Jan 06

Tax Surprises For Many Real Estate Investors

One of the downsides to real estate prices rising and falling is how it can create anomalous circumstances for investors. When executing a tax deferred exchange, per Section 1031 of the IRC, the rules are fairly clear, and frankly, not all that complex. Many would have you believe how sophisticated and difficult they are.

The same goes for selling long term investment property. There are rules, as Grandma loved pointing out. All sales aren’t equal, as all 1031 exchanges are not. In fact, as many have learned the hard way some ‘losses’ are actually huge tax problems, and some exchanges simply were never tax deferred.

Let me be completely clear. It’s entirely possible for you to net next to nothing in a sale, yet owe taxes on large sums of money you don’t have, and didn’t receive from the escrow proceeds. Same goes with tax deferred exchanges. Proceed willy nilly, and you could very well discover first hand what ‘pretend’ cash is all about. As I said, the rules aren’t all that complex, so when we find ourselves in violation, it’s not hard to see, if you can do elementary arithmetic.

Still, don’t try this at home. The rules aren’t that hard to follow. But the when and why, along with the chosen investment strategy can screw things up like Hogan’s goat if you’re not experienced. My first several exchanges were closely monitored by both my CPA and one, sometimes two mentors. Simply put, don’t learn lessons the hard way with exchanges — or sales for that matter. Wanna know how you can believe me when I say that I’ve never had an exchange go bad?

I’ve still above ground. What would you do if my mistake cost you taxes on a half million dollar gain? The only question would be if they’d ever find the body. Badda boom.

A couple common mistakes when selling or exchanging real estate held for long term investment.

Let’s say you acquired a fourplex some time ago for $400,000, via a tax deferred exchange. Youradjusted basis when the exchange closed was around $290,000. Later on, for whatever reason, you decided at the height of the bubble that it was a great time to pull cash out, and put a $400,000 loan on it.

Then the market correction hit.

You become disgusted, and for whatever personal reasons, decide to sell the property. An offer materializes for $395,000 — you like it. Your loan balance at sale is around $360,000. Here’s the conversation I’ve had dozens of times over the last 11 years, when these circumstances are in place.

“Geez, Joshua, I won’t even net $1,000 when it closes. There’s no way I’ll owe any taxes!”

“Um, you don’t wanna know what the IRS will expect from you if you go through with this.”

Note: Due to additional years of depreciation taken, the new basis would be roughly $210,000.  The loan balance was pretty close to around $360,000. Oops. The IRS calls that, ‘loan over basis’. And yeah, I’m keepin’ this as simple as possible. The bottom line? The sales price was $395,000 — less than you paid for it years ago. But the new loan’s balance is around $360,000 — about $150,000 more than your current adjusted basis.

I want to reiterate that though the numbers are relatively simple, what’s true the vast majority of the time means that it’s not true all the time. There are always exceptions to every set of facts, and the IRS loves nothing better than to point out that sticky reality.

Resuming the conversation.

“What’d’ya mean what the IRS will expect?!”

“What I mean, Mr. Investor, is that if you go through with this proposed sale, you’ll most likely be on the hook for what the tax code calls ‘boot’. Bottom line? In your case it means you’ll have about $150,000 added to your job income, and pay at the ordinary income (job) tax rate.”

Weeping and wailing usually ensues at that point. Then the defeated look comes over their face, as reality begins to show its ugly countenance.

Time for one more very unhappy surprise.

Last summer you decided to to pull out a significant pile of cash by way of refinancing one of your high equity income properties. You cleared around $100,000 or so. Then a few weeks ago you found a great opportunity, and opted to execute a tax deferred exchange, which is scheduled to close the end of February. Oops.

‘Aw, come on, Joshua, what’s with the oops again?’

America is great, isn’t it? We’re all taught early on that we’re innocent ’til proven guilty. That virtually goes out the window with the IRS. We’re pretty much all guilty ’til we prove otherwise. In this case, what they’re likely as not to say, is that you pulled that $100,000 — wait for it – ‘. . . in anticipation of executing a tax deferred exchange soon thereafter. The cash you pulled out was your method of tax avoidance.’

So, for some reason they audit you. They see the refi happening roughly six months before you complete your 1031. At that point they begin so grin. They’re gonna declare that $100,000 to be ‘boot’, same as the first example. It’s gonna be added to that year’s personal income, and you’ll be taxed accordingly.

The best part about this so-called rule? There’s no hard ‘n fast time period that must pass between pullin’ out cash, tax free, from your income property, and an exchange of the same property. Nobody, including the IRS, can tell you what’s a safe time period, and what’s not. Don’t worry though, they’ll be fair.

There are all kinds of nasty little surprises awaitin’ real estate investors flyin’ solo, without an experienced, real estate oriented CPA as a co-pilot. ‘Course, having an experienced real estate investment broker tends to help too. :)

If we can be of any help to you with your real estate investments please count on us at Prime Real Estate as your local experts in Chicago, the surrounding suburbs and in Northwest Indiana.

Chicago: 312-450-7400 www.WeSellChicagoland.com

NWI: 219-322-9009 www.WeSellNWI.com

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Dec 30

Lower Your Property Taxes

With home values plunging in many markets around the country, it seems only logical that most homeowners today would pay lower property taxes.

Yet, according to the National Association of Home Builders, property taxes across the nation have increased by nearly 20 percent from 2005 to 2009 (the most recent data available). And several experts say those numbers may continue to get worse, especially if the American economy continues its downward trend. What many taxpayers fail to understand is that a decrease in home values has little impact on property tax bills.

“Property taxes don’t bear any relation to real property values. Each school district and municipality sets a budget for the coming year, then collects that total amount by dividing it proportionately among all real property in their district,” says Charles D. Rubin, president, PropertyTaxDatabase.com, Red Hook, NY.

Adds James Lumley, author of “Challenge Your Taxes (Wiley, 1998): “Property taxes are more a function of how much money a community, municipality, and/or county need to operate. As state and federal dollars previously spent for local needs shrink, communities must often make up the difference with property taxes.”

Several factors are considered when determining property taxes. Local governments typically examine a home’s previous value, as well as recent sales in the neighborhood and whether any improvements or modifications made to a property or neighborhood add value to a home. The methods that assessors use to arrive at taxable values also can include market averages and replacement cost, and these methods can involve arbitrary conclusions, excessive averaging and human error.

Ultimately, property taxes are usually based on an equation of the mileage rate or levy (the amount of money you pay per $1,000 of value) multiplied by the government’s property assessment.

Complicating matters is that many localities reassess properties on a three- or even five-year basis, which means that assessed values in some areas are only now catching up with actual home prices, says Pete Sepp, executive vice president of the National Taxpayers Union.

If you believe your property tax is too high, there are steps you can take to possibly get it lowered.

“First, check over the accuracy of your property assessment. Are the proper features – like bathrooms and garage – recorded?” Sepp asks. “What about the age of the home, or occupiable square footage, or lot size? Human errors can and do occur, and they often boost a tax bill. If you discover an outright error, bring it to your assessor’s attention, along with any evidence you need, like photos, blueprints or deeds.”

If you find no errors, step two requires examining properties in your neighborhood with comparable features and comparing their assessments to your own. If yours is significantly higher than others, you can file for an appeal—usually with your area assessor’s office or a local-level independent review/grievance board that will hear the evidence you gather and decide if an assessment reduction is in order.

To increase your chance of success, ask a Prime Real Estate associate to conduct a comparative market analysis and consider paying for a property appraisal by an independent professional.

If your appeal is rejected, depending on your state laws, you should be able to take your case to a state-level board or court where you can ask for a hearing. The further up the ladder you go, however, the greater the likelihood that you’ll need legal representation.

Feel free to Joshua Lybolt at Prime Real Estate to learn first-hand how he lowered his property tax base in Lake County Indiana from $6700 per year to $3700!  www.WeSellNWI.com

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Dec 29

How to Find Your Ideal Real Estate Agent

Being a real estate agent is hard work. We can tell you that first hand. We know people that think that our job is really cushy, and that we just sit around all day and wait for the phone to ring, but that couldn’t be further from the truth. A good real estate agent wears many hats from psychologist to negotiator.

Real Estate Agent TipsA real estate agent will help you with one of the largest transactions you’ll ever make. Be sure to select your agent carefully.

I was sitting in my office today talking to one of my oldest friends that moved recently out of state, and he asked me what he should look for in a real estate agent. Here’s what we talked about and hopefully these tips can help you find the perfect agent:

Get A Referral

When you’re searching for a real estate agent ask your family and friends if they recommend anybody. If they’ve had a good experience with an agent, their recommendation can help you choose someone you already know has the experience needed for your real estate transaction.

When selling or buying a house you’ll build a relationship with your agent, and this relationship can be a good one or a bad one. Not only will the recommendation reflect the effectiveness of the agent to get the job done, but it will be a reassurance they will protect your best interests.

Interview Multiple Agents If You Can’t Get A Referral

Choose your top three agents after your research. Once you have a few agents in mind you can give each of them a call and have a phone interview. This will help you to decide whether the agent is someone that you should further pursue or whether you can scratch them off the list. It also gives you the opportunity to ask questions such as what their fee is, how much experience they have, as well get some references.

Get a hold of some of the real estate agent’s references. Speaking with some past clients will help you determine if you want to go further with them. You should get a list of questions handy with you that you can ask the references and then write down their answers. Some questions that you may want to ask could include:

  • How hard did the agent work?
  • Did they feel as though the agent played a major role in the selling or the buying of the home?
  • Would you recommend this agent to your family and friends?
  • How well were they able to solve problems in the deal?
  • Where they responsive and how well did they follow up?

Once you’ve decided on an agent, have a one on one meeting with him or her to make the final decision. You want to feel comfortable with the agent, and not feel pressured to make quick decisions, and you also want someone that you feel is looking out for your best interests.

If you don’t feel a bond with the agent then the experience may not be as pleasant as it could be. You may want to meet for a coffee or meet at the agent’s office so that you can judge for yourself in a relaxed environment. Remember, selling or buying a home can be a stressful process, so being with someone that you trust and feel comfortable with can make it go so much smoother.

When you are in search of a real estate agent you aren’t looking for your new best friend, but you are looking for a person that you wouldn’t hesitate recommending to your friends. Following these tips will ensure you’re happy with your transaction and the process will be as stress free as possible.

If you’re looking for a real estate agent, you can check out Prime Real Estate’s new website here: www.WeSellNWI.com or www.WeSellChicagoland.com. Prime Real Estate’s associates represent properties in Northwest Indiana, Chicago and the Chicagoland suburbs.

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Dec 28

A Foreclosure may be Your Next Dream Home

Homebuyers and real estate investors still have time to take advantage of the low-priced houses offered byforeclosure listings. However, their time has become shorter as prices are expected to rise as early as next year as the housing industry is expected to gain some semblance of improvement by then.

Dream home coming true

A lot of people have found their dream homes from foreclosure home listings. Most of them only dreamed of owning the type of dwellings they have now five or six years ago, but in the past few years, even those residences that seem to be beyond their reach have become easily affordable. This is particularly true for areas where owner-occupants are given priority over investor buyers.

Dream Homes From Foreclosure ListingsIt is not just buyers looking for residences that are benefitting from the low prices of foreclosure list dwellings, but real estate investors as well. And we are not just talking about local investors, but those who came from outside a particular selling area and those who are from foreign countries. Markets that offer some of the cheapest homes, like Nevada, are benefitting from surging homebuyer numbers.

Better now than later

However, the abundant opportunities for buyers may not last as long as expected as housing is on track to recover by next year. This means prices will start rising by 2012. And with the European debt issue seemingly on a steadier position, mortgage rates are also expected to start rising soon.

For homebuyers and investors, now would be the best time to go home shopping, before prices and mortgage rates start to move up. Most analysts agree that the time to wait is over for those who plan on buying a new home or even a second house.

Homes at foreclosure listings are still highly affordable, but a lot of housing experts believe that this will not last for long as mortgage rates will soon rise and the housing sector will likely find a balance by the middle of next year, which means that buyers will have to make their move now.

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Dec 27

A Good Time To Remortgage?

Is Remortgaging for You?

It’s true that interest rates are at their lowest levels in years and this has led to many homeowners remortgaging in a bid to save on their monthly mortgage payments.  The good news is that many lenders are offering low interest products and products especially designed for those looking to remortgage.  Whilst many homes have dropped in value, you may still have enough equity in your home to consider a remortgage.  You may also want to take advantage of the low interest right now – this rate is not expected to rise until at least the end of 2012.

What Is A Remortgage?

A remortgage is simply a new loan which in effect replaces your existing mortgage.  You can obtain your new loan through your existing lender or you can choose to use a different lender.  There are many great deals around right now so it’s definitely worth shopping around for the best deal.  The remortgage process involves your old mortgage loan being paid off and any remaining monies made available to you to do with as you wish.  Before you rush off to remortgage, read about the penalties for early repayment of your loan below.

Why Would I Want A Remortgage?

There are many reasons why homeowners may wish to remortgage:

To make the most of lower interest rates

To pay for expensive items such as home improvements or a wedding

To consolidate debts such as car loans and credit cards

It’s important to remember that your mortgage loan is secured on your home so it’s essential that you are able to meet payments on time.

When is it Not a Good Idea to Remortgage?

Whilst many can benefit from remortgaging there are some circumstances where this won’t be a good idea.  For example, you may still be tied in to a fixed term deal and that means you will probably be liable for a penalty payment for paying off your mortgage early.  This can often amount to thousands of pounds in early repayment charges.  Also, if the balance of your existing mortgage is low you may find that many lenders are not willing to underwrite a remortgage or that the fees involved will be more than the savings you make by remortgaging.

Another reason to avoid remortgaging is if your employment has recently altered and especially if you have recently become self-employed.  Lenders need to know that you are able to repay your mortgage payments and they can often hold back when it comes to more uncertain incomes.  The good news is that there are many lenders relaxing these rules and there are also lenders offering specialist mortgage products for the self-employed.

How to Remortgage?

It’s a good idea to stick with your existing lender in many cases.  They often have great offers for existing customers and you may find the application process a little easier too.  Do check out the rest of the market though as more and more mortgage products are being released onto the market each week.  It’s a good idea to speak to a mortgage broker for free mortgage advice on the latest deals and products.

Once you have found the lender you want to use, the process is as follows:

The lender will need to know the value of your home

You will need to complete a new loan application

The lender will need some conveyancy work to be carried out to secure a title report

You will also need to engage the services of a solicitor to arrange repayment of the loan to your existing lender

The Cost To Remortgage

It costs varying amounts to remortgage depending on the lender, but it should usually cost you less than when you first took out a mortgage.  It’s essential to find out what other costs are involved in remortgaging.  Some lenders may waive fees and charges or at the very least reduce them if you are taking out another product with them.

Many homeowers reap the benefits of remortgaging by enjoying lower payments and if they have equity available in their homes, a little extra on the side.

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Dec 26

What is Real Estate Title Insurance

Real Estate Title Insurance Explained

Real Estate Title InsuranceWhen purchasing a home one of the things that buyer’s will be asked is whether or not they wantReal Estate title insurance. Often times I find that home buyer’s lament over this decision because of the expense involved. Real Estate title insurance is certainly not cheap!

While title insurance is a one time expense, it can be disturbing for a buyer tight on cash to have to come up with such a large unexpected expenditure. Real Estate title insurance can easily run into thousands of dollars in a home purchase. Unlike other insurance policies there is no monthly premiums with title insurance. It is a one time expense covering the owner until the property is sold.

One of the questions I get asked a lot by my clients is “should I purchase title insurance’?

Let me first explain what title insurance is and what it covers. Real Estate title insurance is a type of insurance that covers financial loss from defects in title to real property and from the invalidity of mortgage liens.

A title policy is put in place to protect an owner’s or lender’s financial interest in a property against loss due to title defects, liens or other matters. The insurance will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the monetary loss incurred, up to the dollar amount of insurance provided for in the policy.

In my experience all major lenders require title insurance to protect their interest in the mortgage secured by real estate. This is called a lenders insurance policy.  An owner’s insurance policy is not required but in my opinion is a highly valuable insurance that is risky not to have.

There is an opportunity for a buyer to get a substantial discount when they purchases both a lenders and owner’s policy at the same time. This is called a simultaneous issuance. For an enhanced policy, it runs about $4.00 per thousand based on purchase price + $175.00 in Massachusetts. This is a one time premium paid at closing which lasts the lifetime of the property ownership.

The Real Estate Title Search

Prior to a buyer taking title to a property or completing the “closing”, the lender through which the borrower is getting the mortgage will have a title search done on the Real Estate.

The purpose of the title search is to find any defects in the title. There could be any number of defects including liens, unpaid Real Estate taxes, judgments, unpaid condo fees, or others.

If title defects are found the buyer’s or lender’s lawyer will inform the buyer of such defects and then work towards getting them removed so that a clean and marketable title is given to the buyer.

Title insurance becomes of great value when something is discovered in the future that was not found when the initial title search was done.

A Title search starts with the most recent deed searching the grantees name (the person who holds title) back in time until the deed from which the grantee acquired the property is found.

That grantors name is then searched back in time in the grantees book to find when the grantor acquired the title as grantee. The typical title examination goes back fifty years but title insurance would cover beyond the fifty year search.

Anyone who has not purchased title insurance could surely tell you what a nightmare it can become without it!

Common Reason For Title Insurance Claims

Example of some of the more common reasons for claims against a Real Estate title insurance policy are as follows:                                                                  Real Estate Fraud

  • False impersonation of the true owner of the property
  • Forgery of the deed, releases, or wills
  • Real Estate fraud
  • Missing or undisclosed heirs to the property
  • Any Instruments executed under invalid or expired power of attorney
  • Mistakes in recording legal documents
  • Deeds by someone of unsound mind
  • Deeds by a minor
  • Misinterpretations of wills
  • Deeds with misrepresentation of marital status
  • Liens for unpaid estate, income, inheritance,  or gift taxes

For an astute buyer who really thinks about the expense of title insurance the follow up question I get is why do I need it if the lender is going to have a policy anyways?

The easiest way to answer this question would be to ask is what would you do if one of the above title defects were discovered and the attorney who did the title search was no longer in business? While you could certainly sue the attorney for negligence if he was still around practicing; what if he was not? You would have a very large issue on your hands! To be clear an attorney would only be responsible for negligence not the issues outlined above. This is why it is important to have title insurance!

One other important note about Real Estate title insurance:

A federal law called the Real Estate Settlement Procedures Act (RESPA) allows the individual homeowner to choose a title insurance company when buying or refinancing residential property. Most of the time, homeowners do not make title insurance decisions for themselves.

They are typically handled by their lender’s or attorney’s choice; however, the homeowner does retain the right. RESPA makes it unlawful for any lender, attorney, or Real Estate agent to mandate that a certain title insurance company be used. Doing so is a violation of federal law and any person or business doing so can be heavily fined or lose their license.

Section 9 of RESPA denies a seller from mandating a home buyer to use a specific title insurance company, as a condition of the sale. Buyers may sue a seller who violates this provision for an amount equal to three times the cost of all charges related to the title insurance.

In my mind having an owners insurance title policy is a no brainer and is certainly something you should consider unless you absolutely can not afford it! A title policy can be purchased in the future should you not have the funds available at closing time.

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Dec 23

Rents heading up. Affordability for home owner ship at 15 year best. Time to buy a home?

The Wall Street Journal reports stronger lure for prospective home buyers with the monthly cost of owning a home more affordable now than at any point in the past 15 years, homeownership is becoming less expensive than renting in a growing number of cities.

  • The Wall Street Journal’s third-quarter survey of housing-market conditions in 28 of the nation’s largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc.
  • Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4 percent, are the lowest in six decades.  As a result, monthly mortgage payments on the median priced home – including taxes and insurance – are lower than the average rent levels in 12 metro areas, according to data compiled by Marcus & Millichap.
  • Homeownership also is looking more affordable because after several years of declines, apartment rents will rise approximately 4 percent this year, and rents are poised to pick up even more momentum across the country next year, according to Marcus & Millichap.
  • Affordability could continue to improve as prices slide even lower in coming months. Price declines are likely because the share of “distressed” sales, including bank-owned foreclosures, tend to rise in the winter, when traditional sales activity cools.
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Dec 22

How To Reduce Your Risks And Limit Your Personal Liability As A Landlord

Many residential landlords unknowingly strut around with the words sue me figuratively tattooed on their foreheads in bright fluorescent colors!  They’re considered in legal circles to be high profile targets because they run their rental housing business in a lax, haphazard manner with little or no regard to how they’re perceived by their tenants and other potential adversaries.  These are the flashy landlords who collect their rent from tenants while driving exotic automobiles and wearing expensive designer clothes.

These are also the same landlords who are woefully under insured and totally clueless when it comes to knowing how to reduce their risks and limit their personal liability as landlords.  If you don’t want to end up as cannon fodder in court, you should take a low-key approach to running your residential rental housing business.  By a low-key approach, I mean that you should operate your rental housing business in an honest, ethical, professional manner that keeps both you and your business under the radar screen of jealous tenants, overzealous code enforcement officials, snooping members of the media and sue-happy plaintiffs’ attorneys looking for some quick cash.

Landlords Must Know How To Properly Protect Themselves

If you’re a residential landlord whose goal is financial independence through the ownership of rental property, you most likely won’t succeed until you first learn how to:

  • Maintain adequate property and casualty and general liability insurance on your rental property.
  • Reduce the risk of potential lawsuits as a landlord.
  • Limit your personal liability as a landlord.

Four Types Of Insurance Coverage Landlords Should Carry

At a minimum, residential rental property owners should carry the following four types of insurance coverage:

Property and Casualty Insurance: Property and casualty insurance covers residential rental property owners from fire, storm or other catastrophic losses that could render their rental property uninhabitable.

General Liability Insurance: General liability insurance is third-party coverage.  It reimburses rental property owners if they’re responsible for compensating another losses.  General liability insurance doesn’t cover intentional wrongdoing such as arson or assault, but it usually covers negligence and general liability issues.

Flood Insurance: Flood Insurance is available for rental properties that are located in communities that participate in the National Flood Insurance Program.  The federal government administers the National Flood Insurance Program, and insurance companies issue the policies.

Umbrella Insurance: Personal or commercial umbrella insurance provides rental property owners with excess liability insurance coverage beyond the limits provided in a general liability insurance policy.

What Your Insurance Coverage Should Protect You Against

Depending upon whether or not you have employees, your property and casualty and general liability insurance coverage should protect you against:

  • Fire, storm and other catastrophic losses.
  • Liability for tenant and employee injuries.
  • Tenant or employee theft.
  • Malicious damage and vandalism by tenants.
  • Loss of rental income.
  • Libel, and slander by employees against tenants
  • Discrimination lawsuits filed by disgruntled tenants and employees.
  • Allegations of fraud, misrepresentation and other intentional acts by employees.
  • Claims made that exceed insurance policy limits.

Require Everyone Working On Your Property Be Insured

To reduce general liability insurance premiums, require that all repairmen and contractors working on your rental property provide certificates of insurance proving that they carry adequate liability coverage and workers’ compensation insurance.  Require that each repairman or contractor have a minimum of one million dollars in liability insurance coverage.

Don’t Allow Tenants To Keep Any Pets On The Premises

I’m not some sort of animal-hater, but for insurance and liability purposes, it makes sense not to allow tenants to keep any type of pets on the premises.  For example, many insurers are leery of potential wrongful-death lawsuits that could result from tenants’ pet dogs attacking and possibly killing people on the premises.  This is what has happened to the owners of the San Francisco apartment building where a woman was mauled to death by two dogs in a hall last year. The landlord’s liability insurer ended up paying the victim’s estate millions of dollars.

Require All Tenants To Have Renters’ Insurance Coverage

As part of your risk management program, include a clause in your rental agreement that requires all tenants to provide proof of renters” insurance coverage prior to taking possession and occupying the premises.  Most renters’ insurance policies provide coverage against fire and theft to personal property, and personal liability coverage for injuries and damages caused by tenant neglect.

Use An Independent Insurance Agent

Unlike captive insurance agents, who work for one insurance company, independent insurance agents represent many insurance carriers.  An independent insurance agent works a lot like a mortgage broker who shops a loan application to mortgage lenders for the best interest rate and loan terms.  An independent insurance agent shops an insurance application to property and casualty and liability insurance carriers to get the most coverage at the lowest annual premium.

Four Ways To Reduce Risks And Limit Personal Liability

Here are four ways to reduce your risks and limit your personal liability as a landlord:

  1. Maintain adequate property and casualty and general liability insurance coverage on your rental property.
  2. Form a separate business entity to hold the title to your rental property in.
  3. Practice risk management techniques that reduce your risks and personal liability as landlord.
  4. Thoroughly screen the backgrounds of all tenant and employee applicants for criminal convictions.

Maintain Adequate General Liability Insurance Coverage

Regardless of how safe and secure your rental property may be, and how much you plan and prepare for emergencies, you still must maintain adequate general liability insurance coverage on your rental property in order to help reduce your risk and limit your personal liability as a landlord.  In addition to general liability insurance, you may want to purchase a personal or commercial umbrella insurance policy to give you added liability coverage.

Best For Residential Landlords To Adopt A Low-Key Persona

The best way to stay off the radar screens of potential adversaries is to adopt a low-key persona as a landlord that doesn’t draw the attention to yourself and your rental housing business.  For example, I’ve adopted the persona of the busy landlord who’s making a living.  Tenants assume that I’m always busy because I walk, talk and work at a rather fast pace.  I’m always polite and courteous with tenants, but I never engage in small talk, or discuss my rental housing business with them.  When I’m asked about the business, I simply state that, it’s a living, and promptly go about my business.

Best To Use A Separate Entity To Hold Title To Your Rental Property

Lastly, given the overly litigious nature of most Americans today, I very strongly suggest, that you form a separate business entity such as a Subchapter S corporation or LLC, limited liability company, to hold the title to your rental property.  It’s one of the best and least expensive methods available to help to reduce your risk and limit your personal liability as a landlord.  This way, there’s a clear distinction between your personal and family assets, and the assets held by your corporation or your limited liability company.  And, in most cases, any liability incurred by the business entity would be limited to the business entity’s assets.  However, please be advised that there isn’t a business entity known to man that will protect its owners and officers from being held liable when it’s used to engage in fraudulent or criminal behavior.

Hire Prime Real Estate as your Property Management Firm

Skip all of the headaches, go directly to GO on the monopoly board and collect $200.  Prime Real Estate will handle all aspects for you and will advise you of all of the necessary steps and legalities.  We act as the landlord for the property in question, the tenants never meet you nor have any clue of who you are, how much money you make or what kind of person you are.  Call us today 219-322-9009 in Northwest Indiana or 312-450-7400 in Chicago. www.WeSellNWI.com, www.WeSellChicagoland.com

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Dec 21

The Perfect Holiday Gift – A New Home

The holiday season is a time when many Americans engage in gift giving as a way to express their love and appreciate for friends and family members. Especially with the incredible deals offered during Black Friday and Cyber Monday, the holiday season is in full swing.

Some families decide to wait in lines for numerous hours, often cutting into their Thanksgiving dinner time, in an effort to get the best deals on everything from the latest toys to computers and video games. Furthermore, flat screen and 3D televisions are also sold to the masses due to the unbeatable deals. However, it appears as though some parents (and even grandparents) are looking at slightly more expensive gifts for this holiday season – like real estate.

Real estate is apparently the best deal on the market right now, which is leading many parents and grandparents to the real estate market in search a new home for their children and grandchildren.

The S&P/Case-Shiller Index released information indicating now may be the best time for purchasing real estate with home prices falling 3.6% in September 2011 in comparison to September 2010. Clearly, home prices still remain incredibly low. In fact, home prices are not expected to increase anytime before the last half of 2012; therefore, real estate may continue to be gift options throughout the foreseeable future.

Furthermore, high foreclosure inventory offers many exceptional deals on foreclosed homes for sale ranging from multi-family homes to condos. Many parents and grandparents are actually already in the market of purchasing condos when sending their children and grandchildren off to college in an effort to capitalize on their investment, which would cost close to the same amount if the student was staying on campus in a residence hall.

With the continuously falling price of real estate, many other families are considering purchasing real estate for their family members this holiday season.

Imagine waking up on Christmas morning and finding a pair of keys—not to a car, but to your new home!

With the high unemployment rate, many just graduating from college (or even from high school) are having a hard time finding a job that allows them to pay for rent, let alone a mortgage payment. As a result, many Baby Boomers are utilizing their savings to help their children and grandchildren solve this dilemma with holiday real estate purchasing. Fortunately, these purchases help the real estate market while also providing a home for some of those who may be in need.

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Dec 20

December is the Best Time to List your Holiday Decorated Home!

Tis the season to be jolly, unless you are an estate agent or vendor maybe!  Traditionally, the festive period always means a drop in house sales and viewings. However, that is not the case for Prime Real Estate Associates.  Our December are always the best month of the year and this December we will host our Best month EVER!!

However, it doesn’t have to be a completely dry month.  Many vendors are attempting to make the most of the yuletide period and making the sparkly season work in their favour.  If you’re looking to sell your property, you can still attract viewings during the month of December.  It’s all about playing on the season and with romantic notions of the perfect family home.

A house looks more inviting when it’s decorated.  A warmly lit room with fairy lights and candles can really welcome a viewer and give them a sense of what it would be like to live in your home and how cosy it could be.  Christmas trees surrounded with presents and a well decorated fireplace can also add to this effect.  It’s all about gift-wrapping your home and presenting it in a really happy and welcoming way.  All of these individual touches say that your home is very special and hopefully that feeling will rub off on viewers.

It’s important when using this approach that you get the look just right.  Using cheap and tacky decorations could send your viewers running in the opposite direction and even laughing about that ‘awful house we saw the other day’ when chatting with friends.  That’s exactly the opinion you’re not looking for.

Lucy Inskip from The House Doctor, a company that gives advice to vendors on how to dress and present their homes when selling, waned against overdoing the seasonal effect.

‘Avoid the cheap and cheerful approach,’ says Lucy. ‘Things like “Santa Stop Here” signs are great fun for the children, but they don’t exactly entice people to buy your home. ‘Only use white fairy lights and try to create a muted effect.”

This is sound advice as you don’t want to draw attention away from your home too much.  Every room should be tastefully presented with a warm and welcoming hallway, living room and kitchen.  It wouldn’t be going too far even to greet your viewers with a mince pie and glass of mulled wine.  If you’re planning an open house this is a great idea and will really make people feel welcome as they wander around your home.

Whilst you might be sitting there thinking the idea is a bit far-fetched, these approaches do sell houses.  You don’t need to erase December from your year just because it tends to be a little quiet.  Get that For Sale sign up and make your home look warm and welcoming inside and out.  You’ll be surprised how much attention you get!

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