Our non-recourse loan lenders have compiled some millennial trends to be factored into your financial decisions, as well as our two cents on what it means for you as a rental property owner. Take a look into some millennial trends, and apply for a non-recourse rental property loan with First Western Federal Savings Bank today.

Millennials are more likely to change careers.

In their first decade out of college, millennials are reported to change their career four times — twice the rate as Gen Xers as reported by EdSurge. However, “career” is the distinctive word — changing jobs (versus careers themselves) happens even more frequently (but less frequently than some researchers originally thought).

Millennials are thought of as caring more about their jobs in terms of passion and interests. In fact, millennials are more likely to choose a job that pays less but provides better benefits, showing that while salary is important, enjoyment and an overall, holistically positive job means more.

How This Affects Your Rental Property: With consistent career changes and job shifts comes consistent relocation. It’s not always easy to get a new job in the city you currently call home. Millennials are less tied down to a single location than Gen Xers when they were the same age. Especially if your rental property is in or near a city, you can count on millennials to be renting from you at some point or another.

Millennials are more likely to move.

This builds off of the last point, in which millennials are moving more than expected based off of trends from previous generations. Forbes reported that “The United States Census Bureau found that, between 2007 and 2012, Millennials accounted for about 24 percent of the total population of the U.S., but they made up over 43 percent of all movers.”

Whether this is out of pure wanderlust, needing a job, or a combination of the two, millennials are on the move. Interestingly enough, women between the ages of 18 and 24 are more likely to move than men of the same age group.

How This Affects Your Rental Property: Transplants and newcomers to your area are likely to rent, particularly if you are in or near a city. When highlighting the perks of your living space and advertising for your rental property, it’s a good idea to mention nearby attractions or benefits of the area as a whole.

Millennials are affected by massive student debt.

Nationally, student debt has passed the trillion dollar mark and is the highest source of collective debt, even surpassing that of credit cards. On average, millennials who graduated college in 2016 have $37,172 in debt.

NPR recently reported that this is causing many millennials to put off buying houses. In their article, they explain that “Homeownership rates for people ages 24 to 32 dropped nearly 9 percentage points between 2005 and 2014 — effectively driving down homeownership rates overall. In January, the Fed estimated 20 percent of that decline is attributable to student loan debt.”

Millennials are getting married, having children, starting families, and even as they stay locked into their careers, they’re prevented from moving forward with other financial decisions because of student debt.

How This Affects Your Rental Property: Student debt is heavily impacting millennials and their ability to buy homes. Renting continues to be a priority, albeit a reluctant one for many, solely out of financial necessity. As a rental property owner, you can capitalize on the fact that homes and apartments for rent continue to be in high demand.

Millennials are tech-savvy.

This comes as no surprise to older generations who are convinced millennials are on their phones and tablets too much, but the implications for your rental property are significant. If you’re a seasoned property owner, if you’re used to filling out rental property loan applications and you’ve been doing this for decades, it’s time to catch up to how your target demographic searches for apartments and condos. The old days of posting listings in the ad section of the newspaper or putting fliers around town aren’t going to cut it.

How This Affects Your Rental Property: Marketing your rental property online is crucial to finding tenants. Craigslist, Zillow, Apartment Finder, or other sites should be utilized to their fullest potential. Make sure your listing includes photos, is well-written and descriptive, includes contact information, and any other relevant insights to the property. Check out other property listings to see what looks good and what could use some improvement, and format your listing from there.

Millennials are a generation full of potential and are a force to be reckoned with. Once you purchase a rental property with a non-recourse loan from First Western Federal Savings Bank, it’s more than likely that millennials will rent from you. Understanding how to reach this niche audience is critical to your success as a rental property owner.

If you have more questions about non-recourse loans and owning rental properties, our lenders are happy to help! Check out our FAQ page to find answers to commonly asked questions, visit our non-recourse loan page, or contact us to learn more.

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Winterizing Your Rental: Keeping it Open

If your rental property is in a location that doesn’t experience significant winters (like Southern Arizona or San Diego), you likely won’t have to make many changes to prepare your home for the season ahead. But if you’ve got a cabin in the woods, a quaint mountain house, or a property in a bustling ski town, you’ll have some work to do to make sure your rental is suitable for guests in the winter months.

Consult with an HVAC specialist.

There’s nothing more anxiety-inducing than getting a call from one of your renters that the heating isn’t working. Not only will you feel bad that your guests aren’t comfortable, but a bad review could leave your property in jeopardy of getting as many visitors as you’d like. Prevention is key to ensuring your property is set for the winter, and working with an HVAC specialist is the first place to start.

Your heating and air system can be in dire need of replacement within a decade, or it can last twice as long if it’s properly maintained. Call someone to check on your heater, water heater, air ducts, and thermostat before it’s too late — and of course, make the necessary changes immediately to keep your rental property in business.

Insulate accordingly.

Air leaks won’t only make guests cold and uncomfortable, they’ll rack up your energy bill. This is in part due to the wasted energy that’s being consumed — it can just leak outside, after all — and in part because when it feels colder, guests are more likely to crank the heat. Look for places that could stand to better insulated, and caulk up areas as needed.

Have snow removal equipment ready to go.

Is your snow blower in working order? Do you have salt or sand on deck? Are your shovels up to snuff? If not, now’s the time to stock up on snow removal equipment.

Make things easy for guests to understand.

Most people who are renting out properties don’t want to hear from their guests every single time something comes up. There will always be exceptions, but for the most part, this responsibility of keeping your guests informed falls on you.

Knowing how to adjust the thermostat, where to put snow-covered boots, how to get into the property, and how to work the gas fireplace are just some examples of things that guests will want to know. Provide an informational flyer or note sheet for guests that sets expectations, answers their potential questions, and is easy to follow.

Eliminate potential hazards.

We talked about animals in our last blog, and the same prevention methods (such as not leaving food out and closing up leaks in your home) can be applied to your rental property. But when people are actually renting out your property it’s a little different. By that, our rental property loan lenders mean that it’s not as big of a deal if a mouse gets in your house in winter and no one’s there. If you have guests at your property and they see a mouse, this will not bode well for you.

Take precautionary measures to ensure that critters don’t start to call your rental property their new home. In addition to some of the preventative methods we’ve mentioned, you should check up on your property frequently, find pest control solutions that work for you (be it traps or professional help), and take action the moment you notice something’s wrong.

In addition to creatures coming to your place, preventing fire (particularly if you have an older rental property) and pipes from bursting are also essential. Let guests know in your house guidelines document of any necessary measures they need to take while renting out your property — keeping the thermostat above 55 degrees is a great example.

Winter does not have to automatically mean your vacation rental property is closed for the season. In many instances, people have amazing properties that could easily be filled up with renters in winter. Taking care of your vacation rental is the way to ensure you continue generating revenue off of your property all year long.

If you’re ready to apply for a non-recourse rental property loan, our lenders at First Western Federal Savings Bank are more than happy to help you get started! Contact us or fill out our online application to get started.

The post Is Your Vacation Rental Ready for Winter? Part II appeared first on First Western Federal Savings Bank.

The non-recourse lenders at First Western specialize in IRA non-recourse loans, which is to say that we deal with the investment side of retirement accounts. But as you’re considering your future financial goals and plans, it’s a good idea to establish which retirement account makes sense for you and your lifestyle. Learn more about what might be the best retirement savings plan for you, and if you’re interested in using your self-directed IRA for a rental property loan, contact First Western Federal Savings Bank today!

If you don’t want to pay taxes on your IRA withdrawals…

A Roth IRA is a much better option for you. With traditional IRAs, your money is taxed upon withdrawing anything from your account. This is because it’s not taxed beforehand, whereas a Roth IRA means you pay taxes on the money before putting it into your account. Some people don’t mind being taxed after the fact (versus before they put it into their account), but if you’d rather be able to use your money right as it is when withdrawing it, a Roth IRA is a good call.

If you’re interested in investing your IRA…

A self-directed Roth IRA or self-directed Traditional IRA Solo 401(k) is your best bet. These types of IRAs have a lot more freedom with investment opportunities, such as applying for a rental property loan, investing in stocks, or more. If you’re interested in expanding your financial portfolio with the potential for growth, rather than just savings, an IRA with the right flexibility is right up your alley. Our non-recourse loan lenders have a wealth of knowledge when it comes to utilizing your self-directed IRA for rental property loans — visit our IRA non-recourse loan page to learn more.

If you’re more focused on saving, solely for retirement…

A traditional IRA is something for you to consider. This is a fairly common IRA for people to enroll in, usually either because it’s offered through their employer or because they’re not comfortable with investing their current funds into bigger financial projects. Additionally, Forbes points out that “A traditional IRA may be a better choice than the Roth if your current tax bracket is higher than you believe it will be in retirement.” Forbes also goes on to explain that moving money from a 401(k) into a Roth IRA could result in owing income taxes on what you transferred.

If you think you’ll be in a higher tax bracket when you retire…

It’s probably in your best interests to enroll in a Roth IRA. Most people plan on working their way through their careers and financial ventures, making more money over time. However, this is not always the case — certain industries or jobs might not have enough financial growth offered to move you up to a different tax bracket. Not to mention, your income could increase each year, but it still might not be enough to move you up to a different tax bracket.

That being said, if you’re pretty sure or planning on being in a higher tax bracket by the time you retire versus where you’re at now, it’s a good idea to consider enrolling in a Roth IRA. You’ll be able to save on taxes later.

If you’re looking for more flexibility…

A self-directed Roth IRA or self-directed Traditional IRA has what you’re looking for. For self-directed Roth IRA’s, it’s much easier to withdraw without penalty before you reach the retirement age (59½). Traditional IRAs have their benefits, but they’re not as flexible as Roth IRAs in terms of taxes and tax penalties. With a traditional IRA, you not only would face a 10 percent penalty if you make an earlier withdrawal, but you would also be required to take out money when you turn 70½. Additionally, you cannot continue contributing to a traditional IRA once you’re older than 70½.

Hopefully this has helped provide you with some guidance for which IRA would work best for you. Much of the decision-making boils down to your lifestyle, your financial goals, and your current financial situation. If you are interested in using your self-directed IRA for rental property loans and real estate investment opportunities, First Western Federal Savings Bank is the lender of choice for you to work with. Offering competitive rates and coming to the table with nearly four decades of experience, you’ll be working with one of the nation’s most trusted lenders. Learn more about what your rental property loan could be used for, and apply with First Western Federal Savings Bank today.

The post Which IRA Is Best? appeared first on First Western Federal Savings Bank.

Long-Term Tenant Rental: Pros

Consistent Revenue

With vacation rental properties, there will likely be downtimes where business is not exactly booming. While vacation renters might churn out some hefty profits during the busy season, the off-season will find those same renters hard-pressed to find the same revenue. As someone with a long-term tenant rental property, you’ll have a steady source of income for the year — or even longer, should your tenants choose to renew their lease. You can plan on the same amount of income every month, similar to a salary — though it should be noted that this doesn’t count for any added expenses that come your way.

No Need to Furnish

When people rent out a vacation home, they’re expecting to be wowed and wooed. They’re not going to pack their own home with them, so you’re vacation rental property owners will need to pay for lots of the basic amenities. Appliances, beds, furniture, bathroom supplies, and even a TV set and wifi are expected, which add up to be a whole lot of upfront costs.

A rental property for tenants, on the other hand, is basically a shell. Furnishing is an option, but more often than not, landlords and property owners don’t offer it. Other than appliances (and even that’s not a guarantee in some instances) it’s up to the renters to provide all these things to make their space a home. Not having to create a home for your renters saves a lot of money.

Not As Much Upkeep

Of course, a long-term tenant rental property needs upkeep, as is true for every property. You’ll need to make sure appliances are in good, working order, as well as cover any fixes as they arise (such as plumbing or HVAC issues). However, these fixes tend to be more sporadic and infrequent, especially when taking vacation homes into account.

With a vacation rental property, every single time guests leave, the property needs to be prepared for the next guests. This involves extensive cleaning, much more so than making sure the shell of a rental house is set for the next long-term tenants. Plus, guests might have consistent questions or problems — all things that need to be taken care of ASAP, whereas long-term tenants quickly have an idea of what to expect.

Long-Term Tenant Rentals: Cons

Problematic Renters

With a vacation rental, guests nearly always pay upfront with their stay. Even if, for some reason, they’re unsatisfied with their visit, you’ll still be guaranteed a profit. Certain long-term tenants might not be as stable. You can’t expect a renter to pay their entire year upfront, and if they run into an issue and suddenly aren’t able to make their rent, it’s a loss of income for you, one which could lead to eviction and other problems.

Additionally, renters could end up causing a lot of damage to your property, either due to negligence, or solely as a result of spending one year in the same residence. Accidents happen, things break, people are imperfect, and when renters feel at home in your property, they might not always be as cautious and considerate as guests in a vacation home usually are.

Costlier Damage

As we said, guests in a vacation home know they’re guests. They treat everything with a little more reserve and hesitation, simply because they’re on vacation and it’s not their home. Long-term tenants are in your property, but it’s their home, which can mean comfort and carelessness go hand in hand. Some of the damages could be much more costly at the end of a lease, versus the end of a month (or even a year) for vacation rental property owners.

Distance Might Get in the Way

Many vacation property owners live very close (if not on) the premises of their rented-out vacation home. As someone who owns a tenant rental property, the chances that you live next door or down the street from your rental are slim. If the pipes burst in wintertime in the middle of a blizzard, or some springtime flooding results in a lot of damaged carpet while you’re the next state over, it might be much more challenging to get to the issue quickly — which might end up costing you more, particularly in situations where time is of the essence.

No matter what type of rental property you decide to invest in, it’s going to have incredible benefits to help boost your financial portfolio. Figuring out whether you want to turn your rental property into something for travelers or tenants to love can seem tricky, but it’s also an exciting time to think about your future investments. First Western Federal Savings Bank is here to help. Apply for a rental property loan with our non-recourse lenders to get started!

The post Vacation Rental vs. Tenant Rental, Part II appeared first on First Western Federal Savings Bank.