If you believe your home’s assessed value is greater than what you can sell your house for, then it is in your best interest to contest the value. The first thing you have to understand is that property taxes are one of the largest sources of revenue for your municipality, county, and state government. Tax assessments are made up of two components, they include: the value of your land and also your dwelling. The Ohio revised code and Ohio administrative code mandate the appraisal department to conduct a re-appraisal of each parcel every six years, or an update every three years if improvements were made to the dwelling based upon building permits pulled on your property. Understanding how to contest your home’s assessed value is critical to winning your appeal. You will need to consider many factors to determine the fair value of your home. The auditor will look at acreage, age of your home, square footage, recent improvements, outbuildings, decks or patios, and/or other areas of your property that have value.

To appeal your property tax assessment, you should contact your local county auditor to file a formal appeal of the assessed value of your property. You should start by requesting a copy of the property card from your local auditor’s office. The property card should include the information used to determine your homes assessed value, which includes: square footage, lot size, bedrooms, bathrooms, finished basement, etc. If there are any inaccuracies in this information, you should inform your auditor’s office in writing of the errors. You should also contact your local auditor’s office to fill out an appeal form or you can electronically file an appeal on their website. E-filing provides homeowners easy access to complete and submit a department of taxation form, which is a complaint against the valuation of real property online eliminating the requirement for a signature and a notary seal. Many of the county auditors in Ohio will only accept property valuation appeals during the first three months of the year. If you have recently purchased your home, you should provide the auditor a copy of your purchase agreement and a copy of your HUD statement or closing disclosure as evidence of the value of your property. If you have owned your home for more than a year, it would be in your best interest to contact a licensed appraiser to have your home appraised and valued. In addition to the appraisal, it would be beneficial to provide a list of recently sold homes in your area that are similar in age, square footage, amenities, and lot size to your own home. You should provide as much information and documentation as possible when you appeal your property taxes. When referring to your property, use your parcel number and address. This can be obtained from your tax bill. The more information you provide to the auditor, the greater the chances that your assessed value will be lowered, but be careful because the board of revision’s may use the information you provide to increase or decrease the total value of any parcel included in a complaint.

Residential property management in West Chester, PA involves serving two different rental communities.

The first community includes students who attend West Chester University . As certain geographic areas of West Chester do not allow student rentals, it is very important that you make sure what part of town your investment property is located. Student housing is very time consuming for property managers and requires extra man hours to serve their needs. For example, with student housing we get calls to change light bulbs, remove snow or ice, clean rooms and many other requests that we typically do not get from non-student tenants. As an investor you want to make sure that you have a property management company in West Chester, PA lined up to handle these issues or be prepared to handle them yourself.

Also, with student housing you will get a lot of turnover and most students stay one year and move out. So be sure to plan high tenant turnover when considering investing here.

The second community in West Chester, PA is non-students. This may include individuals that live in this very popular community or in some cases people that work at West Chester University. These types of tenants tend to be more mature and easier to manage the properties in which they reside. Additionally, they tend to pay rent on time and do not need nearly as mush maintenance or attention. As an investor this may be the better option, but these types of investment properties tend to cost more per unit.

The good news is non-students may live in your investment property for many years and reduce your vacant time.

West Chester, PA is a very popular community with lots of shops and restaurants in the downtown section. West Chester, PA is also the home of QVC, one of the largest employers in the area.

This town continues to be a very hot market for both sales and rentals. The average sales price for home as of November 2018 is $ 414,100. The average sales price is up 3.4% over the last year. The rental market is also seeing nice price appreciation. The average rental is $ 2,242 per month and is up 1.5% over the last month. This compares to the average rental in Philadelphia of $ 1,581 and nationally of $ 1,449. Given the strong popularity and strong employment in the area I would suggest this a great place for real estate investors to look for investment properties and above average returns.

Property tax reduction:

According to a survey, over 60% of property owners are over assessed by the city taxation authorities. The most shocking fact is to know that less than 2% of the property owners requested re-assessment and still 58% of the owners are paying tax on their over-assessed property. People may feel surprised to know that 70% of owners win their case and enjoy the reduced property taxes. Therefore, it is important for the house owners to scrutinize their annual property levy assessment.

Have you ever think that your property is over-assessed? If yes, then carry out the research. Contact your taxation authority to know your property tax assessment. However, if the owners find their property is over scrutinized and become successful in collecting the strong evidence, they can save $ 200- $ 3000 dollars about every year. However, the savings value may vary depending on number of factors such as your property, tax rate of your city, over-assessed amount of your property, etc.

Getting property tax reduction is not at all a complicated job for the house owners. It will take certain time to understand the process and how to present your appeal in front of authorities. When you are planning to file a property tax appeal, collect enough and suitable evidence to prove your appeal. If you file a property tax protest, but fail to produce suitable evidence to prove your appeal, you need to lose the case. You need to prove your case by submitting the assessment value of other properties sold for less than what your city taxation authority claims your property is worth.

Filing a tax appeal

House owners should know that as a levy payer they have the rights to file an appeal to know the current financial year tax assessment. The first step of appeal process starts with written notification to the local scrutinizing officer. Taxpayers have forty-five-days' time from the date of notice to file their appeal. If property owners did not receive any notice, they need to file for re-assessment by the later of May 10th of the assessment year or 45 days after the date of the levy bill.

Once you decide to file a tax appeal, you need to collect the evidence to support your case. The evidence can be in the form of a sale of the subject property, listing prices, sales of comparable properties and duty appraisal prepared by the licensed evaluator. Once the appeal is filed, the board of evaluators review your petition. If the board finds that your property is over-assessed, the authority sends a new notice stating the change of assessment value.

It is advisable for the property owners to get the experts help when they really wish to file a property tax appeal. Expert solicitors help the owners to save time and reinforce their petition by producing suitable evidence. Another benefit of hiring expert is that they have complete know-how about the local market, good hold on the taxation laws and work with complete professionalism and leave no coin turn around to win the case.

If you are new to the world of real estate, you might be a bit confused by all of the taxes that get assessed. To many people, the words 'property taxes' and 'real estate taxes' sound like they are the same, but there are some significant differences. Let's take a look at them.

Real estate taxes are taxes based on the property's assessed value. They are assessed on privately owned properties and funds are collected by local governments. Real estate taxes are the ones we often hear about that fund schools and pay for road repairs.

Property taxes have two sub-categories. There are certainly real property taxes that are real estate taxes, but there are also personal property taxes. Think of real property as something that cannot be moved. These are things like the house, an external garage, a storage building, or a barn.

Personal property is defined as things that can be moved, like furniture. These taxes are sometimes called excise taxes. Your car is also personal property. Believe it or not, but that licensing fee you pay for your car is a type of personal property tax. If you have a business that repairs items or sells merchandise, that inventory is personal property. In many cases, you are exempt from taxes on the first $ 50,000 or $ 100,000 of inventory, depending on your state.

If you own an RV, this is counted as personal property because it can be moved, even though you might be living in one full time. If it is sitting on land you own, you might have to pay real estate taxes on that land, but not in combination with the RV.

So what is the assessed value that these taxes are based on? Each local government has a department that looks at what the value of a property really is. They look at the structure and the land value itself. Sometimes they calculate these values ​​separately and sometimes they are looked at together. The assessment rate is a lower percentage of the assessed value. For many areas, the assessment rate is 70% – 80%, which then reduces the value of the house, and therefore the amount that the tax rate is calculated against.

It should be noted that HOA or condo association fees are not the same as real estate or property taxes. Those fees go directly to the association to cover costs of common area repairs and maintenance.

Personal property taxes are assessed as a percentage of the value of the item. Each state and county will have their own regulations on how they calculate personal property taxes. Also, each state as well as the federal government allows for a tax deduction on personal income tax forms for real estate taxes that have been paid in a given year.

There are also exemptions that certain homeowners might qualify for that help reduce the tax burden. These exemptions are often for wounded military, the disabled, and the elderly.

Hopefully this has helped clear up the differences between property taxes and real estate taxes. Though they sometimes do overlap, they are also quite different. It just depends on what the item is that is being taxed.

In this job profession it is a business service that is designed to help assist owners in supervising their commercial properties. A commercial property manager may have several jobs but essentially they are the ones that will take care of details that are related to the following:

• Upkeep of the buildings on the property such as making sure that the lawns are mowed, any repairs needed are done promptly
• Checks out and qualifies potential new tenants who want to rent one of the commercial buildings or stores
• Oversees the leasing of sections of the property such as retail space in a mall
• Collects the rent from tenants on behalf of the owner

A commercial property manage involves overseeing any type of commercial property from multi-storied office buildings to retail space. Many times property owners will use a commercial property management firm to hand all the day-to-day details of operating the property so it frees up the property owners time for other aspects of business. The firm that is managing the commercial properties is generally granted the authority to make any decisions that will impact the amount of income the owner receives from their property. Hiring the right management firm can often lead to securing the best rental rates for the space and having a lower turnover of tenants.

One thing that is the responsibility of a commercial property manager is to screen potential tenants by accepting their application and then doing a background check. If the tenant is approved to rent a space then the manager will prepare the lease. For the duration of the lease the manager will make sure that the tenant is provided with all the responsibilities and benefits that are listed in the lease agreement, including the rental amount, when it is due, etc.

The commercial property manager will also serve as the liaison between the tenants and owner. If the tenant has any problems or needs repairs to their space they will see the manager who will take the necessary steps to resolve the issue or have what is wrong repaired. It is the manager's responsibility to resolve the matter to the satisfaction of the owner and the tenant. If the tenant is not paying the rent as outlined in the lease or doing anything that is not in the lease the commercial property manager will be the one that is responsible for delivering the eviction notice. Each jurisdiction or state has their specific regulations in regards to eviction. When serving an eviction notice the manager must be sure that they are following every step in the process to the letter. This makes sure that everything is done legally and the tenant cannot complain they were evicted illegally.

Multiple residence property owners have the daunting task of monitoring and satisfying the needs of a number of tenants. This comes with a slew of specialized risk management concern as well. Ownership of residential properties such as apartments, condominiums, and student housing creates a series of unique risks. As such, some research may be in order to procure the appropriate insurance for the properties being managed. Because different types of properties have different types of exposures, ensuring adequate limits and proper coverage can be challenging.

In addition, there may also be a need to keep track of multiple projects and policy expiration dates, which can be extremely overwhelming. That’s why it’s important to have a specialist to aid in finding the right types and amounts of insurance.

The basic insurance needs for anyone owning Habitational properties is general liability coverage, in case of tenant injury or losses caused by: fire, wind, storms, theft, and malicious damage or vandalism by the dwelling’s tenants. Additionally, depending on the location, flood insurance is recommended. A well-crafted Habitational and commercial property insurance policy can protect in light of any or all of these risks.

Who should have property management insurance coverage?

Anyone involved in any of the following activities should speak to an expert who understands the unique insurance needs of property managers:

Renting or leasing real estate to others

Managing real estate for others

Selling, buying or renting real estate for others

Commercial properties carry some of the same risk factors as residential properties

If you are a real estate investor, but choose to focus on commercial properties rather than residential properties, you also need properly secured Habitational and commercial property insurance policy that is designed accordingly. Just like residential property, general liability and catastrophic event coverage should be purchased. However, when it comes to commercial property, you need to also look at carrying environmental and/or pollution coverage, commercial automobile coverage, or worker’s compensation coverage.

Whether the owner of only residential property, only commercial property, or some of each, working with a professional  Habitational and commercial property insurance provider to create policies that will cover all areas of risk is sound management. Such professionals can advise as to what coverage options are available, standard limits, and a variety of unique ways in which this coverage can best protect the properties based on its use and location.

The basic insurance needs for anyone owning Habitational properties is general liability coverage, in case of tenant injury or losses caused by: fire, wind, storms, theft, and malicious damage or vandalism by the dwelling’s tenants. Additionally, depending on the location, flood insurance is recommended. A well-crafted Habitational and commercial property insurance policy can protect in light of any or all of these risks.

For many, the beginning of a new year signals a time to make some sort of change in their lives and become more like their ideal selves. For others, January signals the time to make a different kind of change, one that is much easier to make: trimming their property tax bill. The tax appeal process in New Jersey involves a number of steps and using an experienced property tax attorney to lead you through the process will make that New Year's resolution much easier to keep.

Since tax appeal season in New Jersey is toward the beginning of the year, lowering your property taxes is a perfect New Year's resolution. Toward the end of January of each year, every New Jersey property owner is supposed to receive their annual assessment. That's the little green card that comes from the tax assessor's office. Since all properties within a particular municipality in New Jersey are taxed at the same rate, it is the assessment which differentiates one property owner's tax bill from another and is the real measure of whether a property is being taxed fairly or not. The period in which one can generally appeal an assessment in New Jersey is from the time the assessment is received until April 1 (May 1 if there was a reassessment or revaluation).

The first step to understanding whether you are being taxed too much is understanding how your property is being valued.

In New Jersey, your assessment is the value at which your property was appraised at the time of the last revaluation. Though the amount at which the municipality values ​​your property changes from year to year, your assessment typically remains the same. Every year, each municipality in New Jersey is assigned an "equalization ratio," which is intended to reflect the current value of the properties in a particular municipality in relation to their value in year of the valuation.

You can find your municipality's equalization ration by calling your town's tax assessor or the county tax board. It can also be found at the New Jersey Division of Taxation website. The "average ratio" is the percentage of "true value" that your assessment is deemed to be. In other words, divide your assessment by the equalization ratio to obtain the true valuation of your property. This is the number your assessor is actually using to compute your property tax, not your assessment.

For many people, the decision about whether they should appeal their assessment is an easy one once they realize the actual valuation of their property. For others, especially people who have owned a property for a long time and have not been thinking about buying or selling, the question of whether to appeal an assessment is less clear.

Here are several rules of thumb to consider in deciding whether to appeal your assessment:

• As your assessment gets older and your equalization ratio gets lower, there is greater likelihood that your assessment has fallen out of line with your property's actual value.
• Conversely, when an equalization ration rises above 100% because property values ​​have fallen (as they have in recent years), that means that on average, properties are overassessed in those municipalities. The property owner still bears the burden of proving that their particular property is overassessed but an average ratio of over 100% is a good indicator of overassessment.
• When you live in a development or neighborhood where properties are very similar, and prices have decreased significantly, your individual property value has probably decreased and your assessment and equalization ratio may not have kept pace.
• Whenever a property has unique characteristics that make it very different from those nearby, there is often a case to be made for reducing the assessment. For example, a very large old home in a neighborhood of smaller, newer homes will often be assessed as a larger home with the characteristics of the surrounding areas. In fact, such homes tend to be more difficult to sell and often warrant lower assessments.

The next step in the process for individuals is to decide whether they want to work with an attorney in this process. While corporations and other legal entities must be represented by an attorney under New Jersey law, an individual homeowner may represent him or herself. Nevertheless, there are very good reasons to consider retaining one:

• Many lawyers work on a contingency basis so that there are no legal fees unless your taxes are reduced. There are certain fixed out-of-pocket expenses that the property owner pays but the lawyer receives a percentage of the tax savings if, and only if, the appeal is successful.
• A lawyer working on a contingency basis should provide a free consultation and do his or her own independent research to determine whether an appeal is likely to succeed. If a lawyer does not return calls and take the time to tell you why they believe your assessment should be reduced, it is a signal to look elsewhere.
• Most of all, there is the convenience of having an experienced professional handle your case. You do not have to worry about any of the rules which can be burdensome and, frankly arbitrary. (For example, property tax appeals can be dismissed if the petition is not printed on legal paper). You do not have to testify at a hearing, which is usually unfamiliar and uncomfortable for the homeowner.
• Many people believe you will end up with a better result when you are represented by a lawyer. This extra savings year after year more than offsets the lawyerer's fee.

Take for example the case of Stephen and Rachel Pineles, who decided to appeal the assessment on their Essex County New Jersey home in 2010. "My town had not had a revaluation in over twenty years and my assessment was outrageously high in comparison with the actual value of my home, "said Stephen Pineles. "Hiring an attorney to handle the property tax appeal was definitely the right decision for me. I did not have to worry about anything. Initially, the tax assessor offered a reduction that was on the low side. In the end, my attorney negotiated a much better settlement and my property taxes were reduced by over $ 3700 or almost 30% of my tax bill. "

As with anything else, there is some amount of risk in appealing your assessment. In New Jersey, if your case is unsuccessful, you will not recover your out-of-pocket expenses. In addition, under New Jersey law, your assessor has the right to argue that your assessment is too low. This right is limited, however, to cases where your property is undervalued by a measure of 15%. If your property's assessment divided by the equalization ratio is $ 100,000, the assessor can only argue that assessment should be increased if he or she can prove your property is really worth at least $ 115,000. If your attorney has done his research well and has determined that there is a good case for lowering your assessment, it is unlikely to happen.

As the new year begins, in addition to some of the more difficult goals and changes people contemplate, it may be worthwhile to consider trying to lower your tax bill. It could be one of the easiest and most profitable resolutions you make.

The purpose of all Commercial Property Condition Assessments (PCAs), ASTM standard E2018, is to make sure that the property and building you believe you are purchasing or leasing is actually the property being received. You will have reached that decision, in part, from the information attained via a professional inspection and Property Condition Report (PCR). Every real estate transaction is different and each transaction has its own unique set of considerations and conditions to validate before finalized. The utilization of professional third party experts in the physical property due diligence process is critical to the overall accuracy and cost efficiency of your property transaction.

The Purchase or Leasing of Commercial real estate, whether it be a basic commercial net lease, a commercial triple net lease, the purchase of a church facility, a retail outlet, or the purchase of a million square foot office/warehouse, the prospective buyer or lessee absolutely must conduct an adequate level of due diligence when investigating the physical quality of the commercial real estate they are investing in.

You need to know not only the physical characteristics of the real estate and buildings being acquired, but the approximate condition and age, to assess the good with the bad, such that you can adequately balance the risks and rewards being offered in conjunction with your real estate deal. The single most important part of the real estate transaction process, aside from the purchase price and profitability balance, is a well-documented review of the actual physical condition of the real property. Otherwise, you could find yourself the not so proud owner of a commercial property that, doesn’t suit your needs, costs more than you can afford in upkeep, or the ultimate remorse for investors – capital expenditures are being sunk into a property on a regular basis that someone else is utilizing and making money off of, and you are not. Suddenly, that long term lease with a solid anchor doesn’t seem so attractive anymore.

The process of commercial real estate inspection begins before the offer to purchase real estate is drafted or signed, by visiting the site and discussing the physical condition of the property with the Owner and real estate brokers. This process should be considered invaluable to establishing relationships required to obtain the information that will be necessary to concrete your due diligence with a Commercial Property Condition Assessment (PCA).

During negotiations and drafting of the real estate sales/lease contract it is important to recognize seller or lessor reluctance to points such as the existence and availability of important documents such as warranties, maintenance contracts, architectural and engineering plans and/or local municipality reviews and inspections. Negative reaction to the request for release of these documents by seller or lessor can imply possible deferred maintenance and/or inattention related to property and building condition(s) and inspection issues.

Once the commercial real estate sales contract is signed the due diligence period begins, focus on maximizing efficiency of time and cost and prioritizing concerns to start checking off the costly big ticket items from the top down. Assuming adequate documentation is furnished by the seller for review, adequate time should be allotted to verify the information provided. Additional effort and monies that that will need to be spent to make up a shortcoming of available documentation through extra property condition assessment and additional field inspections and/or experts should be considered essential and figured into the cost of the property transaction. Ask the seller for all documents and contacts the seller received during his due diligence process when he purchased the property to speed up fact finding.

Review of existing property documents where available may include:

Accessibility surveys, Architectural Building plans, Certificates of Occupancy, Citations from Authorities Having Jurisdiction, Emergency evacuation plans, Environmental studies, Electrical System Construction plans, Fire-detection test and maintenance records, Fire-door inspection reports, Fire-Protection System Construction plans, Fire and Restoration records, Maintenance records, Mechanical System, Construction plans, Violation Notices from Authorities Having Jurisdiction, Construction Permits, Plumbing System Construction plans, Previous inspection reports, Roofing System Construction plans and Warranties, Safety inspection records, Seller condition disclosures, Sprinkler System Test Records, Systems and Material Warranties, Current tenant information, Current policy of title insurance, Notices of any environmental conditions, Notices of any new or special assessments or taxes, Copies of all current bills for the property, Service contracts, Evidence of current zoning, As-built plans and specifications, All construction related documents including warranties, All past and present uses of the property, Third party reports or inspections, Any surveys of the land and improvements in seller’s possession.

One of the best tools available to the commercial property due diligence team is the interview process which can unlock a plethora of potentially useful information regarding the subject property.

Interview of any available key personnel with specific knowledge of the property conditions may include:

Owner, Tenants, Maintenance Foreman, Contracted maintenance services personnel or other contracted companies that routinely work on the property and/or building.

Property Inspection, Real Estate Inspection, Building Inspection, Due Diligence Survey, as they may be labeled in the due diligence report is essential to ensure sufficiency of construction considering the intended use of the occupants and the surrounding geography and climate. The furnishing of any available plans and specifications should be helpful here, but will not end the investigation. A current commercial property condition assessment should be done by a qualified third party inspection company experienced in the type of property to be inspected. A previously performed property condition assessment or inspection is nearly always furnished for the use of a single party in a single transaction and is protected under law and not reusable nor transferable to any other party. The focus of the inspection should be primarily on site condition and building components such as the site drainage, parking, building structure, mechanical and electrical systems and general accessibility and usability of the property. Various climates and geographical regions will require more specific inspection knowledge, thus hiring a local inspector is always a good idea if possible, in lieu of hiring a company out of Wisconsin to perform due diligence on a California high-rise building on a fault line.

Site Survey and Walk-Through to Observe Existing Conditions may include:

Grounds and Topography, Parking, Paving, Access, Building Exterior and Façade, Building Interior, Roofing systems, Structural systems, Mechanical systems, Electrical Systems, Plumbing systems, Fire-protection systems, Vertical transportation systems, and any number of other specialty systems.

The 2010 Americans with Disabilities Act is the current guideline for accessibility standards nationwide and is a federal law, hence non-negotiable and to an extent, yes, it’s retro-active even for older commercial and public buildings. Many states also have additional and/or more stringent or specific accessibility standards as well. Most professional property condition assessment and inspection companies can also perform both abbreviated and complete accessibility surveys as part of a real estate transaction.

Basic abbreviated and full compliance Accessibility surveys may include:

Abbreviated survey looking only for basic ADA Accessibility components visible during the walk-through and documented according to the ASTM abbreviated survey form and checklist gives a quick check as to the general status of compliance. Full compliance survey involves physical measurements of distances, slopes, and push/pull forces required within the accessibility standards to allow for a certain level of physically disabled person to be able to successfully navigate a property, site, and building.

Environmental Due Diligence known as Environmental Site Assessment (ESA) is the most utilized Environmental Inspection Report. The typical level of report preferred by lenders to demonstrate adequate due diligence is called a Limited Phase I Environmental Transaction Screening ASTM standard E1528. This explores the past use of the property and the surrounding properties to identify any potential onsite or adjacent environmental problems or future liabilities. These reports normally require a significant monetary investment and take a number of weeks to complete so they should be done as soon as you have determined you will be moving forward with your due diligence. The purpose of this inspection is to determine if the property contains any hazardous materials or poses a threat in any way to its surroundings. This could be caused by underground storage tanks located on the property or runoff from the property into the water table or any other number of hazards listed by the Environmental Protection Agency. While the report is expensive, the cost of cleaning up an environmental hazard can be astronomical. While not every deal will require you to obtain a Phase I Environment Site Assessment, many lenders will require it as part of their loan guidelines. In case of a fairly new development with a clean environmental record and no neighbors of an industrial nature, a simpler less expensive and much quicker Environmental Transaction Screening ASTM standard E1528 may satisfy lender and legal requirements.

Any basic environmental due diligence report may include:

Research of historical site usage, aerial photography records, property transaction records, construction records, building records, EPA mapping data, local municipality topography mapping, and a through site walk-through to visually identify potential environmental issue indicators.

The information contained herein is purely professional opinion and provided for general real estate inspection reference only and is not intended in any way to be a definitive guide, nor a guarantee of past, present, or future legal or state or federal requirements, nor a measure of performance of any professional services company. Best of luck to you in all of your future property, real estate, and building dealings!

This article was first published in May 2006 as a warning to potential investors to take care when committing to property investments. Hundreds of investors actually signed up with us, and are taking part in a joint legal action, but many more, including many of the leading banks, some now in government hands, went on to get involved in hundreds more bad deals, and are counting the costs in millions!

For those of you that saw the Sunday Times front page article ‘Buy To Let Property Fraud Hits Thousands’ the week before Christmas 2008 will have seen the latest results of that misdemeanour, and the losses and heartaches this widely spread property fraud had on investors an f their families.

To many people, taking the plunge, and investing in property for their future is a major leap of faith. Imagine how they must feel, if their investment turns out to be an investment property Scam?

Is there a way out of any Investment Property Scam?

The first thing to realise is that if you do feel you have been conned, you are probably not the only one. It may feel like it, and you may feel alone, stupid, cheated, and angry or embarrassed – some of the common emotions felt at this time.

But, these are the emotions that developers with crooked minds will encourage you to think. They hope that you will feel ‘suckered’, and just don’t want to tell anybody. In fact, with a clever scam, there may seem to be nothing to tell anyway, apart from your gut instinct, until you start digging.

But inertia is just what these criminals (and they usually are criminals) want you to think. In these circumstances, you must not hold it all into yourself. You must try and find if other people have been duped into a similar situation. You never know, you may be one of ten, twenty or hundreds of similar souls, and if you can find, and become identified with such groups you will stand a far greater chance of getting retribution, believe me.

I got caught up in such an investment property scam about 18 months ago (I know – gasp – shock – horror – and I sell investment properties!). For some months, I thought I was going crazy, I could not understand why I could not get tenants in at anywhere near the prices I was expecting, or even get tenants at all. This was the first revelation, as I had been promised that the properties would have been fully tenanted on completion. Well, at least, that’s what the brochures said, as well as the sales manager at the presentation I attended. And I had bought a number of these ‘beauties’ each supposedly fully tenanted and making me around £500 each per month rental surplus.

Then I started to investigate the situation more thoroughly, and I soon identified the problem. It’s a down and out highly complex investment property Scam!

So how did I, an experienced property investor, and a reseller of investment properties – get involved in an investment property scam?

I’ll tell you how – perhaps Criminal Intent?

What I have done is to chronicle the events that actually took place with my investments, of which I have since found out there were well over 100 similar incidents.

Before I went into this investment, or even recommended them to others, which consisted of a number of refurbished houses converted into HMO’s for students (Houses of Multiple Occupation) I investigated the company thoroughly. (Note the company and location of these houses is not mentioned in this report for legal reasons). I checked out at least 6 of their property conversions, spoke to their rentals people, and spoke with several existing investors. I took my business partner at the time with me to check out my findings. I was also comforted by the fact that these people were spending (and still are spending) a lot of money in the big national newspapers (Sunday Times, Telegraph, and so forth), and had produced a whole range of glossy brochures backing up their claims.

Some of their larger off-plan developments were also being featured in a two-page spread in one of the UK’s leading property magazines. Not only that, but they had (and still do have) very large exhibition stands at a number of the leading UK Property Shows.

Everything seemed to stack up, so I bought a number of them, and encouraged my friends, close family, and business colleagues to buy some also. I paid my reservation fees, and just settled down to wait for these to be completed, and to start generating some surplus cash every month.

The first event in the chain of things was that the houses were very late in being completed, so we were in danger of losing the student intake for autumn 2005, but the investment still seemed quite good, and anyway we had all exchanged contracts by then. And, of course, we all thought we had at least an 11% equity holding in each property, plus the usual growth of 4-6 % from last year. Also, when asked if we could inspect them prior to completion, we were told – “Sorry, as you have tenants in them, you have to give 48 hours or more notice”. Then when we did try for appointments nobody could find the keys… Where were my alarm bells I hear you ask – Obviously on Silent Mode!

But then the dirt really started to rise to the surface…

These houses were all sold under the premise of ‘All contacts for services under one roof for the investor – Use our Services for Sales, Recommended Solicitors, In-house Brokers, mortgages, Tenancy Management from our Own Company’ – you know, a really good packaged deal for the armchair investor.’

Issue 1 was that the houses were not fully tenanted on completion, and in a lot of cases, the tenants seemed to ‘melt away’ after contracts had been signed. So much for the promises made in the developers’ glossies that tenants would be in place before completion, with cross-guarantees so that there would be virtually no void periods, no issues with rent, as if one tenant failed to pay, the cross guarantees meant that the other tenants would be liable.

Also, in some cases, (not with mine luckily) no renovation work had been carried out at all, and the developers then had the cheek to ask for £3,000 per property to fix those that had not been done. Then, major issues with the building work started to surface. Basements would flood, not due to rain, (although this did happen on a number of occasions where the basements had not been ‘tanked’ correctly), but due to faulty plumbing, But if course we had a 12 month warranty contract – Right? Wrong?

Even after constant phone calls and emails, the management company failed to send us proper records, and they did not keep us informed of maintenance issues, tenants leaving, tenants not paying rent on time – all the sort of standard things one was used to expect from a ‘proper’ management company that charged 10% of the rent as fees.

And the hassle I had moving the management agreements to another company is another story for another day when it can be told.

Ok, so, this just seemed like rogue building work and an outright total lack of proper management by the department handling the tenancies. Not the sort of service to be expected from a firm carrying out so much nationwide marketing, but of course, being of such a high profile firm, you would have thought they would have fixed the issues. Right? Wrong!

So because of all these issues, I had by now started to do some very intensive investigation into this company, and the methods being used to package the sale of these houses.

It then transpired that most of these houses had been bought by the developer some three to four months prior to selling them, some the previous morning, for about £90,000 – in the developers words – derelict houses that were totally gutted; 3 bed properties that had basements opened out, and or roof conversions done, so adding as many as 2, 3 or even 4 more bedrooms, and supposedly converted to the highest of standards for HMO purposes, and these were sold to us for around £249,950 up to £325,000 and higher.

Ding Ding Ding – Alarm Bells…

Why were we quite happy to purchase them – because they all came with RICS (Royal Institute of Chartered Surveyors) valuations on the property value and the anticipated rental incomes.

All of which matched the developer’s claims.

But when we noticed that several investors from other groups were having some of these similar houses repossessed – as they were not getting the rent, and consequently could not afford the mortgage, and the valuations were all coming in at around £80,000 to £100,000 BELOW THE MORTGAGE VALUE!

Our own investigations then uncovered that many of these properties had been valued by the same firm, and for comparison, they had used properties by the same developer on the valuation form.

We have come across instances where the mortgages that were granted they :-

· Were not valid for multiple occupancy homes – so why was a loan granted?

· Would not have been granted had the banks known the properties were already tenanted, and not sold as vacant possession. So why was a mortgage granted?

· Would not have been granted if the valuation rental assessment was not realistic. So loans were granted on incorrect information. If the investor had put the rental figures in, they would have probably been done for mortgage fraud.

· Would not have granted a loan (especially interest only) if the true valuation figure had been known.

· Would not have granted 85% of the assumed value had they known a Gifted Deposit was being paid (along with legal and other fees by the developer). The solicitor was aware, as was the broker, so how come the lender was not informed?

Now, as I like to think of myself as a ‘savvy investor’, knowing that gifted deposits, cash backs etc happen and quite often jump start the property market on the move, I had told my solicitor(s) what the side deal was, the broker told me what the deal was, so no problem right?

Wrong… I then find out that neither the solicitor(s) nor the broker had informed the lender.

Somewhere along the lines, something was wrong here.

The question is – Was it the fault of:-

· The Developer?

· The Solicitor?

· The Broker?

· The Investor?

In a society where regulations covering solicitors, brokers, mortgage loans, and valuers seem quite strict, I must say I think something is awry here, where the hapless individual investor can walk into such an unregulated trap!

If you feel you have been involved in such an investment property scam, and would like to see if there are others in the same boat, please visit my blog where you can voice your opinion, and even add your name to a structured list if you want so we can build up a database of like events that could be easily analysed to spot trends, or passed to ‘Watchdog’ for instance.

There is no argument that the IRS is quite strict when it comes to applying the rules governing 1031 exchanges. Every year, hundreds of proposed exchanges fail because the investor fails to meet one of the requirements set forth in the code.

One of the biggest areas where mistakes are made? Identifying the replacement property.

To make sure you don’t make a misstep here and jeopardize your next exchange, we offer our top tips for identification. When you understand all the requirements of identifying replacement property, you are far less likely to jeopardize your planned exchange.

3 Property Rule – There are different rules that set forth how many possible replacement properties may be identified by an investor, but most follow this rule. It allows an investor to identify up to three replacement properties and eventually acquire, one, two or all three of them.

200% Rule – An investor can identify more than three possible replacement properties so long as the total fair market value of all those properties identified does not exceed 200% of the fair market value of the relinquished property.

95% Rule – Not commonly used, this allows investors to identify more than three replacement properties with a total value greater than 200% of the FMV of the relinquished property, so long as the investor acquires at least 95% of the value of the identified properties.

Manner Of Identification – This must be in writing and signed by the investor, and the property must be unambiguously described. This generally means identified by address or legal description. If the property is one where the investor is acquiring less than 100% interest, the percentage share of the acquisition must be identified, too.

Provide Information To The Right Person – The investor must provide the requisite identification information to either (a) the person obligated to transfer the replacement property to the investor, or (b) any other person “involved” in the exchange, such as the qualified intermediary, escrow agent or title company. However, the person receiving the information cannot be a disqualified person like the investor’s real estate agent or a family member. Generally, the qualified intermediary is the recipient of choice in an exchange.

Replacement Property Must Be The Same As What Was Identified – The investor must receive “substantially the same” property as he or she identified. While what the IRS considers “substantially the same” is a bit ambiguous, generally they draw the line at property that differs in basic nature or character.