How Much & When Does Your Investment Property Need Sprucing Up?

One of the things that seem to bother would-be investors is their duties as a landlord. Will they need to make home improvements? How much will this cost? Does a landlord have to spend a lot to earn a good rental income? These are valid questions and I address them in this short video.

A new home needs little or no improvements.

If you’ve followed good advice, you’ve bought a brand new home as an investment. You’ve bought it directly from the builder so that everything in the home is brand new – bath fittings, roof, home appliances, HVAC et al! So there is no need for repairs or upgrading or refurbishing. Your investment is ship shape and read to be rented out to fetch you top dollar in terms of rental income. Your first tenant is happy to pay as well, since they have the chance to move into a new home where everything works and nothing is leaking or broken.
Now say your tenant is moving out after one or a few years of renting your property. There is bound to be a little wear and tear, some few rough edges that need smoothing. Maybe the carpets are a little worse for the wear and the interiors need a bit of sprucing up. Maybe the carpeting doesn’t need to be ripped out and replaced; just steam cleaning could make a world of difference. After some years of use, the interiors will need a coat of paint. A new lick of paint for the exteriors may not be a mistake either after a while. Families looking at properties to rent are looking for aesthetically well-looked after homes to live in.

Why a property manager is your best friend in this case.

So it can all be a little confusing – what to do so that your property continues to fetch a good rental income, and what not to do because it could just be a waste of good money. Here, the insight and experience of your property manager will be of great help. The property manager knows what tenants are looking for, and what factors will decide rent amounts. They will advise you when and if home improvements are required.
Maybe after a few years of the same tenant, a paint job is needed to attract a new tenant. Or maybe not! Most tenants want all of their security deposit back and will ensure that they leave your house in good condition. However, a little landscaping may not go amiss if the previous tenant wasn’t much of a gardener. Remember, the location of the property, local weather conditions will also make a difference. The property manager may be the best person to advise you about what is needed and what isn't.
Maybe your home needs no improvements or refurbishments. On the other hand, maybe it does – it is a case of spending a little money to make more money. The rule of thumb with home improvements for rental properties is this: trust the experience of your property manager and follow their advice to the extent possible. Listen to my podcast or visit to know more about real estate investments.

By Adiel Gorel

Many investors are asking, now that interest rates have gone up by 2% relatively quickly, and home prices are up significantly from a couple of years ago, whether buying single-family rental investments is still something to consider. 

The main point, at the heart of the matter, is that we can get a 30-year FIXED rate loan when buying single-family homes (technically 1-4 residential units) in the United States. This point is so dominant, it supersedes any other consideration. Surprisingly few investors seriously take this dominant factor into consideration. 

For some who have read other materials I have written, the following is a bit of a repetition, but it’s well worth understanding this point fully. The 30-year fixed-rate loan does not usually get its due as an amazing financial tool that should be utilized by any savvy investor who can get it. For many foreigners, it is incomprehensible that in the US we can get a loan that will never keep up with the cost of living for 30 years. During that period, essentially everything else DOES keep up with the cost of living, including rents. Only the mortgage payment and balance (which also gets chipped down by amortization) do not keep up with inflation. 

You can talk to many borrowers who have taken 30-year fixed-rate loans and after, say, 14 years, realized that although there are 16 years remaining to pay off the loan, the loan balance AND the payment seem very low relative to marketplace rents and prices. The remaining 16 years are almost meaningless since in many cases (statistically and historically) the loan balance will be a small fraction of the home price and not very “meaningful.” Just to get some perspective, most other countries on Earth have loans that constantly adjust based on inflation. Both the payment and the balance track inflation all the time—usually with no yearly or lifetime caps as adjustable loans have in the US. 

The power and positive effect on one’s financial future gets magnified when you consider that in 2022, we are still in a period in which interest rates are very low. While investors cannot get the same favorable rates as homeowners, it is nevertheless quite common nowadays to see investors getting a rate of between 5.75% and 6.25% on single-family home investment properties. From a historical perspective, these are very low rates. Most experts think that, in the future, mortgage rates will rise further. From a historical perspective, even 7.5% is considered a relatively low rate.These days, you can “turbo boost” the great power of the never-changing 30-year fixed-rate loan by locking in these still-low rates, which will never change. If in the following year's interest rates indeed go up, you will feel quite good about having locked under-6% rates forever. 

Once you have gotten your fixed-rate loans, two inexorable forces start operating incessantly: inflation erodes your loan (both the payment and the remaining balance), and the tenant occupying your SFH pays rent, which goes in part towards paying down the loan principal every month. These two forces create a powerful financial future for you. 

Many of us have been “spoiled” during the COVID Pandemic that started in 2020. The Fed lowered rates to the very lowest point in the history of the US. Homeowners could get loans at 2.75%, and even a bit less. Investors could get loans at 3.5%, 3.75% or 4%. Happy times. Recently, rates rose quite quickly. Homeowners now get loans at 5% or slightly more. Investors get loans at about 6%, depending on credit. It feels like the sky is falling, but it’s important to retain the historical perspective. These rates are still historically very low. Recall also that currently, inflation is at 8.5%. Inflation is your “best friend” when you have a fixed-rate loan since it constantly erodes the true value of your payment and remaining loan balance. Getting a 6% FIXED rate loan when inflation is over 8% is quite favorable. 

The 30-year fixed-rate loan is so meaningful in changing your future that it works well over the long term, almost regardless of the interest rate. Obviously, the lower the rate, the better. However, by way of an example, when I began investing in the 1980s, interest rates on mortgages were at 14%. Every single investment home I bought back then (and I always made the minimum possible down payment) started out with a negative cash flow. Nevertheless, it was clear to me that since the loan was FIXED, the payment would remain the same, but everything else would keep up with inflation. That meant, to me, that within a couple of years, the negative cash flow would turn into break-even, and a couple of years after that, it was likely to turn into a positive cash flow. A couple of years after that, the cash flow was likely to be a stronger positive, etc. 

Those notions came to fruition exactly as I had seen them. I started celebrating every time one of my homes got to “break-even.” I knew that from then on, the cash flow would be even more positive, on average, as the years would go by. Even with a 14% interest rate, the system worked. Those homes changed my financial life enormously. 

Of course, when rates went down, I refinanced. First, I refinanced down to 12%, then came the magic “single-digit” time, when I refinanced to 9.95% and was ecstatic about it. 

I have thousands of investors’ success stories that I hear all the time. One small example is the Silicon Valley engineer who bought 16 homes, then 13 years later saw his loan balances were under 30% of the home values, despite there being 17 years still remaining on the life of the 30-year loan. He sold 4 of the homes, paid his taxes, and used the proceeds to pay off the small remaining 12 loans, retiring on the strength of 12 free and clear homes. Many of these success stories, including his, are from people who started buying when rates for investors were between 7.75% and 8.25%. 

Many investors are also taken aback by the price increases that took place during the Pandemic. They feel they are being hit by high prices AND higher interest rates. 

One very important thing to remember is that while I am writing this (May 2022), inflation is at 8.5%. 

Some people are concerned about starting out with only a break-even, or a very slight positive cash flow when making 20% down payments. They have gotten accustomed to starting out with a healthy positive cash flow, even with a mere 20% down payment, during the super-low rates era. However, the INITIAL cash flow is just that: initial! 

As time goes by, the mortgage payments remain the same. However, rents rise, on average, with inflation. These days there is a huge demand to rent single-family homes in the suburbs, with a yard and room for a home office. There is more demand than supply in the rental space, and rents are going up quite furiously across the nation. Even if rents only rise with inflation, inflation these days is quite high. Either way, the cash flow gets better and keeps getting better as the years go by, while you build equity in the home, changing your future. I look at these investments as long-term. They will very likely change your future, but they need 10, 12, or 14 years to get to the desired result. In the beginning, the “cash flow” that has the most meaning is your own income: the income from your W-2 job, or your small business, in addition to what your spouse may earn as well. THAT is what pays for your food, transportation, utilities, and kids’ expenses at the present. In the future, when the rental homes can get you to retire powerfully, the equation flips, and then the rental homes will provide the very meaningful “cash flow” you can retire on, as I describe in the example above. 

The mistake many new investors make is thinking that they MUST have immediate large positive cash flow at the outset, despite not really needing it, since they generate sufficient “cash flow” in their jobs. This thinking may create a situation whereby an investor never gets started. Possibly a book the investor had read might have put the idea in their head that initial cash flow is the primary thing to look for. Ten years later, I see people expressing great regret at never having started due to these notions. Some people resort to buying inferior properties in inferior locations, seeking a “better initial cash flow.” Buying bad properties usually doesn’t end up that well. 

Today, as in any time I have seen, is an excellent time to acquire single-family rental homes, finance them with the astounding 30-year fixed-rate loan, and then let time pass while inflation does its thing. We will talk about it in more detail at our upcoming quarterly event, complete with a Q&A. 


© 2022 Adiel Gorel 

The Security Deposit Takes Care of it in Selected Cases.

I have been saying for many years that property investments are your best bet for what I call “remote control riches.” You take a loan to buy a house, rent it out, and then sit back and earn rent that helps repay that loan – creating wealth for you in the long run. Whether you invest in one house or ten houses, you have the pride of ownership and you want your property to be well looked after and in good shape. However, a lot of investors wonder – what if the tenant damages the property?

Difference between damage and regular wear and tear.

Let me just clarify here, that the various states in the United States do have different laws and regulations pertaining to tenancy. However, some things are more or less uniform. Regular wear and tear is something that is recognized in most states and is permitted as being a part of day to day use of a property. So, if a tenant hammered a few nails to hang up some pictures, for instance, this is usually OK. Everyday use and such reasonable modifications are generally not considered ‘damage’.
However, if there is damage that results out of unreasonable actions of a tenant, or some extreme modifications made to the property, the tenant is bound to pay for these. Typically, tenants will ensure that the house is in decent shape when they vacate it, because of something called the security deposit. When the landlord and tenant enter into the lease agreement, the tenant is required to put down a security deposit for exactly this reason – possible damage to the property. If there is substantial damage, this can be paid for from the security deposit amount. The tenant will receive their deposit amount minus the costs incurred towards repairing the damage.

Legal recourse available to landlords.

However, what if the damage is extensive and the costs incurred are higher than the security deposit? Well, in that case the property owner has recourse to the small claims court. Typically, the court will award damages in favor of the landlord. In cases, it can happen that the damage is significant – more than the security deposit amount will pay for and then the tenant goes missing. When the tenant absconds, the court can award suitable compensation to the landlord, in cases even ordering the garnishing of wages.
So, if you are a real estate investor and landlord (or are planning to assume this role), you don’t have to worry about tenants causing damage to your property. A vast majority of tenants would rather not endanger their security deposit or blot their copybook as a tenant, and will keep the premises in good condition. If they do not, there is always legal recourse available. In the end, these are just minor speed bumps on your road to retirement riches. 

The Contract between a Buyer and the Builder – Things to Keep in Mind

How do you secure your real estate investment to make sure you're getting what you pay for? What is the procedure you will have to follow? Who signs what contract, when, and what are going to be the terms? What is the amount you pay as the earnest money deposit? And what on earth is escrow?! There are lots of questions about safeguarding your real estate investment and even more now, during the pandemic. Let me try and answer a few of those.

Buying a rental home – what to expect.

One of the things that concerns a lot of real estate investors is this: how do I ensure that I'm going to get the home I'm buying? The sequence of events will unfold a little like this. You will work with a property broker to identify the home that you want to buy.  There are a lot of boxes you probably want ticked when you make that choice so make it wisely.
After this, you will receive a contract where you are identified as the buyer with the builder as the seller. The document that you and the builder sign will identify the house and set out all the terms and conditions of the contract. At this point you will make payment of an amount as and by way of earnest money deposit. This amount will remain in escrow on your behalf while the house is being built. This could be $2000 or $3000 or $5000 or in that range. If you’d like to know about the process in more detail, you may want to check out my book on Amazon: Remote Control Retirement Riches: How to Change Your Future with Rental Homes. 

How things have changed during the pandemic.

As I have been saying in my podcasts and some of my other articles, there have been some major supply chain problems in the real estate market during the COVID-19 pandemic. Lumber, labor, and raw material procurement – all of these have been problems resulting in significant delays. Right now, demand is actually higher than supply of houses, and buyers are having to get on waiting lists and cool their heels for some months before investing.  However, waiting a few months to make the right investment is immaterial. It doesn’t impact the long term investment you are about to make.Because of all this, some of the buying-selling configurations have also changed. While investors will still follow the sequence of signing a contract and then paying the earnest money into escrow to secure a property, builders /brokers have introduced some variations. This is something that I am going to be addressing soon at our expo event.
To know more about real estate investing, just reach out to us at or get on to our mailing list to get useful updates. We are happy to help clarify any doubts or questions you may have. Remember a real estate investment is the best way to create future wealth for yourself and your family. It can be a life-changing decision that will start to generate a passive income for you right away – your “remote control riches!” 

The Pandemic Has Changed the Dynamics of the Real Estate Business


One of the things that would-be investors want to know is this: how long will the whole investment process take? After all, we are busy people and we want to know how much time and effort we would have to put in, right? This is a reasonable ask, and in fact you should be asking your realtor or your investment guide all of these questions. A lot of investors simply want to know how long the loan application and approval, the actual paper work etc. is going to take.

How long does the investment process take?

There are a few options that will determine the time frame of your investment process. We are assuming here that one is opting for a brand new single family home (which in my view is simply the best choice). So you can opt for a home that is nearly ready; which the builder is ready to hand over possession of. Here, the thing that will take time of about 40 to 45 days is the loan process. The process of closing the deal will take about a month even in the unlikely event of someone buying the property in cash.
Sometimes you would opt for a property under construction where you can add the time of two or three months to the time frame, within which you can finish off the loan formalities. However, I find that the most common scenario is investors choosing a model and the builder starting to build based on this after finding a buyer. This can take as little as four months in my experience but could take up to a year.

Why things have changed now during COVID.

What has changed recently is the pandemic throwing the supply chains off track. Lumber is an issue. Labor is an issue. The supply and delivery of raw materials and fittings such as doors and windows is an issue. What this does is, it creates significant delays in the whole process of building and handing over possession to the buyer. Right now, the supply chain issues remain and delays are not uncommon.
So if you're planning to invest, remember to factor in at least some delays, and, in cases, delays of up to several months over the usual time taken for the investment process. It starts with house hunting where you survey a lot of options and narrow them down to what suits you in terms of price, location, aesthetics, and your financial goals. You then apply for and get the loan, close the deal and find a property manager and then, as I always say, do nothing!
If you have any more questions about how long the investment process takes or indeed any question about real estate investing, we are here to answer those questions for you. We are ICGRE, a real estate company designed to help empower you with the knowledge you need to create a safe, financially secure future. Remember, even if the process does take a bit of time, choosing to invest in real estate is going to be life changing – in a very good way! Call us to set up a free meeting and we will take you through the whole process. 
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