This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

Investing in the D.C. area is always a sure bet. The combination of the country’s most stable economy, transient population and most desired places to be makes it easy to find tenant for your property.

Arlington is a stone’s throw from the District. It boasts a thriving nightlife, lush parks and trails, and great public transportation. People who work in D.C. prefer the lower rents and (somewhat) quieter streets.

Smart investors looking for rental properties that are easy to keep occupied should look into buying property in this area.

While the pros are many, there is a downside. Let’s take a look at why you should and maybe you shouldn’t invest in an Arlington rental property.

Arlington Pros:

Location, Location, Location

The most northern reaches of Arlington allow you to walk to D.C. by crossing one of the many bridges that connect the two. In addition to its proximity to D.C., Arlington is easily accessible via a variety of interstates and major roadways.

Less Expensive Than The City

While Arlington is not cheap, it still beats living in the city. Houses are readily available with off-street parking, both of which are almost impossible to find in the city. A variety of small restaurants allow for frugal dining, while plenty of public parks are available to enjoy for free.

Recreational Activities for Tenants

Clarendon is a millennial hotspot and is teeming with bars, ethnic restaurants, shopping and plenty of things to do. Restaurants, bars and even grocery stores are open late, catering to late night lifestyles. But it’s not just about the nightlife. Tenants will find plenty to satisfy every desire, from clubbing to bike riding to boating.

Superb Public Transportation

In addition to a vast Metrobus system, underground trains provide easy access from as far as Reston to parts of Maryland. During the week, commuter rails travel from Fredericksburg and Baltimore.

Arlington Cons:

Hard to Get Short-Term Return on Investment

If you’re buying a rental property now, even with minimal work it’s likely you’re not going to rent for higher than your mortgage. Investing in rental properties are a long-term wealth building strategy. Rents are high in the area, but probably won’t be high enough to cover your initial investment for some time.

Difficult to Afford

High rents are great for landlords, but terrible for tenants. Even with a well-maintained property in a desirable neighborhood, it may take a lot of due diligence to find the right tenants. It’s not unusual for renters to hold multiple jobs in order to make ends meet.

High Maintenance Costs

If you can’t do the work yourself, you’ll find repairs to be costly. Expect to dish out more money than other areas for contractors and maintenance work.

Multiple Tenant Situations

Are you ready to rent rooms instead of houses? Because rents are so high, you will likely have several tenants renting individual rooms in shared living situations. Even if you advertise an entire house for rent, be prepared to take multiple applications for one group of people.

Short-Term Renters Are Common

Because many workers work on contracts, it’s common for tenants to need less than a year on their lease. Contracts can end without notice, so don’t be surprised if your six-month tenant has to leave a couple of months later.

If you’re looking for a long-term investment in a stable economy, Arlington rental properties are a good option. Though it may take some time to really start making money, if you are flexible enough to accommodate multiple tenants, you’ll find Arlington to be a great place to buy and rent properties.

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

When relocating, one of the first questions you should ask yourself is if you are going to rent or buy. The answer is not always so straightforward.

With a median home value of $530,000, the D.C. real estate market is more expensive than many. That’s why it’s critical to determine what works best for your situation.

If you’re just passing through, renting may be a better option. But if you’re willing to manage property from a distance, buying and living in a home for a short period may be best because you can rent it out later.

Still undecided? Check out this expert advice on when to rent and when to buy.

When Renting a Home Makes More Sense:

You Plan on Relocating

Unlike other areas of the country, D.C. has a very transient population. While it’s true many people stick around for the long term, many are just passing through. Temporary government appointments, military personnel and short-term government contracts all contribute. If you know you’re not going to be around for the long-term, renting is an easier option with less commitment.

Your Income Is Unpredictable

Self-employed professionals and contractors don’t always know what their income will be in the long-term. While contractors can expect a predictable paycheck while on contract, once the term ends you’ll be stuck with a mortgage payment no matter what. If cashflow is an issue, owning a home will make it harder for you to downsize when times get hard.

Retirement is Close

Even if you have a pretty hefty retirement fund, D.C.’s high cost of living can wipe that out quick. If you can buy for cash and still have plenty to live on, then owning may be for you. Otherwise, renting is a better option. The fixed costs (though rents do rise) will make it easy to budget. Renting also provides you with the flexibility to downsize or move into your RV and travel.

Mortgage Rates Are High

The past few years have seen some of the lowest rates for a long time, but lately rates have begun to rise slightly. Because of the high sticker price of Washington homes, try to buy when rates are at a low and rent in the meantime.

Why Buying a Home Is Your Best Bet:

You Want to Start a Family

Some of the top public schools in the country are in the D.C. area, so it makes sense to want to raise a family here. If you’re looking to settle down, the suburbs are an affordable and more spacious alternative to living in the city.

You Plan on Staying Put for 10 Years or More

Even if you’re not starting a family or already have one, buying makes sense if you plan on spending at least a decade in the area. Rents rise every year, but mortgage payments don’t.

Mortgage Rates Are Low

Rock-bottom mortgage rates are a perfect reason to buy a home. Rates have been holding low for quite some time, so it’s best to look as soon as possible.

Rent is Extremely High

High rent is a fact of life in the Nation’s Capital. Since rent tends to increase by a percentage every year, take advantage of fixed mortgages where your payments never change over time.

There’s no one perfect answer for the rent vs. buy question. It all depends on your situation. Take your time to explore your goals and your financial picture before making the decision. If you’re still unsure, a calculator may help you determine what’s right for you.

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

If you’ve ever been in property management, you know that it takes a lot of time, effort, patience and funds to find and retain quality residents. It costs a lot of money to keep turning over units, so it’s a win-win for everyone when residents are happy — they don’t have to move and you don’t have to pay apartment turnover fees.

The team at Gordon James Realty has compiled a list of action items that you may want to consider in the new year in order to keep your residents satisfied:

• Rent them a place they’ll want to move into and come home to. Make sure you’re handing over the keys to an apartment that’s been thoroughly cleaned with no sign of former tenants. Renters want to move into a clean palette – a place to make completely their own.
• Educate your renters from the get-go! If they don’t know the rules, then they aren’t able to follow them. Upon move-in, give them a run-down via the lease, an email, a flyer, and word-of-mouth. Be sure to include things like noise restrictions, pet policies, parking policies, trash day, etc.
• Send them a welcome letter. Everyone wants to feel welcomed! Especially if they are first-time renters or new to the area. Let them know that you’re glad to have them here and remind them of your contact information should any problems arise. It’s also a good idea to educate people who may be new to the area by giving them suggestions on local restaurants, bars, gyms, grocery stores, hiking trails, breweries, movie theaters, parks, etc.
• Leave them a housewarming gift. A thoughtful housewarming gift doesn’t have to be extravagant. Leave them something small that will make them think of the awesome leasing staff – a bottle of wine, flowers, or some property swag like koozies, cups, sunglasses, etc.
• Keep up with them. About a month after they move in, reach out via email to make sure everything is ok and that they are happy with their living situation so far. That being said…
• Don’t get too friendly. After you’ve confirmed that everything is satisfactory with their living conditions and you’ve reminded them how to reach you should a problem arise, keep your distance. You do not need to be “popping in” regularly. That creates unnecessary pressure on the tenant and they may feel like they are being “watched.”
• Host events. Community-wide events are a great way for residents to meet one another and a good opportunity for you to get positive exposure online. For example, you host a Thanksgiving party or a Super Bowl party and many of your residents will likely post pictures on Instagram, tweet and/or Facebook about the event – free marketing for you and your community!
• Ask for feedback. The only way to improve is to ask your residents for feedback! You can send out a survey via email or keep response cards in your leasing office. Your residents will appreciate the fact that you are trying to better the community.
• Don’t be tardy with maintenance and repairs. When a tenant reaches out about a broken laundry machine, faulty lock, etc., make sure you respond ASAP! Even if you can’t get to them right away, make sure you let them know that their request has been received and someone will fix the problem as soon as possible.
• Send season’s greetings. Everyone loves getting mail! Pop a ‘Happy Halloween’ mini bag of candy in their mailboxes, and ‘Happy Holidays’ cards.
• Be realistic. Last, but certainly not least, try to be as reasonable and lenient as you possibly can. Accidents happen. Property sometimes gets damaged. Property managers should consider purchasing tailored landlord insurance in case anything happens. Hope for the best, but always be prepared for the worst.

Have any other ideas to keep residents happy? Share them with us!

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

A great property manager can be hard to come by. In today’s fast-paced, social-media centric society, consumers and renters crave and demand instant gratification – they are ephemeral.

That being said, property managers must constantly be on their toes and ready to take on anything! Not only must they be ready to draw in and lease to rent-ready prospects, but they must also always roll with the punches in order to satisfy current renters. Leaky toilet at midnight? Be prepared for a call. Can’t find the mailbox key. Better be on it. Locked out of your apartment? Must be prepared! Property managers deal with these scenarios (among thousands of others) on a daily basis.

Here are five tips to being a great property manager that you and your team should keep in mind:

1. Communication

Communication is KEY! Property managers deal with tons of people (at all hours of the day) from all walks of life. Some may speak different languages, have different personalities, different needs and different backgrounds. Therefore, those in property management need to have impeccable communication skills. Staying calm and speaking in a professional manner is a top priority. A lot of times, this includes PATIENCE. Residents must always be kept in the loop on things like office closures, maintenance, payments, etc. Additionally – property managers must keep said communication timely. When a work order is submitted, the resident should be notified immediately that their work order has been received and that the issue is being worked on. When a parking lot is being worked on, residents should know of any alternative routes to take ASAP. These are just examples, of course, but the list goes on and on. Keep in mind, that with communication comes listening. Sometimes, the best thing a property manager can do for a current or prospective renter is ensure them that their voice is being heard and that the community is doing everything possible to make their living situation a comfortable one.

2. Organization

Property managers often have to deal with questions, comments, complaints and concerns from dozens of renters and prospects daily. Not only must property managers make sure their current renters are happy, make sure the rents are coming in on time and make sure that work orders are being fulfilled, but they must also work on bringing in NEW renters as well. Organization comes in handy on a daily basis through things like lease expirations and renewals, background checks, security deposits, invoices, etc. A skilled property manager must be organized, and make sure they are hiring organized staff members as well! If you are impatient, anxious, edgy or bad with tight deadlines and daily interaction with “customers” aka your residents, you may want to reconsider your future as a property manager. Do you think you have what it takes?

3. People Person

One of the best gauges of the level of quality of a property manager is the way they interact with people. This does not mean just their renters. This means current renters, prospective renters, renters moving out, maintenance, vendors, other staff, lifeguards, towing companies, plumbers, carpenters, etc. Managing an apartment community is a large undertaking, and men/women that do not have a happy, approachable, “can-do” attitude will find it hard to not only retain residents, but to draw new ones in. A personable property manager must be able to handle the fast-paced nature of community management and make the process of signing a lease and moving in an easy one. Let’s face it – moving is a drag and a hassle. When people move into an apartment, the last thing they want to deal with is an unhelpful property manager with a sour attitude. That said, go the extra mile to make your renters feel welcome! Perhaps a gift basket with community “swag” when they move in? Maybe a couple of take-out menus from your favorite local restaurants? At the end of the day, a “people person” property manager is always easier to work with than a grouch!

4. Honesty

Think about it. What are all property managers typically doing the first week of every month? Handling other people’s money! They collect rents, security deposits, and more. Property managers need to have the utmost understanding that the renters come first. They must always act with the highest level of integrity. As a property manager, they a lot of complaints are heard daily. While it may sometimes be easier to dance around the issue, a property manager needs to always be up front with the renter – even if it’s something the renter doesn’t want to hear. The washing machine can’t be fixed until Tuesday? Tell them ASAP so they can make other plans. The rent check won’t be deposited for another day? Let them know. Not being 100% truthful with renters can lead to mistrust and lower resident retention rates.

5. Reliability

Having a reliable property manager takes the burden off of a lot of people – the staff, the property owners, the renters, the prospects, etc. When a tenant asks something of a property manager or needs help with a certain issue, they should feel confident that their property manager is taking their struggle into consideration. This can be anything from a missing trash can, a broken lock, a bug problem, a noisy neighbor, etc. Property managers must come through for their residents and should be viewed as someone who can quickly and effectively problem solve. Now, the world isn’t perfect and problems aren’t always easily resolved. However, as long as a renter knows that you, as their property manager, are in their corner and working your hardest to make their stay at your property a happy one, then you have done the best you can!

These five qualities, among others, are staple traits of a great property manager. Moving into an apartment is, let’s be honest here, never the most fun and can make for a very stressful time in someone’s life. Working with a quality property manager can make the experience so much more positive – maybe even fun! An organized, honest, reliable, personable property manager with good communication skills is pure gold!

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

The formation of a Limited Liability Company (LLC) entity can be extremely useful if you are a rental property owner. It allows you to protect your assets, gain tax benefits for your rental property, and manage any property ownership transfers in a more convenient way. This article explores the legal, tax and property transfer benefits of holding your property in an LLC, rather than keeping it under your name.

Asset Protection

If you elect to form an LLC and transfer your rental property to the LLC, any judgment against the property will extend only to the LLC and not to your personal assets. In essence, the LLC offers you liability protection against a lawsuit or against creditors who might seek to make claims on your assets. It is also generally recommended that you place each rental property you own in a separate LLC. This provides additional assurance that any judgment against one property will not affect the other properties. Moreover, in many states, creditors can seize a property if it is owned in your name. If it is in an LLC, however, creditors may be limited to placing a lien on your property. Although types of liens vary, a lien may allow a creditor to claim any cash distributions from the LLC to its owners, and may also entitle the creditor to have the right to any proceeds from the sale of the property. In D.C., for example, a judgment lien can be attached to your rental property for up to 12 years. Other liens, which may be attached to the property, will impact a creditor’s ability to collect funds under a judgment lien. Creditor-debtor laws do vary by jurisdiction, and you should research your state’s regulations to understand the rights and obligations that debtors and creditors have under the law.

You can further protect yourself by adding a liability insurance policy for each property, as well as purchasing an umbrella policy to provide additional liability coverage beyond the limits of your primary insurance policies. Placing your rental properties in an LLC and buying additional insurance for them offers you a double layer of protection in the event of a lawsuit.

Tax Advantages

An LLC can be taxed as a sole proprietorship, a partnership, a C corporation or an S corporation. For rental property ownership purposes, it is best that an LLC is taxed as a sole proprietorship or a partnership. This is because any income will flow through to the individual members of the LLC and it will be reflected on their tax returns. In this case, the company will not have to pay any federal income tax and its owners can take advantage of tax deductions for the rental properties held in the LLC.  You would be eligible for the real estate depreciation deduction, but will also have to pay capital gains taxes when you sell the property. However, there are options to defer capital gains taxes, such as a 1031 exchange, if you sell one property and reinvest the sale proceeds into another property of like-kind within a specified time period.

Property Ownership Transfer Benefits

When you transfer your rental property into an LLC, you can create units of ownership with a specific value and allocate them to any other members of the LLC. This offers an easy way for you to designate ownership in the property to other family members, rather than updating property deeds to reflect changing ownership interests. Ownership interests can also qualify for several valuation discounts, depending on the structure of the LLC, the terms of its operating agreement, and the division of ownership interests among its members. Since these valuation discounts can reduce the overall value at which ownership interests are valued, they can have a significant impact on gift taxes and estate taxes when interests in the property are transferred between LLC members.

For more information about the benefits of placing your property in an LLC, see the following:

• Beliveau Law Group
• Smith and Condeni LLP

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

Trusting your valuable property to tenants is often a difficult enough step. When you live far away from the property, being a landlord is even more challenging. Many owners worry about whether things are going smoothly and struggle to stay informed without racking up big travel bills to check on the property. If there are problems, it can be difficult to manage repairs or legal issues from hundreds of miles away.

Long distance rental property owners need to make sure properties are managed well. Here are some factors to consider and tips to make sure you’re valuable asset is taken care of even when you can’t physically be there.

• Is hiring a property manager necessary?

Some owners delegate the job of dealing with the rental to family or friends. But managing rentals — overseeing contractors for repairs during the workday, answering middle-of-the-night emergency calls or handling tenant complaints — often involves more time, attention and expertise than they can provide.

In addition, proper management of your investment property requires a proactive, not reactive, approach. Professional property managers can provide your property with the attention it deserves. They have the experience to anticipate any potential problems and market knowledge to reduce vacancy times. This will not only help you lower expenses and possibly increase revenue, but it will also give you peace of mind. From rent collection, leasing, and maintenance to accounting and due diligence issues, the right property manager will make a big difference in how your property is maintained and appreciates over time.

• How can you obtain a good return on your investment?

To make sure that your asset continues to provide you with a good return on investment, examine your expenses in the context of your revenue stream. The rent you receive is your income from the property, but your expenses include everything from marketing, to property maintenance and repairs, as well as tenant evictions. As a landlord, you may face unexpected issues in one or more of these areas. A professional property manager would be able to step in and handle any problems. Not only will this result in decreased vacancies and lowered expenses, but it will also increase your return on investment.

• How can you stay informed about your rental property?

When you live far away, you’ll need a good way to stay informed about your property. After all, you can’t just drive by. Some owners rely on receiving rent payments to assure them that everything’s going well. But tenants who pay rent can still create problems or unwittingly allow property issues to worsen. Rent payments don’t tell you what’s going on inside the property.

Professional property management companies often use the latest high-tech software to give owners a virtual window into their rental property. The software gives you secure anytime online access to rental agreements and financial statements along with updates on inspections, property maintenance and marketing efforts. Some managers even post inspection photos to give owners additional peace of mind. Whenever you want to know how things are going, you can just log on. The software also allows gives owners another way to communicate with management, in addition to phone calls and directly e-mail.

Many property owners choose to manage their own rentals. But living far from the rental is the factor that often tips the scales away from self-management. Once you factor in the costs of traveling to the rental and the headaches of dealing with even routine property issues, it will likely balance any fees paid for professional management. And ultimately, professional property management services will result in the continued maintenance of your asset while potentially reducing property expenses and increasing return on your investment.

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

Pop-up stores are popping up everywhere.

The pop-up retail phenomenon, once known as flash retailing, has grown in recent years. A pop-up store is a short-term, temporary business that sets up shop in an unused open space, storefront, or within an existing store. It is rented for a fraction of the cost of a long-term space and is a cost-efficient way for a retailer to increase its brand awareness and make a profit. A retailer will rent a pop-up space for as little as one day to upwards of a few months.

Standalone pop-ups come in many shapes and sizes and are found at different locations. They can include vendors, restaurants, and exhibits. Pop-ups sell almost anything: books, art, clothing, cosmetics and beauty supplies, jewelry, music, art, food, and seasonal items. They are set up where there is much foot traffic (due diligence will help a retailer choose an accessible, busy location.) These pop-ups can be located in a marketplace–such as a stand at a crafts fair or farmer’s market–or inside a shopping mall that embraces pop-ups as a way to fill vacancies and keep shoppers coming back. They can also operate as a gallery space, standalone kiosk, college campus store, a collection of tables in a parking lot or on a side street, a booth or a tent in a public park or town square, or a food truck or motorized vehicle.

While the concept is popular among small business owners, major retailers such as Walmart, Toys “R” Us, Ann Taylor, Nike, Target, and Lexus have integrated pop-up concepts into their marketing strategies to extend their brands.

An example is Toys “R” Us, which has 30 outlet center pop-up stores. Toys “R” Us started opening pop-up outlets in 2010. On July 1, it opened a new location at the Jersey Shore Premium Outlets in Tinton Falls, NJ. Its outlet stores average 2,500 to 5,000 square feet. The store features products not found at its brick-and-mortar or online sites.

A building owner is likely to be willing to rent out storefront space to a pop-up retailer for a short time rather than not rent it out at all. Also, the owner still has the chance to book a higher-paying tenant later on.

Another pop-up trend is the “store within a store” in which space is rented to a retailer within an established store. This helps the store owner offset rent. In this scenario, pop-up retailers often will match their wares with the building owner’s merchandise.

An example is at Nordstrom, which hosts its own “Pop-In@Nordstrom” specialty pop-up shops, which are a recurring series of retail products not typically found in a Nordstrom store. Jewelry retailer BaubleBar, which began as an e-commerce retailer, opened a pop-up within Nordstrom department stores before recently expanding into its own retail shops. And in 2015, London-based designer goods retailer Liberty set up within five U.S. Nordstrom locations. Another example is in New York City, where menswear retailer Rothman’s added a 750-square foot pop up shop inside its Park Avenue location to host emerging designer brands. Rothman’s rotates its pop-up tenant every six weeks. Other retailers such as Best Buy and Sears have also been successful integrating pop-ups.

There are a number of benefits to pop-ups. They can provide a starting point for someone just starting out in retail who is looking to generate brand awareness or experiment selling different products. They also give a digital retailer an opportunity to engage its customer’s offline.

Customer engagement is a strong reason to open a pop-up shop. As with commercial real estate, location is the key. A pop-up retailer has the advantage of identifying locations where customers are most likely to be, thus providing built-in foot-traffic. Scouting out the location will also identify if there is parking nearby and whether the location is accessible by public transit.

A pop-up space provides a move-in ready small space without the concerns of committing to a long-term lease, getting insurance, managing staff, and operating much equipment. Typically there are fewer costs on inventory, equipment, physical appearance, and labor. Some pop-ups serve as stepping-stones to permanent business locations, thus helping a local economy.

A critical step for a pop-up store is having a budget. This includes budgeting for inventory and rent, the design of the space, marketing and promotion, a window display and signage, Internet access, and even food and beverages for customers.

There are pop-up pitfalls. Some of the most common are the wrong location; not promoting the event on social media; not distributing flyers and promotional material in nearby cafes and shops; not having a launch event (think food and balloons); not having a window display or signage; not installing Wi-Fi; not having a welcoming atmosphere; not scheduling setup and breakdown time; and staying in a location too long.

There are organizations that help pop-up shops get set up. Launched in 2012, Chicago-based PopUp Republic has helped promote 30,000 pop-up shops, restaurants, events, and spaces and has worked with large brands to create and execute pop-up concepts. Pop-up retailers can visit PopUpInsider.com for lists of available pop-up spaces, and Storefront.com helps brands find temporary retail space from commercial real estate owners. Popupmarketplace.com allows property owners in need of tenants to list their temporary pop-up spaces. New York-based Lionesque Group is a pop-up architect and has produced award-winning pop-up shops for large brands.

According to a PopUp Republic poll, pop-up shoppers look for unique services and products, localized assortments, optimal pricing, convenience, and a fun experience.

For Washington D.C. business owners who lack resources and finances, pop-ups provide a viable and creative alternative to an expensive retail space. Recently, Washington D.C. pop-ups have grown in appeal. For example, in June digital fashion retailer ModCloth set up a pop-up inside the old Urban Chic space in Georgetown for a one-month stint. Today, Washington D.C. pop-ups offer products and services that include fashion, cosmetics, arts and crafts, farmer’s markets, beads and jewelry, eateries, coffee, chocolate, bike repair, and even supper clubs.

Both small and large retailers are embracing the pop-up trend. A pop-up store is an exciting and creative way for new retailers to test the waters, or for existing retailers to expand their niche. Having a brand, budget, and a location will give retailers the keys they need to pop-up success.

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

Commercial developers are venturing into virtual reality technology as a way of allowing prospective tenants to visualize and experience a space — even before it is built.

The trend

One of the biggest technological trends over the past decade has been the ability to create and visualize 3D representations. While most of these technologies have been developed for the gaming and entertainment industry, virtual reality has grown into having key applications in real estate by allowing potential tenants and buyers to take a simulated “tour” of a property.

According to a recent study by Goldman Sachs Research, virtual reality will become an $80 billion market by 2025, with $2.6 billion being targeted for real estate. More commercial developers and brokers are currently exploring the virtual reality trend as a key tool in selling or leasing potential spaces.

How it works

Commercial developers have begun using 360-degree video systems throughout their properties to record spaces. The recordings are edited together to create an interactive projection — or simulation — of the interior spaces and surrounding landscape. Potential tenants and buyers are able to view the 3D simulation using virtual reality software applications on a phone, computer or tablet.

The technology gives the illusion of walking through a space and allows the users to look around in different directions from multiple vantage points, feeling as if they are actually touring the property in person. Users can click or scroll on their device to navigate through a space and zoom in on particular features. Some of the 3D applications require special headsets.

Potential prospects can also tour a potential property before construction has even begun.

Some of the main providers of virtual reality applications and 3D gear include Facebook Oculus, Samsung Gear VR, Google Cardboard and HTC Vive.

Uses and benefits

Whether touring an existing property or one being developed, the virtual reality software applications will let users experience:

• Floor plans and square footage of spaces
• Views from windows
• Natural light at different times of day (sun and shadows)
• Interior lighting
• Floors and ceilings
• Landscaping
• Changing finishes, furniture, textures and colors
• Parking features.

Among the most valuable benefits of virtual reality systems and applications include:

• Potential prospects can take a virtual reality tour of a commercial property anywhere from their laptops or mobile devices without having to set up appointments or travel.
• You can showcase multiple properties at the same time.
• Instead of traditional architectural renderings, virtual reality breaks down design concepts with minimal effort.
• Users with accessibility issues can reach all parts of the space.
• Research shows a higher level of engagement by real estate customers when experiencing virtual reality.
• A virtual tour will last many years until renovation of the property.

The cost outlook

One hurdle for widespread use of virtual reality in commercial real estate is cost, which can run into the thousands of dollars depending on the scope of the project. The cost of hiring a professional to shoot 360-degree videos can be $3,000 or more. Gear such as headsets are available for under $1,000.

For example, 3D interactive headsets that debuted this year include Oculus Rift at $599 and HTC’s Vive Pre at $799.

Because virtual reality hardware companies are continuing to innovate, however, the costs of virtual reality applications and 3D gear are likely to come down. Commercial developers should also weigh the time-saving potential and the cost-savings of not having to arrange and conduct actual physical tours of their properties.

Transforming the industry

A commercial virtual tour has the potential to increase interest in your property and simplify your sales efforts. This can provide you with a competitive advantage.

While virtual reality technology will likely not replace a physical building tour and still has a way to go, virtual reality stands to play a key role in transforming the way commercial developers and brokers do business in years to come.

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

If, after reading our article on why it’s a good idea to hire a property management company, you decided to move forward on that, you might wonder what to look for in a property management company. The process requires a careful assessment of your needs, budget and goals as a landlord.

There are several factors to consider before choosing a property management company:

What are your needs and do the company’s services match them?

A property management company should be able to handle the entire rental process for your property — from advertising and marketing the unit to tenant screening and collecting rent once a tenant has been found.

Once a tenant has been placed, key tasks property managers handle include: preparing leases and enforcing the lease terms, inspecting the property regularly, overseeing all repairs, landscaping and other maintenance. A property management company should also have a sophisticated system to track rent collection, notify you of any property issues, document all financial transactions and provide you with regular reports of income and expenses. Because the company should handle all communication with the tenants, great customer service and the ability to maintain positive relationships with tenants are critical.

If you own a DC rental property, for example, but live here in Arlington, you are legally required to provide the city with the name and address of a resident agent based in D.C. Since the resident agent can be an individual or a business, you can use the services of a DC property management company, which can receive any communication on your behalf.

What is the company’s fee structure?

Ask for details about the company’s fees and what services they cover, before you sign a contract. This is an area where companies differ.

• Is there a flat percentage fee for an all-inclusive package or does the company charge different fees for separate services?
• Are there extra charges for specific services or items?
• For repairs, does the property management company add a percentage “mark-up” fee to contractor’s invoices?
• How often will you be billed for the fees?
• Who will be responsible for handling your property?
• Find out whether the company will designate a dedicated property manager for your property. If so, find out whether the manager is licensed and how much experience he or she has, including experience managing properties similar to yours. Find out the company’s procedures for handling issues that might come up when your manager is busy or on vacation.

How and when can you and the company communicate?

When you have a question, will the company answer quickly? The company’s availability and responsiveness to you and to tenants matter. Note their hours and learn how they respond to owners questions and how they handle urgent and emergency property issues that occur outside of those hours. Do they have 24-hour emergency service?

Some companies have sophisticated property management software that allows owners to securely view their property records and monthly reports online anytime. If the company doesn’t have that, find out when and how the issue reports.

Decide how often you want your manager to contact you with updates. In addition, it is wise to set limits on how much the company can spend on repairs without your approval.

Does the company have good references?

Request and call multiple references from the company. Has the company managed properties comparable to yours? How many additional properties does the company manage? How do they divide their time to address issues at different properties?

These questions can help you start the process of selecting a property management company for your rental property.

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.

On the surface, becoming a landlord seems like a simple decision.

You choose a property, invest just enough to turn a profit and choose a credit-worthy tenant. The rent is paid on time, nothing ever breaks, and your monthly rental income is sufficient to cover your mortgage (if you have one) and monthly maintenance expenses.

Unfortunately, things don’t really work that way and even a credit-worthy tenant can cause cash flow issues. Nothing ever works perfectly all the time, and you may operate at a loss until you have sufficient equity in the property.

If you’re renting a property that’s thousands of miles away from your location, you also have to worry about how well the tenants are taking care of things since you’re not physically present.

While you may be able to hire an individual to take care of your property, without the proper experience, resources and knowledge you may be wasting precious dollars.

Do you really need a property manager? It’s up to you to decide, but here are some of the issues you may face if you choose the DIY route:

1.   Legal

Leasing agreements are complicated. And while you can easily pick one up at the nearest Staples, these generic agreements may not be legally sufficient in the area you choose to invest in. Because DC is not a state, the agreement may need different language and might not hold up in court.

Though you can hire an attorney to draft one for you, when it comes to enforcing the agreement you’re left to your own devices. If this is your first time as a landlord, you may not know when it’s appropriate to secure legal counsel to help before things get out of hand.

2.   Physical

This is particularly difficult if you are a long-distance landlord. You need to conduct inspections on both the outside and inside of the property on a periodic basis. But you cannot waltz in anytime you choose and depending on the terms of your leasing agreement, you may not be able to go in without prior notice.

If the exterior of your property is showing signs of neglect, chances are the inside of the property is as well. A good property manager can drive by a property and make an accurate assessment.

If the grass isn’t mowed and the exterior of the home shows signs of recent damage due to negligence, vandalism or weather, it’s probably time for an interior inspection.

Read More

This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and home owner associations. Please submit any questions in the comments section or via email.

When searching for an investment property, you might be faced with the decision to buy a fixer-upper or a home that’s already upgraded. It’s a common question, particularly from those making their first excursion into the income property arena. There are numerous right answers, requiring your thoughtful consideration of multiple factors before you make the leap.

Make your evaluation in light of the three most important rules of real estate:

1. Location
2. Location
3. Location

Whether you buy a home to occupy or rent, a desirable location supersedes all other considerations. Sure, you might find a seemingly fabulous “deal” on a property. However, if it’s in an undesirable location, you’ll face one or both of these challenges:

• Difficulty finding good, qualified tenants
• Needing to charge lower rent to entice tenants

Either of these issues will potentially lower your income, cash flow and profits. Despite self-help articles and books written about getting rich with real estate, owning, maintaining and managing rental property requires hard work. Sure, you’ll enjoy tax-deferred gains while you own the property and favorable tax treatment when you sell, but profits depend on your ability to generate sufficient cash flow to make mortgage payments and pay operating expenses.

Do you really want to risk the cost of having zero rental income while you spend months finding qualified tenants? Or, being forced to lower your rent by 30 to 50 percent just to attract appropriate tenants? Investing in a desirable location can help you avoid these issues.

Fixer-Upper Differences

Real estate fixer-uppers come in a variety of flavors. Ask yourself a few critical questions to make the right decision for you.

• How handy with home repairs are you? What can you do well and what repairs will you need licensed professionals to do?
• Do the properties you‘re considering just need some TLC (thorough cleaning, paint, new carpet, etc.) or major system repairs (electrical, plumbing, HVAC, roof, septic or sewer, etc.)?
• What will necessary repairs or improvements cost you? Is it possible to recoup the cost of repairs with higher rental income or greater appreciation in value when you sell?

Your honest answers to these questions help you determine whether a fixer-upper or rehabilitated rental property is your best option. Further, evaluate the cost difference between buying a rehabbed home and the costs of fixer-upper “deals” plus what it will cost to fix them. Don’t forget to factor in the cost of mortgage, insurance, etc. while it sits vacant during repairs.

To help you judge if you are really getting a deal on a fixer-upper, consider the following:

• Be sure your math works. Estimating the cost to upgrade the property versus buying a property in good shape must work in your favor, at least on paper. Add 10 to 25 percent to your estimate to avoid unwelcome and costly surprises to your budget.
• Seriously consider houses needing minimal repairs.
• Choose fixer-uppers only if you have the time, energy and some ability to do part of the fixing.
• Order a full inspection from a proven, thorough home inspector.

Finally, even if you own only one rental property, consider hiring a quality property management firm in your area to save you time and headaches and give you cost control.

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