Renters get relief from foreclosure

February 19, 2012

Federal law offers renters more protection from eviction if their landlord loses the property through foreclosure. The law has some fuzzy requirements, but should be a boon to renters who otherwise might have been evicted with little or no notice.The law allows tenants who have a lease to remain in their home until the end of the lease period.The fundamental purpose of the Protecting Tenants at Foreclosure Act is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing, if the renter signed the lease before the owner obtained the foreclosed loan. In that case, the lease will still "survive" the foreclosure. The law protects only a bona fide lease or tenancy, which is defined as a situation that meets three criteria:

The renter may not be the former owner of the home, or the former owner's spouse, child or parent.

The terms of the rental must be at arm's length between the landlord and renter.

The rent cannot be substantially less than the fair-market rent, unless the rent is subject to a government reduction or subsidy.

The bottom line is that landlords and renters have new rights and responsibilities in foreclosure situations. While renters may face challenges in their attempts to exercise those rights, knowledge and action can prevail. Read more

A New Breed of Investors Steps Forward

February 17, 2012

"Mom and pop investors" are trying to capitalize on a depressed real estate market in the hopes of one day being able to cash in. An article in USA Today highlights this new breed of small-scale investors who like to buy and hold properties, opposed to the high-dollar large investment firms that once dominated the real estate market who preferred to buy and flip their property investments.

For "mom and pop investors," the strategy is to buy homes at rock-bottom prices, rent the properties out to cover all of the costs of home ownership for several years, and then one day sell the homes when prices recover.

"An unprecedented number of investors are looking into this," John Burns, CEO OF John Burns Real Estate Consulting, told USA Today.

Investors purchased more than 26 percent of single-family and condos in 167 U.S. markets in the first nine months of last year, according to data supplied by Burns to USA Today.

For investors in the rental market, an 8 percent annual return is fairly normal, according to Burns. "That means that someone who buys a $100,000 property -- and pays cash for it -- makes $8,000 a year after expenses, including maintenance and taxes," the USA Today article notes.

Of course, the threats of tenant and maintenance issues always has the potential to derail that potential profit, so investors need to be careful before jumping in, some experts warn.

Source: "Mom and Pop Investors Propping Up Home-Buying Market," USA Today (Feb. 14, 2012) Read more

Renters Insurance

February 15, 2012

Renters insurance is the protection every renter needs. This type of insurance will protect you in the long run against many perils. Insurance companies offer many benefits with this type of policy. The renters insurance policy typically protects you from huge medical bills in the event that someone gets injured in your apartment with liability coverage. It also covers your personal property in case of a fire or theft. The most important thing to get when you've settled into your new house or apartment is to obtain a renters insurance policy.

The biggest misconception that most renters have is that the landowners insurance policy will cover them and their personal belongings in the event of a disaster. This is not true. The homeowners insurance that your landlord carries will only protect the structure and the homeowner's personal property not yours. In fact, many landlords now require their renters to carry a renters policy. This way, if the renter does damage to the property such as damage to windows, walls, or carpeting the renters insurance policy will pay the landlord for the damages.

Renters insurance is very affordable and well worth looking into. Read more

Facing capital gains on investment property? Here’s one way to defer taxes.

February 14, 2012

WASHINGTON Feb. 13, 2012 "Taxation with representation ain't so hot either." Gerald Barzan, humorist If you own investment property, and you sell it this year, you will have to pay 15 percent capital gains tax to the Internal Revenue Service. This does not include the up-to-25 percent recapture tax on any depreciation that you took over the years. Next year, unless the Supreme Court throws out the new health-care law, the tax rate will be 18.8 percent. Why? Because of a special 3.8 percent Medicare surtax on unearned income, which includes the sale of rental properties and even your second home at the beach. This will kick in Jan. 1. There is a way to defer your tax obligation. It is called a Starker exchange, named after a man who successfully convinced the courts that based on the exchange of real estate, no tax was immediately due. The law establishing this like-kind exchange can be found in Section 1031 of the Internal Revenue Code. The rules are complex, but here is a general overview of the process. Section 1031 permits a delay (non-recognition) of gain only if the following conditions are met: First, the property transferred (the "relinquished property") and the exchange property ("replacement property") must be "property held for productive use in trade, in business or for investment." Neither property in this exchange can be your principal residence, unless you have abandoned the property as your personal house. Second, there must be an exchange; the IRS wants to ensure that this is not really a sale and a subsequent purchase. Third, the replacement property must be of "like kind." As a general rule, all real estate is considered "like kind" with all other real estate. Thus, a farm can be exchanged for a condominium unit, a single-family home for an office building, or raw land for commercial or industrial property. There are some tax consequences. If you do a like-kind exchange, your profit will be deferred until you sell the replacement Read more

Tenant Screening

February 13, 2012

Having to evict a tenant is a costly and time consuming process that all landlords would rather avoid. That's why it is important to screen your prospective tenants carefully before handing over the keys.

Often, properties where the owner acts as landlord are targeted by bad tenants since their financial history is less likely to be investigated than if they approached a rental managed by a property manager that will notice red flags which might escape the notice of the owner. Property managers will conduct the research necessary to minimize the risk that you'll receive a bad tenant.

While there are number of stand alone tenants screening services as well as bad tenant databases to check against, the reality is that it takes experience to detect the cues that accompany tenants who may look good initially but turn out to be trouble in the long run. Look for a thorough property management company that will screen the tenants credit and background. Professional property managers often charge an application fee to do the screening, which sends out a clear message that the screening process is handled professionally. Read more

What is Property Management

February 12, 2012

Property management pertains to the processes applied to maximize returns by effective administration of property--one of the major assets of most organizations. It also comprises the disciplines implemented on property rules and rental policies. A property management company is tasked with the responsibility of managing the multiple aspects which come along with the ownership of real estate. This is akin to the role of management in any business. One of the important roles property management companies play is that of acting as liaison between the landlord and tenant. Their duties include posing appropriate gross rent, accepting rent, responding to and addressing maintenance issues, advertising vacancies for landlords, and doing credit and background checks on tenants. In exchange for the service provided, property management companies charge landlords a percentage of the gross rent collected each month, in addition to lease commissions. In addition to managing income and expense related activity, property managers may also manage construction, development, repair and maintenance on a property. The direction of repair and maintenance is quite a large part of a property manager's function. Property managers should develop a relationship with the management company, property owner and tenants that is based on a mutual trust and complete confidence in one another. His alliance with tenants gives an advantage to the landlord and provides them the necessary buffer servicing their desire to profit and distance themselves from their tenant constituency. There are many aspects to this profession, including participating in and/or initiating litigation with tenants, contractors and insurance agencies. Litigation alone is at times considered an entirely separate function, set aside for trained attorneys. Although a person or persons will be responsible for this in their job description, there may or may not be an attorney working under a property manager. Read more

Retaining good tenants

February 12, 2012

In order to attract and keep good tenants, your property will need to have a track record of being well managed by a reputable property manager. Since it costs time and money to place a qualified tenant, it makes sense to do whatever you can to limit your tenant turnover. Tenant satisfaction should be a high priority.

The experience and efficiency that a professional property manager brings to the table could give your property the edge in a competitive market.

The reality is that tenant retention doesn't just happen, it is the result of consistent reliability, and quality service that a professional property management provides to let tenants know that they are appreciated.

Tenant satisfaction means longer tenancies and happier tenants that have fewer disputes and complaints. Read more

How Rental Housing is Being Advertised and Vacancies Filled

February 11, 2012

2012 will see the expansion of rental housing being advertised online or via sites that correlate to the explosive growth in the usage of Smart Phones and tablets such as the Apple's iPad. The following video is a reminder of how many property managers around the nation are choosing to advertise vacant rentals using the worldwide web and why (click here). Property managers are also finding that social networking sites, like Facebook and Twitter, can be another great channel to market vacancies. Specialty websites like RentVine.com have been used by an increasing number of owners and property managers to expand their advertising of vacancies online. That trend should continue and grow in 2012.

The number of houses going into foreclosure increased exponentially in 2011. As a result, the number of displaced former homeowners looking for rentals increased to record levels. The good news is that the year 2012 looks very bright and promising for the property management industry and for both single and multifamily rental housing owners. Read more

What is a Property Management Company?

February 9, 2012

Property management is the operation, control of (usually on behalf of an owner), and oversight of commercial, industrial or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its usable life and condition. This is much akin to the role of management in any business.

Property management is also the management of personal property, equipment, tooling and physical capital assets that are acquired and used to build, repair and maintain end item deliverables. Property management involves the processes, systems and manpower required to manage the life cycle of all acquired property as defined above including acquisition, control, accountability, responsibility, maintenance, utilization, and disposition. Read more

Property Managers are essential

February 8, 2012

Renting your property out to tenants can be a stressful process - finding suitable tenants, making sure your rent is paid every month, maintaining the upkeep of your property and sorting all of the legal paperwork are just a few of the factors involved in managing your own property.

If you are opting for the full services of a property manager, they will begin by researching how much the going rental rate is for your property, marketing your property and finding suitable tenants. Managers will have access to a large variety of mediums to market your property and from previous experience will know which places to promote your property to find the right tenants for you. The chosen tenants will need their references checked and are now credit checked to make sure they are reliable at keeping up with payments. Managers will also sort all necessary legal paperwork, saving you the hassle of working out all of the renting legalities.

Hiring a property manager will let you get on with your own life without having to worry about the time and hassle of looking after your own tenants, and everything else that comes with renting a property.

Read more