Owning property in Texas puts you in a decent financial position – especially if you’re renting the property and making a profit on it. But if you want to make your profits consistently, and mitigate potential risk, you need to strategically plan to protect yourself.

One way to protect yourself – and your entire real estate operation – is to form an LLC for your investing needs. But how exactly does this work and is it worth the money and effort to protect your rental property in Katy, Houston,

Owning property in Texas puts you in a decent financial position – especially if you’re renting the property and making a profit on it. But if you want to make your profits consistently, and mitigate potential risk, you need to strategically plan to protect yourself.

One way to protect yourself – and your entire real estate operation – is to form an LLC for your investing needs. But how exactly does this work and is it worth the money and effort to protect your rental property in Katy, Houston, or another Texas city?

What Is an LLC?

A limited liability company (LLC) is a type of organization meant to provide liability protection to the owners of the organization (plus some other benefits). Like a corporation, it’s treated as a separate legal entity, meaning it can take on debt, hold assets, and be targeted in a lawsuit just like an individual person. It’s also treated as a “pass through” entity for tax purposes, meaning the LLC won’t owe taxes on the money it makes; instead, you’ll pay taxes on the money you withdraw or receive from the LLC as an individual.

The rules and requirements for LLCs differ by state. Each state has a slightly different process for how to form LLCs, how LLCs are treated and taxed, and how to actively maintain an LLC. But for the most part, starting an LLC is relatively straightforward and inexpensive.

In Texas, LLCs aren’t required to file annual reports with the Secretary of State, but you will need to file annual franchise tax reports.

Why Form an LLC?

Why would you form an LLC for your real estate interests?

• Liability protection. Real estate investing does carry some risk. You could lose money on a property if there’s a real estate crash in your area. You could end up spending too much on repairs and upgrades, compromising your profitability. You could even end up with a string of unreliable tenants who don’t pay rent.

But one of the biggest risks you’ll face is legal action. If a tenant hurts themselves at your property, or if you treat the tenant unfairly in some way, they can hypothetically sue you. A liability insurance policy can provide you with some protection, but you’ll still be named as an individual in these matters, meaning you’ll be held personally liable for the damages. If you create an LLC for your property, you’ll enjoy a layer of extra protection for yourself; the LLC can be held liable instead of you.

• Tax benefits. Forming an LLC can also confer tax advantages under the right conditions. Because LLCs are pass through entities, you’ll have more direct control over how your assets are managed, how you make money, and how your income is taxed. You can even use an LLC to reinvest your profits, reducing your tax bills while helping you secure new opportunities. Note that forming an LLC isn’t always a strict tax advantage; consult with your tax professional for further guidance on this point.
• Partnership management. LLCs can make it easier to manage a property (or several properties) with another person or entity. There’s nothing stopping you from forming a conventional partnership and navigating the joint management world that way – but having an LLC adds protection for stakeholders and streamlines some aspects of management. Just make sure you have a solid operating agreement in place to explain the roles, responsibilities, and entitlements of each party involved.
• Succession planning. An LLC can also make succession planning easier. If you have many different properties, it could be a hassle to manage deed transfers and other legal transactions when it’s time to transfer assets. But if all those assets are unified under the umbrella of an LLC, all you have to do is transfer the LLC to ensure a successful transition.
• Scalability. If you plan on purchasing and managing many properties in the future, the benefits of an LLC increase further. Having a stable organizational framework for your endeavor makes it much more easily scalable. That said, you may want to start separate LLCs for separate real estate endeavors.

Are There Downsides to Creating an LLC?

There are some downsides you’ll need to consider as well.

• Initial time. While starting an LLC isn’t necessarily complex or hard, it does require some time from you upfront. Depending on your existing level of familiarity, it could take you a few hours or a few days to get started.
• Mortgages and financing limitations. Getting a mortgage as an LLC is often more difficult than getting a mortgage as an individual. This can make it challenging to secure the financing you need to secure more purchases.
• Costs. In Texas, you can start an LLC for a mere $300 filing fee (plus a handful of other incidental expenses). That’s not prohibitively expensive, but it’s still a cost worth considering. For most LLCs, there are no annual fees to worry about.
• Limited forms of protection. As the name suggests, limited liability companies can only provide you with limited forms of protection. You may be held personally liable for certain issues and under some circumstances.

The Role of a Property Management Company

If you have a property management company working on your behalf, you may benefit from some liability protection without the need for an LLC. Your property manager will likely be liable for a variety of possible issues related to your property and your tenants; this is highly dependent on the initial contract you sign, so make sure to investigate the details and understand what you’re signing.

The Bottom Line

In some situations, it pays to create an LLC for your real estate investment interests. If you’re managing properties alone, if you’re building a business with a partner, or if you plan on scaling up your operations significantly in the future, this is especially true. But there are also situations where creating an LLC is unnecessary – and may add some complexity to your property management approach.

Navigating the worlds of real estate investing and property management are tough, but it’s even tougher when you’re making every decision without professional guidance and advice. Green Residential exists to make your Texas real estate investing decision easier – so contact us today for your free consultation!

There are many important ingredients for success in a rental property management strategy. You’ll need to find the right neighborhoods, purchase the right properties, find the right tenants, and keep a tight leash on your expenses if you want to make a consistent profit.

In addition to all that, you’ll need to turn yourself into a thorough archivist, documenting almost everything related to your property. Why are documentation so important, and what steps can you take to make it easier on you?

The Role of Documentation

Let’s take a look at some of the ways that thorough documentation can help you as a property manager.

What Should You Document?

What forms of documentation should you be pursuing?

Improving Your Approach to Rental Property Documentation

What steps can you take to improve your approach to rental property documentation?

Are you feeling overwhelmed by the documentation you need for your rental property? You don’t have to go it alone. With a competent property manager, you can turn your rental property into a truly passive income source – so you can focus on more important things. Contact us to learn more about our approach today!

As their names suggest, single family homes are designed to house a single family, and multi-family homes are designed to house multiple families, usually indifferent, segmented units.

In a duplex, you typically have a single building bifurcated so that two different families can live in two different sections. Triplexes and fourplexes are similar. There are also apartment buildings, which allow you to have many different units in a single complex.

Investing in multi-family properties can be highly beneficial for your real estate investing strategy. But there are also some drawbacks and caveats you’ll need to keep in mind. If you’re investing in these types of properties for the first time, it’s important to know what you’re getting into.

Benefits of Multi-family Properties

Let’s start by taking a look at the benefits of multi-family properties as they compare to single family properties. No matter what type of rental property you invest in, you’ll see the benefits of passive income and (ideally) property appreciation over time. But these are the distinct benefits of multi-family properties:

Downsides of Multi-family Properties

That said, there are some downsides you’ll need to keep in mind as well.

Important Tips for Maximizing Results From Multi-Family Properties

So how can you maximize the benefits while minimizing the downsides of these types of properties?

1. Prioritize the location. As with other types of real estate investing, location should be one of your most importantly considered priorities. If you choose a multi-family property in a good location, you’ll benefit from better tenants, higher rent prices, less competition, and fewer headaches overall. Finding a good location can be tough, and even then, you’ll have to contend with competition – but it’s all worth it if it means getting the right property.
2. Screen tenants thoroughly. Difficult tenants are always a problem, but for the most part, you can avoid these issues by screening your tenants thoroughly. It’s tempting to fill your properties as quickly as possible, but it’s usually better to take your time, do thorough background checks, and weed out candidates who aren’t likely to be a good fit for your property or community.
3. Focus on tenant retention. Once you do find good tenants, focus on keeping them. People who invest in multi-family properties sometimes get overconfident because multi-family properties are less susceptible to income volatility. However, it’s still expensive when tenants leave prematurely. You can prevent tenants from leaving by building good relationships with them, responding to requests quickly, and offering support when warranted.
4. Hire a property manager. Properties get more complex when you add more units to them, and if you have a portfolio with many multi-family properties, your management responsibilities could quickly become overwhelming. That’s why it pays to hire a property management company that can take care of almost everything on your behalf.
5. Upgrade, improve, and prevent. When you purchase a new multi-family property, spend some time upgrading, improving, and updating it. Your goal is to put the property in excellent condition, so you prevent the majority of functional problems you might encounter in the future.
6. Consolidate your maintenance plans. Practicing maintenance in multiple multi-family properties is time-consuming and complex if you don’t have a thorough strategy in place proactively. Make sure to consolidate your maintenance plans so you can prevent most problems – and fix the unpreventable ones quickly.
7. Diversify your portfolio. Finally, work on diversifying your portfolio. It pays to have many different types of properties from many different areas in your possession, so you’re better insulated against economic volatility.

Multi-Family Properties – The Perfect Fit

Are multi-family properties the perfect fit for your investment goals and your budding real estate portfolio? Or are you leaning toward single family residential homes? Whatever your property management strategy happens to be, we have professionals who can support you.

Contact us today to find out more about how Green Residential can improve your real estate investing strategy!

iBuying is changing the way many people buy and sell homes. But what is it exactly and what does it mean for you as a real estate investor?

This article will answer those questions. So read on if you’ve ever wondered about the impact iBuying has on real estate investing.

What is iBuying?

First of all, no, iBuying is not an extension of Apple’s brand of iPhone, iPad, and so on.

The “i” in iBuying stands for “instant.” The term refers to instant cash offers made on houses by large corporations. These large iBuyer companies use algorithms that take into account comparable properties in the area (aka “comps”) to determine what price to offer on a home. They purchase homes this way on a large scale to turn around and sell them for a profit (usually after renovations). In other words, iBuyers are like institutional house flippers. Some also offer trade-ins for other houses they have in their inventory. They make most of their money by taking advantage of economies of scale.

The first iBuyer to enter the scene was Opendoor, which launched in 2014. Since then, the real estate market has flooded with a number of iBuyers, including Redfin Now, Offerpad, Knock, and up until the end of 2021, Zillow Offers (more on this later).

So, what do iBuyers have to offer homeowners that traditional real estate agents don’t? Well, iBuyers can close on a home deal much faster, often in a matter of days instead of weeks. In addition, since iBuyers purchase homes as-is, sellers don’t have to worry about repairing or cleaning the house. And though there is usually a service fee, selling to an iBuyer allows you to circumnavigate agent commissions.

All in all, iBuying is an innovative new market player in the real estate space. But what does this mean for you as a real estate investor?

Threats of iBuying to Real Estate Investors

Now that you know what iBuying is, let’s go over the potential threats it poses to you as a real estate investor.

For one, iBuying means more competition. If you’re looking to make offers on investment properties like single-family rentals, your offer needs to be higher because selling to an iBuyer is usually faster and more convenient. In aggregate, this could mean you’ll be spending more on purchasing investment properties.

Another threat presented by iBuying is its potential ability to manipulate housing prices. For example, an iBuyer could potentially manipulate housing prices by keeping their inventory off the market (lower supply will cause home prices to rise). Another way an iBuyer could manipulate the market is by overpaying on some houses to force comp prices to go up so they can sell future homes for more. Keep in mind, however, that an iBuyer would have to have a fair bit of market share to have these kinds of impacts, but it’s possible.

The Benefits of Working With iBuyers

That said, iBuyers can also help real estate investors. For example, you can purchase investment properties from iBuyers. This way, you can shop for properties all across the US, lower your property search time, and close on deals faster. You also don’t have to schedule appointments to tour iBuyer homes. If you invest in single-family rentals (SFRs) or fix-and-flip properties, this could really speed up your workflows. But that’s not all.

iBuyers can also help real estate investors on the selling side. For example, you can get rid of investment properties you no longer want by selling to an iBuyer. Simply fill out some information on the property on an iBuyer’s website and get an offer within 24 hours with no obligation on your part. If you do decide to sell, you won’t have to worry about making repairs or cleaning either, and it’s very low risk since it’s an instant cash offer.

As a real estate investor that needs to buy and sell homes frequently, working with an iBuyer could be just what you need.

The Final Verdict

So, does the rise of iBuying present a net good or a net bad for real estate investors? Right now, it’s hard to say, especially since homes sold to iBuyers still only make up 1.3% of all home sales.

On top of that, the jury is still out on how successful iBuying will be in the long run. Zillow’s iBuying platform (called Zillow Offers), for instance, shut down in November, 2021, when it turned out to be unprofitable. And even more recently, Opendoor started selling homes at a loss for the first time ever. So it’s unclear how much longer iBuying will be around, let alone a threat to real estate investors.

If anything, think of iBuyers as another tool in your real estate investing toolbox. They may present some competition when making offers on investment properties, but you can also leverage their competitive advantages by buying from and selling to them when it makes sense. The key is to keep a pulse on market trends and only make moves when conditions are right.

Partnering with Green Residential

Another way to leverage competitive advantage is to partner with a professional property manager. Property managers like Green Residential can help you advertise your properties, screen tenants, manage leases, perform home inspections, do repairs and maintenance, serve eviction notices, and much more.

By partnering with us, you’ll gain a competitive advantage and have more time to focus on your real estate business. So if you are in the Houston or Austin, TX areas, don’t hesitate to reach out. Contact us today to take your real estate business to the next level. We offer a free analysis of your rentals to help you know where you can make improvements and what kinds of returns to expect as a result. We look forward to chatting!

Your rental property is an income provider in your family. And if you want it to continue producing income for your family for years to come, you have to protect it. There are dozens of ways to do this, but don’t underestimate the importance of winterization each year. Properly winterizing your properties year after year will make a big difference over the life of ownership.

Why Should You Winterize Your Rentals?

Winterizing your house basically means you’re proactively preparing for winter

Your rental property is an income provider in your family. And if you want it to continue producing income for your family for years to come, you have to protect it. There are dozens of ways to do this, but don’t underestimate the importance of winterization each year. Properly winterizing your properties year after year will make a big difference over the life of ownership.

Why Should You Winterize Your Rentals?

Winterizing your house basically means you’re proactively preparing for winter so that the house and all key systems are prepared to withstand serious temperatures and harsh elements that could put a strain on the property.

Winterizing a rental property is important for a few distinct reasons:

While winterizing a rental property doesn’t make it invincible during the colder months, it does lessen the likelihood of negative events occurring. If nothing else, it increases the longevity of the property.

9 Tips for Winterizing a Rental Property

The good news is that winterizing a rental property is actually fairly simple. We recommend keeping an annual to-do list and just checking those items off once the weather starts to turn. Many landlords wait until late fall and/or when temperatures reach the high-30s overnight. However, you can be even more proactive if you’d like.

Here are some of our top tips for winterizing rental properties:

1. Clean Out the Gutters

At the end of fall, after the last of the leaves drop, hire a professional gutter cleaner to go around the perimeter of your home and remove all leaves and debris. This will prevent overflowing gutters in the winter, which can cause dangerous icicles and ice dams to form.

2. Flush and Wrap Your Water Heater

Surprisingly, water heaters account for as much as 20 percent of your utility bills during the winter months. Make sure you’re taking care of your water heater and helping it run as efficiently as possible.

Two easy things you can do are (1) flushing your water heater before the first spell of cold water and (2) adding insulation around your water heater to conserve heat.

3. Reverse Ceiling Fans

Most people use their ceiling fans in the warm months to create a cool breeze and then turn them off in the winter. But did you know you can use fans in the winter, too? You just have to adjust them.

In the winter months, your fan should spin clockwise. This will push warm air down and actually make you more comfortable. You might be able to reduce heating costs by up to 15 percent by running your fans like this during the colder months.

4. Replace Air Filters

You should replace air filters on your furnace every few months (depending on the type of filter you use). At the very least, you want to replace all air filters throughout your HVAC system before winter hits. Go ahead and invest in thicker, higher-quality filters. They’ll last longer and provide better protection and filtration for your system.

5. Winterize Doors and Windows

Windows and doors are where most of a home’s heat loss occurs. If the property has extremely high utility bills during the winter, you might want to take time to better insulate the area around windows and doors. A combination of caulk and weatherstripping is usually enough to cut down on heat loss.

6. Add a Chimney Balloon

If your rental property has a chimney, there are some things you can do to keep it protected during the winter. For example, if your tenants do not use the fireplace (make sure to check with them!), you can add a chimney balloon. This has the potential to reduce your utility bill by as much as 25 percent by reducing drafts. Another added benefit is that it may potentially keep unwanted pests, like squirrels, from entering the home through the chimney.

7. Check Your Roof

Fall is the perfect time to give your roof a quick check-up. Doing so could prevent serious water damage during the winter months.

For a quick and easy look at your roof, climb up into the attic and look up. Search for any signs of water staining on plywood roof underlayment and/or signs of daylight poking through where it should not.

For a more thorough check-up, hire a roofing professional to come out and give you a full breakdown of the condition of your roof.

8. Close Crawl Space Vents

If your property is built on a crawlspace, you’ll want to close off all of the screened air vents around the perimeter of the foundation. This helps keep cold air out and will allow the crawl space temperature to remain at a safe temperature for your pipes, furnace, and other key components.

9. Cover Hose Spigots

If you have exterior water spigots on your rental property, they should be winterized. This involves disconnecting any hoses, draining the spigot and pipe (by turning off the water supply and letting the spigot empty), and installing outdoor faucet covers.

Unless you live in an area where the weather stays below freezing for weeks at a time, you should be good with nothing more than a basic styrofoam spigot cover. However, you can crumple up newspaper and/or old rags inside of the cover to provide even more insulation.

Protect Your Rentals With Green Residential

At Green Residential, we work for you – the property owner. Whether finding and screening tenants, collecting rent checks, maintaining your property, winterizing the property, or even evicting tenants who aren’t following your lease agreement, we can do it all. Contact us today to learn more about our comprehensive Houston rental property management services!