Property Taxes

 

 Hi Prospects & Friends!

Property taxes come with every residential and commercial property some examples are;

• Homes
• Condos
• Apartments
• Land
• Shopping Centers
• Malls
• Banks
• Stores
• Offices
• Restaurants 
• Townhomes 
• Mobile Home Parks
• Mini Warehouses
• Storage Facilities 
• Schools
• Colleges

The examples listed above, are some of the residential and commercial properties that have property taxes. Their are cases where these same properties listed above might have property tax exemptions to pay no property taxes, whether be for government purposes or charity purposes,  but either way majority of the population does pay property taxes. 

Does Inflation Effect Real Estate?

 Hi Prospects & Friends!

Inflation can effect real estate, in different ways. Some ways maybe;

• Higher interest rates on the mortgages, for the real estate bought, whether residential or commercial.
• The DOM "days on market" number climbing higher, causing the real estate to sit longer on the market.
• Remodeling costs costing more for renovating the real estate.
• Demand slowing down from the buyers, buying the real estate, because of the higher interest rates, the expensive renovation costs, and the DOM.

The examples listed above, are some inflation factors that can affect the real estate. Best thing to do when wanting to buy real estate when inflation is high, is do your due diligence by researching what maybe causing the property you're trying to buy to get affected, and then proceed with whether it's worth it to continue forward with your search for buying the real estate, or the sell of your home. 

Repair Fees

  

 

Hi Prospects & Friends!

If you're renting a place from your landlord, make sure you understand, and are fully aware of the repair fees specified in your lease agreement. Doing this task before you sign the lease, helps you understand your responsibility from costly repair fees you will be responsible for from your neglect, as well as from damage caused by you, with the rental property you are renting. The lease you sign will specify the repair responsibilities from the landlord, as well as the repair responsibilities from the tenant. Every landlord and property manager have different repair specifications specified in their leases, so make sure you understand them, and your responsibilities to any neglect as well as damage caused by you.

Mortgage History

 

 

Hi Prospects & Friends!

Mortgage history means all the types of mortgages you've been approved for that were reported on your credit report, which you've made payments to with the lender. Understand if the mortgage history you develop with these lenders turns negative from the payments, any new lenders if view your credit report will require you to pay higher interest rates, if you're not paying the mortgage in cash. Paying cash can become costly if you don't have it, so keeping your mortgage history positive will help greatly avoiding these costly mortgage issues.

What Is A Buy/Hold Strategy?

  

Hi Prospects & Friends!

Whether you're analyzing residential or commercial properties, certain properties make more sense to use the buy/hold strategy. A buy/hold strategy is a technique applied, when a property makes more sense to just hold it to reap the profits longer term. These properties maybe;

• Raw land
• Revitalizing communities
• Rental properties 
• 1031 Exchanges
• Apartments

All properties are very different, and carry different characteristics, and when applying this to economical factors, the buy/hold strategy comes into play immediately when these key factors join together. A buy/hold strategy wouldn't make sense if you're needing the appreciation and the equity from the properties immediately short-term, since you would also trigger capital gains taxes, and recaptured depreciation disposing the property short-term. Buy/hold strategies also don't work great for everyone, since you need to know in advance how long to hold the property, before you purchase it. Best key factor to decipher is know why you're buying the property, and then apply this to the economical factors to see if it falls better in a buy/hold strategy.

Mortgage Interest Rates

 

 

Hi Prospects & Friends!

Mortgage interest rates are still currently much higher than they were awhile back. This doesn't mean if you're currently still sitting on the sidelines to still sit there. If you're concerned about the interest right now, try buying down points technique and get your rate to what you want. If you can afford to buy down your points, and the costs you pay are worth it in the long run, versus sitting on the sidelines hoping the mortgage rates will come down, then you should proceed with this technique. The lower your mortgage interest rate, the lower your loan will be in interest, as well as your mortgage payment. When you buy down points you can have;

• Good credit 
• Bad credit 
• No credit
• Cosigner 
• Partner

It doesn't matter, since you're paying to buy down your rate anyways. The buying down your mortgage interest rate isn't for everyone, so do your due diligence in advance on this unique real estate loan option. Sitting on the sidelines hoping mortgage interest rates will come down, could actually be costing you hidden jewel opportunities in the real estate industry.

Real Estate Notary

 Hi Prospects & Friends!

Ever Google a search for a notary, but really need a real estate notary? Well time is on your side if you've discovered this blog by accident. We all will either need a Will someday, or will know someone related needing one. Majority of Wills need a notary signature, if their written correctly, and the best option is to get your Will notarized by a real estate notary. Real Estate Notaries focus on real estate related documents, including notarizing Wills, so key here is making sure you locate the proper one, who will be able to notarize your real estate documents appropriately. 

What Is A Property Manager?

 

 Hi Prospects & Friends!

Property managers manage and oversee the properties they manage whether residential or commercial properties, and they all have tenants and these managers are responsible for managing them and the properties these tenants are leasing. Property managers can be an:

• Individual
• Company 

It all depends on the person managing the property whether they're a individual or a company. Majority of property managers are companies, while there are some property managers who work independently as individuals to their rentals. Either way the tenant/landlord rules don't change, because the property manager is acting solely as an individual property manager or as a property manager with a company. So understand these key facts here, and you will fare well with understanding these differences. 

Facing Foreclosure

   

 Hi Prospects & Friends!

Year end is near, and many of us are ready to start the New Year off right. Some of us are tangled up in foreclosure or facing foreclosure, and have very limited resources or sources to save the property. The best thing one can do is learn your foreclosure timeline in your state, and once you get that information, then next contact your lender and either;

• Reinstate your loan
• Modify your loan
• Sell your home

If all else fails and you can't get the money fast enough to reinstate the loan, or get the application done quickly and timely enough to the lender to do the modification, then sell the property. What you don't want is the sale date to post with an actually date, because by then things will start to escalate with the lender and their foreclosure process, and your timeline will get more aggressive with how to get out of the foreclosure, and not lose the property.  So key here is to know before you contact the lender, what you're planning to do to prevent the foreclosure, and don't wait till you're told you have a sale date to take action. 

Over Pricing Your Property

  

 Hi Prospects & Friends!

Over pricing your property isn't a good idea at any given means, and it's even a worse idea if you end up in a bad market while doing it. We all want the best price for our property, but in reality market conditions actually have much of a bigger influence on what our property is worth versus what we think. You can make top notch repairs and improvements to your property, but it's a waste of money if your selling it in a bad market with:

• Neighbors and close by markets discounting their properties for quick sales.
• Foreclosures, shortsales, and loan modifications occurring more than normal proximate to your property and nearby market areas 
• Investors buying properties as is to buy just to remodel and rent right back out. This technique actually profits the investor owner doing this, but it devalues the next owners property if the investor decides not to sell the property fixed up. Example would be the investor buys a property in your market area as is and pays cash, while decides to remodel but not resale for immediate gain, but rather wants to lease property back out. Well this sales comp will affect the other property values, because it was bought as is, and it can't be ignored when analyzing your property values if it's comparable. If it's not comparable then it won't affect you.
• High Mortgage rates 
• Been rezoned in a 100 year special flood zone, or in any flood zone. This will discount your property no matter what remodeling you do. Best to know if your property is in a flood zone before you buy it, so you can discount it then.
• In a unrestricted community, but has some laws restricting certain business uses. This can really affect a properties value if you didn't research the property when you bought it. Example would be Sam bought his property 15 years ago. It was nonconforming and grandfathered in, and he has decided to sale it as a commercial property, which has allowed him to realize a 50% gain. Well new buyer decides to make offer on property thinking they will be able to use it as a daycare, but when buyer receives the updated zoning and deed restrictions they're informed they have to use it as is in it's nonconforming grandfathered use or tear down and use as SFR. Current owner realizes this issue will discount his property if appraised, and pulls off market and decides to rent out until get approval from their zoning committee to get rezoned as commercial, and hope it gets approved. 

These are just a few issues listed that could affect a already over priced property. Key here is to always factor in market conditions, and research the property thoroughly before you decide to sale it. Properties change just like anything else. You could be just fine while living in it as you have or even using it as commercial, but if things have occurred under your radar you never knew ocurred, you could affect your own properties values, and not even know it. No one wants their neighbors going to board meetings with a majority vote blocking other neighbors from doing things to their properties they thought they were allowed to do in the past. Attend those meetings, and if can't stay on top of the changes in your community. I recently ran across a MLS property where it went from $800,000 and reduced to $425,000. The agent said in comments "discovered bylaws have changed the use on this property and it's residential and can't sale as commercial like thought". Well I bet the seller is quite angry about this, since it's a lot money that they lost, but like I said research and stay alert with your community while don't overprice, and all will go well. 

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.