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Over the next few weeks you will see Blog Posts not only from me but from our Referral Partners-HIGHLY EDUCATIONAL in our world today!

As always please let me know if you need to speak to me!  I am always available!

It’s finally possible for self-employed borrowers or independent contractors who have difficulty documenting their income to actually get a stated income loan to buy a non-occupant property for investment purposes.

The “debt-service-coverage” loan program helps these investors, house flippers and landlords who have multiple expense write-offs on their tax returns to buy investment properties without having to document their income.

The new option – use the anticipated monthly rent as income to qualify for the loan.

No Income Stated or Verified

If you have been aggressive with deductions on your tax return but have adequate cash flow, this type of loan may be for you.

The debt coverage ratio measures the ability to pay the property’s monthly mortgage payments from the cash generated from renting the property.

Lenders use this ratio as a guide to help them understand whether the property will generate enough cash to pay the mortgage expense.

The debt coverage ratio is calculated by dividing the property’s month net operating income (NOI) by a property’s monthly debt service. The monthly debt service is the total of the mortgage principal and interest payment, taxes, insurance, and any HOA fees.

Investors can qualify if the net operating income from the property is equal to or greater than 1.0 times the monthly debt service.

So, if you have a property that can generate $2,000 per month in rent, investors can qualify with an “all-in” mortgage payment of $2,000!

Debt Service Coverage Ratio (DSCR) Investor Loan

  • Loan-To-Values up to 80%
  • Credit Score down to 600
  • Qualification based upon cash flow of subject property
  • Interest only option available
  • 5/1, 7/1, and 30-year fixed options available

Non-Owner Occupied and Investment Purposes Only

This is only for Non Owner Occupied properties for investment purposes.  You will be required to sign a statement that states you live in another property that you own.

Please do contact Tom Bonetto for more specific information regarding qualification!

Here’s the link to the article: https://lendingcoach.net/debt-service-coverage/

As I’m sure you’re aware, the Tax Cuts and Jobs Act of 2017 (TCJA) was enacted at the end of last year. It’s the largest tax overhaul since the 1986 Tax Reform Act and will affect almost every business in the United States. Considering all the changes that took effect this year, It may be appropriate for us to meet as early as possible to discuss how these changes might affect your 2018 business tax return and to nail down any actions that may need to be taken before the end of the year.

Here’s a quick recap of the new rules, followed by some thoughts on steps we can take to reduce your 2018 tax liability.

  1. New Business-Related Tax Rules for 2018

The business-related provisions in the TCJA are permanent and generally take effect beginning with 2018 tax years. For businesses, highlights of the new law include: (1) an increase in amounts that may be expensed under Section 179 and an increase in the bonus depreciation deduction; (2) a 21 percent flat corporate tax rate; (3) a new business deduction for sole proprietorships and pass-through entities; (4) the elimination of the corporate alternative minimum tax (AMT); (5) modifications of rules relating to accounting methods; and (6) several changes involving partnerships and S corporations. The following is a brief overview of some of the more significant aspects of the new tax law that may affect your business.

Section 179 Deduction. For 2018, businesses can write off up to $1,000,000 of qualifying property under Section 179. The theory is that the money a business saves on taxes, as a result of deducting the full amount of equipment and other business property, can be reinvested back into the business. Additionally, writing off an asset in the year it is purchased, saves you the time and money it takes to keep track of the remaining basis of an asset after its yearly depreciation. The $1,000,000 amount is reduced (but not below zero)

by the amount by which the cost of the qualifying property placed in service during the tax year exceeds $2,500,000.

In addition, the definition of property that qualifies for the Section 179 deduction has been expanded to include certain depreciable tangible personal property used predominantly to furnish lodging or in connection with furnishing lodging, as well as any of the following improvements to nonresidential real property: roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; and security systems.

Bonus Depreciation Deduction. The new tax law extended and modified the additional first-year (i.e., “bonus”) depreciation deduction, which had generally been scheduled to end in 2019. An enhanced bonus depreciation deduction is now available, generally, through 2026. Under the new rules, the 50-percent additional depreciation allowance that was previously allowed is increased to 100 percent for property placed in service after September 27, 2017, and before January 1, 2023, as well as for specified plants planted or grafted after September 27, 2017, and before January 1, 2023. These deadlines are extended for certain longer production period property and certain aircraft.

The 100-percent allowance is phased down by 20 percent per calendar year in tax years beginning after 2022 (after 2023 for longer production period property and certain aircraft).

Another new provision removes the requirement that, in order to qualify for bonus depreciation, the original use of qualified property must begin with the taxpayer. Thus, the bonus depreciation deduction applies to purchases of used as well as new items.

Additional Depreciation on ‘Luxury’ Automobiles and Certain Personal Use Property. Another benefit of the new tax law is that it increases the depreciation limitations that apply to certain “listed” property such as vehicles with a gross unloaded weight of 6,000 lbs or less (known as “luxury” automobiles). For luxury automobiles placed in service after 2017, an additional $8,000 deduction is available, thus making the write-off for the first year $18,000. The deduction is $16,000 for the second year, $9,600 for the third year, and $5,760 for the fourth and later years in the recovery period.

New Deduction for Qualified Business Income. One of the biggest changes for 2018 is the new qualified business income deduction. If you are a sole proprietor, a partner in a partnership, a member in an LLC taxed as a partnership, or a shareholder in an S corporation, you may be entitled to a deduction for qualified business income for tax years beginning after December 31, 2017, and before January 1, 2026. Trusts and estates are also eligible for this deduction.

While there are important restrictions to taking this deduction, the amount of the deduction is generally 20 percent of qualifying business income from a qualified trade or business. A qualified trade or business means any trade or business other than (1) a specified service trade or business, or (2) the trade or business of being an employee. A “specified service trade or business” is defined as any trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, including investing and investment management, trading, or dealing in securities, partnership interests, or commodities, and any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees. Engineering and architecture services are specifically excluded from the definition of a specified service trade or business.

However, there is a special rule which allows you to take this deduction even if you have a specified service trade or business. Under that rule, the provision disqualifying such businesses from being considered a qualified trade or business for purposes of the qualified business income deduction does not apply to individuals with taxable income of less than $157,500 ($315,000 for joint filers). After an individual reaches the threshold amount, the restriction is phased in over a range of $50,000 in taxable income ($100,000 for joint filers). Thus, if your income falls within the range, you are allowed a partial deduction. Once the end of the range is reached, the deduction is completely disallowed.

For purposes of the deduction, items are treated as qualified items of income, gain, deduction, and loss only to the extent they are effectively connected with the conduct of a trade or business within the United States. In calculating the deduction, qualified business income means the net amount of qualified items of income, gain, deduction, and loss with respect to the qualified trade or business of the taxpayer.

Qualified business income does not include any amount paid by an S corporation that is treated as reasonable compensation of the taxpayer, or any guaranteed payment (or other payment) to a partner in a partnership for services rendered with respect to the trade or business. Qualified items do not include specified investment-related income, deductions, or losses, such as capital gains and losses, dividends and dividend equivalents, interest income other than that which is properly allocable to a trade or business, and similar items.

If the net amount of qualified business income from all qualified trades or businesses during the tax year is a loss, it is carried forward as a loss from a qualified trade or business to the next tax year (and reduces the qualified business income for that year).

W-2 Wage Limitation. The deductible amount for each qualified trade or business is the lesser of: (1) 20 percent of the taxpayer’s qualified business income with respect to the trade or business; or (2) the greater of: (a) 50 percent of the W-2 wages with respect to the trade or business, or (b) the sum of 25 percent of the W-2 wages with respect to the trade or business and 2.5 percent of the unadjusted basis, immediately after acquisition, of all qualified property (generally all depreciable property still within its depreciable period at the end of the tax year).

The W-2 wage limitation does not apply to individuals with taxable income of less than $157,500 ($315,000 for joint filers). After an individual reaches the threshold amount, the W-2 limitation is phased in over a range of $50,000 in taxable income ($100,000 for joint filers).

In the case of a partnership or S corporation, the business income deduction applies at the partner or shareholder level. Each partner in a partnership takes into account the partner’s allocable share of each qualified item of income, gain, deduction, and loss, and is treated as having W-2 wages for the tax year equal to the partner’s allocable share of W-2 wages of the partnership. Similarly, each shareholder in an S corporation takes into account the shareholder’s pro rata share of each qualified item and W-2 wages.

The deduction for qualified business income is subject to some overriding limitations relating to taxable income, net capital gains, and other items which are beyond the scope of this letter and will not affect the amount of the deduction in most situations.

Changes in Accounting Method Rules. The new tax law has also expanded the number of businesses eligible to use the cash method of accounting as long as the business satisfies a gross receipts test. This test allows businesses with annual average gross receipts that do not exceed $25 million for the three prior tax-year period to use the cash method. A similar gross receipts threshold provides an exemption from the following accounting requirements/methods: (1) uniform capitalization rules; (2) the requirement to keep inventories; and (3) the requirement to use the percentage-of-completion method for certain long-term contracts (thus allowing the use of the more favorable completed-contract method, or any other permissible exempt contract method).

We need to discuss whether or not your business might benefit from these changes. If the answer is yes, we’ll need to file tax forms with the IRS to initiate the changes, as well as set up your books and records to appropriately reflect the new methods being used. The sooner we do this, the better.

Carryover of Business Losses Is Now Limited. Beginning in 2018, excess business losses of a taxpayer other than a corporation are not allowed for the tax year. Under this excess business loss limitation, your loss from a non- passive trade or business is limited to $500,000 (married filing jointly) or $250,000 (all other taxpayers). Thus, such losses cannot be used to offset other income. Instead, if your business incurs such excess losses, you must carry them forward and treat them as part of your net operating loss carry forward in subsequent tax years.  In fact, net operating losses carried over from a prior year can only offset current business income up to 80%.

New Interest Deduction Limitations. You may have heard about a new limitation on the deduction of interest expense. Effective for 2018, the deduction for business interest is limited to the sum of business interest income plus 30 percent of adjusted taxable income for the tax year. However, there is an exception to this limitation for certain small taxpayers, certain real estate businesses that make an election to be exempt from this rule, businesses with floor plan financing (i.e., a specialized type of financing used by car dealerships), and for certain regulated utilities.

The new law exempts from the interest expense limitation taxpayers with average annual gross receipts for the three-taxable year period ending with the prior taxable year that do not exceed $25 million. Further, at the taxpayer’s election, any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business is not treated as a trade or business for purposes of the limitation, and therefore the limitation does not apply to such trades or businesses.

Elimination of Entertainment Deduction. The new tax law also eliminated business deductions for entertainment. As a result, no deduction is allowed with respect to: (1) an activity generally considered to be entertainment, amusement or recreation; (2) membership dues with respect to any club organized for business, pleasure, recreation or other social purposes; or (3) a facility or portion thereof used in connection with any of the above items.

Under prior law, there was an exception to this rule for entertainment, amusement, or recreation directly related to (or, in certain cases, associated with) the active conduct of a trade or business. This is no longer the case.

In addition, no deduction is allowed for expenses associated with providing any qualified transportation fringe benefits to your employees, except as necessary for ensuring the safety of an employee, including any expense incurred for providing transportation (or any payment or reimbursement) for commuting between the employee’s residence and place of employment.

A business may still generally deduct 50 percent of the food and beverage expenses associated with operating their trade or business (e.g., meals consumed by employees during work travel). If meals are combined with entertainment, the meal portion needs to be separately stated in order for the business to deduct the meal expense.

Changes to Partnership Rules. Several changes were made to the partnership tax rules. First, gain or loss from the sale or exchange of a partnership interest is treated as effectively connected with a U.S. trade or business to the extent that the transferor would have had effectively connected gain or loss had the partnership sold all of its assets at fair market value as of the date of the sale or exchange. Any gain or loss from the hypothetical asset sale by the partnership is allocated to interests in the partnership in the same manner as nonseparately stated income and loss.

Second, the transferee of a partnership interest must withhold 10 percent of the amount realized on the sale or exchange of the partnership interest unless the transferor certifies that the transferor is not a nonresident alien individual or foreign corporation.

Third, the definition of a substantial built-in loss has been modified so that a substantial built-in loss is considered to exist if the transferee of a partnership interest would be allocated a net loss in excess of $250,000 upon a hypothetical disposition by the partnership of all of the partnership’s assets in a fully taxable transaction for cash equal to the assets’ fair market value, immediately after the transfer of the partnership interest. This could necessitate the adjustment of the basis of partnership property.

Fourth, TCJA modifies the basis limitation on partner losses to provide that a partner’s distributive share of items that are not deductible in computing the partnership’s taxable income, and not properly chargeable to capital account, are allowed only to the extent of the partner’s adjusted basis in the partner’s partnership interest at the end of the partnership tax year in which an expenditure occurs. Thus, the basis limitation on partner losses applies to a partner’s distributive share of charitable contributions and foreign taxes.

Lastly, the rule providing for technical terminations of partnerships has been repealed.

Changes to S Corporation Rules. Several changes were also made to the tax rules involving S corporations. First, income that must be taken into account when an S corporation revokes its S corporation election is taken into account ratably over six years, rather than the four years under prior law. Second, a nonresident alien individual can be a potential current beneficiary of an electing small business trust (ESBT). Third, the charitable contribution deduction of an ESBT is not determined by the rules generally applicable to trusts but rather by the rules applicable to individuals. Thus, the percentage limitations and carryforward provisions applicable to individuals apply to charitable contributions made by the portion of an ESBT holding S corporation stock.

International Tax Changes. TCJA makes sweeping changes to the United States’ international tax regime through a series of highly complex provisions that are beyond the scope of this letter.

  1. II. Year-End Tax Plannin Section 179 Expensing and Bonus Depreciation. As discussed above, the Section 179 expensing and bonus depreciation rules have been generously enhanced under TCJA. These changes may create new opportunities to reduce current year tax liabilities through the acquisition of qualifying property – including property placed in service between now and the end of the year.

Vehicle-Related Deductions and Substantiation of Deductions. Expenses relating to business vehicles can add up to major deductions. If your business could use a large passenger vehicle, consider purchasing a sport utility  vehicle weighing more than 6,000 pounds. Vehicles under that weight limit are considered listed property and deductions are more limited. However, if the vehicle is more than 6,000 pounds, up to $25,000 of the cost of the vehicle can be immediately expensed.

Vehicle expense deductions are generally calculated using one of two methods: the standard mileage rate method or the actual expense method. If the standard mileage rate is used, parking fees and tolls incurred for business purposes can be added to the total amount calculated.

Since the IRS tends to focus on vehicle expenses in an audit and disallow them if they are not property substantiated, you should ensure that the following are part of your business’s tax records with respect to each vehicle used in the business: (1) the amount of each separate expense with respect  to the vehicle (e.g., the cost of purchase or lease, the cost of repairs and maintenance); (2) the amount of mileage for each business or investment use and the total miles for the tax period; (3) the date of the expenditure; and (4) the business purpose for the expenditure. The following are considered adequate for substantiating such expenses: (1) records such as a notebook, diary, log, statement of expense, or trip sheets; and (2) documentary evidence such as receipts, canceled checks, bills, or similar evidence. Records are considered adequate to substantiate the element of a vehicle expense only if they are prepared or maintained in such a manner that each recording of an element of the expense is made at or near the time the expense is incurred.

Retirement Plans and Other Fringe Benefits. Benefits are very attractive to employees. If you haven’t done so already, you may want to consider using benefits rather than higher wages to attract employees. While your business is not required to have a retirement plan, there are many advantages to having one. By starting a retirement savings plan, you not only help your employees save for the future, you can also use such a plan to attract and retain qualified employees. Retaining employees longer can impact your bottom line as well by reducing training costs. In addition, as a business owner, you can take advantage of the plan yourself, and so can your spouse. If your spouse is not currently on the payroll, you may want to consider adding him or her and paying a salary up to the maximum amount that can be deferred into a retirement plan. So, for example, if your spouse is 50 years old or over and receives a salary of $24,500, all of it could go into a 401(k), leaving your spouse with a retirement account but no taxable income.

By offering a retirement plan, you also generate tax savings to your business because employer contributions are deductible and the assets in the retirement plan grow tax free. Additionally, a tax credit is available to certain small employers for the costs of starting a retirement plan. Please let me know if this is an option you would like to discuss further.

Increasing Basis in Pass-thru Entities. If you are a partner in a partnership or a shareholder in an S corporation, and the entity is passing through a loss for the year, you must have enough basis in the entity in order to deduct the loss on your personal tax return. If you don’t, and if you can afford to, you should consider increasing your basis in the entity in order to take the loss in 2018.

De Minimis Safe Harbor Election. It may be advantageous to elect the annual de minimis safe harbor election for amounts paid to acquire or produce tangible property. By making this election, and as long as the items purchased don’t have to be capitalized under the uniform capitalization rules and are expensed for financial accounting purposes or in your books and records, you can deduct up to $2,500 per invoice or item (or up to $5,000 if you have an applicable financial statement).

S Corporation Shareholder Salaries. For any business operating as an S corporation, it’s important to ensure that shareholders involved in running the business are paid an amount that is commensurate with their workload. The IRS scrutinizes S corporations which distribute profits instead of paying compensation subject to employment taxes. Failing to pay arm’s length salaries can lead not only to tax deficiencies, but penalties and interest on those deficiencies as well. The key to establishing reasonable compensation is being able to show that the compensation paid for the type of work an owner-employee does for the S corporation is similar to what other corporations would pay for similar work. If you are in this situation, we need to document the factors that support the salary you are being paid.

As you can see, a lot is going on with respect to business income and taxes for 2018. The new tax law provisions are quite extensive and also quite complicated.

Please call me at your earliest convenience so we can discuss how these changes will impact your business, and what kind of strategies we can adopt to ensure that your business gets the best possible tax outcome under the new rules.

Sincerely,

Anne Cornelius, CPA

Happy 1031? IPX1031


NO TRICK: A Treat for Unsuccessful 1031 Exchanges!

A treat from the IRS? Taxpayers should not be spooked if they are unable to complete their 1031 Exchanges. A treat may exist for a calendar-year taxpayer who initiates a 1031 tax-deferred exchange during the last few months of this year only to find that the exchange fails (they are unable to purchase new replacement property within the time periods set forth in Section 1031). Since the exchange period will go into 2018, the IRS provides an option called “tax straddling” which allows most taxpayers to pay the tax that is due on their 2018 return as opposed to their 2017 return.

Of course the major benefit for a taxpayer who successfully completes a 1031 Exchange is 100% deferral of taxes and the ability to invest all of their equity into new property. Unfortunately, if a taxpayer is not able to purchase new property to successfully complete the 1031 Exchange, the taxes associated with the sale of their investment property will be due. However due to “tax straddling” the taxpayer may receive a one year tax payment deferral thanks to the coordination between IRC §453 and §1031 provided in the §1031 regulations.

How does this work? If a delayed 1031 exchange begins in the latter portion of 2017, the exchange period may run into 2018. If the exchange fails or if the taxpayer (having a bona fide intent to do an exchange) receives cash boot in 2018, the 1031 regulations treat the exchange as an installment sale allowing the taxpayer to consider that the exchange proceeds were received (and are taxable) in 2018.

However, if a taxpayer prefers to pay their taxes as soon as possible, in accordance with IRC section 453 (d) a taxpayer may “elect out” of the installment method. By electing out, the taxpayer can recognize the gain in 2017 instead of 2018. To elect out, the sale should be reported on Form 8949, Form 4797 (or both) and not on Form 6252. The election must be made by the due date, including extensions, for filing the 2017 tax return. For more information about the procedure and forms to use, see IRS Publication 537 and consult with your tax advisor. Additionally, tax straddling does not apply to all sales and any gain attributed to debt relief will have to be recognized in the year of sale.

The IRS does not penalize investors for attempting to complete a 1031 Exchange. Tax straddling provides an added incentive to taxpayers selling investment property at the end of the year. Why not attempt to complete a 1031 Exchange when a one year payment deferral is available as the back-up plan?

Please call us at IPX1031 to discuss tax straddling and other valuable tax-deferral solutions. Be sure to consult with your tax advisor before participating in a 1031 exchange.

If you asked 100 Professional People to name the top three challenges, time management would be in the three every time. Calls, emails, texts, and social media demand immediate attention. Even the most focused people can be distracted!

The absolute KEY to managing your time is organizing your calendar and STICKING TO IT. This will really keep you on the path and help you complete your tasks every day. Here is how I do it and I am told that I am one of the most organized Professionals in the industry.

 

The Night BEFORE

I always start my day the night before. I use a task program that is free and so easy to do. I add everything that I want to accomplish-phone calls, mailing, items to get done and yes even picking up dry cleaning. If I see that I have more to do in one day than I know I can get done-I prioritize them.  With my task program if I do not complete an item, I can add notes (if I have started the task) and change the date.

As I go down the list, if I find that something is time sensitive, I add it to my google calendar to be sure not to miss the time.  I also am sure to set the reminder appropriately.  For example, if I need to drive for 20 minutes I put the reminder at 30 minutes so I leave my office and arrive on time.

First Thing when you start your day

Whenever your day starts (mine is usually 4 AM) resist the urge to jump on email or social media. Put your cell on DO NOT DISTURB. Now get to work on your To-Do List.  Take time to complete items that can be done without email and phone-usually marketing, blogging etc.

The exception to NOT checking email is if you are expecting a contract as contracts always take precedence. Do not open every email but take a quick scan to make sure that highly important items are taken care of.

Morning

Your concentration, will power and discipline are always best in the morning.  I usually make sure if I am doing a financial analysis on properties that I do this in the morning. This is always the best time to knock off the to-do list.

Late Morning-Noon time

Usually when I need to come up for a bit of air, maybe a snack or cup of coffee; I get up from my desk and take a minute.  Now, it is a good time to evaluate or even reprioritize the rest of my day. Have I completed the high priorities?

If I have the day under control, this is the time that I look at market items or industry news. Keeping the day organized will let you have the time and energy to take on the unexpected items that suddenly become urgent.

Afternoon

I always put tasks in the afternoon that do not take as much energy or perhaps not as much concentration. It’s a great time to answer all phone calls, emails and texts. Social media takes this time as well.

If the To-Do list has been knocked out or completed as much as possible and you are looking for ways to make your day more productive make calls to your data base or polish your marketing.  Prepare for appointments, etc. In the professional world, the successful Professionals do not use the task list completion as the end of the day.

Late Afternoon/Evening

Have a quitting time! You may still take phone calls or check emails. Before you wind down and compete your day-take a minute to go over your tasks one more time to make sure that you have completed all that you wanted to or needed to.

Remember to add your personal time or family time as actual appointments on your calendar!  You are not effective unless you have true and enjoyable down time. Someone said to me recently, who will be at your funeral?  Prospects or family?  This is not to end this on a negative note but to help you stay focused on the items that are important to you!

There are SO MANY so called Real Estate Gurus out in the market place and I really hate to see anyone give them their money! For all of the 20 years that I have selling Investment Real Estate; sometimes it baffles me how these people can take the money from investors-many of whom have little experience.

I have given seminars for Investors since 2003 and I do not want a dime upfront.  If I do my job correctly-including educate the Investor; there is not any reason that I do not get compensated for my efforts on a performance basis.  Meaning COMMISSION!

Here is what every Investor in Real Estate needs to know-simple steps.

  1. Pick a Power Team-which means a Broker (preferably a CCIM) that understands the market that you want to invest in.
  2. With the Power Team- Make sure that the Broker is strong and well connected to the sources that you need(Lawyers, Lenders, Inspectors and other Brokers as well)
  3. Decide on your PATH. This can mean several things such as what type of asset class do you want.  Why do you want to invest? How long do you want to hold the investment? Make sure that your Broker not only understands this but also has the well rounded ability to explore all possibilities with you. Often times when someone visits with me, by the time we are finished with the conversation we are exploring a different path.
  4. Make sure that you get “papered up”. This means your entity that you are going to use to buy the Asset with.  Don’t wait until you go to contract.  Contracts can be overwhelming and why not get some of the details completed before you go to contract.  You will be busy enough with the Due Diligence that you will not need to be distracted by the paperwork of the Entity,obtaining your EIN number, and establishing the correct bank accounts.
  5. Speak with either your CPA or your Power Team’s recommended CPA.  While your CPA may be great; get the advise of a good Real Estate CPA.  Like all professions-some CPAs are better at different things.
  6. GET QUALIFIED-in today’s world, if you are not qualified the contract is not worth the paper that it is written on!
  7. Be prepared to write a contract.  This does not mean the closing price-it means get the deal and figure it out! Rely on your Broker to advise the offering price.  Many markets need a full price offer to obtain the accepted contract.
  8. ASK QUESTIONS! If I do not hear a question after explaining something; I can only believe that I was understood. The only “stupid” question is the question that is not asked!

I could go on and on and often I do but here is the BEST advise I can give-no matter what market or even country that you invest in:

Give a Tenant a CLEAN place to live

Give a Tenant a SAFE place to live

Give a Tenant responsive property management

Do this and you will not experience vacancies, you should be full and I can speak from experience that you will get above market rents!

Check out our listings Gerchick Real Estate Listings

I have been using Social Media since about 2009.  I am active on Facebook, LinkedIn, Twitter and within reason Google Plus with the addition of You Tube.

While I have had articles written about my use of Social Media-there are some thoughts and idea that are important to share.

I also spent a great deal of money to update my website at the end of last year. Over the course of my career I have spent more than you can imagine to create the Branding that I use today.

First, I started on Social Media to “see” what the kids were doing on Facebook.  In 2009 not many Real Estate professionals had caught on.  In the first six months of using Facebook-I sold 7 properties.

I am currently connected to 5000 people on Facebook. I have a page and a closed group as well.  Today Facebook is used to promote everything from a political stance to the food that you have for lunch! I find that I do not log into Facebook like I used to for these reasons.

Twitter started when my Step Daughter, who was about 8 or 9 came to me and said that I needed to have a Twitter account. In the spirit of encouragement, I told her to make one for me.  Hence, I am ccimcutie.  I did not use Twitter a lot for a long time.  Now I use this all the time.

You Tube is used all over my website and I love the platform not only to educate my Clients but to share videos with Clients that helps with marketing.

LinkedIn is the platform that I recommend. As of this morning I am connected to almost 12,000 people.

Here is the secret to social media (and there are NO secrets in marketing) – consistency!  I spend approximately at the minimum 1-2 hours a day. I have most of my social media accounts linked together so that I can work on one platform and it will populate all of them.

BEFORE you dive into Social Media spend a GREAT deal of time to develop your profiles.  For heaven’s sake get a current professional photo!

I do not hire my Social Media to be done by someone else-they never sound or feel like me.

Remember that when someone connects with you-send a thank you to them and tell them about yourself.

STATISTACALLY, you have 7 seconds to make an impression-don’t use this to tell someone what you had for lunch-no one cares!

When someone endorses you on LinkedIn-say thanks and Endorse them back.  ASK for Recommendations and know the difference between Endorsements and Recommendations. Be sure on LinkedIn to list all 50 of your items that You want to be endorsed for!  Change the order as the top three is the order that these items are seen.  Change them as you evolve in your business.

Block anyone that either annoys you or certainly harasses you! On all Social Media Platforms.

Remember that no matter what your business is – if you don’t tell anyone they will not know who you are or what you do!

In future blogs, I will take each platform and break it down completely what works for me and what does not.

“If you’re not willing to learn, no one can help you. If you’re determined to learn, no one can stop you!”

This past week I had a person ask me what is one of the biggest epiphanies I have learned about myself in the last couple of years.  Great question and it only took me a few seconds to respond.  I said, “the older I have become, the more I understand how much I don’t know and how much more I have to learn.”  Another way to translate this insight comes from an old saying my grandfather used to tell me and it goes like this, “To know what you know and to know what you don’t know, means that you know.”

One of my greatest discoveries is that human beings can never exhaust their capacity to learn.  Many people learn to be lazy and become complacent in life, then they can’t figure out why they battle dread and become unfulfilled.  However, when you make a commitment to learn and grow every day you begin to understand and enjoy the journey of life.  There is no final destination on this earth.  Our purpose is to grow to our full potential, serve others and make a difference with our lives.  Today I want to share with you a few keys to help you enjoy your success journey.

1 – THINK LONG TERMone of the greatest tragedies in contemporary living is short term thinking.  Successful people set long-term goals and they understand that these targets are merely the result of short-term habits they need to do every day.  These healthy daily habits should not be something you do; they should be something you are.  Patience and discipline are two prerequisites to succeed in any area of your life.  Think about it.  Which did you plan for more, your wedding or your marriage?  Which do you plan for more your vacation or life?  See the difference?

2 – THINK BIG, PLAY BIGI love this quote from Marianne Williamson,“Your playing small does not serve the world”.  There’s nothing enlightened about shrinking so that other people won’t feel insecure around you.  We were born to make manifest the glory of God that is within us.  It’s not just in some of us; it’s in everyone.  And as we let our own light shine, we unconsciously give other people permission to do the same.  As we are liberated from our own fear, our presence automatically liberates others.”  It is so important to take risks and try new things.  If you never try and take advantage of opportunities or allow your dreams to become a reality, then you will never realize your true potential.

3 – TAKE PERSONAL RESPONSIBILITYyes, take personal responsibility for everything in your life.  We live in a world today where most people want to blame their past, their parents, the government, their boss, their spouse, their ex, the color of their skin, their whatever.  I’m grateful to my grandmother who taught me the importance of taking responsibility for everything that happens in my life.  The truth is that life is not so much about the cards you are dealt, but how you play the hand.  Adversity it is not prejudice and visits all of us.  No matter their weaknesses, past failures or beginnings, successful people know they are responsible for their life.

4 – ELIMINATE TOXIC PEOPLE – Get rid of people in your life that subtract and divide – draw closer to people who will ADD and Multiply to your life.  People we spend the most time with, add up to whom we become.  I love how Jim Rohn said it, “you are the average of the five people you spend the most time with.”  There are wise people and foolish people. There are less ambitious people and there are more ambitious people. If you spend time with people more advance than you, no matter how challenging that might be, you will become more successful.  Who do you surround yourself with?  What changes do you need to make today?
Remember, the capacity to learn is a gift; the willingness to learn is a choice.

TIME FOR ACTION!

We at Gerchick Real Estate are always striving to grow and learn and BE BETTER!  We offer Real Estate solutions for the Investors! Register on this site and see how much information that we give you-so YOU can make better decisions.

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So in this article, I want to share 5 important reasons for real estate investors to invest in multifamily real estate as part of their overall investing plan.

#1 Easier to Finance

Although multifamily investment properties are more expensive than single-family properties, they’re generally easier to finance, all things considered.

While this may sound counterintuitive, investors need to understand that multifamily properties pose less risk for a lender, because multiple families are living under one roof.

Vacancy relating to multifamily and single-family property is just one example of how multifamily properties are less risky for lenders. A vacancy with a multifamily property has less of a negative impact than with a single-family property, because it continues to generate cash flow from rents collected from the remaining families.

#2 Quickly Grow Your Portfolio

Investors can grow their rental property portfolio more quickly with multifamily investment properties than single-family homes.

For example, the time, energy, and expense of purchasing 300 single-family properties with 300 closings can be drastically reduced by purchasing one multifamily property with 300 units. An aggressive investor can grow his portfolio quickly with a few multifamily purchases, rather than taking years to purchase individual properties.

#3 Easier Property Management

Some real estate investors with single-family homes try to self-manage their properties in order to save money, especially when they only own a few properties. Of course, this usually does not bode well for the investor or tenants, and causes major stress for both parties.

Multifamily investment properties can be easier to manage because they produce the cash flow and income to reasonably afford the staff to manage the property.

Additionally, multifamily properties can be less expensive to manage because:

  • Professional management staff work full time, and possibly live, on the premises.
  • Units in a multifamily property are centrally located, and not spread out over a large geographic area.

#4 More Options for Forced Appreciation

Forced appreciation occurs when an investment property increases in value as a result of actions taken by the owner.

Multifamily properties inherently have more options for owner-driven appreciation, because a small change adds value affecting multiple families, not just a single family. Also, larger multifamily properties have large common areas and community amenities that can be enhanced to add value and force appreciation.

Finally, when breaking down the numbers on a per family basis, the cost per family for the improvements of a multifamily property are often considerably less compared to a single-family home.

Common improvements to multifamily investment properties that force appreciation include:

  • Improving curb appeal.
  • Updating common areas and individual units.
  • Adding and improving amenities.
  • Adding security features, such as a gate, security guards, etc.

#5 More Cash Flow

Multifamily investment properties have a greater opportunity to generate cash flow than single-family properties, because of the reasons we’ve discussed.

Higher profits are generated by lower expenses resulting from having multiple units under one roof, when compared to single-family homes spread great distances apart. Also, multifamily properties have centralized and consistent management teams that can generate profits by lowering expenses.

Cash flow is also generated with multifamily properties by consistently forcing appreciation, which results in higher rents, higher profits, and a stronger balance sheet.

 

While it is possible to buy and/or sell a commercial property yourself, a good Commercial Broker is often a great source of information.

A Commercial Broker is valuable to the Buyer and the Seller in a real estate transaction.

FOR THE BUYER

Buyers often fear that using a Commercial Broker will require they pay a fee.  Generally (but not always) it is the Seller who pays the sale commission. Another frequent myth is that the Buyer can find a better deal by purchasing “For Sale by Owner” properties because the Seller is avoiding the Broker’s commission. However, in many cases, the selling price of the property ends up being equal or higher than those listed by Commercial Brokers.

Commercial Brokers can:

  • Help determine an approximate price range
  • Refer you to a lender with financing options best suited to your needs
  • Provide access to many resource
  • Information on a broader supply thru their resources including sources not available to the public
  • Provide a market analysis
  • Use their experience in negotiating
  • Follow up on all of the contract details and closing  process

FOR THE SELLER

When selling a property, the focus should be on:

  • Getting the best price
  • Selling the property with the least amount of hassle

Commercial Brokers can:

  • Provide up-to-date information on what is happening in the real estate market, including financing changes and competing properties
  • Serve as your marketing coordinator
  • Suggest repairs to market for the highest and best price
  • Providing access to Commercial Listing Services
  • Marketing to other Commercial Brokers
  • Pre-screen and show your property to qualified Buyers
  • Guide the transaction to a successful close

HOW TO QUALIFY THE RIGHT COMMERCIAL BROKER FOR YOU

Some of the questions that can help you decide are:

  • How will you keep us informed on the progress of the Sale?
  • Where do you feel that your strengths lie?
  • How did you arrive at the suggested listing price?
  • What is your marketing plan?
  • Can you give me references of past clients?
  • How long have you been practicing Commercial Real Estate?
  • Are you a full time Broker?
  • Are you an investor yourself?
  • How many sales did you have last year?
  • How many Buyers/Sellers are you currently working with now?
  • How “available” do you make yourself?
  • How does someone contact you?
  • Are you familiar with the type of property involved?
  • What is the average transaction that you did last year?