The LPA Landlord Newsletter,
December 2005
HAPPY HOLIDAYS!
Dear Fellow Landlord,
Happy Holidays! As holiday season gets busier, we first and foremost want to wish you a safe and wonderful holiday. The LPA is dedicated to helping you make your rentals as trouble-free as possible. Especially during the holiday season! With this newsletter, we'll prepare and share Happy Holidays as we get ready to say goodbye to 2005.
This month in The LPA Newsletter, we have:
a Special Report by financial expert, Cary Losson:
More Return On Equity For Your Investment Property Dollar. This article is helpful to those of us intersted in smart investing while taking
advantage of tax deferral under IRS code section 1031.
How to Screen Tenants in 5 Easy Steps (Back by popular demand)
Also, check out the latest Success Quotes and Rent Excuses!
Please e-mail us if you have any questions or would like to add or share any material / information. Again, we wish you happiness and successful landlording throughout this holiday season!
John Nuzzolese
John@theLPA.com
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INVESTOR SPECIAL REPORT:
More Return On Equity For Your Investment Property Dollar
By Cary Losson, Founder and President of 1031 Exchange
Options.
Few would deny that real estate is a solid investment. It
provides an attractive combination of stability, reliable cash
flow, preservation of principal and capital appreciation.
However, many investment property owners nearing retirement find
themselves in a quandary. They are equity rich, but cash poor,
with increases in the value of their property far outpacing
income growth. They also are often tied down by the day-to-day
issues of property management and, particularly in cities like
San Francisco, California, shackled to the constraints of rent
(and eviction) control. In fact, San Francisco is home to some
of the lowest cash return on equity in the state's real estate
marketplace, which is somewhat counter-intuitive given
California's ever-booming property market.
The obvious answer is to sell the property and unleash the
dormant equity, but that can be problematic. These investors
face the reality of prohibitive capital gains taxes and
recaptured depreciation, as well as the task of identifying an
alternate investment venue; or locating, acquiring and financing
suitable replacement property in the time period allowed, taking
advantage of tax deferral under IRS code section 1031.
An ideal solution for many investment property owners may be to
reinvest the proceeds from the sale of their property and
utilize a subsequent 1031 exchange into a tenancy-in-common (TIC)
ownership type, also known as co-ownership of real estate (CORE)
interest in a suitable replacement property.
1031 exchanges, also known as Starker exchanges or tax-deferred
exchanges, permit owners to sell investment property and defer
tax payments by reinvesting the proceeds into another investment
property (or investment properties). In order to completely
defer the payment of tax, among other things, the replacement
property must be of equal or greater value and all the equity
from the sold property must be reinvested in the new property.
The marriage of 1031 exchange and TIC/CORE allows investors not
only to defer their capital gains taxes but also to upgrade
their investment real estate.
click here for the full article...
Cary Losson is the Founder and President of 1031 Exchange
Options. A luminary in the TIC/CORE 1031 exchange
marketplace, Mr. Losson is frequently quoted in journals and
periodicals concerned with investment property issues and
advice. For more resources to assist in your learning: http://www.1031exchangeoptions.com/resources.html
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Landlord Tip:
Don't Forget to Increase Rents!
One of my biggest mistakes was not raising the rent on a yearly basis. I thought that as long as the rent was being paid, I didn't want to rock the boat. I later realized that my properties were way under rented. I found that when I tried to increase rent, the tenants went crazy. They resented that I "all of a sudden" want to hit them with a rent increase. They felt that as "good tenants" I was punishing them for no reason.- Louis C., NY
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How to Screen Tenants in 5 Easy StepsBy John Nuzzolese
I always say that "95% of your tenant problems can be eliminated in
the screening process." If you're like me, you probably find it
difficult to relax when you have vacancies. So getting it rented is
the main idea, right? Well, from now on, lets say "getting it rented
to a properly qualified tenant is the main idea."
Below is what I call The 5 Steps of Screening Tenants.
STEP 1: First Contact
From the very first contact with the tenant, the screening process
has begun. Whether you are the landlord, real estate agent or property
manager, the same still holds true.
First Contact is usually by telephone, so you need to ask the right
qualifying questions in order to decide if you should proceed to step
2. Advise customers of your up front rent and security deposit
requirements and other important facts regarding the rental that may
help disqualify the prospect.
I suggest you make a list or prospect card of questions to ask and
have it handy while you conduct your first contact interview. For
example:
| Name: |
Phone: |
| Reason for Moving: |
# of People: |
| # of children & Ages: |
Occupancy Date: |
| Pets: |
Smoking: |
| Credit: |
Landlord Reference? |
|
Please note that anyone who has a problem answering your questions
(as long as you ask them politely), probably will not qualify for your
rental. Serious customers want to make a good impression on you and
should be happy to answer your questions. This process can save you
and customers a lot of time and trouble.
STEP 2: Showing the Property
From landlords to real estate agents, we all have our own style in
showing the rental. I think we all need to be aware of certain
telltale signs to watch for while evaluating your prospective new
tenants.
- Appearance. Is the prospect neat and clean? Did
he or she make an attempt to make a good impression? ....
click here for the full article...
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Where's the Rent?!
Most Recent Top Tenant Excuses
"My son had to quit his job because his grades are slipping."
I rented the apartment to her based on her income and references. The son didn't even have a job. I guess they'll have to move if they can't afford the rent. I told her that. - Robert A., Tustin, CA
"I looked up this house in the tax records and it belongs to someone else. I'm not paying you. I'll be holding the rent until I find the 'real' owner."
The deed and mortgage is in my partner's name, but we are both on the lease. I know this is just a stalling tactic and must charge a late fee. - Martina K., GA
"I don't have it. I'm a landlord too and I had to use this month's rent to evict my non-paying tenant."
Well it sure is a domino effect. The only difference is that I'll have my mortgage paid even after I evict you. - Ronald C., KY
"Oh, hi. I was just making out the check now."
This is what shes said when I called on the 14th of the month. I told her we needed the check immediately and will pick up the check right away, she said: "I'm not home now, I'm at the car place getting my car fixed." (By the way, I did get the check later in the day and it was dated the 4th! Does she think we are stupid?)- Steve S., NY
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Quotations...
"History never looks like history when you are living through it. " - Abe Lincoln
"You see things; and you say, 'Why?' But I dream things that never were; and I say, 'Why not?'" - George Bernard Shaw
"We need men who can dream of things that never were." - John F Kennedy
"Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity." - Socrates
"How much did your last tenant problem cost you?"
- John Nuzzolese
A Way of Being
- Gary Link, Attorney at Law
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America's #1 real estate expert is also an LPA Member!
The Landlord's Troubleshooter and more Real Estate Books By Robert Irwin
Robert Irwin is the bestselling author of more than 50 books on real estate. His career in the real estate industry encompasses more than three decades of experience as real estate broker, landlord, and consultant to lenders, agents, and investors.
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Books by LPA Members
The Landlord Protection Agency is proud to recommend the following landlord books written by LPA Members, Robert Irwin, Timothy Spangler, Tony & Sandy Midea and Dan Auito. Just click on the book for more information about it.
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