If you have been considering starting a home business on the Internet, a few home based business ideas will be presented in this article.For your information, there are lots of ways to generate extra cash even when full-time jobs and overtime are not an option. Ideas include renting a room in your home, tutoring or selling items you have stored away for years and never used them.Here are a few ideas to consider:The key is to find what skill you bring to the table or something you believe would be fun to do. For example, if you have computer technical skills, you could teach a class, install computers or create websites. A good tip is to think about what people are willing to pay for.Among the fastest and easiest ways to get extra cash is by selling your unwanted and unused stuff in your garage or attic. You could post a few signs in the neighborhood letting people know you are having a garage sale or you could sell online with services such as eBay. Yes, you can use the Internet to sell your stuff locally.You can sell old books, comic books, sports equipment and any number of items you have put away and never even thought of using them. So, if you have been a pack rat for many years, now you can cash in on them.Another great idea is to rent out a room in your home or find a roommate if you live around universities, colleges or resorts. You could rent short or long term.How about earning cash by house sitting? You earn money and have a place to live, long or short term.If you are a photographer, you could work weddings, high school and college graduations as well as sports events.An all-time favorite part-time job is tutoring specific subjects for high school or college preparatory classes. You can teach anything you have detailed knowledge of and get paid for it.Get your creative juices flowing and I am sure you can come up with some good ideas for earning extra cash. You can do so much with a working knowledge of a personal computer and the Internet. The fact is, running a home business on the Internet will replace many traditional jobs in the near future. You will enjoy and benefit much from being your own boss, setting your own work schedule and spend quality time with family.These home based business ideas can be started on the Internet by anyone with a computer and a broadband Internet connection.
Why You Should Not Hire a Property Management Company
During my daily activities driving around town looking at properties, I see many For Rent By Owner signs on lawns of vacant rental property. As I see these signs, I find it interesting that the owners have not asked themselves, is it really worth it?
I wonder to myself if the property owners have actually asked themselves some key questions:
Am I actually saving money doing it myself?
Am I prepared for the responsibility?
Do I have all the tools I need such as Applications, credit and background checks, leases, eviction forms, notices, repair and cleaning resources?
Will the cost of doing it myself actually save me money or will it cost more?
As a full time professional property manager, I know from experience how difficult and costly it is to manage rental property.
How do I know this?
Because I do it for a living, I have unique insight into the activities and costs associated with managing income properties. My time is valuable! Why would you as an income property owner want to invest the aggravation, effort and time it takes to make a few extra dollars a year renting a property yourself, when you can hire a reputable company to do it!
It’s a no brainer to me. Isn’t your time worth more then $10.00 per hour or $33.58 per month or $403.00 a year for one property! What am I talking about? Let’s take a look at how I arrive at these figures… Before we begin to look at the costs associated with property management, let’s set a few ground rules and identify and define some terms.
Fees
Property management companies charge anywhere from 5-35% for their services based on:
The rental term – Short, mid or long term
Services offered – Concierge, housekeeping etc
Repair services – On staff or hired as needed
Local market – Some areas receive higher management fees then others. Example: Los Angeles California may charge 20-30% fees for long term rentals where my market area charges much less.
Other factors
Property Management services in my area for mid and long term rentals run approximately 10% of each month’s rent. Sometimes, an additional first month’s rent fee is charged to cover initial setup costs.
Lease Terms
I classify lease terms as:
Short term rentals – Less then 1 month
Mid term rentals – 1 to 6 months
Long term rentals – 7 months to 1 year
Variables for renting in my market area depend on several factors:
The season – Being a primarily tourist oriented area; we go through several tourist oriented seasons where our residency swells.
Transfer in and out of Military personnel and families
Construction increases
The Seasons
Let’s break down the type of renters by season so we can estimate and gauge the types of renters we will typically have in a given season:
Winter – During this season we get several types of renters which include “snowbirds”. “Snowbirds” tend towards mid term rentals. They come to our area during the winter months and their primary residences are often the northern United States and Canada.
Spring – The spring season brings short term renters in the form of “spring breakers” as well as families taking advantage of breaks during the school year. An interesting aspect to spring is the semi annual transfer of military families to one or more of our local military bases.
Summer – This season consists primarily of short term renters and midterm renters. Visitors from all over the world travel to our area during summer and stay anywhere from 2-3 days to 1-2 months. While visitors from the United States tend towards short term, European visitors lean more towards 2 weeks or more.
Fall – This is an interesting season and often the time of year local residents change residences. It is also part of the semi annual transfer of military families to one or more of our local military bases.
Vacancy ratio
An important factor to consider in estimating the costs to run an income property is the Vacancy Ratio. Vacancy ratio is defined as the amount of time a rental property is vacant compared to the amount of time it is not.
Vacancy ratio is governed by not only the seasons as mentioned above, but also:
The price of the unit
Amenities – Pool, spa, allow pets, etc.
The local economy
Marketing
Availability of the unit
Other factors defined by the area
In my area we typically see on average a vacancy ratio of 2-4% for small multi-family long term rentals (duplexes and triplexes). However, during difficult economic times we could expect to see ratios as high as 6-7%! I’ve recently seen vacancy ratios as high 10-12% for several areas.
For ease of calculation, we will use a 5% vacancy ratio since it is in the middle of the vacancy ratios we expect to see in my market area. These may or may not reflect the ratios other areas experience. It is advisable to seek the assistance of a qualified property management company in the local area for accurate data.
Let’s get to it…
Now that we have a few guidelines to work with, we can make some educated estimates:
Vacancy ratio
Expected rental terms
Property Management Costs
Using these guidelines, let’s look at the average costs to use a Property Management company. In our example we will use a 2 bedroom 1 ½ bath apartment which typically rents for $700.00 per month utilities not included and no pets allowed.
The property management fee of 10% will provide the following services:
Marketing and advertising – general (lawn sign, website, print, etc.)
Tenant screening/Application services – Background and credit checking
Unlimited unit showing – Using an average of 5 pre-qualified tenant showings per Unit before is rented.
Online transaction processing for tenant and owner
Monthly accounting report
Monthly Unit inspections for the first 3 months
Tenant notifications – Failure to conform to Lease, 3 day rental notices and late payment notices, etc.
Tenant evictions – NOTE: Only the beginning of this process is included. Expenses for full tenant evictions are typically paid by the owner.
Our formula for calculating rental income will be:
Rent * term = Gross Rent minus Vacancy Ratio = Net Income:
$700.00 * 12 = $8400.00 – $420.00 = $7980.00 annually
We expand on this formula and include a property management fee of 10%
Rent * term = Gross Rent minus Vacancy Ratio = Income – Property Management Fee = Net Income:
$700.00 * 12 = $8400.00 – $420.00 = $7980.00 – $798.00 = $7182.00 annually
Note: This article is not intended to be an investment strategy article. The intention of the article is to identify whether it is worth the cost to use a property management company for a rental unit. Therefore, our example uses a simple calculation of net income and not Net Operating Income which is much more complex and used for investment strategies.
In our example calculation we see that without any negative impacts affecting a rental unit, the property management company made a whopping $798.00 per year on 1 unit. Let’s now put a price tag on just some of the services we’ve identified being offered by the property management company using average pricing:
Application services – Application forms will cost approximately $5.00 for 5 forms
Marketing and advertising – Lawn sign – $15.00, Website – $40.00 per month, Newspaper advertising – $40.00 per week
Tenant screening – Background check – $15.00, Credit check – $15.00
Unit showing – $10.00 per hour, 5 showings (1 showing per hour) = $50.00 (This is an extremely low rate and used simply to provide a guide. I’m sure your time is worth much more then $10.00 per hour).
Tenant notifications – Notification forms will cost approximately $5.00 for 5 forms, Hourly cost for 1 notification – $10.00 (includes travel time)
We will omit the remaining example property management services as typically they would not be provided by an owner anyway. Without including the advertising costs, when we add up these costs we have an expense of $155.00. If we use our vacancy ratio of 5% (or 6 weeks) and calculate our advertising costs we will need to add in $240.00.
The cost for an owner managed unit not using a property management company is then calculated as:
Rent * term = Gross Rent minus Vacancy Ratio = Income minus simple operating costs = Net Income or:
$700.00 * 12 = $8400.00 – $420.00 = $7980.00 – $395.00 = $7585.00 annually
Wow, a property owner who does the renting of a unit by themselves makes $403.00 more a year or $33.58 more a month then if they hired a qualified property management company!
However, I am not aware of too many property owners whose hourly employment rate is $10.00 per hour considering someone who makes $10.00 would find it difficult to obtain financing to purchase income property!
The question then becomes, how much is your time worth?
If your time, aggravation and effort to rent a property yourself are worth the added income of $403.00 per year or $33.58 a month, then by all means you should not hire a property management company! If on the other hand, less aggravation and effort and your time is worth more then $403.00 a year, you should consider using a property management company to take care of your income property.
A qualified property management company not only saves you time, effort and aggravation but also saves you money. What would happen if the unit would have been vacant longer then 6 weeks? The advertising costs would have eliminated all or part of that $403.00 a year you made!
Is it really worth it? I don’t think so.
If you own rental property, do yourself a favor and hire a reputable, qualified property management company.
Services such as:
Tenant screening – Background and credit checking
Application services
Unit showing
Online transaction processing with tenant and owner reporting
Monthly account reporting
Electronic funds transfer
Are all part of most property management companies standard services.
In addition, property management companies have professional full time staff to help you with all your needs: from creating the most efficient advertising campaigns to tenant screening and background checks to advice for repairs and staging to get the most income for your rental units.
A Simple Product Creation and Product Launching Formula
If you tried to think of people involved in product creation, who would come to mind? You may think of Edison, Franklin, or maybe Henry Ford. Would you ever think of yourself as someone who can create a quality product? Product creation is actually relatively easy and product launching is not that tough either! If you follow a few easy to understand steps, you could be starting the product creation and product launching process sooner than you think.
The first step in creating your information product is to know and understand your market. This can be very time-consuming, especially if you are unsure of what to do or where to look to know your market. Studying your niche market and understanding the buzz words and buying patterns can ease the process dramatically. Personally, I would recommend networking with someone who has had success in the niche market you are considering and learn from their results. If they are into product creation and not very business savvy expect some hesitation. If they only sell products and have nothing to do with product launching or product creation you may your first affiliate (sales person)! Something else you can use to find hot trends is with the Google Trends tool.
The second step is the product creation process. Take your niche market and brainstorm ideas and topics relating to it. There are a lot of product launching contests going on recently relating to a newly created internet marketing tool. There are so many aspects to the mentioned niche that literally, and unfortunately, anything can be considered an Internet Marketing tool. The reason that anyone can basically create an Internet Marketing tool is because of something called Private Label Rights products.
What I use private label rights products for, and highly recommend them in this specific manner, is to cure writer’s block especially when it is lingering. Many people base their entire product creation and product launching on a private label rights product. This is where you can start to shine and build a strong brand for yourself. If you set goals for yourself, short-term goals to be exact, you can see your product creation come into being much faster and there is a good chance with less revision needed. If you keep hitting time restraint road blocks; however there is nothing wrong with a slow and steady approach, you can consider outsourcing portions of your project. Outsourcing can be an extremely huge benefit or just as great of a disaster.
You can find someone to outsource work to at a freelance site such as Guru.com or eLance.com. When reviewing proposals it is almost mandatory you perform a background check on them as you are in essence hiring them. Doing a background check on freelancers is as easy as asking for samples of their work and reviewing feedback on the freelance site from previous customers. Depending on the size and requirements of your project this can add up to a decent sized investment, so caution is very important. One tip I always recommend to people looking to hire an individual is to ask them what they can provide you that no one else can. This simple question gives them a chance to “toot their own horn” and acknowledge where they feel most competent as far as their skill set.
The final portion of the product creation and product launching formula is the launch. This can literally make or break the effort, time, and maybe (if you invested) money you put in to your project. There are numerous aspects to product launching and although their relevance is debated in terms to their effect, experts agree all must be followed. The person in your field who you asked for product advice from can help you substantially if you have kept in touch. If not, the first thing you need to do is to create a visually appealing website with flawless design work.
I also mentioned outsourcing before, this is one aspect of product launching I have little strength in and I always outsource this portion. The website does not have to be large however the content (ad copy in Internet Marketing) must be stellar and as perfect as possible. This is where advertising knowledge or experience is beneficial. When the site is set up you now put a lead capture form on your website.
I put two lead capture pages on all products I create on the internet and is one of the best methods of getting a solid start when you are in the product launching stage. When you gain information from a prospect or someone looking to get paid for referring sales you are able to provide them updates or specials. Many people abuse their prospect or affiliate lists by in turn emailing them with a new product daily and I find the recommendations to be totally unrelated to their original need, problem, or interest.
Another stage in the product launching stage is creating a free report or demo version of your product to entice the product to sign up to your email list. Using proper follow up with this can help generate numerous sales for you. One thing you need to ensure is that your free product completely relates to your main product that you are looking to sell.
You are now ready to advertise your product launching to customers as well as the opportunity to sell for affiliates. This is the single aspect that many product creations and launches fail on. It is actually not entirely difficult. One thing you can do is write articles (and a good amount of them) on topics relating to your product. I am a huge advocate of giving a solution in forums. When you join a forum you are normally offered the opportunity to create a signature. In your signature, you should enter the link to your opt-in or lead capture page. When you respond to posts, you are advertising your opportunity.
It is not impossible to create a product and it does not have to take a long time. You need to setup a plan and stick to it. If you get stuck, look at similar and successful products to your own and try and see how they did it. When you sit down and brainstorm you will be surprised with what you can imagine.