Buying A Restaurant Business

 

 Hi Prospects & Friends!

Buying a restaurant business can be a great business endeavor if you know the aspects and handlings of the restaurant business, as well as have the appropriate assistance. When buying a restaurant business some things to take into consideration for analyzing as well as who would possibly needed to be hired would be:

• Financial Statements, Balance Sheets, Income Statements
• Appraisal of the business fixtures, and the business to make sure you're not over paying for it.
• Real Estate Attorney
• Real Estate Broker
• Business Broker
• Inspector
• Lender
• Insurance Company
• Title Company

Depending on your particular situation for your restaurant business, as well as where you're within your negotiated contract, you may not need all these items listed, but it would be wise to make sure you do realize having any of these will allow for your contract to go smoother, once you pin point who will benefit you better in your restaurant business contract. So in conclusion buying a restaurant business doesn't have to be difficult, if you know who you should be approaching to assist you from the very beginning. 

Buying Down Mortgage Rate

  

Hi Prospects & Friends!

What are discounted points, and how would you use them? Discounted points are actually points connected to your mortgage rate that you pay for to buy down your interest rate offered to you from a mortgage company. These point can be costly, and while it does look enticing to buy down your interest rate, it would make better since to only buy them down if you will actually save money from your loan. Example would be Tom wants to buy an investment property and is quoted an 9% interest rate for his loan. Tom knew he would have to pay a higher interest rate, because of his property being an investment property, and he also knew, because of the current state the economy is in with inflation issues, and federal funds rate being raised to stabilize the economy, which this rate affects the other rates on loans. So Tom's loan officer offers Tom the numbers and says for each rate but down it will cost you $1,000. Tom does the numbers, and calculated it will only cost him an additional $3,000 to buy down his interest rate to 6%. So in this case Tom gives the ok to loan officer to do this. Once the interest rate is bought down to 6%, Tom knows this will be his new fixed permanent interest rate. So in conclusion buying down points can work well if;

• Economy is unstable
• Mortgage rates are much higher for your property than would normally be.
• You can afford to pay the buy down point costs.
• You're not just doing it, because it's a "norm" or pressured too.
• You've done all the research on discounts points, compared all the lenders costs buying them, and you understand what you're actually doing in first place asking to buy down your rate with points.

So staying alert with some of these key tips will help assist, when thinking about buying down your interest rate.

Commercial Office Holdover Fees

 Hi Prospects & Friends!

When one leases a commercial office space, a key factor to know upfront is understanding holdover fees. If you're not familiar with holdover fees they will be explained in this post. Majority of landlords want to recoup their rent costs if you stay beyond your lease with a expired one or even not moving out on time if don't renew. What happens is holdover fees will generate against you coupled with even one months rent and you will be responsible for these fees. Example would be Mary's lease expired June 30, she doesn't renew and didn't move out in an timely manner out of her office space, and moved out July 2. The landlord sends her the July statement and she explodes when she sees her rent being charged as a holdover fee for July and another charge for Julys rent. Mary assumed 2 days wouldn't be a issue since the movers came late, but she didn't realize her landlord didn't view this as a simple just 2 days over. Best thing to do in cases like this in commercial office leases are if not going to renew;

• Contact your property manager and let them know well in advance your not renewing, as well as send them an email stating this along with the pictures showing your space is vacant when it's empty by your expiration date.
• Make sure you don't slip past your expiration date by even 2 days, it will cost you holdover fees and another rent payment.
• Don't damage the space while moving out, this will cost you the security deposit as well as holdover fees if the landlord thinks you did this neglectly. 

So if you apply these key factors against your commercial office lease move, you won't have any issues and will even walk away with a payment "your security deposit".

Self Storage Facilities

 Hi Prospects & Friends!

Self storage facilities are properties, that have within them separate divided units of different sizes that are able to store our things. Most of us have garages or out buildings to handle this task, but their are other options to use and self storage facilities are one of them. When deciding if it's worth to rent a self storage facility, always compare the prices for:

• Climate Controlled
• Non Climate Controlled

when analyzing this variable. Reason for this is a lot of the storage facilities will charge a cheaper price for a climate controlled unit varying it's location in the facility. So always pay attention when deciding what to rent, because why would you pay same or even higher price for a non climate controlled unit against a climate controlled one? Another thing to take in consideration is, majority of self storage facilities operate their rental units on a month to month basis versus a regular yearly or more lease, as well as the rates may fluctuate monthly or semi annual or quarterly, or etc. Knowing this information is key before you accept the lease. Self storage facilities can be a wise decision for leasing reasons, if you're crammed for space elsewhere or want to downsize, but not ready yet to lease or buy something bigger.

What Is NOI?

 Hi Prospects & Friends!

Whether you're a property manager or an investor it is wise to know what NOI is. Any investment property will have an NOI if you're generating income from it. NOI is "Net Operating Income", which is the income left after all expenses have been paid. So if your gross income is $6,500/month and your expenses total $10,500 you have a negative NOI and need to either adjust the income generated, reduce the expenses or sale the property since you have a -$4,000 monthly loss. Sometimes a negative NOI can be generated by a bad economy so best way to avoid a negative NOI is to just do your homework on the investment by analyzing the financial income statements, GRM and plugging in the numbers for the I=V/R equation. Doing that will detour you from buying the investment in the first place and avoid the negative NOI.  

Real Estate & Recessions

 

Hi Prospects & Friends!

Real estate always gets affected when recessions occur, because recessions affect interest rates, jobs, credit, and overall the economy in general. Knowing how to prepare for recessions go hand in hand against the real estate itself. Meaning know before you decide to engage with a real estate activity, how far on the recession scale will it get affected. Looking at the economy as of now, I think it's cloudy and I agree with majority of the economists we're heading towards a rolling recession. Whether you're a

• Buyer
• Seller
• Landlord
• Tenant
• Property Manager 
• Appraiser
• Loan Officer
• Inspector
• Developer
• Builder
• Escrow Agent 
• Consumer
• Company

staying alert on how recessions affect the real the estate industry will keep you within means of what you can tolerate against your real estate decisions, when time comes for you to make them. Interest rates and credit play major key factors in how recessions affect against the real estate, and knowing how to apply these key factors against your real estate decisions is key in surviving recessions affecting the real estate. So continue to stay alert on the general economy itself, and you should be ok.

Land As An Investment

 Hi Prospects & Friends!

The current changes in the real estate market, have many wondering where are other possibilities to invest in real estate besides rental properties? Well proposing land as an investment is an option, and many don't bother to use land as a holding investment, since it doesn't have a property on it generating monthly rental income. Land is a very excellent source of investment income if you look at is a holding investment in revitalization areas. Land can by far generate significant value appreciation if applying it with revitalization techniques. So next time you run across a parcel that fits in your investment perimeters, don't ignore it, because if you do you will regret passing on it if you find out the builder or developer beat you to it dirt cheap, and then held the land as an investment to build on, so they in return could immediately make you pay the higher land price for re-entry for the current available parcels.

Inflation & Real Estate

 Hi Prospects & Friends!

The economy is still showcasing signs of high inflation, and this economic factor is still affecting the buying and selling sides of real estate. If you're sellers and listing your property on the market understand the longer your inventory stays on the market, the buyer maintains bargaining purchasing power. If you're a buyer seeking to buy a home, understand mortgage rates are still not that low, and you could be looking at a higher interest rate than just 1 year ago. Overall don't let the current economy steer you in another direction you wouldn't elsewhere turn, because if you let this happen, you could miss out on many golden real estate opportunities, as well allow it to cost you whether you're a buyer or a seller. 

Section 8 Inspections

Hi Prospects & Friends!

If you're on Section 8 housing, understand with each apartment there is a requirement for a inspection of the unit you choose, and if it fails the section 8 housing inspection, then you will have to find another apartment. Majority of landlords have their apartment complexes in compliance already with the Section 8 housing inspection rules, but from time to time there will be a situation where the apartment complex won't comply, and it will cause issues with you getting to live there, due to Section 8 housing rejecting the unit, because of failing there inspection. Best way to get ahead of these issues, are just know the timeline of your voucher and plan accordingly against the apartment unit you want. Doing this will avoid these inspection issues, if for example your timeline is 6 months, and within 90 days Section 8 housing wants the inspection done on the unit your choosing, and it fails then you can quickly proceed to finding another apartment and let Section 8 housing immediately know so they can adjust the voucher to proceed with a new inspection on the other unit, since it's within your 6 month timeline. Avoid doing inspections within the 90 days nearing the 6 month timeline, so if the inspection fails, then your timeline of 6 months to locate your apartment won't elapse. This will also cause you to roll over to a month to month in your current place, if the lease expired, and you haven't moved yet. So inconclusion pay close attention to your Section 8 housing inspections, and timelines and this will prevent elapses or you under duress, due to not knowing what to do next, if the inspection fails. 

Pre-Qualifying Tenants

Hi Prospects & Friends!

When managing properties we all tend to think the applicant we approve will always work out, but sometimes this isn't the case. I have been managing properties since 2003, and the key things I've learned for discovering good tenants long-term are to just pre-qualify them before you even allow the application to be done. What I mean by this is ask some general questions, for instance like;

• Why Are You Moving?
• Is Your Rent Going up?

These are just a few of the questions I ask, but if you're really savvy you can decipher deeper into these questions on a psychological level and possibly conclude;

• Why Are you Moving? (Hopping from place to place if not showing stability at any of their other places lived at)
• Is Your Rent Going Up? (Rent hopping meaning their rent pattern shows downward spiral then a spike then process repeats)

Analyzing deeper into pre-qualifying the possible candidate will land you better to a better qualified long-term tenant. Always ask yourself "Well if their moving because rent is being raised, why would they stay with me when I raise rent"? If you can answer this question very quickly then you have an idea you have a "Rent Hopper" and can you handle these kinds of candidates on a temp basis, or will you just move on an let someone else rent to them, while you continue to search for your long-term tenant? Everyone is different, but with me and from my experiences I prefer long-term tenants, 3+ years and the best way to retrain them is to pre-screen your candidates with pre-qualifying questions, so that way the tenant isn't wasting money on your application fees, and your not wasting time losing out on the candidate you seek by them renting somewhere else. So inconclusion I will share a quick skit giving you an idea how this may work;

Candidate- Hi I saw your ad & I'm interested in viewing your place

Landlord- Hi just a real quick question "Are you currently renting right now"?

Candidate- Yes

Now right when the candidate says "yes" this is when you apply your "pre-screening" questions & doing this will eliminate 100% of any issues that maybe heard during this conversing, and then either you and the candidate will either move forward or not. Even if candidate says "No" it doesn't matter what they say, its how they answer the question that will lead you to the level of the conversing you can analyze deeper, and proceed with your next technique pre-screening them. The phone conversing has to be done real quick or you will lose the candidates interest. So know what your going to ask them before they answer your question, key is to make it;

Quick

Simple

Pleasant

All your pre-screening techniques should be adequate coupled with etiquette. 

Case of Discounted Neighbor Comp

 Hi Prospects & Friends!

The currently economy is not really being friendly to sellers or buyers, since sellers are having to deal with discounted neighbor comps, while buyers are dealing with higher interest rates. Many of you are thinking what are discounted neighbor comps? Here is an example "Samantha listed her home for $85,000, and it sat on market for only 10 days and then she decides to drop it to $75,000. The property finally closes and sales for $55,000. Their was nothing wrong with the property, and the reason why Samantha accepted the $55,000, was because she was in an hurry to sell, and didn't really care about the price drop since she originally paid $19,000 for the property years ago. Next Sam her neighbor was going to list his exact same property like Samantha's for $95,000, but because it was a recent comp next to him he knows it will be used against him when comes times for negotiations. So Sam decides to not list his property, because of this issue and cant take a huge price cut like Samantha did, Sam wants close to her original list price she listed for which was the $85,000. Sam knows their are other comps similar to his that sold for $85,000-$95,000, but he just doesn't want the hassles of Samantha's comp being used against him since it's indeed his neighbor with exact same property layout. So conclusion is our current market is causing all kinds of sellers and potential buyers to create deals that aren't appealing to their peers/neighbors who want to buy/sell and just causing them to "wait it out" till another neighbor lists at a better market price that sells at full market.

Current Real Estate Trends

Hi Prospects & Friends!

When analyzing the current real estate market right now, the term "DOM" will be your best friend to get you through these tough real estate market times with high inflation and higher interest rates. DOM means "Days on Market", and this metric is a key metric on any property if used properly and appropriately at the right time. Example would be Tom doesn't currently like the interest rates right now, and doesn't like what his mortgage payment would be because of the increases the Fed did. Tom decides that he doesn't want to sit on the sidelines and "wait it out" for the high inflation and high interest rates to come down, so he takes immediate action. Tom sees a home that has been sitting on the market in his area he wants to possibly buy to move into for about 192 days now. Tom instantly realizes this home has a 20% discount, and decides to red flag this house to monitor it more in depth. While Tom is still analyzing this current home he likes, he realizes if he can discount the home much lower as it ages on the market, then the current higher interest rates wont affect him much. So Tom decides that he wants to continue to "wait it out" specifically for this home for another 2 more weeks with a cap of one month max. Why would Tom want to do this? Tom instantly knows he will be at a 30% discount, and this will help keep his mortgage payment more affordable against the higher interest rates happening right now. What are the risk of this? Possibly someone else coming into bid on the home while you're "waiting it out" and they are ignoring the DOM and just want the house and really don't care about discounting anymore since they can "afford it at it's current price". So to avoid this from happening look for homes with very little "attention" that you like and monitor those instead. Conclusion here, is yes the current real estate market is being affected by the high inflation and higher interest rates, but if you use the "DOM" metric it will balance out these current real estate issues, and make the numbers work more properly and appropriately for the home you're wanting. 

Primary Residence Coupled With Over 65 Exemption

Hi Prospects & Friends!

When buying a home, majority of us buy the home to live in permanently, and don't bother to make plans on renting our home out. We use this primary home residence on our drivers license, our mail and on all our bills we pay associated with our home, as well as all other bills outside the home. When you first buy your home, you already know if it will be your primary residence or not, and will plan accordingly. Primary residences come with home perks, and the biggest one is your homestead exemption which just means you get a discount on your annual property taxes. The second biggest homestead perk comes for buyers 65 or over, and these buyers are exempt from paying the majority of their annual property taxes, which does have a capped value, so to better understand this particular exemption here is an example;

Mary & Peter buy a home and they're both 68, for the county jurisdiction their home is zoned in they're entitled to the over 65 exemption, because of being 65 or over, and for just homesteading the property (living their with proof of drivers license showing the address). So Mary & Peter are happy and start to analyze their over 65 exemption more in depth. Mary writes down the numbers and discovers;

• Assessed Value- $175,000
• Over 65 Homestead Exemption- $250,000 cap
• Homestead Exemption- 20% (for all the county jurisdictions 5 total for their house) 
• School Exemption - 20% and $40,000 for homestead exemption, and $25,000 for over 65 exemption
• College Jurisdiction- 1%  and $75,000 for over 65 exemption
• Emergency Jurisdiction- 5% and $160,000 for over 65 exemption

Mary immediately informs Peter their over 65 exemption is eliminating a total of 5 taxing jurisdictions, because of each one offering them a $250,000 discount, and this amount is not including the 20% additional homestead discount. Mary & Peter smile and say this is great, because of their assessed value being $175,000 which is lower than the over 65 exemption of $250,000 they will not have to pay any taxes on those 5 particular taxing jurisdictions. The other few taxing jurisdictions that are left, Mary and Peter aren't concerned since those taxing jurisdictions are very minimal amounts they will have to pay annually. Mary then looks at Peter and says "I think we should of gotten a bigger home equal to the over 65 exemption of $250,000 since we would not have to pay taxes on that home either for those 5 particular taxing jurisdictions. Peter then says to Mary, lets just homestead this primary residence for 2 years, in order to claim our up to $500,000 capital gains tax exemption for being a married couple, and we will renovate and flip this home into the home you really want which we will pay up to $250,000. Mary then says, thanks hubby and glad we both understand how the over 65 exemption works. 

So inconclusion, for buyers under 65 you do get the homestead exemption for allowing your home to be your primary residence, and this will save you money on your annual property taxes, so don't ignore filing this exemption. The key here is to know what taxing jurisdictions you're paying before you buy the home whether your over 65 or under 65. Reason for needing to know this, because if you analyze more in depth, you can actually buy a home that will fit in these perks to even benefit you even more, if you know the rules to the capital gains taxes, the over 65 exemptions, and the primary residence rules.

When Applying For A Mortgage

Hi Prospects & Friends!

When applying for a mortgage some key factors you will have to have available already in advance are;

• 2+ years stable job history
• A seasoned bank account showing 6+ months of money saved as a down payment
• 2+ years of most recent tax returns

These key factors are what makes up 70% of the mortgage application while coupled with the other 30% being your credit being decent which totals out the 100% requirements for your preapproval process to take place. If you lack any of these key factors listed, then you will need to be prepared to accept getting rejected for approval or possibly getting a over rider and being allowed to have a co-signor in exchange. Most banks and lenders are not all the same in how they view their application process, but the key factors listed here are the main ones 90% of banks and lenders go by. It can be devastating to find out during the middle of the loan processing, the bank decides that ok you passed all the key factors, and have a decent credit score, but they want another 3 months of the mortgage payment reserved along with what you already have in your bank account for the down payment. To make this make sense, and not overwhelm you, look at example below;

Jack gets a preapproval letter for $250,000 and he is safe to go ahead and look at homes under this price, but because Jack is searching around the time the mortgage company does their annual tax estimates they now project his mortgage monthly payment will be $1,860 instead of $1,625. So Jack gets a call from his lender to add another $1,305 to his bank account for the reserves of the new projected monthly taxes being added to his monthly mortgage, since he didn't put down 20% to waive this option. Jack realizes after the call he doesn't have the $1,305 readily and available, because he cant touch his IRA or Roth or any of his brokerage accounts, during the loan processing, since he knows it will trigger the lender to analyze he is having money issues, and borrowing money. So Jack then contacts his girlfriend Jackie, and says I've got 24 hours to get the lender $1,305 reserved in order to get final approval on my loan, and its all because the mortgage servicer waited to last minute to project my monthly taxes for the next year in advance. Jack informs Jackie he doesn't know what to do, and she then says I have an idea, can you reduce your loan amount to justify the shortage by picking a much cheaper home? Jack then says wow ok, I didn't think of that let me call my real estate broker. In conclusion Jack gets the advice from his real estate broker by being told to just knock of about $50,000, and look for homes under $200,000 if this isn't an issue, and Jack says ok. Jack enters back in safe zone, after the lender estimates the new numbers for his loan and now his mortgage will be about $1,550. The point of this example is this kind of stuff does happen in the real world of loan processing, and to not get tangled in it, best thing to do is make sure you're fully prepared for that sporadic call from the lender possibly requesting;

• More down payment
• More mortgage payments reserved
• Looking at your credit at last minute to see if you bought something or stopped paying on something
• Monitoring your balances in your asset accounts against what was provided when you applied, by requesting at last minute another most recent bank statement as well as the other asset statements showing most recent balances
• Contacting your job day of closing to make sure you weren't fired or lied if your not a small business owner
• Making sure somebody else isn't putting more money in your accounts if it was you that only applied for the mortgage by analyzing the balances from what you provided against your sources of income against the most recent balances they are now requesting
• Making sure you're not using a ghost/private investor to provide you all the money but use your credit to get the house

This list can become longer, but key here is you're not safe until the loan is signed at closing and it funds at the title company and you get the keys to your new place. I use to be a loan officer years ago, and from my experience I have witnessed these kinds of issues going on while the buyers thought all was good because they received their "preapproval letter" by their lender. 

 

Calculating Your Homesteaded Property Taxes

Hi Prospects & Friends!

If you own a property and are using exemptions, its always wise to know how to calculate the property taxes. To go about on how to do this see the equation and example below;

Peter is buying a property for himself, because he saved some money for down payment, and finally gets approved on a FHA loan. Peter wants to know in advance the yearly taxes on the property he is buying, before he sees it with the real estate broker, because this will help Peter on budgeting his costs for his home. Peter just doesn't want to wait for the agent to get him the number, or see it when the title company escrows his account and provides him a HUD-1 statement at closing. So Peter uses the equation:

Appraised Value x Exemption Rate x Jurisdiction Rate / 100 per assessed value = annual taxes. Lets look deeper into this equation with some numbers for better understanding;

Appraised Value is the value you pay taxes on and is given to you annually from your county appraisal district

Exemption Rate is the rate you're entitled to if you have any exemptions like a homestead

Jurisdiction Rate is the rate you pay for each taxing entity taxing you on your home

100 per assessed value just means you will be paying $100 per your assessed tax rate

So Peter goes online to his county appraisal district and gets his numbers.

Appraised Value = $175,000

School exemption is 20% and he gets $40,000 homestead amount = $75,000 ($175,000 x 20% = $35,000 + $40,000) The school rate is 1.31 so now Peter calculates $175,000 - $75000/100 x 1.31 = $1,310 he will owe his school district for that year.

Jurisdiction Rates are at 20% each with each additional taxing entity totaling 6 of them

Tax entity 1 homestead rate 20%, tax rate 0.37 = $518 ($175,000 x 20% = $35,000), ($175,000 - $35,000 / 100 x 0.37 = $518)

Tax entity 2 homestead rate 20%, tax rate 0.033 = $46.20

Tax entity 3 homestead rate 20%, tax rate 0.009 = $12.60

Tax entity 4 homestead rate 20%, tax rate 0.16 = $224

Tax entity 5 homestead rate 20%, tax rate 0.005 = $7

Tax entity 6 homestead rate 20%, tax rate 0.55 = $770

So Peter calculates his projected annual taxes for his home himself as $2,887.80 which will project his monthly tax payment added to his mortgage in the amount of $240.65 in taxes per month. Peter is happy he was able to calculate his own projected property taxes for his home, and sees the taxes do fall in his budget of under $3,500 per year. So in conclusion Peter has cushion, and knows in order to minimize his property tax monthly payment, he needs to keep looking at homes below $200,000 in this are zoned to these jurisdictions since the numbers work. You can find the jurisdiction rates, appraised value, and exemption rates all at your county appraisal district website. Enjoy now you know how to calculate your own annual projected property taxes, without help or assistance.

Are You Protecting Your Collateral Properties?

Hi Prospects & Friends!

Collateral properties play a key role with lenders and investors since its their portfolios that determine if we will witness more than normal foreclosures and bankruptcies, which happen to drag down the property prices if these portfolios aren't managed correctly with collateral monitoring. If you're a lender and you have a bunch of defaults the worst thing to ignore is the property itself, if you're just getting contact from the borrower on when they will make payments. So lets first acknowledge if you have a mortgage then you are the borrower, and if you have the collateral then you're the lender. Majority of lenders have collection departments that monitor their collateral portfolios, by contacting the borrower in any form of communication they can, but on the other hand borrowers aren't really contacting the lender about their collateral property and if its ok. So point is if you are responsible for collateral property portfolios, then it would be wise to monitor your collateral too. No lender or investor wants to hear the news that their collateral property was acknowledge as having the shingles falling off while windows and doors are broken, all while the borrower informed the collection department they're doing ok, and property is fine and that they will handle the defaulted payments soon. This is a one sided call and can be avoided by having properly done property inspections to protect these collateral portfolios. Commercial collateral portfolios aren't exempt from these issues either. I recently did an inspection on a big chain restaurant privately owned, and behold what happened, in my property inspection report I informed the lender the property will always make money because of having excellent street frontage and highway access, but because the borrower of the franchise entered into default this was putting the property and the restaurant in jeopardy if the lender didn't get the loan cured from the borrower within 180 days, and this would cause further riskier collateral issues. So the lender did an assignment and allowed another investor to take over the loan, since the new investor could handle the bigger risks developing. In conclusion key is to know when to stay or remove yourself from the collateral by staying on the collateral monitoring.

Properties & Flood Zones

 Hi Prospects & Friends!

When buying a property it's always wise to know if its in a flood zone or not, this automatically happens when the mortgage company orders the appraisal, since the appraisal shows whether its in a flood zone or not, but many who pay cash option not to get the appraisal or even ignore having a real estate broker provide the flood zone information. If your paying cash its always wise to get the flood zone information in hand, before you negotiate the contract, because it doesn't make since to do an option period just to have it done, when in reality you can have the information in hand before you negotiate the contract. Not knowing a property is in a flood zone until after you buy it, can cost you money in future if you try to sell it, since majority of properties in flood zones have to have a negative adjustment to their values when formulating their appraised values. So in conclusion if paying cash, it would be smart to know this information the minute you see it hit the market, since it bullet proofs your future appraised values. Example of this would be:

Mary has cash and sees her neighbors condo pending for $175,000 which is down the street from the property she is monitoring, she isn't paying any attention to anything other than informing the title company her contract will be all cash and will be a quick close. Mary doesn't realize her property is in a flood zone, because it's a private seller, and she only is concerned that she gets this property closed quickly at the title company in order for her to remodel and flip. The seller doesn't disclose to Mary its in a flood zone, because they don't even realize it. So to sum all this up Mary ends up buying the property from the seller in a all cash deal, and they both go their own way. After Mary remodels the property she decides to hire a real estate broker to sell it for her. The real estate broker provides her all the necessary disclosures she will have to provide to the new buyers, and she signs off saying her property isn't in a flood zone, and that she wasn't aware it was. As things get good for Mary, she accepts an offer, and then her broker is contacted by the buyers agent informing them the buyer has rejected and terminated the offer under their option period, due to lender not providing additional financing because of the appraisal coming lower because of having to adjust for being in a flood zone. Mary gets angry, and pulls the property off the market, and sells it to another private party, which was what was done to her, and the cycle starts all over again, meaning somebody being naive too will offer her cash and she will accept to just get out. So in conclusion don't let this happen too you, and be very alert about flood zones. 

Property Tax Protesting Notices

 

Hi Prospects & Friends!

If you own a home, every year around late fall early spring you will receive a property tax protest notice from your county appraisal district. If you own a business and have business assets, you will also receive a property tax protest notice. These notices give you the opportunity to protest your values by April 15th every year. These annual notices shouldn't be ignored, and you should treat your annual property tax protesting notices like yearly maintenance. Hiring a property tax consultant to handle these every year for you would be the best reliable option, since they can provide the most recent comps, and can even appear to your hearings on your behalf. You may think a few hundred dollars every year isn't much, but just having the mindset to pocket this money instead to invest or put against retirement or even your children's college fund are better options for you. Understand the difference between your values on your property tax protest notice, you will see:

• Assessed Value
• Market Value

When you analyze the proposed values you want to pay close attention to the assessed value, this is the value you will be taxed on. The notice will show you the prior years values, so if you see a difference in the assessed values from the current year to the prior year, then you need to protest this value, because you may think it's not a big issue but unless you calculate your taxes yourself you will not see any difference if the value is:

• $250,000
• $275,000

The property tax consultant will be able to handle all this for you, if you have no idea how. If you're in Texas you may hire me to handle these tasks for you, I'm a licensed Texas property tax consultant, and you can click book appointment, and pick property tax consultant as the choice. So always remember to not ignore these property tax protest annual notices, when they arrive each year in the mail.

Real Estate Security Deposits

 

Hi Prospects & Friends,

When we tend to think about renting a place, we really don't bother right away asking about the security deposits on the property, and whether they will change or not. Well my real estate tip if you use it wisely will help assist you when or if you decide too rent a place. Always make sure when you find the place you want to rent, you ask if the security deposit will change because of:

1. Bad Credit

2. No credit

3. No rental history

4. Needing cosigner

5. Lack of recent employment history

Having these issues can derail you into possibly paying 3 times the security deposit or even rejected if you don't ask in advance. So be a "Smart Renter" and apply this tip. I do post real estate tips occasionally in this blog so watch for them.  

👀 P.S. you're welcome to shop at my online real estate store for our "Smart Renter" products at https://tinyurl.com/5ehejb3e you will find some cool stuff I created and will enjoy using.

Owner Financed Rental Properties

 

Hi Prospects & Friends, 

Some of us from time to time have either owner financed a rental property, or been involved in the transaction of the owner financed rental property whether you were the real estate broker or agent, or title company or real estate attorney. Owner financed rental properties are similar to bank mortgages with regards to having a deed of trust with venders lien and a note recorded in the courthouse. These legal documents act as a security of legal protection to protect the seller in case the buyer defaults, just like as if it was a mortgage with a bank. Many don't bother to realize when a buyer pays off their mortgage the bank or mortgage lender will automatically release the lien from the securement of the deed of trust with venders lien, and send the buyer a copy of the release of lien. In the case of owner financed rental properties, majority of the sellers who are holding the deed of trust with venders lien don't bother to have this done, since their not thinking like a bank or mortgage lender, and this becomes a serious issue if the rental property is finally paid off, but their is no release of lien recorded in the courthouse specifying so. This will further cause more real estate issues if the buyer doesn't bother to request the seller to have it done either, since it will create a cloud on title which would cause the buyer to have issues with the title company, if they ever sold it, and had to open title at a title company. So too eliminate this always remember when you owner finance or buy owner financed rental properties, when you pay them off you need to get a release of lien from the seller and get it notarized and recorded. This legal document has to be notarized in order to be effective, so make sure you have a notary. We offer real estate notary services, and can handle this task if live in the state of Texas. Most sellers will want you to provide this document, since it is you who wants it, so don't pass on this thinking you're ok not having it, because ignoring not getting a release of lien from the seller when the note is paid off will cause as I mentioned before cloud on titles, and other serious issues like if the seller passes away after you paid it off, and you never bothered to get them to sign the release of lien acknowledging you paid off the rental property in full from the terms of the note in the deed of trust with venders lien. Release of lien documents aren't just documents that can be drafted by self, they do have to be done by a real estate attorney or any attorney who specializes in real estate documents, so also understand you will have to have this document drafted by an attorney and recorded in the courthouse, as well as notarized.