- Why Central Texas?
- A Brief History Lesson (up to 2000)
- A Temporary “Bug” in the Software (2001 to 2003)
- Back in the Saddle (2004 to Present)
- Why? Jobs and Relocation!
- “Keep Austin Weird” – Seriously
- Austin is Pro-Business – Pay Your Rent or “Hit the Road!”
- There’s No Bubble Here (aka “Have I already missed the boom?”)
- Supply and Demand – “Save Our Springs” & The University of Texas at Austin Effect
- Austin Moving from 3rd to 2nd “Tier” Status
- Why Should I Work With Castle Hill Investments?
- Castle Hill Investments’ “Turnkey” Partner Team
- Property Types – What Should I Buy?
- A Closer Look At "The Numbers"
- After the Sale – an Owner’s Manual
- The First "Make Ready" and Realities of Purchase
- Limiting Landlord Liability and Deeding to LLCs/LPs, etc
- Real Estate Capital Gains Taxes: A Primer
- Texas Property Taxes – "Huh?"
- 1031 Exchanges
- After the Sale – Checklist and Action Items
- Real Estate As a Component of a Well-Balanced Portfolio
- Cash Flow Calculator
- Three "Real World" Investor Stories
- Austin and Central Texas Neighborhoods
The First "Make Ready" and Realities of Purchase
It is realistic to assume the first year of ownership of an investment property will also be the most expensive, and Castle Hill prepares our buyers for this reality.
The reason is related to economic theory and a concept called "morale hazard" (very interesting article can be read here)
Often times, a property owner is only motivated to sell when something is wrong – perhaps they are aware that an air conditioner or roof is only a few years away from replacement. Maybe they have unruly tenants who don´t pay rent on time or take advantage of them. Or maybe they haven´t painted and carpeted the unit in several years and are afraid that when the current tenants move out, they´ll have a larger than usually "make ready" expense.
Though Castle Hill does everything in its power to vet these concerns, sometimes it´s a reality of property ownership that a new owner will indeed have to spend more on paint and carpet, systems replacement, or removing a bad tenant, than they might expect. So let us go on record now – expect potential bumps when you first buy a property!
We suggest to clients to expect anywhere from $2,000 to $4,000 on their first make ready if the tenant moving out has lived in the property for more than 3 years.
The upside to this phenomena of tenant cycling and make readies is that with a good property manager in place, future tenants will not only be more qualified and able to pay rent and live responsibly, but they will be held accountable via their security deposits to ensure that when they move out, the unit can be turned over quickly with a minimum of future owner make ready expense.
The most expensive event in rental property ownership is tenant turnover. It is vital to the successful economics of rental property ownership to minimize turnover by keeping rents competitive and tenant service superior.
As an investor, Robert Grunnah purchases property with the full assumption and desire to see current tenant turnover and to lease to his own tenants as quickly as possible. He also spends more than most on make ready to create a desirable living environment to attract top caliber tenants that will pay above market rents and stay for many years.
The upside to this phenomena of tenant cycling and make readies is that with a good property manager in place, future tenants will not only be more qualified and able to pay rent and live responsibly, but they will be held accountable via their security deposits to ensure that when they move out, the unit can be turned over quickly with a minimum of future owner make ready expense.
The most expensive event in rental property ownership is tenant turnover. It is vital to the successful economics of rental property ownership to minimize turnover by keeping rents competitive and tenant service superior.
As an investor, Robert Grunnah purchases property with the full assumption and desire to see current tenant turnover and to lease to his own tenants as quickly as possible. He also spends more than most on make ready to create a desirable living environment to attract top caliber tenants that will pay above market rents and stay for many years.
NEXT >> Limiting Landlord Liability and Deeding to LLCs/LPs, etc