieve scale more efficiently compared to single-family homes. However, multifamily properties also present challenges, such as: » Higher Property Taxes // Multifamily units typically incur higher property taxes, impacting overall profitability. » Management Complexity // Managing multiple units can be more challenging and may require third-party property management, increasing operating expenses. Additional Considerations In addition to the core factors discussed above, there are several other considerations to keep in mind when choosing between single-family and multifamily investments: » Market Affordability // Evaluate the affordability of the market and consider the cost per unit relative to rental income potential. » Market Demographics // Analyze the demographics of the local market, including the proportion of renters versus homeowners and the demographic profile of renters. » Scale // Consider the scalability of each investment option and assess your ability to manage and grow your portfolio over time. Market Trends and Opportunities Keeping an eye on market trends and identifying emerging opportunities can significantly impact your investment success. In recent years, multifamily real estate has witnessed a surge in demand due to changing demographic trends, such as an increase in millennial renters and a growing preference for urban living. This shift has led to a rise in multifamily development projects and presents lucrative opportunities for investors looking to capitalize on the rental market’s momentum. Conversely, single-family homes continue to be a staple of the housing market, offering stability and potential appreciation in suburban and rural areas. Understanding these market dynamics can help you align your investment strategy with evolving consumer preferences and maximize your returns. Risk Management Strategies Mitigating risks is a crucial aspect of real estate investment. While both single-family and multifamily properties offer attractive returns, they also come with their unique set of risks. For single-family homes, tenant turnover and vacancy rates can impact cash flow, while multifamily properties face challenges such as tenant disputes and property management complexities. Implementing effective risk management strategies, such as thorough tenant screening processes, proactive maintenance plans, and contingency funds, can help safeguard your investment. By identifying and addressing risks upfront, you can navigate market fluctuations and protect your investment portfolio. Tax Implications and Financial Planning Understanding the tax implications of real estate investment is essential for optimizing your financial strategy. Both single-family and multifamily properties offer various tax benefits, such as depreciation deductions, mortgage interest deductions, and property tax deductions. However, the tax treatment of rental income and capital gains may vary depending on the property type and ownership structure. Consulting with a tax professional and incorporating tax-efficient strategies into your financial planning
Property Management and the Buy-and-Hold Investment Strategy
Enhancing the Profitability and Longevity of Rental Investments By Jennifer Stoops Investing in real estate has long been recognized as one of the most lucrative and stable ways to build wealth. Among the various strategies employed by investors, “buying and holding” stands out as a time-tested approach to maximize returns and achieve financial freedom. Buying and holding real estate involves purchasing a property with the intention of owning it for an extended period. Unlike other investment strategies like flipping properties, this approach focuses on long-term wealth accumulation and cash flow generation. The idea is to buy a property at a favorable price, hold onto it for an extended period (usually years or decades), and let the property appreciate in value over time. There are many benefits of the buy-and-hold real estate investing strategy: Appreciation Real estate properties tend to appreciate in value over the long term. By holding onto a property for years, investors can benefit from substantial appreciation, which contributes significantly to their overall wealth. Passive income Buying and holding real estate allows investors to generate a passive income stream through rental payments. Rental income can cover mortgage expenses and other property-related costs, creating a steady cash flow. Tax advantages Real estate investors enjoy several tax benefits, including various tax deductions and depreciation. These tax incentives can lower the overall tax burden and increase the profitability of the investment. Hedge against inflation Real estate investments act as a hedge against inflation since property values and rental incomes often rise with inflation. As the cost-of-living increases, rental rates can be adjusted, protecting investors from the erosion of purchasing power. The Property Management Part The benefits of investing in and owning long term rental properties are significant, but it is not all rainbows and unicorns. Once you own a rental property, there is the matter of managing the property. This is a critically important piece of the buy-and-hold strategy and yet is often overlooked and undervalued in how it can affect the return on your investment (ROI). Often, the significance of managing the asset is not recognized until a problem occurs, which is often very costly. Typically, we use professionals in our lives who specialize in various fields that bring knowledge, expertise, value and protection to us. In the world of buy-and-hold real estate, a professional property manager may be your best investment for the continued increase in the return on your investment. With all the issues surrounding our economic climate, including squatter issues, eviction moratoriums and housing affordability, professional property managers are equipped to handle these issues. Why Use a Property Manager Effective property management is paramount to the success of the buy-and-hold strategy. Properly managing real estate assets ensures that investors can maximize returns, minimize expenses, and maintain the value of their investments. Engaging professional property management services can relieve investors of the day-to-day responsibilities of running rental properties. Property managers handle tasks such as tenant screening, rent collection, property maintenance, and compliance with local laws. Professional property managers are like an insurance policy as they bring an intimate knowledge of the local real estate market to the investor. This expertise allows them to accurately determine optimal rental rates, ensuring that the property generates maximum income without deterring potential tenants with overly high rates. Additionally, property managers are well-versed in the local property laws and regulations, helping investors avoid legal pitfalls that could result in costly fines or lawsuits. Owning and managing rental properties requires a significant time investment, from advertising vacancies and screening tenants to handling maintenance requests and emergencies. By hiring a property manager, investors free up their time to focus on other aspects of their lives or business. Property managers also act as a buffer, shielding investors from the day-to-day stresses and issues that can arise with tenants and maintenance. One of the most critical tasks in property management is tenant screening and placement. A professional property manager conducts thorough background checks, credit assessments, and rental history evaluations to ensure that only reliable and responsible tenants are chosen. This diligent screening process reduces the likelihood of rent payment issues and property damage, safeguarding the investor’s income and property value. Consistent rent collection is essential for maintaining stable cash flow. Property managers implement efficient rent collection systems, making it easy for tenants to pay and ensuring that the investor receives their income promptly. Moreover, in case of any rent-related issues, property managers handle late payments and enforce lease agreements, reducing the burden on the investor. Property maintenance is an ongoing necessity that can consume a significant amount of time and resources. A property manager maintains a network of trusted contractors and service providers, ensuring that any repairs or maintenance needs are addressed promptly and at reasonable costs. This proactive approach helps preserve the property’s value and keeps tenants satisfied. Having a vacant property is one of the leading causes of stress for an investor. Vacancies can be costly for investors, as they lead to income gaps. Property managers employ effective marketing strategies to minimize vacancy periods by creating compelling property listings and utilizing various advertising channels. They also have access to a pool of prospective tenants. Do you know the laws for the state, municipality or HOA where your rental property is located? There are state laws, municipality laws, HOA covenants and restrictions, city and town ordinances, code enforcement, all information you need to know regarding your property to keep from inadvertently doing something wrong. Navigating the legal landscape of rental property management can be complex. Property managers are well-versed in tenant-landlord laws and regulations, ensuring that all interactions and agreements are compliant. In case of disputes or conflicts with tenants, property managers have the experience to handle negotiations and resolutions, protecting the investor from potential legal entanglements. In the world of real estate investment, time and knowledge are invaluable assets. Hiring a professional property manager is undoubtedly a prudent choice, giving investors access to expertise, efficiency, and peace of mind. From expert market insights to
The Long and Short of Short-Term Rentals
Generate Income and Have a Place to Vacation By Jennifer Stoops Investing in real estate is becoming a very common strategy among those looking to build wealth and diversify their investment portfolio. Single family residential assets have long been the key target of real estate investing with multi-family assets coming in at a very close second. In more recent years, a new player has joined the real estate investing strategy, the short-term rental. With travel demands being higher than ever and more flexibility to work from home, the short-term market is red hot. The rise in work from home over the last few years has increased the number of people who would like to relocate, but previously could not due to work. This is also adding to the increased demand for short-term rentals as people are looking for temporary housing while they search for their new home. What is a Short-Term Rental? What classifies as a short-term rental? These are dwellings that are furnished and rented for short periods of time and considered to be for “transient” use. Accommodations such as corporate housing and vacation rentals are examples of short-term rentals and are often an alternative to the traditional hotel. The length of the rental agreements vary from an evening to days, weeks or multiple months, but are generally less than a six month (some consider less than twelve months short-term) period of time. Short-term rentals can be anything from single family homes, multi-family buildings, condos, townhomes, apartments, a cabin, a guest home, garage apartment or even a room or a portion of a dwelling. Short-term rentals have quickly become one of the most lucrative real estate investments you can buy. However, when compared to the traditional and more familiar long-term rental, short-term rentals may seem intimidating. There is a long list of benefits to owning short-term rentals. What are the Benefits of Short-Term Rentals? Short-term rental investments create higher earnings than their long-term rental cousins. A well marketed short-term rental in a desirable area will consistently outperform long-term rental revenue. Another benefit to owning short-term rentals is better maintenance of your asset. With frequent short stays, you have a much greater ability to become aware of any maintenance issues much sooner providing the opportunity to catch issues that may otherwise go unnoticed or unreported. Flexibility is another huge gain with this type of investment. You have complete control over the calendar of when you want to offer your rental and for how long. You also have the flexibility to adjust pricing of your rental as you see fit. Not only do short-term rental investments create a profitable monthly cash flow, but the asset will also continue to appreciate year after year. Like many real estate investments, the longer you hold onto a rental property, the more it will increase in value over time and the more your investment will be worth when you decide to sell. While there is never a guarantee, real estate is usually a good investment and generally withstands difficult economic times. Accessibility to building wealth much faster is another advantage to short-term rental investing. You can take out a loan to purchase a property and use borrowed money to generate more income. This strategy is immensely helpful for beginner investors. Learning how to leverage debt in a profitable way can prove very useful in building wealth at a much faster rate. One additional benefit, but certainly not the end of the list of advantages to investing in short-term rentals, is tax benefits. Real estate investing has a significant number of tax advantages, which make them a very appealing opportunity for wealth building and portfolio diversification. Some tax advantages include deductions for maintenance, marketing, management and depreciation. Factors to Consider There are some critical factors to consider before jumping into this type of investment. Choosing the best location to purchase this type of investment plays a critical role in its profitability. Also, consider hiring a professional management company. Unless you plan to make owning short-term rentals your full-time career, hiring a management company can save you money and certainly time. There is a significant amount of work involved in the management of short-term rentals such as maintaining the calendar, collecting deposits and fees, drawing up contracts, coordinating turns in between tenants (and doing so in a very quick period of time, often within hours of the previous tenant vacating) and maintaining working utilities. There is also maintenance coordination when things break, property preservation, being on call for emergencies or issues at the property, coordinating access to the property, potential evictions and so much more. Management companies also have relationships with local vendors, which will likely mean discounted rates for you. In summary, short-term rental investing is another great wealth building opportunity under the real estate investing umbrella. There are some key factors that can make or break how well and how often your property rents. Once you’ve selected your property, don’t forget to pay attention to ways you can maximize your asset. Check out other rental listings in the area to see how yours “stacks” up against the competition. Your rental listing is one of the most critical components to getting your property rented early and often and keeping the calendar full. Use professional photos, descriptive details about your property’s features, have modern and clean furnishings and keep the property clean and well-manicured on the outside (if you are responsible for landscaping and not provided by an HOA). Having a well-stocked inventory of kitchen essentials, bathroom essentials and linens are very important to the experience your renters will have. The location of your rental will also dictate what other small details you should consider providing. For example, if your property is near the beach, supplying things like beach chairs, beach towels, beach toys and a cooler will enhance the tenant’s experience. As an added bonus, owning a vacation rental gives you the ability to have a place on hand for your own vacation. An investment
Alternate Investments as a Wealth Building Strategy
Why Multifamily Assets Should be a Major Contender By Jennifer Stoops With our current economy being ever changing and uncertain, people have been looking now more than ever at diversifying their retirement, personal and wealth building investment portfolios. The days of relying on a 401K, Roth IRA, stocks and bonds as your retirement portfolio are no more. While these conventional options for building wealth are still beneficial, market trends are creating an environment that is causing more people to look into alternative investments to broaden their investment and wealth building strategies. So, what are alternative investments and why are they becoming more and more prevalent as a part of a wealth building strategy? Alternative investments are financial assets that do not fall into conventional asset categories like stocks, bonds and cash. These types of investments can create compelling opportunities for investors to diversify their portfolio, dampen the impact of market volatility and help to achieve long term financial objectives, even during times of market uncertainty. The Benefits of Alternatives There are some significant benefits to investing in alternatives because they behave differently than traditional equity and bond investments. Adding alternatives to an investment portfolio can help in three major aspects: they can lower volatility, broaden diversification, and enhance returns. Alternative investing can lower volatility because they rely less on broad market trends and more on the strength of each specific investment. Therefore, adding alternatives can reduce the overall risk of the portfolio. With low correlation to traditional asset classes, alternatives can be a beneficial way to also broaden and diversify your portfolio. Alternatives can improve the risk and return of a portfolio and enhance total return through access to a broader macrocosm of investments and strategies. Some examples of alternative investments are private equity, hedge funds, venture capital and real estate, just to name a few. Single family residential assets (SFR) have historically been the “go-to” for real estate investments as a part of portfolio diversification. However, multi-family investing has quickly become a major contender. Why Invest in Multifamily Properties There are plenty of reasons to invest in multifamily properties, which are often apartment complexes of four units or more. Some of the primary benefits of investing in multifamily assets include a reliable cash flow, less risk than other real estate assets, easier access to financing, growing your portfolio takes a lot less time, better cash flows allows for a greater opportunity to hire a professional management company, the creation of passive income, higher potential for appreciation and a higher demand. Investing in multifamily properties can result in a reliable monthly cash flow that an investor can rely on from rental payments. Even as a unit becomes vacant, an investor can still rely on cash flow from other tenants. A vacancy in multifamily is less risky because it continues to generate cash from other occupied units. Financing for multifamily assets is also easier to obtain. Despite multifamily assets being more expensive than its single-family counterpart, securing a loan for multifamily real estate is surprisingly easier than it is for securing financing for single family assets. You’ll also be securing a single loan for multiple units which is more cost effective. Lenders are prone to considering the properties ability to make money rather than a decision based on one buyer’s credit. Because multifamily properties generate strong, steady cash flow, most lenders consider these a lower risk investment. Acquiring multifamily assets is a much faster strategy to build your investment portfolio. By procuring multifamily properties, you will save time, energy, and money, not to mention you will build a significant, income generating real estate portfolio. For many investors, buying multifamily assets is a launchpad to building their own real estate empire. Multifamily investing makes scaling relatively easy. Scalability, shared services and features, multiple units in one location, all add up to reduced expenses. With the extra cash flow, multifamily properties are ideal for hiring professional property management to maintain and protect your assets. And who isn’t interested in creating passive income? Investing in multifamily properties is a great way to create and generate passive income and with the extra cash flow, this would allow for some cash to be put towards your next multifamily asset on the journey to building wealth through a real estate portfolio. There is a much higher ability to create forced appreciation. Forced appreciation occurs when an investor proactively increases cash flow and property value with property improvements such as common area improvements and updates, curb appeal improvements, updating individual units, adding and improving amenities and adding security features. Lastly, demand is high. Multifamily properties are in high demand and this sector is forecasted to grow. What is driving demand? Baby Boomers preparing for or having already retired and looking to be closer to family and with less hassle of maintaining a property, people relocating for jobs, empty nesters looking to downsize and millennials not quite ready to buya home. These trends will likely continue, therefore continuing to create demand for multifamily properties. Hot Multifamily Markets Yardi Matrix recently released its 2023 winter outlook which projects rent growth in 2023 will hit 3.1% at the national level. That is a more than 50% drop from the 6.4% reported in 2022. This year will be one that is considerably more normal, but that still means a great year for the industry. The factors driving multifamily rent growth in 2023 include a strong economy, low unemployment, and a growing population. Further, the availability of financing options such as fixed-rate loans can help investors take advantage of the current market conditions. Everybody has their own positions and speculations on which markets will be the hottest for multifamily in 2023. Based on the rent growth projections provided by Yardi Matrix, here are three markets every real estate investor should be conducting their own due diligence on. I am not including the usual suspects like New York City and Dallas. San Jose, CA According to Yardi, San Jose’s projected rent growth in
Should I Allow Pets in My Rental Properties?
Pet-friendly rentals can mean more revenue, a larger pool of tenants and longer leases. Making the decision to invest in residential real estate is an excellent step in the right direction toward building wealth. While this is a wise choice, there are many things to consider to get the best return on your investment. Although many investors consider the obvious, such as where to market and whether to hire a professional property manager, many overlook the not-so-obvious decisions until they are confronted with them. One of those is whether you should accept pets in your rental properties. Finding quality tenants is a big hurdle, so should you exclude tenants who would otherwise be desirable because they have a pet? Here are some things to consider as you decide whether your rental property will be pet-friendly? Did you know that accepting pets could generate additional revenue for yourinvestment property? Most states allow reasonable nonrefundable pet fees and pet rent to be charged to residents who have pets. Be sure to pay attention to the term fee versus the deposit; deposits are refundable. And, always check state statutes to be sure you are in compliance with your fees. Can I charge a pet deposit, pet fees or pet rent for residents who have an assistance/service/support animal? No, you are not able to charge any additional fees to a resident with an assistance/service/support animal. If my resident has an assistance/service/support animal and the animal causes damage to my property, can I deduct damage costs from the security deposit? Yes, if the animal causes damage to the property, you can deduct the cost of repairs from the security deposit. You should process the security deposit as you normally would within your state’s statutory requirements. I still have concerns about accepting pets. Even more concerning is determining the validity of assistance/service/support animals (determining the validity of a reasonable accommodation request). Is there any way I can protect myself? Deciding whether to be pet friendly is a big decision. Should you set parameters on the type of pet, weight, breed restrictions? How do you know if the resident is being truthful about the type of pet they have or if they have a pet at all? How do you know if the pet has bitten anyone or if the pet is housebroken? What about validating animal accommodation requests? Are you confident that you (or your staff) know the allowable questions for validating an accommodation request? Thankfully, like other tools to help make managing rental properties a little less tricky, there is a solution that can help with this too. Thousands of investors and property managers across the country are using Petscreening.com to streamline their pet policies and to handle validating their accommodation requests so they don’t have to worry about asking the wrong questions and end up in a pile of poop. Still thinking about whether or not you should accept pets in your rentals? Maybe this will help: As of 2019, approximately 72% of renters have pets. This is a significant jump from 43% in 2014. However, 55% of landlords do not accept pets. That means 45% of landlords will likely earn 72% of the rental business. How does this affect no-pet rental properties? Having a no-pet policy will likely mean longer vacancy periods and potential for unauthorized pets in your properties. Conversely, being pet friendly can decrease vacancy periods and generate additional revenue. Residents who find pet-friendly housing have an average lease of 26 months versus 18 months for those that are not pet-friendly. So, do you want shorter vacancy periods, more revenue and longer leases? Then you pawsitively should consider being pet friendly.
“Retired Dental Hygienist Turned Property Manager”
That’s what the illustrious headline would read to describe my career shift to the real estate and property management industry!
