I have a saying that I use, “I don’t disappear at the Close of Escrow.” My clients know this and depend on me to help make their investments successful.
The Close of Escrow is simply the beginning. Many agents collect their checks and disappear. Technically at the Close of Escrow, the agent’s duties are done, EXCEPT for confidentiality. NOT ME!
I primarily work in the mutli-family space, There is the transition of the building along with the transition of the tenants. I wanted to help the client understand only a fraction of the items that I help to facilitate after the Close of Escrow.
At closing and if not before, I want to make sure that the new property manager has not only all of the leases but ALL of the tenant’s contact information. This includes their email if possible.
The Tenant’s move-in checklist as well as the tenant application. Please remember that it is illegal for the previous owner to provide the Tenant’s credit report.
I also place in the original contract that the Seller will provide LABELED keys-even to the mailboxes, laundry, storage and vending machines. Once I received a box of keys to a 100 unit property with NO labels. What a mess.
The Property Manager will need the entity documents and a copy of the final settlement sheet. I provide all of this information. They need this to do the utility transfers and laundry lease transfer as well.
The security deposits are not owned by the new owner but rather are held in trust for the tenant until they vacate the property. Only then may the Owner take possession of the deposits or disburse them. At close of escrow, I have the seller transfer these to the Buyer. On the same settlement sheet, the deposits are then transferred to the new property manager. This way it definitely shows the in and out of the deposits and where they are kept.
If there are repairs to be done to the property, or if repairs have been made, I make sure that this is passed on to the property manager as well.
In the State of Arizona, ALL tenanted residential property must be registered with the state showing the legal name of the owner (entity or individual) and the name of the current property manager. If the owner changes the name or the property manager it is imperative that this be updated. The new property manager should do this automatically but ultimately it is the property owner’s responsibility to see that these things are done. The cost is minimal and it is a State Law.
Many times as I drive around, I drive past properties that I have sold. I really look at them. If I see something that is not correct or needs attention, I snap a photo and send an email to the owner and the property manager. As a rule, towards the end of the year, I take a photo of EVERY property that I have sold that year and send it to the Buyer. Perhaps the Buyers have not even seen their property recently.
Remember that every property is different and while these are only a few of the items that I do AFTER the closing, there are usually many other items that I attend to.
Most importantly, I still answer my phone and my clients have heard me say, “If there is a challenge, call me before I cannot help you. Even if it is months later.”.
Remember that I answer my phone and am available. I either will answer or return your call VERY timely. 602-688-9270
Have a really good day!
I, like so many others in this crazy environment that we live in today am really tired of hearing the same doom and gloom over and over. So my goal to you today is to put some positive thought there for you. Let’s start the New Year off with what we have and be Thankful. Let’s look around us and garner the good from the bad (even evil). Let’s focus on the goals that we have and accomplish something that makes us happy.
My son and his wife are teachers and while this has been a really difficult time for them, they have stayed focused on spending time with my two young grandchildren. This is time that they will not get back and they have not missed the time with the toddlers.
How many times has someone told you to “Follow your passion”? Advice around this topic is given ALL the time. Today, I wanted to explore this advice and maybe dispel some lies and add a little clarity around what passion is.
First, people all the time say they don’t know what their passion is. The reality is most people do not find it, they cultivate it. Most people find something that is interesting and then simply works on whatever that is.
Second, I’m sure you have heard the phrase “Go big or go home.” I read Originals by Adam Grant and the research is completely different. Most people gradually ramp up and take small consistent steps on their interests over a long time. They don’t just quit their day jobs.
Third—Balance. Today, it is heard from a lot of young people that think they can have balance every day. Not true. A friend of mine has a GREAT book called The Fantastic Life. In this book are rules and Rule 18 of his book, The Fantastic Life, is Do Nothing in Moderation. Everyone wants to have clarity and focus so we can spend our most valuable asset, our time, on the most important things in our lives. Life is all about tradeoffs.
Make YOUR Fantastic Life happen!
Call me, I really do answer my phone. 602-688-9279
As many of my Clients are aware, I often write my Blog about real life situations and certainly about education. This is the case here.
I want to discuss the reasons that the Letter of Intent (LOI) is used and how this relates to the Contract.
First, let’s discuss the Contract often referred to as the PSA (Purchase and Sale Agreement). The Contract is a binding contract on ALL parties, namely the Buyer and Seller of the Property. The Contract spells out the legally binding Terms and Conditions of the deal. It’s important to obtain the Buyer and Seller’s signature. While it is important if for some reason, an initial is missed on a page-this is still binding. The only way that the Terms of the Contract can be changed is by an Addendum that is signed by BOTH the Buyer and Seller. Many agents present a counter to the Contract after this has been signed and this is NOT used. The rule of thumb is that you would use Counters before the Contract is accepted and addendums after the Contract has been accepted. Emails, Text Messages do not change any terms of the contract. Also, the Agent or Broker cannot change anything on the contract unless they are a party to the Contract and this would mean that they are either the actual Buyer or Seller named on the contract.
The Letter of Intent is sometimes used to define terms before the expense or time of preparing a contract. Let me clear that the LOI is nonbinding and is used only for guidelines with which to prepare documents. Often I see items in the LOI that the Seller may not want to agree to when the Contract is prepared. Then it is appropriate to prepare a Counter to the LOI. Even when these are signed by the Buyer and Seller it is still not binding.
Many times the Agent will write the LOI and then once the basic items have been agreed to the LOI is shipped off to the Attorney to actually write the contract. A good Real Estate Attorney will write the contract as close as legally possible to the LOI.
I do not always use an LOI on a basic Contract as the LOI is non-binding and if we are going to go to contract, then let’s do it. However, it does NOT mean that I will be discussing the Terms that my Client wants incorporated into the Contract with the Cross Agent.
I use the LOI always when the Attorney is preparing the Contract. In fact, usually I will send the LOI over to the Attorney for Blessing before presenting it to the other Agent.
The Letter of Intent is really used to define the outline of the final Contract. Sometimes this will prevent a long list of Counters to the Contract.
Remember that the LOI is only an outline and does not bind anyone to the Terms-only the Contract does this.
I answer my phone, feel free to call me. 602-688-9279
As a veteran of 24 years in the business, it astounds me that agents do not return another agent’s calls. Let alone a potential Client!
When I answer my phone, the most common response that I receive is-YOU answered my call. My response is often, well you called me.
If the Sellers of these listed properties even know how often that their listing agent NEVER returns a call for an inquiry on a property, they should FIRE them! I spoke to a new client yesterday (yes on a Sunday on a Holiday weekend) and I could feel their frustration as other agents would not help them. They are qualified and really nice people.
Many times I have to ask over and over for marketing and rent rolls on properties. It is a time suck and I really do want to deliver to my clients any information on a timely basis. This week, I was trying to write a cash offer on a mid-sized apartment building. I reached out to the Listing agent MANY times. Per the guidelines that I work under as a Broker, if the Listing Agent does not respond I can go directly to the Seller. I do not like doing this but again, representing my client is my top priority. Only after threatening to do this, did the Designated Broker respond (she was the listing agent). She said that it was off market and that she would update all sites. WHAT A WASTE of time for everyone involved.
Many times I have agents call me and laugh because they will say straight across the board that they knew I would answer my phone!
Here is a story that is true. Tom and I have been a couple for over 23 years. Guess what? I was the only agent out of thirty (he says) that answered his call on a Sunday. He came into my office with three little girls and here I am today. We joke that he found me in a newspaper and I ran a credit report before I would go out with him. He made me laugh and still makes me laugh.
So remember that I answer my phone or certainly return calls and emails VERY timely. Call me and see! 602-688-9298.
First and foremost, I am well on the road to recovery from Covid-19. Yes, both Tom and I had it. He first, then me. While he was nearly as affected as I was, he is still feeling the after effects of the general fatigue. He is back at work and should be fine. Many of you know that I was in hospital and am still recovering at home. I tire quickly and still (probably for some time) have a cough. However, neither of us are contagious anymore. This is something to take seriously and please be careful with distancing and using your masks.
I will say that many of my clients have given me great support and I want to thank you for this!
Real Estate continues to be very lively in Phoenix. Many investors are against multiple offers.
I wanted to share my thoughts when you may be in a multiple offer situation. As a Buyer’s Agent, I am seeing this quite often. I REALLY hate to get into a multiple offer situation. Here’s why, you are simply bidding against yourself. You and I have no knowledge of what the other offer is and we are simply allowing the listing agent to raise the price or remove contingencies. If this is what you want, I will certainly do my best. My recommendation is often, withdraw the offer and go on to another property. Many times the listing agent suddenly becomes much easier to work with and we still get an accepted offer. Did the listing really have another offer? Who knows? A few days ago, I wrote an offer for a client that had several offers. The listing agent wanted my client to pay 20K over listing price and remove appraisal contingency. Also to remove the inspection contingency. While I certainly spoke with my client to offer them the terms and conditions, my solid advice was to move on. In another case last week, we wrote a really good offer on a property and the agent called the next day that they had accepted another offer. She let it slip that the other offer was one of her own clients. Did she use my offer to encourage an offer from her client? PRobably. This is called “shopping the offer”. Hard to prove but highly unethical!
As a Seller, if you received more than one offer be careful. I usually recommend that we work with the best offer. If you use the multiple offer forms and it is done correctly, often you may lose ALL offers for the very reasons that I have outlined above. If we vet the offers on the table, while there is never a guarantee in Real Estate, most often we go to a successful closing,
I also wanted to touch base on the differences that I am personally using with Covid-19 and listing a property.
While I alway use professional photos and supply the due diligence upfront thus circumventing many buyers that are not serious, I have added other tools to the tool chest. I now have virtual tours done to all listings. I also am in the process of obtaining actual floor plans for each property. This way every potential buyer has a tour of the property and floor plans. Of course, I have always kept up with current books and records along with the most current rent roll. Some properties have 20 to 25 different pieces of due diligence provided on the more than 30 websites that I list on. Remember that this takes me almost 6 hours to update every month. I want to thank the property managers and the owners for helping gather all of this information. Without this timely help, this task would be insurmountable.
I hope that this Blog helps draw back the curtain to the job that I work on every day and again I want to thank everyone for their continued support while I am still recovering from Covid-19.
Remember that I do answer my phone and feel free to call me. 602-688-9279.
Mortgage rates are at all-time lows. Many homeowner’s are taking advantage and locking in for the long term. But what about investors, are they doing the same?
Refinancing rental properties can unlock a good deal of wealth-building opportunities for investors, including the ability to lower interest rates and monthly payments, improve loan terms, and earn additional cash flow.
Interestingly, many investors have not taken advantage of today’s market.
For one reason or another, there are a number of investors that don’t even realize the opportunity that’s in front of them.
Should I Refinance My Rental Property?
In most cases, investors should consider a refinance to:
- Lower the mortgage rate
- Convert from an ARM to a fixed-rate
- Turn a hard money loan into a conventional one
- Pay off the loan more quickly
- Upgrade a current investment property
Much has changed in a relatively short period of time regarding rates and valuations…and they are almost all in favor of the investor.
As mentioned earlier, interest rates are historically low…and they look a lot better than they did even this time last year, let alone a few years ago.
5.75% versus 4.5% example
If you purchased an investment property in October of last year, for example, many borrowers took on mortgages with an interest rate in the high 5% range.
Today, if that investor were to refinance their $250,000 loan from 5.75% to 4.5% for example, they would save nearly $200 per month.
There might be some discount points involved depending on the scenario, but they can be financed into the loan amount, so the only out-of-pocket cost would be that of an appraisal.
Assumptions: $250K loan, 70% loan-to-value and 760+ credit score
When you own an investment property, the goal is to earn a solid rate of return…and refinancing that property can increase your short-term cash flow and help you build longer-term wealth.
The above is from my referral partner Tom Bonetto and is geared for 1-4 units.
Remember that I answer my phone and call me to discuss the market anytime!
Cost Segregation is an application by which commercial property owners accelerate depreciation and reduce the amount of taxes owed! I have used this myself quite successfully. This savings generates substantial cash flow that the investor can use to reinvest into other investments or pay now their loans for principal reductions thus generating more cash flow!
A Cost Segregation Study is an engineering-based calculation that you can provide to your CPA. These calculations are used to change the way their commercial property is depreciated. This is an affordable, legal method of reducing income so the investor pays less in income taxes. The AICPA and Journal of Accountancy both suggest the use of Cost Segregation Studies for clients who own commercial and residential rental income properties.
When I sell a piece of commercial property, it is likely that my client is not taking advantage of all the tax strategies and write-downs, written to their benefit, that are available to them through new and existing tax code. This information could not only benefit them on the property they just purchased, but on others in their portfolio. Most of my clients would love additional cash flow from a reduction in their largest expense: taxes.
If you have an interest in this, I have a good source for this service. Schedule a call with me today. If even you are thinking of purchasing or have already purchased.
One fourplex saved me $12,000 to offset against my own tax bill!!! I am always looking out for your bottom line!!!
I hope that everyone is doing well. The Phoenix Market is absolutely on fire.
Call me and as you know I answer my phone 602-688-9279.
My next few blogs will be moving towards education.
I am often asked questions about investing in tenant occupied properties. I am going to break the top 50 questions that I am asked into sections and will dedicate the next few blogs for this. If you have missed one, scroll down and see the data rich information from past blogs.
Property taxes are one of the most common questions so let’s start this week with Property Taxes.
Many investors come from other states where the property taxes are reassessed at Close Of Escrow to a much higher rate. Guess what? NOT in AZ! In Arizona the county assessor assesses the property on the ASSESSED Value not the Sale Price. This is typically much lower than the sale price. Our taxes here are paid in arrears and while you can pay in full once a year, the taxes are typically split into two payments and due twice a year.
Let’s say that the accessed taxes are $5000.00. Great at Close of Escrow the taxes are prorated. If the Seller will owe for a part of the period; the Buyer will get a credit from the Seller at the CLosing to compensate for the next payment.
People have asked me how the access value is done and frankly, I am not sure. What I will say tath sometime in February there is a postcard sent out for the taxes fro the following year. Watch for htis and if you see that there is a problem this is the time to contest the taxes-not later.
Around the 20th of September of every year, the taxes are public record and viewable on the assessor’s website.
CAUTION, keep your mailing address up to date with the country so that you receive the notices.
One last question answered as well. Will I be charged a transfer tax at the CLosing? When I first heard about this, I had to look this up many years ago. Here is the really good news-THERE IS NOT A TRANSFER TAX IN THE STATE OF ARIZONA!
A touch on personal property taxes. Mostly dealt with on Assisted Care or Mobile Home Parks. Be sure to look for outstanding personal property liens as this typically is accessed against the perosanlproerty and does not always show up on your title reports. If purchasing this type of property, simply have the seller provide the documentation that this has been paid.
This market is STILL hot and please call me to discuss your needs! I answer my phone or return the call quickly! 602-688-9279.
Hope that you have a GREAT day!
Remember to look for my book on Amazon about investing in commercial real estate!