May 31, 2019 | Real Estate
Renovations that create a multi-use property or the development of a new multi-use project can be a very attractive investment especially in urban areas that are undergoing redevelopment. The concept of multi-use is to make the most of the site that is revitalized or developed.
Multi-Use Projects
Typical multi-use projects have a mixture of retail space, restaurants, offices, and/or living spaces. They may include parking areas. Large multi-use projects can also become destination locations that are core improvements, which create a momentum for the gentrification of an entire area. Waterfronts, boardwalks, and walking promenades are successful as multi-use projects in many cities.
The advantages for investors in these projects include the ability to design the use of the space to maximize the return on investment (ROI). Depending on the area for the project’s construction, there may also be tax advantages.
Tax Advantages
Under the new tax laws, Opportunity Zones all across America have been created to stimulate redevelopment in areas that are distressed. The federal tax advantages include either delaying capital gain taxes or avoiding them altogether if investors hold the investments for more than ten years.
It is also possible to sell a project in an Opportunity Zone for a profit and then reinvest the proceeds under a tax exchange transaction into another investment in an Opportunity Zone and avoid paying the capital gains. Check with a competent real estate and tax attorney to learn how to set up an Opportunity Zone Fund to maximize the tax advantages.
Additionally, the financial basis used for calculating any profits on the second transaction is raised, thereby locking in the tax savings on the profits from the first transaction. This is a very effective strategy for build-to-suit developers who organize a multi-use development project in an Opportunity Zone with the intent to sell it.
State, County, And Municipal Support
Depending on the location, there may be state, county, and/or municipal support in terms of tax abatements and contribution of the land and funds for the development of a multi-use project.
Lack Of Basic Services
Another key consideration is that many Opportunity Zones lack sufficient basic services. Some neighborhoods do not even have a grocery store. A multi-use development, in a distressed neighborhood, which offers services and stores for these basic needs, is likely to experience an immediate consumer demand for the offerings.
Loans And Investment Funds For Multi-Use Projects
Lenders are more attracted to multi-use projects because of the possibility of higher average rents per square foot that will cover the monthly mortgage payments. Multi-use projects can be successfully funded by crowd-sourcing techniques as well.
Opportunities For Real Estate Agents And Brokers
REALTORS® have commission-earnings potential in the sale/acquisition of the properties for a multi-use development, leasing out the properties when developed, and selling a project upon construction completion or after being leased out.
Conclusion
The advantages of multi-use approaches as a development project are significant. There is plenty of support available in many parts of the country for these projects. REALTORS® benefit from many opportunities for commissions on each project as the development begins, the project is leased out, and then potentially sold.
Be sure to partner with a trusted real estate professional if you are interested in purchasing and developing a multi-use property.
May 30, 2019 | Real Estate
What happens when you suddenly get a notice to pay your mortgage to a company you may have never heard of? How do you determine if this is a legitimate request or a scam?
A borrower may get a written notice or an email that their mortgage sold to another entity or that a new loan servicing company will now be collecting the mortgage payments. The borrower needs to exercise extreme caution before just sending in a payment to the new company. It is prudent to double check to see if the communication is legitimate because many people get scammed by this type of notice.
Borrowers must receive a letter in the mail from the original lender notifying them of the change before getting any communication from a new company. If there was not a letter from the original lender, it is probably a scam.
How To Verify A Legitimate Request With The Original Lender
It is important to be 100% certain that communications are with the lender. DO NOT respond to any notice received by email by clicking on any link in the email, even if the email looks legitimate.
Fraudsters on the Internet use a technique called “phishing” to trick people into thinking they are getting a request from a legitimate company when the email comes from a criminal. These emails are very convincing. They look exactly like the real company; however, they are fake.
Borrowers who want to communicate with their lender online, should type in their lender’s website address and make contact through the company’s official website.
Better yet, call the customer service number listed on the company’s official website and talk directly to a customer service person to verify that the request is legitimate. They will ask you for identification information and then be able to tell you your loan status.
What Is Loan Servicing? Can A Lender Sell My Loan?
Companies may choose to have the collection of the loan payment done by a third-party vendor. Usually, in any loan, there is a provision that allows the lender to sell it to another party or to change loan servicing companies. These legal rights are normally in the part of the loan document called the “Mortgage Servicing Disclosure.”
This legal right is usually held only by the lender and the borrower has no option but to comply with a legitimate request. Since almost all lenders sell off their loans to other companies or investors, so that they can get more money to loan out, the chance of a new mortgage loan selling is extremely high.
Troubles With Loan Servicing
Many make a smooth transition from one loan servicing provider to a new one by simply following the instructions. Others have troubles. Besides actual fraud by fake companies, there may be problems with real companies if the information in the records is not accurate. The date of a loan transfer may cause an overpayment or a late payment.
Any time there is confusion with regard to a mortgage loan servicing transfer, it is best to be proactive and stay in touch with the original lender for guidance in connecting with the new loan servicer.
Conclusion
Lenders sell their loans all the time. Loan servicing companies change frequently as well. These can be a simple legitimate transfer of the business process from one company to another. However, this is an area that is ripe for scammers to trick people and for bad companies to take advantage of their customers through loan servicing fraud techniques. Be aware of this problem and take care to avoid any negative consequences of loan servicing fraud.
Remember that two of your best partnerships in real estate will be with your licensed real estate agent and your trusted home mortgage professional. Be sure to rely on them if you have questions or concerns about your property.
May 23, 2019 | Real Estate
How does an average homeowner become a real estate investor? Certainly, owning a home is an investment in real estate. However, this guide discusses the next step for many to become a real estate investor. This is to buy another property and use it for a commercial purpose. Owning another home is less of a burden when an investor finds a way to make the home pay for itself.
Here are some tips on how to help a property generate cash flow:
Renting Out A Home
Renting the home to others may be an effective way to pay for it. To do this well, a real estate investor looks for a home with special characteristics. The home is for sale at a low enough price and can be financed well enough so that the cash flow coming in for the rent will be equal or more to the expenses of owning and managing the property. It is terrific if the property makes a positive cash flow each month, even if only a small amount.
If a property has a $50 per month positive cash flow, then that small amount builds up over time. Adding more properties with positive cash flow increases the investment portfolio value quicker.
Home Office
Using all or part of a home as an office creates special tax deductions for the expenses that cover the portion of the property used for business. Even if a homeowner does not have enough money to buy another home, starting a small business by using a home office may help create the money for the investment needed as a down payment on the second home.
Renting A Home Out As A Vacation Rental
Many like to rent homes in nice areas for vacation purposes. The home can rent out as a full home or as individual rooms in the home. Airbnb is a useful web-based service that can bring rental customers for those interested in doing this.
Bed & Breakfast
Another way to make money by owning a property is to turn it into a commercial enterprise as a bed & breakfast. Depending on the location, and the number of tourists attracted to a particular area, a bed & breakfast business can be profitable.
Tax Implications
Even if owning a second home does not make positive cash flow, it can still be financially beneficial when it reduces the tax burden. Work with an accountant and/or investigate the tax implications of owning the property. It may be possible to take deductions such as for property expenses and non-cash deductions such as depreciation, which when combined with other income, reduces the overall tax liability.
If owning a second home reduces the taxes to be paid, this is a financial benefit that offsets any negative cash flow. Tax savings is money in the pocket, so this counts as part of the positive cash flow that comes from owning a property.
Summary
These are just a few ideas to consider that may help pay for a second home and make it easier to become a real estate investor.
When you are considering a new property, be sure to partner with a trusted real estate professional.
May 22, 2019 | Real Estate
Many who are financially sound got that way by being skilled at accumulating wealth. The question is, did they also accumulate quality of life? Working all the time to build wealth, while at the same time lacking happy experiences with those who are important, is not creating a rich life. Here are some ideas to promote both a healthy and wealthy lifestyle.
Time Budget
For those who already do a decent job at managing their finances by using a budget, congratulations for doing half of the planning well. In order to have a fully-satisfying life, the other budget that is needed is a time management budget.
Allocate time on a weekly basis to all the other things that are important, which, in addition to money-making efforts, may include:
- Personal Growth and Development: Examples in this category include daily meditation, yoga practice, and self-help classes.
- Quality Family Time and Time with Pets: This category is less about the things to do and more about who does them together. Take time to sit with kids and play with them. Walk the dog or use a laser light on the wall to play with the cat.
- Community Service: Make an effort to spend at least one hour each week doing some community service. This is a “pay-it-forward” way to keep everything in perspective and develop an attitude of gratitude.
- Stress Relief: Find a way to release anger and frustration in a healthier way, such as going to a gym and working out with a punching bag.
Make More Time
Time is actually more precious than money. The best practice strategy is looking for the possibilities to create more passive income that requires money investment to produce a positive result but little or no time to make it happen. Creating passive-income streams by investing in real estate is a way to achieve wealth, while also creating free time.
Delegate And Outsource
Make a list of the little annoying things that take the most time. Find a way to delegate some of those tasks to others. Consider using the help of freelancers to outsource things that are time-consuming and can be done more efficiently by others.
Let A REALTOR® Do The Work
If there is some investment capital available to work with, find a real estate agent that becomes an integral part of the long-term business strategy. Make an investment plan together and let your agent find the properties that qualify for the strategy. Be happy paying the agent commission for a property acquisition that meets the investment criteria.
Success Creates More Success
Rewarding others who bring valuable deals that create passive income usually improves the results. If possible, start young, be patient, and, step-by-step, build up a valuable real estate portfolio. The life goal is to eventually create enough passive income, which requires so little time that most of the time can be spent playing with pets along with the grandkids. That is the meaning of true wealth.
May 21, 2019 | Real Estate
Trading land like a billionaire relies on three simple premises. The first one is to acquire the land for cheap. The second one is to never intend to sell it. The third one is, if you trade it, trade up.
Howard Hughes
Billionaires that start with an inheritance have an advantage. Howard Hughes was born into wealth. His father invented an oil drill that penetrated difficult, hard rock, which made Howard Hughes one of the richest men in the world from his inheritance.
Hughes visited Las Vegas during WWII for the first time. Then, in the 1950s, he traded some parcels of desert land that he owned in Northern Nevada for 40 square miles (26,500 acres) of federal land. This property, managed by the US Bureau of Land Management, was in the northwest of Las Vegas.
Hughes died on April 5, 1976. Well after his death, this land would later become the master-planned community of Summerlin. The first family moved into Summerlin during 1991.
Vacant lots in Summerlin now sell for an average of $2 million per acre. This makes the land Hughes originally acquired by a trade of land worth a few million, equal to about $53 billion today.
Billionaire Lessons
Howard Hughes was not exactly clever. He was just greedy and stubborn. He decided to make Las Vegas his home after he came for a party in 1966. He stayed at the Desert Inn in the penthouse. After ten days, when his reservation was over, the manager asked him to leave. Instead, stubborn Hughes bought the hotel.
Next, Hughes went on a buying spree. He bought three casinos. He acquired all the vacant lots around the Desert Inn. He purchased all the vacant land on both sides of the street that became known as the Las Vegas strip. He bought the North Las Vegas airport and the land around the McCarron International Airport, which is right off the strip. Hughes’ appetite for buying things was insatiable.
The lesson learned is to buy and hold all the key land that is available. Be patient. It took 40 years for the land value in Summerlin to really take off in terms of value. Hughes did not live to see this but maybe he is laughing from his grave. One thing is certain, the desert land that, long ago, nobody but Hughes wanted became worth a fortune.
Investing In Raw Land
Investing in raw land that becomes valuable depends on just a few considerations, which include:
- Location: Select land that is in the path of future growth.
- Hold: Be prepared to own the land for a very long time.
- Stimulate Development: Develop the area or encourage others to do so.
Summary
Land traders achieve success by being extremely patient. They are able to imagine the future growth of an area ahead of others. Land trading may create long-term opportunities because of the continual expansion of the population. This happens frequently around metropolitan areas in many parts of America.
If buying land appeals to you, be sure to schedule an appointment with your trusted real estate professional.
May 15, 2019 | Real Estate
For those who have not taken a look at the innovative technology that is now used to make artificial grass, they will be surprised at how realistic some of the newest products look when compared to living grass. Installing artificial grass, which is high quality, does not come cheap.
Prices range from $8 to $14 per square foot. However, this investment may pay off well because of improved resale value, low monthly water bills, and other benefits. The best artificial grass can last up to 25 years with little to no maintenance.
Here is a comparison of the advantages and disadvantages of the most innovative artificial turf to help homeowners and business owners decide if these new products are suitable for their properties.
Disadvantages
Besides the investment cost, here are some other disadvantages.
Hot To The Touch
Some artificial grass products do no dissipate heat very well. In areas where there is a lot of direct sunlight this problem can make artificial grass too hot to walk on barefoot.
Nevertheless, there are advanced designs of artificial turf, which have perforations that allow water to easily run through. These can be quickly cooled down by simply spraying the artificial turf with a light water mist spray.
Homeowners Association Rules
The rules of the homeowners association (HOA) may prohibit the use of artificial turf. Check the HOA rules before installing artificial grass. There may be a need for an exception to the rules.
High-quality artificial grass looks as nice, if not better, than real grass. Low-quality artificial turf looks like cheap, green, furry plastic. Make sure the HOA sees a sample of the artificial grass product for the project for their more accurate understanding and consideration.
Advantages
There are many advantages of using high-quality artificial grass.
No Water And Low Maintenance
In drought-stricken areas, water for irrigation may not be available at all, has use restrictions, and/or is extremely costly. Artificial grass does not need a huge amount of water that real grass needs to survive. It is very low maintenance.
No mowing or lawn care is needed to keep it looking perfect. It is washable, which makes it easy to remove dirt, dust, and pet litter. It is durable and tough.
Curb Appeal
High-quality artificial grass makes a home stand out. When all the neighbor’s homes are dull with dead, brown, real grass or another bland-colored ground cover, a vibrant green artificial lawn really looks spectacular in comparison.
Pet-Friendly
Pets like quality artificial turf. It is easy to clean. It should be able to withstand plenty of pet activity without showing ugly wear and tear. Depending on the installation, pets are discouraged from digging up the lawn.
If a portion does get damaged, it is fairly easy to replace a damaged section.
Conclusion
Artificial grass is increasing in popularity. In most cases, the advantages far outweigh the disadvantages. Even for properties, which have the option of maintaining a real-grass yard, artificial grass is something worth considering.
For tips on home improvement projects that can improve your resale value and attract buyers, be sure to consult with your trusted real estate professional.
