Mariia Chernetska on LinkedIn: Ways to Increase Tenant Retention at Your Rental Property (2024)

Indeed, Achieving Financial Independence Comes with DrawbacksThe pursuit of financial independence (FI) represents a journey toward freedom, security, and the ability to shape one's life according to personal terms. However, this path is far from straightforward and comes with its own set of challenges.It can be tempting to fixate solely on achieving financial freedom, but this obsession can unexpectedly detract from overall happiness and well-being. We'll explore the true journey to financial independence, the risks associated with obsessive pursuit, and alternative approaches to leading a balanced and fulfilling life.The Path to Financial IndependenceAchieving FI is neither quick nor simple. It involves years of disciplined saving, strategic investing, and lifestyle adjustments. This journey can be arduous, particularly when breaking old spending habits or balancing familial responsibilities.Financial independence means having sufficient investment income to cover living expenses without reliance on traditional employment. Attaining this requires substantial savings, wise investments in assets like stocks and property, and disciplined financial habits such as living below one's means and reducing unnecessary expenses. Establishing multiple streams of passive income, such as dividends or rental earnings, is crucial for achieving and maintaining FI.I advocate for pursuing financial independence because it provides the freedom to allocate time as desired, stability, and the flexibility to pursue personal interests and family time.However, an exclusive focus on FI can be overwhelming. Instead, consider it a journey marked by incremental achievements.Begin by securing your finances—accumulating savings to cover essentials and emergencies. Then strive for financial health—having additional resources for occasional treats or luxuries.Once these milestones are met, work toward complete financial independence, where investments generate sufficient income for sustained lifestyle without requiring active employment. This process mirrors the adage, "How do you eat an elephant? One bite at a time."The Drawbacks of Unyielding PursuitWhile FI offers substantial rewards, relentless pursuit can have drawbacks. Persistent concern over financial goals may induce stress and anxiety, adversely affecting mental well-being. Intense focus might lead to burnout, particularly if it necessitates long hours or multiple jobs, overshadowing personal relationships and growth.Consider someone working multiple jobs and scrimping every penny to accelerate FI. This could strain relationships, resulting in social isolation. Stringent frugality might also diminish enjoyment and spontaneity, curtailing experiences that bring happiness and relaxation.

Investor Alert: 5 Crucial Insights on the Current Commercial Real Estate MarketIf you're currently investing in or considering investing in commercial real estate, you need to understand the market's current dynamics.The perspective you get largely depends on who you consult. However, it's evident that multiple viewpoints are more beneficial. Official data—such as construction rates, macroeconomic factors, and consumer sentiment—suggests a thriving market.But a seasoned and independent expert can provide deeper insights by questioning some of these data points and conclusions. Dr. Peter Linneman did just that on a recent episode of the Walker Webcast.His outlook on commercial real estate may not be overly optimistic, but it's insightful and could help you avoid costly mistakes in the future.Real Rental Growth vs. CPI Rates:Recent CPI reports show that the rental market significantly drives inflation. The shelter component of the core CPI increased by 0.4% in April, or 5.5% year-over-year. This might seem like good news for rental market investors, suggesting rents are rising. However, the calculation methods used in the CPI are flawed. The inclusion of old and new leases skews the data, causing a lag of 12-18 months. Moreover, the CPI relies on the Owners Equivalent Rent (OER), which is based on homeowners' perceptions rather than actual valuations. Without these inflated metrics, actual rental growth is more modest, with Zelman tracking single-family rental rates up just over 3% year-over-year.Challenges in the Office Space Sector:The pandemic caused a significant drop in demand for rental spaces. The expected return of office workers hasn't materialized, with office attendance stabilizing at 30% below pre-pandemic levels. Construction and banking responses to this crisis have been counterproductive, with $80 billion still being invested in new office construction. Lenders are also restructuring commercial loans rather than foreclosing, complicating the situation for investors.Shaky Consumer Confidence:Despite narratives of resilient consumers, the unemployment rate may be higher than reported, affecting consumer confidence. Official figures don't account for all un- or underemployed individuals. Dr. Linneman estimates the true unemployment rate to be closer to 6.6%, much higher than the 3.9% reported in April. Additionally, the Consumer Confidence Index has been declining, reaching its lowest level since July 2022, suggesting prolonged pandemic impacts on finances.

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Investing in Passive Real Estate Opportunities as a Non-Accredited Investor: What You Need to KnowInterested in real estate investment but want to avoid the complexities of being a landlord, securing financing, dealing with renovations, managing tenants, navigating permits, and other hassles that come with hands-on real estate activities?I share the sentiment. While I've owned numerous single-family rental properties in the past, my current focus is on passive real estate investments.Passive real estate investments encompass various options such as notes, funds, real estate syndications, and crowdfunding investments. Each option has its own set of advantages and disadvantages, distinct from active real estate investments.However, there's a catch: Many passive investments are restricted to accredited investors only. The government imposes these restrictions under SEC regulations, barring non-accredited individuals with a net worth under $1 million (excluding primary residence) or incomes under $200,000 per year from certain types of investments classified as 506(c).Some passive investments classified under 506(b) do allow non-accredited investors, but they cannot be publicly advertised.So, how can non-accredited investors find opportunities in passive investments that are typically off-limits?Crowdfunding platforms offer a straightforward starting point. Several platforms permit investments from non-accredited investors, such as Groundfloor, Ark7, and Arrived. These platforms vary in quality, historical returns, and reputation, and I've personally had positive experiences with some of the largest ones.Additionally, some real estate syndicators are exploring alternative SEC filings like Reg-CF, which allow non-accredited investor participation. I've invested in such opportunities and found transparency and trustworthiness to be crucial, such as with Goodegg Investments led by founder Annie Dickerson.Networking with other passive investors is another effective approach. Online forums like those on BiggerPockets or dedicated platforms like Left Field Investors facilitate discussions on reputable sponsors and investment opportunities.Joining a passive real estate investment club can also be beneficial. Clubs like Left Field Investors, SparkRental's Co-Investing Club, or the Alternative Investing Club cater to investors seeking passive real estate opportunities, offering a platform to collectively vet deals and share insights.Listening to real estate podcasts that feature syndicators and industry experts is another valuable resource. Podcasts like those hosted by BiggerPockets, Marco Santarelli, Goodegg, and Left Field Investors often showcase sponsors and their investment strategies.

A Guide to Preparing Your Rental Property for TenantsIf you're like many property owners, you aim to generate rental income from your investment property. However, before achieving that cash flow, you likely need to renovate and ready the property for potential tenants.Renovating a home is different from preparing it for rental purposes. While not all homes require renovations, every rental property must be made ready for prospective tenants.Owning rental property involves understanding your rights and those of your tenants to comply with legal requirements when preparing a home for new occupants.The following guidelines can help you refurbish your rental property as a real estate investor and prepare it for new tenants, allowing you to list it sooner and potentially increase monthly rent.How To Renovate Your Rental PropertyAfter purchasing a rental home, it's essential to make the necessary repairs and updates to ensure it meets safety standards and local rental regulations.Start with a detailed plan, especially when setting a renovation budget. Include all anticipated work and material costs, and if possible, overestimate to cover any unexpected expenses.How To Prepare a Home for RentersOnce the renovation is complete, it's time to prepare the property for renters. This involves beautifying the rental house, such as planting flowers or ensuring the windows are clean.Here are some tasks for each room that can help increase the monthly rent:BedroomsWhen a tenant moves out, you might need to clean the carpets in the bedrooms. Some landlords install hardwood floors to avoid regular carpet cleaning, but these also require cleaning and can get scratched. You may need to touch up paint and fill holes in the walls from hanging pictures.Ensure bedroom windows open and close properly and have screens. Replace window coverings if needed. Touch up moldings and baseboards, and make sure the door functions well and looks good.BathroomsPrepare bathrooms by checking that faucets work and there are no leaks. Ensure the toilet is clean and functional. Replacing broken mirrors or sinks can make a bathroom more appealing.Perform preventative maintenance, such as inspecting pipes under cabinets to ensure sinks drain properly. Check all outlets and switches, and hire a professional for any needed repairs.Living and Family RoomsLiving and family rooms often experience wear and tear. Accidents can happen, so be ready to clean or replace carpets, repaint walls, clean or replace window coverings, and repair doors or windows.Ensure all light bulbs are working.KitchenWhen preparing the kitchen for the next renter, ensure all appliances work, such as the fridge, freezer, oven, and stove burners.Consider landlord insurance or a home warranty to cover the costs of expensive repairs. Check the cabinets and ensure all doors and drawers function properly. Test smoke and carbon monoxide detectors and replace them if needed.

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Master Your Finances: 5 Strategies for Achieving True Financial FreedomIn real estate investing discussions, the term "strategy" often conjures images of specific deal types like BRRRR, house hacking, or flipping. However, for me, strategy encompasses a broader scope beyond individual transactions.While strategy can be defined in various ways, I resonate with the idea that it outlines long-term objectives and the overarching approach to achieve them. It sets the stage for how you intend to pursue your goals, contrasting with tactics which involve the specific actions taken within that strategy.For real estate investors, strategy extends beyond single deals or portfolio decisions. It encompasses significant considerations such as choosing between a 9-5 job or full-time real estate, determining risk tolerance levels, and assessing time commitments to manage portfolios.Decisions about refinancing or short versus medium-term property leasing fall under tactics rather than strategy. It's crucial to prioritize strategic planning before implementing tactical maneuvers.I'll illustrate how my strategic planning has shaped my tactics and contributed significantly to my progress towards financial freedom. My objective is to generate $20,000 per month in post-tax, inflation-adjusted income from real estate within 15 years. While I've been investing for 14 years, the first seven were without a formal plan. It was about seven years ago when I defined this ambitious goal, marking the midpoint of my timeline and surpassing expectations.Here are the five strategic decisions made seven years ago that have been pivotal in exceeding my goals:Pursuing a Lucrative Career:Early in my investing journey, access to capital was limited, necessitating partnerships for initial deals. Recognizing the need to scale, I pursued diverse roles—from waiting tables to tech startups—before committing to a master's in data analytics, a stable and growing field. Though costly, this decision quickly paid off, leveraging a higher income for more significant investments and borrowing capabilities.Emphasizing Equity Over Cash Flow:With a 15-year horizon and a stable career, I prioritized equity accumulation over immediate cash flow. This strategy involved targeting properties with high potential for value appreciation through strategic renovations and investments in high-demand areas, ensuring sustainability and growth.

Important 1031 Exchange Factors That Could Disrupt Your TransactionAfter spending almost a year navigating the 1031 exchange process myself, I can confidently say that I am now well-versed in all aspects of 1031 exchanges, and you can rely on my expertise.Many experienced investors are familiar with the fundamental requirements for a successful 1031 exchange, which, if executed properly, allow you to defer significant capital gains taxes. However, once you delve deeper into the process, you’ll discover there are many nuances that aren't immediately apparent. Here are some commonly overlooked details to consider.What Most People Know About 1031 ExchangesThe new property must be of equal or greater value than the property being sold.You have 45 days to identify a replacement property.You have 180 days to complete the purchase of the new property.Additional Important DetailsInclude Your Mortgage in the Sale Price:This is a detail often overlooked. If you are selling a property for $500,000 but have a $200,000 mortgage on it, you need to exchange it for a property worth at least $500,000. This likely means you will need a mortgage of at least $200,000 on the new property as well.Watch Out for the Boot:If you sell your original property for $500,000 and purchase a new property for $400,000, the $100,000 difference, known as "the boot," will be subject to capital gains tax. Ensure that the new property is equal to or greater in value than the one you're selling.The New Property Must Be in the U.S.:You cannot use a 1031 exchange to purchase a property abroad, such as in the Côte d’Azur.A Third Party Must Hold the Proceeds:All proceeds from the sale must be held in escrow by a third party. If you touch the funds at any point, you will lose all tax benefits.You Can Purchase Multiple Properties:You are allowed to identify up to three replacement properties within 45 days after the sale of your original property. There are two exceptions:You can identify more than three properties if their total value does not exceed 200% of the sales price of your original property.You can identify an unlimited number of properties as long as you eventually acquire at least 95% of their total value. Your intermediary will help you legally document your target properties.Deferred Capital Gains Disappear Upon Death:Although tax gains are deferred, they are eliminated upon your death. Your heirs inherit the property without the deferred capital gains tax obligations.Final ThoughtsUltimately, the 1031 exchange remains an excellent strategy for preserving your equity and deferring taxes. However, it’s crucial to thoroughly understand all the rules and nuances. A single mistake can nullify your tax benefits and cost you your gains.

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New California Legislation Tightens Rules for Property FlipperYou've probably heard the expression "lipstick on a pig." In the realm of house flipping, it refers to superficial improvements that hide underlying issues beneath new paint and Sheetrock.California's new law, Assembly Bill 968 (AB-968), effective July 1, mandates that sellers who flip one-to-four-unit properties within 18 months of purchase must disclose comprehensive details of all repairs and renovations. This requirement aims to protect buyers from undisclosed property conditions.However, compliance with AB-968 involves more than just detailed disclosures. Flippers must now meticulously document all repairs costing over $500, provide copies of related permits, or assist buyers in obtaining them if unavailable from official sources. Additionally, they must disclose the names and contact information of all contractors involved.The impact of this law on residential flippers is significant. While some may continue to handle general contracting themselves, especially for less skilled tasks paid in cash, more regulated work like plumbing and electrical must involve licensed contractors, permits, and inspections. This shift may increase costs and project timelines, challenging the traditional speed-focused approach of flipping.Non-compliance with AB-968 could lead to fines, lawsuits, or even rescission of the sale if undisclosed work is discovered or promised repairs remain incomplete. As a result, legal consultation prior to listing is increasingly advisable for flippers navigating these new regulations.This legislative trend in California, including previous proposals like Assembly Bill 1771 aimed at taxing profits from flipping, reflects broader concerns about housing supply and affordability in the state. Despite support for increased housing construction, skepticism remains regarding its impact on housing costs and community dynamics.In summary, California's tightening regulations underscore the need for thorough disclosure and adherence to legal standards in house flipping, impacting operational costs and market dynamics for investors in the state.