Feel free to call me, everyone knows I answer my phone 602-688-9279.
Have a GREAT day!
Feel free to call me, everyone knows I answer my phone 602-688-9279.
Have a GREAT day!
The BINSR is one of the most important but delicate items of the Escrow. I want to spend some time discussing this. It’s important that if the property is the right property that the Buyer and Seller walk away with a Win-Win situation. Too often the Agents get in the way of the BINSR. Ijust had a property cancellation and the inspection was not anything that could not have been overcome. Mostly small items!
When the Buyer has completed their due diligence during the inspection period it is time for the BINSR to be prepared and submitted to the Seller.
Please note that the BINSR is not part of the contract and when this negotiation is completed, there may and probably will be an addendum to the Purchase Contract will be signed. The BINSR is typically not sent to Title or the Ender but the Addendum to the Contract certainly is.
First, it is important to understand that no matter when the BINSR is submitted that the inspection period is now over. This means that the Buyer needs to have all of the due diligence completed. Remember that his DOES NOT mean appraisals or loan but rather books and records along with physical items. There is a list on the Buyer Advisory and the face page of the residential contract.
Secondly, when the BINSR is submitted (either Commercial or Residential) the Seller has five days to respond. IF the Seller does not respond, this means that the Seller will not do anything. Once the Seller responds (unless they agree to everything) the Buyer has five days to either continue to negotiate, accept or cancel the contract with full refund of the Earnest Money.
When submitting the BINSR for multifamily, often we are looking for the Buyer a credit at cose. One of the important items that our referral partner provides is a SOPC which can help give the Buyer the number to work from. I cannot stress how this is helpful for two reasons. First, this gives me a number to place in front of the Seller that is a third party. This also delineated Health and Safety and Immediate needs. The Seller thereby has material knowledge of the Health and Safety and Immediate needs. IF they will not agree to the number or the repairs and the Escrow cancelled due to this, the Seller and the Listing Agent now have to disclose this knowledge going forward.
A word of caution,do not wait until the very last minute to respond. Last year a Buyer’s Agent who was self representing himself, waited until 11:59 to send the BINSR to me. His email failed and he sent it at 12:01 AM. The inspection period was up and his Earnest Money was at risk-clearly. His 10K was either forfeited or he had to close. He closed. If he had sent this earlier, he could have cancelled and gone on.
It is important as in any negotiation that the Buyer be reasonable as well. Last year, I had a Buyer that asked for very unreasonable items to be repaired. Remember that if it is not broken the Buyer cannot ask for replacement, especially on items that according to the inspection would last at least another 5-8 years. Here is a saying that I think about-Pigs get fat and Hogs get slaughtered. Something to think about.
Also, on all of my transactions, the Title company issues a Critical Dates Letter. This is important to review and it will give the dates of the end of the inspection period.
I hope that this helps and if you have any questions, remember that I answer my phone!
Have a great day!
I wanted to take a few moments to really explain some of the processes that I use to make Investors successful.
First, I answer my phone. How important is that?
When a person first connects with me, we have an automated procedure that I use. I place the person on an MLS search for 2 or more units. This allows them to start becoming familiar with the market. It is only sent out twice a week and is an opt in program. If you have not opted in, you are missing information. If you need me to send this to you again, let me know. If you want to be added, let me know.
I use Salesforce as a CRM. Once the person is in Salesforce, they will get an email from me to explain my background.
Also, if the person is on LinkedIn not only will they receive an invitation from me to connect but also an invitation to the closed investment group that is updated with market stories in real time once or twice a week. Another great way to understand the Phoenix Market.
Additibally, remember that I am a member of the Tucson MLS and can (by request only) add you to the Tucson MLS as well.
I keep a massive spreadsheet containing all leads and current clients. This is tracked as to when I have spoken to you and your comments. It also tracks when and how often the MLS searches are opened. Two of my referral partners Tom and JC) help me with getting these people qualified for a loan. If the person is just looking that’s great. What about if they are interested in more than 4 units? No problem, but then I can help find the right commercial lender for the task at hand.
When I find a deal that I think is worth getting serious about, I send out a constant contact. I do not play favorites, the first Investor that calls me and wants it-gets it!.
When we go to Escrow or Contract, I have an online portal system that we store all executed documents and due diligence and you will be invited to this as well.
Did I mention the website? I know that you are on this now but have you registered for the back side-more information. I have spent over $30,000 on this website. You can access it easily from your phone as well.
How about my book on Amazon? Just google my name and it comes up!
How about the 10 hours of education on the site? I paid almost $25,000 to make this a GOOD educational program for the investor.
Don’t forget the classroom workshop on May 2nd.
Below is a bit about the market last week.
According to the Information Market, residential sales in Maricopa County were up 14.8% in January 2020 when compared to January 2019. That’s 7,922 units vs. 6,898 units. Resales accounted for 6,768 of the sales in January of 2020 compared to 5,954 in January of 2019. Median resale prices were up 10.1% over that period to $285,000. New build sales rose to 1,154 vs. 944. New median sales prices rose 6.7% to $365,706.
Feel free to call me, I answer my phone and return calls as soon as possible! 602-688-9279!
Hope your day is amazing!
The first quarter of 2020 zooming byand I am going to share my research and thoughts on the market for the Phoenix area and in particular MultiFamily.
First and foremost one of the questions that I am continually being asked is how long until we see a correction in the Phoenix Market. Let me be clear-I do not have a crystal ball and will not set specific times or dates.
Here is what is happening now. There are over 250 major companies relocating to the Phoenix Market and this means jobs and building growth. One of the reasons that we see this is really two fold. One, California is almost impossible to build in and the laws that DISCOURAGE growth are rapant. My phone is ringing constantly with California Investors. I am meeting with several Californians that have given up and moved here. Many are liquidating their assets on the coast and moving their investments here. The second reason is that our State has a VERY friendly legislature for growth and are incentivized to make this happen. What is really interesting is that I am receiving quite a bit of interest from the East Coast as well.
Remember that our cost of living is low as well.
So the next question is what about jobs, tenants and places to live?
In reference to jobs, our unemployment rate is below that National average and our workforce is robust. Tenants are interesting right for two reasons. The first is that the amount of rents are keeping up with the wages and rents are on the increase there is no doubt. We had a multi unit property that the tenants needed the rents raised. The Property Manager raised the rents $200 across the board and not one tenant left! One of my clients in Tucson wanted to rent a small apartment here so he could manage the rehab on one of his properties. He could not find an apartment or at least one that he felt was affordable for his needs. The second part of the Tenant situation is that the younger tenants (millennials) do not want home ownership, they do not seem to want the responsibility of maintaining their own property.
Places to live are really interesting and probably the main reason that we see NO vacancies to speak of.
About 10 years ago, Elliot Pollock who is probably the foremost economist on the PHoenix market projected that in 2020 we would need 525,000 more dwellings and that 35% of this would be new multifamily. I went to a conference two weeks ago on the economy that he was one of the featured speakers. Not only have we not met these numbers but now he believes that we need more units and that he projects that our growth will remain strong for at least another 4 years.
Here is a link for some breaking news that happened yesterday check it out Historically low inventory continues driving home prices higher
I want to quote and give you directly from the horse’s mouth Elliott Pollack’s last Monday projections. I respect him a great deal and you should go to his website and sign up for his weekly updates. See below.
Also, remember that I am on the ground and digging deals out. Call me I want to speak with you and help you understand the market and what is going on.
ELLIOTT D. POLLACK & Company
FOR IMMEDIATE RELEASE
January 27, 2020
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
It was a slow week for national economic news. Leading indicators were essentially flat. Monthly existing home sales increased substantially from a year ago in December but were up only modestly for the year (2019 over 2018). And the supply/demand imbalance in the country caused resale prices to increase at four times the overall rate of inflation and more rapidly than wage gains for the December over December measure but were up more modestly for the year as a whole. This is because when interest rates declined during the year it allowed more of the pent up demand for housing to manifest itself. Other than that, it was political. The impeachment trial got underway in the Senate. And according to the Washington Examiner, the death of Mr. Peanut, the Planters Peanut symbol for the last 104 years, overshadowed the first day of impeachment arguments on Twitter. Is the public telling us something?
On the local level, the latest Arizona, Greater Phoenix, and Greater Tucson employment data shows that the state and its major metro areas are continuing to do well economically. Arizona remained the third most rapidly growing state in 2019 and Greater Phoenix was the third most rapidly growing major employment market in the country in 2019. Thus, the state and Greater Phoenix are going into 2020 with a full head of steam. The same can be said for the single family, apartment, office and industrial real estate markets in Greater Phoenix.
Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.
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.