Getting hold of a commercial property is tough. This cannot be compared with getting a residential property for lease. There are many factors which can turn the most lucrative deal against you. Also there exist a lot of factors that can affect the business opportunities as well profitability if such a property is not chosen without thinking about the pros and cons.

To choose a proper place we need to look for the right place where we can have our business running smoothly. In such cases many people rely on their own instinct and go ahead with their own strategy and plan to get a lease. They may succeed or they may fail. But if you are looking to get a commercial property for lease, you must always find a broker who knows the tricks of the trade. Getting a broker will help you in selecting the right properties in the area of your choice.

Getting a commercial broker is not at all difficult as they are more than willing to find you the right place if you sign a small representation agreement and part with a little incentive. As they will be getting most of the fees from the owner, they will definitely secure you with the best deal available. If you are trying to lease a place in a small town where commercial brokers may not be available, you can search the public records yourself and have a deal fixed with the landowner. But choosing a broker in a big city will help you as the brokers work for the commissions and they will definitely try to get you the best deal available. Finding such a broker is not difficult at all especially if you are working with any real estate attorney.

As is the case while renting a residential property, you will find that the lease agreement is generally more inclined towards the benefits of the landlord. You have to be very careful about the terms and conditions as there are a few snags that remain almost in every agreement and if not addressed at the beginning, could dent your financial plans. Any commercial property for lease market is a cut-throat market, and any agreement should be prepared so that both the tenant and the owner get to receive benefit from the contract. As of current situation there is no fixed security deposit that you must pay and it varies a lot. You can use your negotiation skills to reduce the amount though.

The general areas that may or may not be mentioned specifically in the agreement need to be addressed properly and you should come to a decision regarding the up keeping of the common areas. However, even if not mentioned, you are responsible for maintenance and utility of the area you have taken on lease. The tenure of lease may be fixed by both the parties and can range from anything from 2 years and more. If you want to leave the place before normal deadline, you must be ready to pay out the remaining period by giving a termination fee.

If you’re looking for house insurance coverage, it’s important to have a good understanding of what it is. This type of insurance typically provides coverage for your private home, and in the event it is damaged or loss, compensates you. How much of the property that is covered, and how much compensation money you can receive, depends on the insurance company itself as well as the policy, deductible, and what is exactly covered in the policy.

Property damage can be covered in your policy if you want to protect the property itself, including the yard and any items of value other than the house, such as the storage building, gazebo, or garage. There is also home contents insurance that protects your valuables from loss or theft.

Your geographical location and local weather play a role in the type of policy you get. Most places require fire and flood insurance, even if you just live close to a stream. It does happen sometimes – streams can turn into raging rivers if there is enough rain. Those living in coastal areas are usually required to have hurricane property.

Optional House Insurance Coverage

Some house insurance coverage is optional and not required. If you feel that some of your neighbors are untrustworthy, for instance, you might extra theft damage or even some type of medical care coverage. It’s possible to save money and get discounts for taking extra safety precautions. Remove all objects on the property someone could possibly trip over. Have security alarms and cameras installed around the property to reduce the risk of being robbed. Working smoke detectors are always essential for not only safety, but for increasing the overall safety of your property.

Liability coverage is definitely the most essential part of homeowners insurance. If a visitor winds up getting injured while on your property or in your home, you might end up having to pay compensation. If you are sued, you’ll have to hire a lawyer, and that could potentially cost thousands of dollars.

It will also be very costly if your house is utterly destroyed and you have to have it rebuilt. Some insurance coverage will pay for a hotel or other living arrangement while it is being repaired or rebuilt. Consider the rebuilding costs of the home versus its actual value when purchasing house insurance coverage.

Since home / property insurance can be so complicated, first take the time to research it further. The best place to find information about house insurance coverage, and to get a reliable quote, is Lemonade Insurance. It’s highly-rated and very affordable in many states.

When people come to think about buying or selling a house, they move on to the procedure of Independent house valuation, which helps them understand the value of their house as per the rates of the market. Though they are not quite aware of the details of property valuation in detail, they make it a point to evaluate their house only at the time of selling or buying. It has to be understood that there are a lot many theories that are included with the valuation of a property these days.

What is Income Method?

Income method is a type of property valuation method that estimates the worth of a property according to the revenue potential. The income that is generated that is calculated can either be from the rental income or from the re sale value. This method is pretty complicated, but is used widely by investors when they are about to place a value on any kind of property investment or to assess whether what they are investing will be profitable in the coming future.

For being accurate with the help of income method, one has to rely upon certain assumptions. They are:

• Resale value of property

• Income that will be gained from renting the property

How to calculate the value of property

For calculating these assumptions the current data of properties similar to the one owned is made use of, for getting a good idea on the value of the property. Valuation of this kind comes into reality when the income generated should be set against the capital so as to find out how property will become profitable for us, for estimating the property’s profit, is should be compared to a similar investment or same capital expenditure. This will help in assessing whether the property guarantees investment in future.

Can you calculate the risk factors?

The most difficult part of any kind of investment in property is to calculate the risk. Though we can research about the past, we will not be able to get the right solution for the same. It is a true fact that predicting about the property market is simply an impossible task. Though we can put an estimate on the property by taking a look at the current data and trend, it is extremely difficult to predict the speed or magnitude of the risks.

Income valuation method does not attempt to find out the current market situation. On the other hand, it depends mainly on the property value in the coming future. It takes the value of the future and compares it to the price that has to be paid at present. The estimate of the final sale value and the income for rent mainly depends upon predicting the market, which is to an extent very difficult.

Though this method is mainly used by serious investors and not by home buyers, we find that this method has a lot of advantages over the method of comparable sales. The advantage of this property valuation method is that it concentrates on the individual. It values the property to them and not the market. If you are very much serious in investing property, the income method of valuation can help you to know the large profits you are in search of.

Owning rental property can be a lot of fun, but it can also be a lot of work. While many landlords have really amazing experiences, there are just as many who do not. By hiring a property management company, you can take the worries and time-consuming tasks that come with managing a rental property and pass them along to a professional. Before you make a move towards hiring a professional rental management company, take stock of your property and decide whether or not the costs will be worthwhile.

The Pros of Hiring a Property Management Company

They Can Find Tenants for You

A professional management company can handle the marketing for you and your property, placing ads and screening calls from prospective tenants. When someone responds that fits the qualifications you have given the property management service, the company will call you!

They Can Act as Your Liaison

Good customer relations are essential, and if you have a large business you may not have time to keep a relationship going with every new tenant. If you hire a rental management company, they can help step in and fill this role for you. Professional property management companies can also field complaints and requests for repairs or maintenance instead of leaving all of this up to you.

They Can Handle the Finances

If dealing with the financial aspects of being a landlord doesn’t appeal to you, or you simply think it would be better to have someone else handle this part of your business, a property management company might be a great fit for you. Professional property managers collect rent, deposits, and any late charges that might occur. No more having to remind tenants of a late payment!

They Know the Local Laws

Because there are specific laws that deal with rental properties, hiring a property management service can be your ticket to greater understanding of these laws for your own benefit. Having a professional in your corner can be enormously helpful and also help you avoid any potential legal blunders while managing your rental property.

They Are Well Connected

Any professional rental manager worth mentioning is likely to have connections with other professionals and groups in your area. When you need to hire someone for a repair, upgrade, or replacement your manager will be able to recommend someone they know or have worked with before, helping you get the job done right the first time.

The Cons of Hiring a Property Management Company

They Cost Money

Really the only con of using a professional rental management company is the cost. Many landlords will avoid signing on with such companies because they are worried that doing so will affect their profit margin a little more than they would like.

There are many advantages to hiring a property management company; peace of mind and the knowledge that they will call you if something truly important occurs are all valuable things that a business owner can definitely appreciate!

Why should I hire the services of the rental property management organization to look after my property given on rent? It would be the first question from every landlord who has given his property on rent, if you ask them to use the services of any such group existing in your city. You will agree that when a person lets his house or any part of his house for rent, his main goal is to earn profits from it to enjoy a better life and make payment of his various bills.

Giving a house on rent is one of the oldest practices carried across the world. If there are any used parts at home, people give it on rent to earn extra income from that part. To a certain extent, this practice seems possible to earn more income in short span of time without investing a single penny from the pocket. But, when a person has a huge amount of properties under his possession and he has given all of them on rent, then looking after all those properties at the same time could be complicated for him, until unless he has enough time to look after them or has someone to take the care of those properties in his absence. However, for that it is imperative that either you or the other person taking care of your property should have proper knowledge of handling the property given on rent.

This is mainly because of lots of legal formalities associated with it, moreover, there are certain conditions where being a landlord you have to sort out any issue arising from your property to your tenant. Let us, for instance, say, while giving your house on rent you told your tenant that the house is equipped with an electrical converter to lighten the house during the power cut. But, during power cuts if that electrical converter did not work, then at that time it is obvious that your tenant will call you and complain about that issue. In such situation if he is residing in your house then it will be easier for you to rectify his problem, but if your rented house is quite away from your residence, at that time going out of home to solve the issue of an electrical converter will be laborious and irritating for you. Therefore, to cope with all these issues it will be better for you to acquire the service, property management group to look after all such complicated issues.

The above mentioned illustration of an electrical converter is just an example to understand the relevance of the services offered by a property management group. There is a plethora of services offered by the expert working in these groups. These experts are well-versed with all legal activities which are expected to be performed by the landlord. Do you know, that before allowing someone to live in your house as a tenant it is imperatively expected from the landlord to cross check the background of your prospective tenant? May be your answer is yes, but do you know what to do if your tenant makes excuses in paying the rent on time, or starts making improper use of your prospective tenant. Hiring the services of experts working in property groups will help in overcoming all these problems.

These experts will properly advertise about the availability of your property to rent, conduct their interviews and cross check their credit from the local police station. Will collect rent from them on time. Make regular inspection of your property that it is not being damaged or improperly used by the tenants. Look after their phone calls during odd hours and reach at the site to solve those issues. These experts will also help you in getting your house vacated from the tenants before the expiry of the agreement, in case if you wish to use the house for some personal work. Not only this, if at the end of tenancy agreement your tenants wish to continue the agreement, in that scenario, these experts will get all the paper work done strictly according to the rules and regulations, prescribing the new terms and conditions related to the rent and use of the house.

People who own a commercial property can get more than enough cash flow from their commercial property and definitely have guaranteed financial security for your future. Of course, both of these benefits do come with a price. One of these is the property has to be in good condition to maintain or increase its value. Otherwise, you will have to spend more money on maintenance and taxes.

Considering commercial property management firms is an excellent solution. Instead of you, and a handful of people you know, running your commercial property, you get another company to do the managing so it will be less hassle and stress-free. Check out some advantages that you can get from getting these services from professional property management experts.

– You will be able to provide the very best service to tenants. A commercial property firm will have the systems and the people in place to address every kind of tenant concern, from the smallest utility issue to the more serious security problems. Even though you own a fairly small commercial building, servicing tenants and making sure they are satisfied (and safe) can be time consuming as well as energy draining. Unless you have nothing else to do with your days, then you could better serve your tenants by hiring a business management firm to do the job for you.

– You can get better tenants for your commercial property. One of the ways to maintain profits is to get the best tenants. This means tenants who pay on time and who also take care of their leased spaces as their own. Delinquent tenants not only dissolve profits, but they also create a lot of stress.

– Property professionals have the experience to manage your property. From collecting rent to implementing maintenance work, these business managers can handle every aspect of running any building. They do the job for you so you don’t have to be stressed out or be hassled.

– A well-managed property will never fail to yield revenue. With expertise and experience at the helm of your business venture, you are sure to turn over a good profit every time. Some of the best leasing companies even assess your terms and make appropriate recommendations so that you not only reduce problems but also boost revenue.

– You need to relax and enjoy your investment. Finally, what good is a property investment if you can’t even find the time to relax and enjoy the profits you have earned? With the right management firm, you can do that now. Click here to know more.

The field services industry, which is commonly referred to as the “property preservation”, “foreclosure cleanup” or “REO trashout” industry, has changed considerably over the years.

When the mortgage crisis and eventual housing fiasco first seized the real estate industry, a great number of smaller foreclosure contractors entered the market. Many of these micro companies performed assorted mortgage field services tasks for lenders, banks, financial institutions, REO conglomerates and asset management companies in hamlets and diverse regions across the United States of America.

A ton of larger, national entities were also part of the landscape that was fast becoming a burgeoning property preservation industry.

A great many of the larger entities such as those of Pemco, Sentinel, Cyprexx, Safeguard, Chronos Solutions (previously known as Matt Martin Real Estate Management), and a great number of similar companies, were direct, first hand components of HUD (“The United States Department of Housing and Urban Development”).

These larger companies hired smaller debris removal, cleaning and trash out services as subcontractors to handle duties such as lawn maintenance, property securing (boarding doors/windows), property inspecting, trash/debris removal, winterization and de-winterization jobs, repairs, lock changes, home maintenance, painting, carpet removal, gutter cleaning, pressure washing, tree removal and many similar property upkeep and maintenance duties.

Services were often performed on vacant houses, many of which mortgagees had walked away from after getting foreclosure letters from their mortgage companies.

Multiple Subbing Opportunities, Jobs and Contracts for REO Service Vendors

Contracts and work order requests were received in numbers, and many small companies had to rush to hire subcontractors to assist with the overflow.

As a result, these smaller contractors made a ton of money in the property preservation and foreclosure cleaning industry at the height of the mortgage crisis.

A Changing Property Preservation Industry

However, fast-forward five to seven years, and its evident the industry has changed, exponentially.

The New Trashout Business, Foreclosure Cleaning Services and REO Property Preservation Model

In recent years, foreclosure cleanup and trash-out services have not only begun to target new key customers and client bases, but they have also added a number of new very profitable mortgage and field services and inked new necessary policies and procedures that work specifically for their own services and businesses — regardless of who their companies may be aligned with or who they may be servicing as vendors and subcontractors and working for, whether it be on a local, national or regional level.

The Property Management Contract – Taking it Apart

The manager will be taking on significant responsibilities with the owner’s real estate. It is important to look at the contract and at a minimum it must

1. Name all parties to the contract

2. The legal property address

3. Define the responsibilities of the manager and the owner

4. Enumerate all fees and commissions for leasing or real estate sales.

5. Define the term of the contract

6. Both parties must sign and date the contract

What is Agency?

“It may be referred to as the relationship between a principal and an agent whereby the principal, expressly or impliedly, authorizes the agent to work under his control and on his behalf. The agent is, thus, required to negotiate on behalf of the principal or bring him and third parties into contractual relationship.”

Wikipedia

Basically you are signing off and binding the manager to act in your behalf and in your best interest regarding the management of the property.

The Take-away:

1. You should require a current license and go to search your state dept. of Real Estate to see if it is current and that there have not been any complaints or suspensions or revocations of the real estate license.

2. You should also check with your local Better Business Bureau and ask for referrals. 3. Finally, ask to see the general liability insurance policy and if the principals have errors and omissions insurance.

The length of the Contract: Often this is one or two years. Property Managers don’t like a month to month contract because they need to get the tenants into the rent roll and into their system. They also need a little time to learn the property. One year should be a minimum.

The Take-away: Be sure that the contract can be voided, without having to provide reason and without penalty with a written 30 day notice to terminate the arrangement. Be sure that your written termination date matches the hire date or you may have a deduction for early termination. If the hire date was on the first, terminate on the first.

Duties and Responsibilities of Managers

1. Maintenance and Inspections: In a general sense they should perform all the duties necessary to maintain and manage the property. You may specify that certain tasks or procedures remain the owners to do. Many owners like to do their own maintenance.

The Take-away: Property management companies often have their own handyman and you should be very clear about how this works. If a light bulb is out and the handyman has to travel back and forth and change the bulbs, there is likely a minimum one hour charge. It could cost you $45.00 to change a light bulb.

2. Major Repairs: you should expect that all major repairs be completed with three independent bids and receipts to back up the billing.

Take-away: To protect yourself, you should establish limits on how much can be spent without having to get your approval. If the bids all seem high, we think you should have the right to bid it out yourself. If you do, you would then be responsible for the outcome and if it was not up to code, the management firm may not want to represent you. So, for those who know what they are doing, this might be a money saving option on big jobs.

3. Inspections: The manager should be there for all city inspections and without any charge. This is part of the management of the property.

Take away: you should have in writing that the company will also provide annual inspections and a written report.

4. 24 Hour emergency Service: This is part of basic management. There must be a 24 by 7 response team and there should be no extra charge for this. Its part of the basic manangement of a property.

Tenant Screening and leasing

1. Marketing and advertising the rental: The company should be familiar with the local market and be able to price the unit so that it rents reasonably fast and at the right rent. A poor rental process can cause you time on the market while all the bills still have to be paid. We have seen many companies try to hit home runs with getting the highest price only to be over zealous and cost the owner months of income.

The take-away: Ask the company how much leasing experience they have, how long a property is on the market. How to they come to their pricing strategies and how they intend to advertise, and are there any costs involved. We think that craigslist and a company website should do the job. With the exception of luxury properties, newspaper classifieds are a costly

expense.

2. Tenant Screening: What are the tenant screening criteria. he company should be able to clearly offer you a set of rules. This should never be an off hand “we pick em if we like em” approach. Thats a law suit waiting to happen. We will write on fair housing, the federal government’s body of law governing housing and discrimination. meanwhile there are a series of articles at our website you can read if you need to know.

Financials:

All management companies should have accounts online and always available. The bigger companies will have an accountant in the company. Thats a plus.

The company responsibilities are:

1. Track income and expenses to determine profitability

2. Rents and other fees from the property shall be deposited into a special bank account or trust as required by law and cannot become mingled with the company funds.

Issue monthly income statements

3. Negotiate rental agreements

4. Respond to tenant requests and deal with problem tenants

5. The Agent should collect the rents and other income from the property promptly

6. From the rents received the Agent should pay all operating expenses and such other expenses as requested by the Owner. This may include the payment of mortgages or taxes.

Howard Bell for yourpropertypath.com

Death, Taxes, and teenage texting – these are the certainties of life. The tax code is far too complicated for anyone to understand, and why teenagers can text all day but never write a thank you note is an unsolved mystery.

Death on the other hand is somewhat more straightforward. One day you’re reading the newspaper and the next day you’re in it. Let’s take a look at what happens to your property once everyone knows where to send the flowers.

First, and surprising to a number of people, most of your property will probably not end up in probate court. Only what passes by will goes through the process. If you don’t have a will, don’t worry, the state has one for you. Of course the state has never met you and doesn’t know how you’d want things distributed, but whose fault is that? Dying without a will is called intestacy. You don’t want to die intestate. Go see an estate planning attorney and get cured.

Now that we’ve solved that, here’s how property passes.

Life Insurance and Annuities

The death benefits are paid to named beneficiaries. Unless you name your estate as beneficiary, the death benefits will escape probate. Generally, it’s not a good idea to name your estate as beneficiary. One reason is that assets in your estate are available to creditors. The benefits also are slower to reach the hands of your heirs. An heir has not yet been born that wants your money later than sooner.

If you have exposure to estate taxes, you may want to consider an irrevocable life insurance trust (ILIT). An ILIT keeps the death proceeds out of your taxable estate.

Life insurance companies used to send a check directly to the beneficiary. Today they are more likely to send a checkbook that the beneficiary can access. Life insurance companies claim this is more convenient for the beneficiary. Call me crazy, but I think they do it to hold on to the money a little bit longer. Most beneficiaries already have a checking account. Why would they want another?

Retirement Plans

Deferred Retirement Plans, including Individual Retirement Accounts, pass by beneficiary. Same rules apply to surviving spouse that exist for annuities. It obviously helps to have a surviving spouse. The people who wrote this tax code were probably married.

A Roth IRA also passes by beneficiary, but has no income tax ramifications to the beneficiary, even if the beneficiary is not the surviving spouse. The people who wrote this portion of the tax code were probably divorced, but had a slew of children.

If taxes are due when received by a beneficiary, the taxes may be strung out over a number of years by different techniques including a “rollover beneficiary IRA.” Go see a financial planner to see what works for you.

Jointly Owned Property

A lot of property like real estate, bank accounts, and brokerage accounts are owned jointly. The most common form of joint ownership is “joint tenants with right of survivorship (JTWROS).” The surviving owner automatically gets the asset upon the death of another owner.

JTWROS should not be confused by another type of joint ownership called “tenancy in common.” Tenancy in common divides the property in actual shares and when an owner dies, they can leave the property by will to whomever they want. Take a shoreline cottage jointly owned tenancy in common by two married brothers. If one dies, he can leave his portion to his wife and children. They can then continue to enjoy their seaside vacations. Naturally, as this passes through the generations, a real family rats nest is created, but if you can’t fight with family over who gets the prime summer weeks, who can you fight with?

Property In Your Own Name

Now we come to the property that passes by will. If you solely own something that doesn’t pass in the manners described above, it becomes part of your probate estate. For example, if you own a savings account in your name alone, it passes by your will. Your will names an executor, a thankless but necessary job. It is up to the executor to inventory your probate estate and eventually distribute it to your heirs.

Many people are establishing and funding “living trusts.” These trusts are established during your lifetime and funded with assets that would otherwise pass by will. Since most people are their own trustees, control of the assets isn’t an issue. At the death of the individual, the assets fall under the control of a new trustee. Since the assets are already in trust, they escape the probate process. The assets are still exposed to estate taxes because you controlled them during your lifetime.

That’s the basics. See a financial planner and an estate planning attorney to work on the details. This is an area that is not fertile ground for doing it yourself, and death doesn’t allow for mulligans.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

We only own property inasmuch as we can pay the legal taxes applied to it. Here are the ten most common questions you should know the answers to if you own property or plan to someday own property.

1. How is Property Tax Computed in California? Annual property taxes will usually be from 1% to 1.25% of the sales price of the home at purchase.

2. Can Property Taxes Go Up Annually? Unfortunately, the answer is yes. In California the maximum tax hike on property is 2% of the previous rate.

3. When Do I Have to Pay Property Taxes? Property taxes are paid twice a year. One is billed in February and is due by April 10 at the latest; the other is billed in November and is due at the latest by December 10

4. What Happens to the Tax I’ve Already Paid this Year if I Sell My House? This is handled in the escrow process at closing. If you have already paid taxes for time past your occupancy, the buyer will reimburse you for the difference.

5. What is an Impound Account? If your lender is paying your taxes and insurance as part of your monthly payment to them and your down payment on the house was less than 20%, they will require you to have what’s known as an impound account.

6. I have an Impound Account – Why Do I Get a Refund Some Years and a Raised Payment in Others in Order to Fund the Impound Account? Your lender is collecting funds from you to pay your taxes and insurance premiums on your behalf. When your taxes or premiums rise or fall, they adjust the amount collected from you.

7. Can I Simply Pay All of My Property Taxes in December? Yes, you can – but it may have some tax implications. Check to see if there are any downsides to this in your county.

8. What is Mello-Roos? Mello-Roos is a fund set up for builders to borrow from in order to put in the necessary infrastructure for a new development – sewers, sidewalks, street lights, etc. The loans are paid back through your property taxes.

9. How Can I Tell if I am Buying a ‘Mello-Roos’ Home? The seller is legally required to inform you. The tax bill, which is public information, will also list this.

10. How Long does Mello-Roos Apply to a Property? Typically 10-20 years.