Category: Real Estate

IRS enables you to take deductions for any legitimate expenses that are related to running rental properties. If you own some rentals, you may claim expenses in categories spanning everything from depreciation, repairs, insurance to interest. But, you should record them. To make sure that you are taking advantage of rental estate tax deductions, it is important to use accounting software.

Mortgage Interest Payments

Interests on rental properties may take some forms and can be one of the rental property’s biggest tax benefits. Mortgage interests, loan origination fees, points, interests on credit lines, and interests from credit cards used for the property-related expenses can be deductible. If you make loan payments on rental properties, there are 2 components to the payment. There’s a portion going to an interest expense and principal. You may see it looking at your statements monthly. Unluckily, you cannot deduct your payment’s principal portion. But, you may deduct interest portion.

Depreciation

Depreciation is actually a rental estate tax deduction for hypothetical wear and tear on buildings as if it’s an expense. Even if you might not be encountering costs for covering actual maintenance expenses, the accounting principles let you take advantage of eventual costs through depreciation. Knowing what depreciation is and having records is important and you must turn to your tax professional or CPA for help. Generally, you could depreciate the value of the rental property minus the land’s cost evenly over 2 decades like straight-line depreciation.

Insurance

Any kind of insurance is known as an expense or tax deductible for real estate. It includes special perils insurance and basic hazard insurance like hurricane or flood coverage and liability insurance. Insurance for rental properties is usually 15%-20% more than the policy for owner-occupied policy.

Homeowner Association Fees

If rental properties are situated in a community, which charges any type of homeowner association fees, PUD fees, condo fees, and much more, such are deductible expenses. IRS considers it to be necessary to maintain the property. HOA fees differ depending on your place, unit’s size, and amenities included, yet the average fees for HOA for single-family home are around $200-$300 monthly. Aside from that, you might deduct the items needed by HOA. For instance, several HOAs need expensive for the rent signs, which meet particular specifications. Such sign expenses could be deductible.

Supplies

Supplies are somewhat a miscellaneous, which may include anything from office to hardware supplies. A lot of supplies would be used directly on a particular property and deductibles to properties itself. A good example could be the driveway sealant if the can’s used on the property. Some supplies could be applicable to some or all properties and deductibles to businesses as a whole. A good example could be computer printer paper that cannot be allocated to a property, yet it’s used for everything related to the business.

Those are just some of the many real estate tax deductions that you should know. If you want to know the other deductions, make sure to search online.

For a first time home buyer, the mere thought of having to choose from tons of real estate options might already feel overwhelming. Since this is one of the most significant investments you will ever make in your life, making the right decision is crucial.

To serve as your guide, here are the top five best cities to purchase your very first property in.

1. Memphis, Tennessee

Even though Nashville overtook Memphis as the largest city in Tennessee, rock’ n’ roll’s birthplace managed to beat its Eastern neighbor as far as budget-friendly houses are concerned. Taking pride in its own sports and music culture, Memphis was dubbed as the best place where millenials can move to due to its reasonably priced housing market.

However, the good prices In Memphis don’t just stop with its real estate market. The city is also known for its low costs of living as compared to other metro areas of the same size. When it comes to employment, Memphis serves as the home to three Fortune 500 companies so you can expect for lucrative jobs in the corporate world. You can make ends meet even if you are just making an average salary every year.

2. Oklahoma City, Oklahoma

Oklahoma City is the hot spot where young people are moving and more and more millenials are searching for a home in this city. This can partly be because of the excellent employment opportunities. Once there, new residents of the city can indulge in the affordable housing stock and notably low costs of living. When it comes to income, a first time homebuyer has more than enough reasons to be happy and contented.

3. Orlando, Florida

More than Disney itself, millenials have come to realize that the sprawling city of Orlando has so much more to offer. Millenials looking for homes have been flocking the area in the past few years. This is partly because aside from Mickey Mouse being the city’s biggest employer, Orlando is also the home to Electronic arts and JetBlue.

There is another bonus for young families aside from the affordable housing prices, and this is none other than the strong local schools. The students of Orland have been rated to be more prepared for success in college compared to students in other similarly sized cities.

4. Tampa, Florida

The home prices in Tampa are more affordable than those in its nearby neighbor Orlando, not to mention that the city also has the biggest percentage when it comes to home price reductions. As one of the top destinations for millenials, the city provides diverse neighborhoods in the sprawling borders.

Aside from having some of the biggest employers, Tampa is also the best spot for aspiring business owners, with the city being one of the perfect locations for young entrepreneurs.

5. Jacksonville, Florida

There are a lot of things to love in Jacksonville. As the United States’ biggest geographical city, the population of Jacksonville has been getting bigger recently. Combine the job market and its steady growth with low home prices and you can see why it is a famous destination for property buyers.

 

There are some kinds of mortgage insurance. The one that many people complain about is PMI or also known as Private Mortgage Insurance. Homeowners with PMI need to pay hefty premium and insurance does not cover them.

Private mortgage insurance or PMI provides zero protection to borrowers. Some borrowers think that PMI makes them special, yet there aren’t any offered private services with this type of insurance.

A less known kind of mortgage insurance is the type, which pays off your mortgage once you die. In short, you pay small premiums for a less chance of dying. You can get better protection with a life insurance policy. The kind of mortgage insurance that many people carry is the kind that ensures lenders in case the borrowers stop paying the mortgage.

Reasons Why You Pay for PMI

A lot of borrowers take out PMI for the reason that the lender requires it. This is because borrowers are putting down less than twenty percent of sales price as down payment. The less the borrowers put down, the higher the risks to lenders. Thus, the lender likes insurance against default.

You do not select a mortgage insurance company and you cannot negotiate premiums. It may not be typical, yet what happens if you get mortgage that exceeds eighty percent LTV or loan-to-value.

Who is Required to Get PMI?

Homebuyers who put down less than twenty percent of the purchase price of the home and the ones who have a conventional loan are typically needed to pay PMI. You should ask your lender if the loan you’re considering needs PMI or MIP or mortgage insurance premium.

PMI – How Much Does It Cost?

The cost of private mortgage insurance relies on your down payment and credit score, yet it ranges from 0.3% to 1.5% of the yearly’s original amount of loan. This is an extra cost aside from the interest you pay on mortgage.

There are some ways on how you can pay PMI and these include the following:

• One Huge Payment – There are times that lenders would require borrowers to pay PMI in full at the time of closing. You may see if yours does in loan estimate.
• Monthly – Majority of policies in PMI require borrowers to make payments every month. It’s an extra charge added to your mortgage bill every month.

You can also consider both options. You can pay some of PMI upfront like a down payment and you can just pay the remaining monthly.

Factors to Consider When Choosing a Loan That Requires Private Mortgage Insurance

Like some kinds of mortgage insurance, private mortgage insurance may help you qualify for loans that you might not get other. However, it could boost your loan’s cost. It does not also protect you once you run into issues on your mortgage. This will only protect the lender. Sometimes, lenders provide conventional loans with small down payments that don’t need PMI. Typically, you’ll pay higher interest rate for such loans.

 

Homeowners can now earn some extra cash on the side by opening the doors of their homes to guests looking for short-term vacation rentals. As a result, Airbnb rentals are growing more and more popular by the day. But, amidst this very competitive market wherein references and good reviews are vital to ensure the success of your vacation rental business, it is a must to host your Airbnb in the best way possible. This is a business that also becomes an art when done the right way.

Below are some useful tips to host Airbnb and give your guests a five-star experience.

Add a Personal Touch

When you host your Airbnb, having a personal interaction with your guests can spell the difference between a memorable stay and a so-so experience. Try to know more about your guests prior to their arrival and ensure that they know that you are ready to answer their questions about the area or the Airbnb. Greet them when they arrive and check to see that they settle in well to form a personal relationship. This is also your chance to make sure that everything they will need for their stay is within reach. Take things a notch higher by leaving them with a welcome note.

Cleanliness is a Must

Your Airbnb must always be clean all the time for your guests to have a memorable vacation. Bathrooms must be spick and span, trash cans should be always be emptied, dusts must be wiped, and signs of previous guests must be removed. If you are using a cleaning service, it would be great to prepare a checklist of things that should be done during every cleaning so that nothing will be neglected.

Stick with Simplicity

When you host your Airbnb, minimal clutter is a must. As much as you want the Airbnb to make your guests feel at home, you shouldn’t make it too personal to the point that guests will feel as if they are intruding with your way of life. Avoid displaying family pictures and remove personal belongings from drawers and closets. The goal here is to give your guests a comfy space where they can just relax, spread out, and genuinely feel at home.

Inform Guests

One of the best tips to host Airbnb is to offer your guests all the necessary information before and during their stay to create a better and smoother experience. Give them clear instructions during check-in and clarify house rules prior to their arrival to set their expectations beforehand. The moment your guests arrive, it should also be easy for them to find essential instructions for different equipment pieces like fireplaces or stereo systems. You should also give them contact details they can use if they need help or have questions. Tell them the checkout procedures and other things that require explanation.

Help Your Guests Explore

Offer valuable service to guests by acting as their personal concierge. Recommend good restaurants or give them directions to the best attractions of the area. You might want to write down these recommendations so guests can browse these at their leisure. You can also stick your property with guides or books about the place.

 

 

Many tenants have less invested in their homes than homeowners do. At simplest level, it is the difference between a thousand dollar security deposit and down payment. However, it goes deeper than that. Majority of tenants plan to move away for a year or two, while some homeowners buckle down for long haul. Homeowners are both financially and emotionally invested.

So, how can a landlord protect his hard-earned asset against an inbound natural disaster? Even though you hire property managers, this type of prevention and advance planning is beyond their service level.

Below are some of the ways to make an indestructible rent:

• Avoid Carpets

Carpets aren’t a landlord’s friend. They easily stain, hold odors, and lifespan is short because they discolor rapidly as well as show wear and tear. If your tenants have pets, pet dander and fur is hard to remove from any kind of carpeting. It could be the allergen nightmare for the next renters.

• Use Hardwood Substitute and Not Real McCoy

Hardwood flooring always looks good and there is no doubt about it. It can be also delicate and expensive. Unless you purchase expensive planks that are made of woods, hardwood floors would scratch. You can also consider either high-end laminate wood or bamboo. These are less expensive, more mold-resistant, and more resilient compared to hardwood. Also, they look beautiful.

• If You Use Carpets, Follow Some Rules

First and foremost, use the darkest possible color carpeting you may get for your rental unit. This differs by unit. Other units handle darker carpeting better compared to others based on the room size, wall colors, lighting, and so on.

The reason why you should choose darker carpets hide stains much. These work better than light colored carpets. The idea is making your carpets last as many tenants as possible without the need to be replaced between each single tenant. For low-end units, you can consider combining high-end padding with a low grade quality carpeting. Thick padding may create an illusion of plush and thick carpets, yet it does not need to be replaced just for the reason that tenants tracked mud across the carpet or spilled some red wine during a party.

• Plexiglass Solution

Have a storm door or screen door? How frequent have your tenant’s pets or children put their faces, hands or baseballs through these? If your rental unit has pets or kids, consider replacing screens or glass of storm doors with plexiglass. It is much easier to install, cheap, flexible, and strong. It can also handle no matter what your tenants throw at your door. However, there is an exception and this includes scratches. That is the flaw with the plexiglass. It scratches easily compared to the glass. Luckily, you may swap for a new piece if you want to.

Those are just some of the ways to make your rental indestructible. You can follow any of those tips. Just make sure to consult professionals if you cannot do it on your own.

Are you planning to purchase a commercial property? Well, you made the right choice because now is the great time to do so. Investing in commercial property offers a lot of benefits, and the top reason is that this provides a great return on investment.

But, just like other investments, it is wise to know everything about this purchase before you take the plunge. So, how much money do you need to purchase commercial property? Read on to learn the different costs involved in buying a commercial property to determine if this is a practical investment for you or not.

Pre-purchase Costs

To find an ideal type of commercial property and location, you might want to work with a commercial broker. These professionals know the ins and outs of the market and they can help you find the property in your preferred location that suits your budget.

After you identify a suitable property, the next step is to determine your pre-purchase costs:

• Due diligence fees that include the following:

• Cost of property inspections to know if the property is in good condition
• Environmental screening to let the buyer check the past uses of the property and latent defects that call for attention and potential risks associated with these.
• Hiring a specialized commercial real estate lawyer to access, evaluate, and verify several legal documents.
• Probable need to hire an accountant to determine how much you can afford

• Costs related to mortgage that may include application fees as well as legal fees during the process of application
• Property appraisal to determine the property’s market value

Costs Associated with Property Ownership and Operation

Owning a commercial property is associated with three categories of costs, namely variable costs, fixed costs, and replacement reserves.

• Fixed costs

• Property taxes – Whether it depends on geographical location, property type, or as determined by the municipality, each situation is unique that results to varied property taxes.
• Commercial insurance – This covers you for any unexpected event such as floods, theft, fires, windstorms, vandalism, and others.
• Mortgage payments – Down payment on commercial mortgage ranges from 25 percent to 35 percent. You need to pay monthly payments to pay off mortgage principal on top of the interest fees.

• Operating costs

• Property management costs – You can save money and time if you hire property managers who will handle daily concerns related to property maintenance, collecting rent, preparing lease agreements, and tenant relations.
• Maintenance and repairs – You might discover that repairs are needed sooner than later during the due diligence process. This may include big ticket items such as roof replacement, cooling and heating systems, siding, plumbing, windows, and others. You also need to consider regular maintenance costs like janitorial services, landscaping, snow removals, and others.

• Replacement reserves

You can prepare this to account for future repairs of big ticket items such as roof replacement or parking lot resurfacing, just to name a few. During the process of inspection, the inspector will determine what needs replacement and when to give you a good idea of how much you have to save to afford future costs.

 

The name Grant Cardone is well-known among entrepreneurs and people who are in sales. He is a professional sales trainer who was able to develop a real estate portfolio worth $566 million from scratch. He is also a bestselling author and talks about how to create wealth.

Whether you wish to become the next Grant Cardone or you simply want to take your investment efforts to the next level, here are some important things you can learn from this self-made millionaire.

Know Your Market

Investing in San Francisco, California is very different from Los Angeles area. You have to know the location and property. Every suburb is different so be familiar with the market down to its micro-level.

Don’t Invest in a Single Door

Investing in a small property, duplex, or a house will never generate adequate flow of cash to cover the debt of the deal, your management time, or even generate a passive income. Grant Cardone’s rule of thumb is to invest in 16 units or more. This scale will provide you with sufficient cushion for covering your debt, management, and will leave you a positive flow of cash.

Know More about Your Partner in Debt

Your debt partner here is your bank and you have to know everything about it. You have to understand their offered terms, the strengths of the bank, their specific areas of specialty, and other related information. For instance, if the specialty of your chosen bank partner is in single-family houses, they would not be an ideal partner for deals concerning large multi-family units.

Calculate Your Returns Over the Years

Avoid thinking short term when it comes to your investments. Thinking in months is a big no-no. Instead, you have to think for long term and what flow of cash you will be seeing throughout the term of investment.

You will have to consider your initial investment as well as the appreciation that this will earn through the years while you are holding it. Aside from this, you will also be getting a cash flow every month.

Exit

You will also have to know how you will exit your investment. It is important to know your target audience. This will be the potential buyer of your property years from now. You have to know who your buyer is on your way out.

These are the terms that you have to think in when you are planning your property improvements as well. If you will decide to add a dog run, a gate, covered parking, or another extensions,  who will be interested to rent your property and who will be interested in those renters?

Considering all of these things will help you identify and find your potential future buyer.

These are only some of the key pointers for investment that you can learn from Grant Cardone. At the end of the day, you have to be smart with your investments. Your first investment is to know more about the investment opportunity available. Always invest in something sure to avoid disappointments.

Today’s economic conditions have unemployment levels that are higher than they’ve been in a lot of years. A lot of people are still unable to find jobs and unemployed. A field that continues to provide a lot of career opportunities is basically real estate. It means that there are millions of dollars in available commissions for real estate deals. However, for you to get such commissions, you need to get a real estate license.

• You Will Gain More Money

Every time investors sell properties through an agent, they spend about up to six percent of the sale price on the agency commissions. Often, it goes amiss that agents pick up another three percent for processing transaction. Thus, investors are losing up to nine percent in profits from the purchase price or complete sale. Having a real estate license can free you from substantial agency fees as you are your own agent.

• You Will Get Access to MLS

The biggest benefit of getting a license is that you will have an access to MLS or Multiple Listing Service as well as a source of comparable sales. With real estate license, you will have independence when borrowing access from the agents, which is often hard. Moreover, instead of waiting for realtor to inform you the newest deals, you will be the first one to know when the new listing shows up on MLS, providing you upper hand in choosing properties in some preferable locations. In addition to that, accessing MLS enables you to run a custom search query. You can also analyze real estate historical data for thorough understanding of the listings. You may also determine particular details including the kind of property and buyers.

• You Will Get More Business Experience

Although you only make 1 or 2 deals in the calendar year and get a lesser income from those, consolation is that you will get a lot of experience once you decide to set up your real estate agency in the long run. If you understand the ways real estate business works, you will gain important insights on the property transactions like detailed property information and contracts. All of these might save you lots of money and time over time.

• Get Full Control over Real Estate Deals

Having a real estate license enables you to make offers and negotiate on the terms without the need for agents. You will also get to the real estate deals directly with property inspectors, lenders, lawyers, and anybody else involved in the process of buying properties on both the selling and buying side. Other than that, in terms of showcasing the finer details of the property, real estate agents will put in same efforts as you. They will not drive long distance for properties showing, follow up with the potential buyers, lay out delicious spread, and show the property’s best view.

While a real estate license might not be necessary for investors, buying properties using it might change the way you carry out your future investments.