85% of Americans would love to earn money from home. Many people hear about home-based businesses constantly, but don’t understand the concept enough to follow through with their curiosity. The benefits of starting a personal home-based business are numerous, personally appealing, and cater to a lifestyle that many people never get to experience.There are four top reasons that most people don’t create their own home-based business. Four reasons that are rarely true and can all be avoided with the proper instruction and teaching.
High investment financially.
Too much time required.
High risk with no payout.
Complete lack of knowledge in the area.
These reasons are understandable, can happen, and have happened to many people. It’s sad to say, but there are likely more scams on the internet than actual income generating opportunities. That’s just how the internet works, and we’ve learned to deal with it. All four of these reasons can be false however, and easily corrected. You simply need the right opportunity, one that’s not focused on taking your money from you.There are countless ways to make money on the internet. You can create your own product and market it, perform tasks online, offer writing services, the list goes on and on. The most lucrative and appealing form of internet income is network marketing, or multi-level marketing. This is not a pyramid scheme, cold-calling, or door-to-door work. It is legitimate cooperation with a business or company to represent their company/products/services to others. You create sales, and in turn get commission from those sales. Network marketing is nothing new, and has been around a very long time. The benefits of starting a home-based business utilize the internet along with network marketing and create an unlimited funnel of personal wealth. This could be MLM, affiliate marketing, a personal business, etc. The benefits discussed below apply to all.The benefits of starting a personal home-based business:
No boss (plan your own workday, monitor yourself, set priorities)
No income ceiling (unlimited income potential)
Self-satisfaction (you create the business, you get the credit)
Work with people you like (no difficult coworkers, no office politics)
Flexibility (work whenever you want)
No commuting (save time and money)
No office expense (quicker profit)
Security (no layoffs, no downsizing)
Tax deductions (home office, car expense, medical insurance, phone, entertainment, travel, education, etc)
Better retirement plan (SEP IRA’s and Keoghs let you deduct a higher percent of business profit from your 401k)
Now the list could go on, but I’m sure you get the idea. You are the owner, the employee, and the CEO. You decide what to do, when you want, and how to do it. Do you want a website? Do you want to promote offline as well? It’s all up to you. Network marketing, or MLM, has some additional benefits that are worthy of mentioning as well.Additional benefits to an MLM opportunity:
Low start up cost: Start programs free, invest a little, or invest a lot. You determine what you’re paying. Most businesses take thousands of dollars in capital to begin.
No expensive training: You can find all of the information and training to have a home-based business online. Just like any area of study, you will have to learn new things and be eager to better yourself in the area of home-based business.
No administration hassles: You’re self employed, but you’re a rep for an established company which handles all the product selection research and development, shipping, warehouse, etc. Basically, they did all of the typical business hassles so that you don’t have to. This is an awesome thing.
Keep your regular job: No one has to know that you’re working at home. If you’re not seeing income right away, nothing is making you quit your regular job. Until your “part time” income is high enough to replace it, you can manage both at once.
No expensive tools necessary: A computer is all that you need. Your most critical tool is people skills, and you’ll learn those more in-depth along the way.
Residual Income: You profit from the product purchases and sales of everyone in your group. Nothing is more important to your financial future than the residual income concept. It’s an aspect that makes MLM so unique and appealing.
Keep in mind that you can do anything your heart desires to make money online. I am simply highlighting the benefits of starting a personal home-based business for you to see the potential that it has for anyone, experienced or not. If you’re a complete beginner in online sales, a program called Internet Income University will teach you everything you need to know along the way, while helping you to earn money simultaneously. And it’s completely free. Even professional marketers have signed with this program because of the lucrative F.A.S.T. Income Plan they get you on.If you like talking to people face to face, you like the idea of traditional network marketing. You enjoy that personal touch that you can add by conducting an in-person meeting with someone. Don’t get me wrong, you can still profit by marketing online at the same time, that’s the beauty of MLM, you can promote however you want! A top-notch fitness company, Team BeachBody, encourages both offline and online promotion. Discuss it over dinner, refer people to your personal web page for it, or promote it through your Facebook page, it’s all up to you.The benefits of starting a personal home-based business are almost too many to discuss. It is a world that is literally at your fingertips, and ready to be used in a unique and personal way to generate even more income. You’re the boss. Now start your home-based business today.
The Benefits of Starting a Personal Home-Based Business
Considerable Factors Involved in Product Creation & Marketing
The niche you have chosen should allow creation of more than one product or service. With the technological advancements in the hosting industry, from automated control panels and scripts that simplify creation of accounts, to complete turnkey solutions; there is no need to worry about spending time on the real products sold to the customer. The main ones are keyword selection, sales copy principles, graphics, affiliate programs, product creation, online payment processing, auto responders, and search engine optimization.
Once you’ve earned money from this type of information product business, you can invest in the creation of your own products if you want, or start offering more informational products that allow you to sell your knowledge. But the creation and production costs of a similar big ticket in sequence product, although higher, are still pretty low. A key by-product of this process will be the creation of 3-D, Computer Assisted Design art.
The Association for Financial Professionals permits the following activities for repatriating funds: Research and Development activities, advertising and marketing programs, hiring and training new recruits, acquiring patent and other rights to intangible property, improving transportation, funding capital investments with the purpose of job creation and job retention & funding product responsibility or environmental claims.
It prohibits certain activities like: Tax payments, Payment of executive recompense, Payment of dividends, Redemption of stocks, Debt investments and Portfolio investments. Therefore, before repatriating the money, you must consider whether it is worth or not.
Checklist on what artist and product development necessitate includes: Exceptional vocals, musicianship and/or songwriting skills, Continued education and enhancement of musical skills, Quality equipment, Performance ability, Image creation and maintenance, Plan of action, goal setting, excellent promotion materials including photographs, press releases and artwork, Business management skills, Marketing, Publicity and Promotion knowledge, Online and Offline Professional management, Basic knowledge of recording, producing, engineering, and mastering, Basic knowledge of manufacturing, distribution, and sales online, brick and mortar and air-play, Good choices in members, staff and advisors, Physical and mental preparedness, Basic knowledge of finances, accounting Law and legal issues etc.
The goals for doing so are for the product owner to: Communicate the whole, Determine and communicate when releases are needed, Determine what functionality is sufficient for each release & focus on business value derived from the releases. The delivery team on the other hand will see the whole, learn about the steps to realize the vision, learn the business priorities, provide technical input to the roadmap and provide estimates for the projected features. The salesperson must lead the prospect through the various decision criteria needed in order to secure a sale. Whether your idea is the development of a product, launch of a service business, or even the creation of an event or program for a non-profit, creativity is the root of all entrepreneurial efforts starting with the vision itself.
People quickly learn to spend their time on marketing and product creation, rather than repetitive tasks. Apart from empowering companies and individuals, there should be a particular focus on identifying labor intensive businesses that have the potential to make a significant and positive impact on employment creation as well as those businesses that have a product or service offering for export markets with the final objective of booming local economies.
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.