Benefits of Real Estate Investment vs. Stocks and Bonds

As the economic recovery continues to build, Americans are again able to consume and invest; and with recent reports from the U.S. Census Bureau noting 34 percent of American households are rental units, investors are taking notice and rushing to reap benefits of placing investment funds in single- and multi-unit residential property.

“Investor demand for single family properties remains strong,” says Kirk McGary, CEO of Real Property Management, citing a recent study from Zelman & Associates that found investor demand for residential properties ranking at 60.9 on a scale of 0-100. “Trends like this in the housing market have created significant demand for property management companies like ours, as investors choose to put their money in real estate as opposed to the alternatives.”

Although there are many investment options available, real estate vehicles offer the ability to finance a portion of the purchase price to leverage the initial investment to control an asset valued much higher – unlike stocks, bonds and CDs. With lower interest rates available, a small increase in the value of a leveraged property investment can carry a greater return than an unleveraged investment — approximately 12 percent gross according to the same study by Zelman & Associates.

Investing in real estate also offers tax benefits where earnings from investments in CDs, bonds and stocks are taxed. By making deductions from the profit on mortgage interest, cost of property repairs and depreciation, property owners are writing off depreciation of an asset that is actually ascending providing yearly benefits to a long-term investment.

Most importantly, ownership of property improves cash flow. Subsidizing the investment with consistent rental income puts money in the investor’s pocket, covering the mortgage, repairs and additional homeownership costs.

Being able to minimize tenant turnover through timely and concise management reflects on the bottom line, maximizing the return on investment overtime.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Using Your IRA to Buy Investment Properties | Zillow Blog

AUTHOR:PROFESSORBARON.COM

With taxes going up for most people, you might be paying more attention to your tax-deferred retirement investing options, such as your Individual Retirement Account (IRA). And with property prices going up, you might ponder whether you can invest those IRA funds in real estate to both defer (or eliminate) taxes and earn a fair rate of return.   Read more

 

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Smart Real Estate Investing for the New Rebound

Market InsiderMy Market Insider – Update for October 2012

Featured “Insider Tip”: Smart Real Estate Investing for the New Rebound

A new real estate boom appears to be taking root and spreading across the U.S., but is this really the investment opportunity of a lifetime or are we being set up for another exploding bubble?

What Would Warren Buffett Do?

Legendary investor Warren Buffett has been known to dominate the headlines and even made the cover of Time Magazine, so what’s he talking about? Buffett’s recent crusade has been focused on selling the benefits of real estate investing and pointing out an array of indicators which suggest a new, extended period of growth. This is a view being echoed around the country from veteran real estate agents who say, in certain markets, a seller’s market is definitely here again.

The New Gold Rush is On …

Those who can afford it are bidding on packages of 500 rental properties being offered by Fannie Mae, while others are racing to foreclosure auctions or bidding on as many short sales as they can.

Prices are as close to bottom as most can predict, and the fear is that soaring home prices (due to shrinking inventories), the potential evaporation of REO and short sale opportunities in the near future, and a potential rise in mortgage rates will cause the best opportunities to fade quickly.

In principal the strategy appears to be sound. After all, banks are now paying selected homeowners up to $35,000 to complete short sales and get out, making cutting deals a breeze for investors. But are we getting set up for another great fall?

Over-Confidence Breeds Dangerous Speculation: Are You Being Fooled?

It truly is a great time to invest in real estate for those who buy wisely, buy low and have the finances to do so. Unfortunately, the contagion of overconfidence already seems to be infecting the masses, luring novices into acquiring properties they believe they can flip like the investors on a reality TV show.

Stories are emerging of buyers overpaying for homes and multifamily apartment buildings and even a surge in investing in the junk subprime securities which were supposedly to blame for the whole housing crash six years ago. It seems some people will never learn or just enjoy gambling.

How to Invest Wisely in the New Rebound

When utilized wisely as part of a diverse portfolio, real estate investment can be the best move for most Americans to build wealth and subsidize their incomes in retirement. Between passive cash flow, appreciation as a hedge against inflation, and depreciation to offset taxes, it is incredibly attractive. However, there are a few rules which must be followed:

1. Define Your Goals

Before acquiring any property, ensure that you have defined your financial and personal goals and that your investment decisions are aligned with them.

2. Is Your Home the Worst Investment You can Make?

For many, purchasing a home can create forced savings and eventually become the best investment they ever make. However, your own residence and home equity should never be something to gamble with. It’s where you live; your investments are for paying for that. Don’t confuse the two.

3. Don’t Invest in Real Estate Until You Are Financially Ready

Real estate is somewhere to put your money to work for you. No money down real estate investing is possible, and it can be a way to make money, but if you bite off more than you can chew and don’t have any savings or reserves, you are asking for bankruptcy.

Make sure you are prepared for the worst, have separate personal savings which are sufficient to carry you through for several months, and have an exit strategy before you get in as well as a plan B and C.

Don’t Believe the Hype!

There are many ways to invest in real estate and even more silver-tongued professional sales people to pitch them. Choose a solid strategy and be wary of distractions that can lead you into investing in all types of exotic locations and structures you don’t really understand.

Note investing, construction, commercial properties and starting property management companies can all be exciting and profitable, but just as with stocks, it may be safer to invest in what you know.

Protecting Yourself Against Market Fluctuations

The most important thing for anyone considering real estate investment is to get educated. Don’t worry, this doesn’t mean having to go back to school or picking between tacky late-night infomercial products. However, it does mean learning more about the potential risks, how to protect against them, real estate cycles and the signs of negative fluctuations to watch for.

Buy-and-hold investing and creating a portfolio of rental properties is hot right now and has the potential to create incredible wealth over the long term. Just realize how long you may have to hold your investment and what the penalties could be if you need to cash out early in less buoyant times.

 

Excerpt from Market Insider, October, 2012.  Explore a wealth of information that will help you better understand the factors that impact the real estate market – sign up for FREE access to valuable market data !

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

REO Properties: Is List Price Just the Starting Bid?

Winning with ForeclosuresWhen it comes to bidding on REO (bank owned or foreclosure) properties in Stuart, Florida, it seems the list price has now become the starting point, not an asking price.  Previously banks would establish the list price of a foreclosure with the expectation of negotiating an acceptable offer within 90% to 95% of asking price. With increasing demand, limited inventory, and competition amongst buyers, it is no longer realistic to expect to get a steal on REO properties. In fact, it seems the banks in some instances may set the list price low in anticipation of receiving multiple higher offers. While there are still good values to be had, I caution my clients that desirable REO properties typically do not sell for less than asking price. It is now common to find ourselves in multiple buyer situations where the listing agent requests a “highest and best” offer, often resulting in a sale thousands above asking price.

 

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

 

Landlords: FAQs About Leases


Frequently Asked Questions


  • What reasons do I need to file an eviction?

    You can file an eviction if a tenant refuses to vacate the premises after the service of a proper notice to the tenant. Whether or not a notice is “proper” is determined by law and by the lease. Different types of notices are required depending on the reason for the termination. For example, a notice that terminates due to the nonpayment of rent is a different notice than a notice based on criminal activity.


  • How do I begin an eviction?

    All evictions begin with a proper notice that tells the tenant to vacate the premises. Once the notice expires, an eviction complaint is filed with the Clerk of the County Court.


  • Can I evict a tenant who has children?

    You can evict any tenant who fails to comply with the lease.


  • What notices do I need to give?

    It is critical that a proper notice be given. Different types of notices are required depending on the reason for the termination. For example, a notice that terminates due to the nonpayment of rent is a different notice than a notice based on criminal activity. The wording of the notice is important. You should get advice from an attorney before issuing a notice to the tenant.


  • How do I serve the notices?

    Your lease may tell you how to serve the notice. Check its language. If your lease does not give you specific direction on how to serve the notice, then you can do one of the following: a.) hand it to an adult who lives at the property; or b.) post it on the door to the property.


    The law permits you to mail the notice to the tenant. However, using the mail means special rules apply to the deadlines contained in the notice. Do not use the mail for the service of a notice without first getting legal advice.


    If you are posting the notice on the door, be sure to fasten it securely to the door so that it does not blow away.


  • What is a Three Day Notice?

    A three day notice is the most common type of notice. It is used only in situations where the tenant has failed to pay rent. The notice tells the tenant to either pay the rent within three days or vacate the premises within three days.


    The language on the three day notice must be very precise. Not all forms that one finds on the internet are valid under Florida law!


  • What amounts can I put on the Three Day Notice?

    The three day notice can demand only the rent that is due as of the date the notice is served. It cannot include amounts that are not rent. It cannot demand rent that will become due tomorrow or due any time in the future.


  • Suppose the tenant tries to pay me?

    The tenant has the absolute right to pay you the full amount of rent due within the time frame of the three day notice. You must accept the rent if it is offered to you within the three day time period. If the three day time period has expired, you can refuse the rent.


  • Suppose the tenant only has partial rent?

    You do not have to accept partial payment after you have served a three day notice. However, you do have to accept rent if the amount tendered is the full amount that was demanded on the notice.


  • Can I collect late fees?

    You can collect late fees only if the lease says you can. If there is no written lease, then you cannot collect late fees.


  • How long does an eviction take?

    It varies depending on the reason for the eviction, how busy the court is, and whether the tenant mounts a defense. Generally, an eviction for nonpayment of rent where the tenant does not file a defense to the case, takes about three weeks until judgment is entered. If a writ of possession must be issued and served to make the tenant move, then about another week is added to the time.


  • Can I refuse cash?

    Your lease may say how payment is to be made. If your lease says you can refuse cash, then you can refuse cash. Otherwise, you must accept it.


  • Do I need an attorney to file the eviction?

    The eviction is a lawsuit. It must be filed by an attorney or by the individual landlord who will then represent himself in court.

    A property manager can file some evictions. The property manager can file an eviction based on nonpayment of rent, provided the lawsuit does not seek a money judgment and provided that there is something in writing showing that the property manager has the owner’s permission to file the eviction. Also, the property manager is only entitled to file the eviction and then submit paperwork for a default judgment to be entered. The property manager cannot act as the “lawyer” at a hearing or file any other papers.


    If the landlord wishes to file his own eviction, the clerk of court may have forms available for a small fee.


    There are advantages to having an attorney handle the eviction. The attorney is most familiar with the eviction process and can most ably handle the filing of the required papers. The attorney is on the frontline, able to handle any defense asserted by the tenant and any problems that may arise.


  • Can I hold off on a repair if I do not receive rent?

    No. The obligation to repair and maintain property is totally independent of the tenant’s obligation to pay rent. If the tenant has not paid rent, then the remedy is to serve a three day notice.


  • Can the tenant fight the eviction?

    The tenant has the opportunity to file an answer to the eviction complaint. In that answer, the tenant can list the reasons why the eviction should not occur. These “defenses” are then heard by the judge. However, the tenant is only entitled to have the judge consider the defenses if the tenant has deposited the rent that is owed into the court registry.


  • Suppose the tenant retains an attorney?

    Just as the landlord is entitled to hire an attorney, so too is the tenant. If the landlord is representing himself in the eviction, and the tenant retains an attorney, then the landlord should seek the help of an attorney so that there would be an “even playing field” in court.


  • Do eviction cases go to court?

    All lawsuits are filed with the “Clerk of Court”. All judgments are signed by a judge. However, not all cases go through a hearing or trial. In fact, most evictions do not require a hearing or trial. If the tenant fails to file an answer or fails to deposit the rent that is owed, a “default” will be entered and, following that, a “default judgment”. For those cases where a default is entered, there is usually no hearing or trial.


  • What happens if the tenant pays the rent to the court?

    If the tenant deposits the rent that is owed into the Court Registry, then a “final hearing of eviction” or an “eviction trial” will be scheduled. At that final hearing, the judge will decide if the landlord is entitled to get back possession of the rental premises. The landlord must be prepared to prove his case at the final hearing with witnesses and exhibits. The tenant will have the chance at the final hearing to present proof why he should not be evicted.


  • Can the tenant file bankruptcy and stop the eviction?

    The tenant can file a bankruptcy case at the bankruptcy court. Once the bankruptcy case is filed, all collection efforts must stop. That means that the eviction must stop until the bankruptcy judge gives permission for it to proceed. Getting that type of permission is not difficult but generally requires the assistance of an attorney who is admitted to practice in that court.


  • Will the tenant have to pay my attorney’s fees?

    The Florida Landlord Tenant Act says that whoever wins a landlord tenant case can win attorney fees. Thus, if you are successful in evicting your tenant, you are entitled to a judgment that says the tenant must pay your attorney fees and court costs. Keep in mind that having a judgment for the attorney fees is not the same as having the money in your pocket! You would still need to collect the fees.


  • Can I file an eviction if I have no lease?

    Yes. However, you will need to show what the oral agreement was about the tenancy. How much is the rent and how often was it to be paid? On what day was rent due? Those facts have to be alleged in the eviction complaint and then proven to a judge.


  • How do I non renew a tenant?

    A notice of nonrenewal can be served to the tenant and will be valid if it gives the tenant a sufficient number of days “warning” that the lease will not renew and if it tells the tenant to vacate on the last day of a rental period.


    How many days must the notice give? Look first at your lease. It may tell you how much notice must be given for a nonrenewal. If your lease does not contain such language, or if there is no lease, then the following rules apply:

    — If the rent is paid on a monthly basis, then give not less than 15 days’ notice prior to the end of any monthly period

    — If the rent is paid on a weekly basis, then give not less than 7 days’ notice prior to the end of any weekly period.


  • Do I need a reason to non renew a tenant?

    No. You can nonrenew a tenant for any reason, as long as it is not retaliatory or discriminatory.


    This answer may be different if the rental property receives the benefit of a rental assistance program or other government benefit. Consult with an attorney if you are not sure.



Information courtesy of the Law Offices of Heist, Weisse & Davis

Phone: 1-800-253-8428 Fax: 1-800-367-9038

Serving Florida’s Property Managers with offices in Orlando, Clearwater, and Fort Myers Beach, Principal Office



Articles for Landlords


Learn about important issues affecting landlords and tenants including:



Click here for over 150 articles by the attorneys at the law offices of Heist, Weisse and Davis, P.A., eviction and property management law services providers for Florida residential property managers and landlords.



Information courtesy of the Law Offices of Heist, Weisse & Davis

Phone: 1-800-253-8428 Fax: 1-800-367-9038

Serving Florida’s Property Managers with offices in Orlando, Clearwater, and Fort Myers Beach, Principal Office



Five Tips for Buying a Foreclosure


ForeclosuresPurchasing foreclosed properties in Stuart, Florida can be a vexing process for many home buyers. Here are some helpful tips for buyers considering a foreclosure:


1. Ensure that you are working with an agent with access to accurate foreclosure information. Do not assume that all agents have foreclosure expertise or equal access to these listings.

2. It is typically easier to pursue bank-owned properties rather than short sales, which can take months to close (if ever). When it comes to short sales some banks will negotiate in a timely manner, but don’t even think about a short sale if you must close by a certain date. Bank-owned property transactions on the other hand are straightforward; the banks are tasked with selling these properties as quickly as possible.

3. Price is negotiable. Don’t assume that banks are firm on their price; you can offer less. For example, asset managers responsible for liquidating bank-owned Stuart, Florida condos are often willing to consider a lower offer. That said, low ball offers are often rejected outright. In most situations I would not offer less than 90% of list price as banks have been pricing these homes competitively. If the home is in good shape and in a desirable area you will most likely be competing with buyers offering full price or more.

4. Ask the bank to pay your closing costs. They may say no, but banks can be quite accommodating when motivated. At a minimum they usually will pay for title insurance.

5. Get pre-approved for a mortgage. When making an offer, whether a foreclosure or short sale, it is essential to be pre-approved. You may want to consider using the same bank as this may help during negotiations.


This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Renting Your Vacation or Second Home

RentalsRenting your property can be a great way to offset some of the ongoing expenses of owning a vacation or second home. If you are an out of town owner you will need to consider how you will manage the property long distance. Hiring a property management company or a real estate professional are two options that can ease the stress of going it alone.

A property management company will charge an ongoing fee, usually 10% of the monthly rent for their services (in addition to their fee for procuring a tenant) while a Realtor may offer some services as part of his listing agreement. The latter can save you an ongoing management fee but will require some “hands-on” participation from you.

As a Realtor who handles rentals as well as home sales, I provide many of the services offered by a property manager as a courtesy to my clients. This primarily consists of getting your home “rent ready” with the assistance of service professionals who provide various maintenance services directly to my clients for a fee while I help manage the process.

Some owners rely on a neighbor or nearby relative to perform these functions only to find the job does not get done or is done poorly. In the end you wind up with an unhappy tenant you need to deal with from miles away. Regardless of which approach you take, your home must be spotless and equipped to handle the demands of tenants seeking a stress free vacation rental and who may become repeat renters for years to come.


Preparing Your Unit to Rent

It may seem obvious but having a bright and clean rental will result in a quicker sale and a better tenant! For seasonal rentals I recommend a thorough cleaning before we begin showing the unit. You should also plan on another cleaning before your tenant arrives, especially if it has been vacant for a while. Bathrooms need to be spotless and free of mold and grime. Carpets may also need shampooing. You may want to consider a cleaning service for scheduled visits – local cleaning companies charge about $100.00 for a typical 2/2 condo or villa (basic service).

Clutter and personal items should be removed or stored in a secure area. You should also try to address any maintenance needs before showings begin.

If upholstered furniture or bedding is showing its age, consider having it cleaned or replaced. Likewise, threadbare linens, pillows and sheets should be replaced as needed.

Also, consider a fresh paint job if the walls are dingy or showing wear and tear. This is very important for vacation rentals to help move them quickly.

You should provide your tenants a list of contact numbers (including yours) for service emergencies. Include information about anything that pertains to your unit, complex or community.


This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.



Listing Your Rental: Frequently Asked Questions

RentalsQ: We are flexible in terms of short or long term rentals and would like to know your opinion on each market for the area and our property.


A: Right now there is a strong demand for annual unfurnished residential properties. I also get calls for short term rentals, which often are corporate relocations such as FPL and Martin Memorial Hospital employees, but demand is unpredictable.


Q: I am interested in finding out your fees for services. Also, we do not live in Florida at this time and would like to know your availability for seasonal rental in case this is the option we decide on. We are looking for services that can take care of the turn around for new tenants.


A: Here’s what we do when we list your rental:


Marketing

-Evaluate the rental potential of your property

-Create a Web page featuring the rental

-Exposure on multiple Web sites including CraigsList, Facebook, and TCPalm (the Stuart News’ Treasure Coast Web site).

-MLS and Realtor.com


Finding a Tenant

-Comprehensive tenant screening including credit and background check

-Collect advance deposits

-Lease preparation

-No fee until we rent your property


Fee Schedule:

10% commission for annual rentals

15% commission for rentals less than six months

Note: we share our fee with cooperating brokers who help procure a tenant.


Sales Tax

We collect sales tax on all rentals less than six months from the tenant. This fee is disbursed to you with other advance deposits. You must file and pay the tax to the state of Florida.


Property management:

We do not offer property management but I can recommend service people for repairs and maintenance. You would pay for these services directly but as an out of town landlord I can assist you with coordinating maintenance schedules in terms of getting the house “rent ready”.


Rent Collection

We collect advance rent, which is typically first, last and security. These funds are disbursed to you less our fee. The tenant then pays the ongoing monthly rent to you directly from the second month on. Seasonal rentals under four months are paid in full in advance. Note: Florida law requires you to keep the tenant’s security on deposit in a Florida bank.


This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.


10 Tips For Purchasing Rental Property in Stuart, Florida

RentalsWhen considering a rental property for investment or a vacation home you plan to rent out to offset expenses, it is important to make sure you perform due diligence and are prepared for the task at hand. As a “rental property virgin” buying your first property involves more than just buying a home and renting it out. Here are some tips to help get you started.


1.Find a seasoned Realtor who knows Stuart, Florida’s neighborhoods and communities as well as the surrounding Treasure Coast area. An experienced agent can recommend suitable properties to buy and will be able to provide up to date information about local market conditions, negotiate the best deal, and procure a tenant when the time comes.


2.Check your finances. When financing your rental property or vacation home it is important to ensure there are no errors on your credit report and resolve any problems quickly.


3.Schedule an appointment with your accountant or lawyer. They will point out how becoming a landlord affects you from a legal and tax standpoint.


4.Determine your budget. Your lender or mortgage broker should help calculate the maximum amount you can afford to pay, how much of a down payment will be needed, and get you pre-approved for a mortgage. Estimated closing costs and other incidentals must also be factored in.


5.Visit neighborhoods that interest you at various times of the day and night to get a feel for what the area is like.


6.Be selective http://microbestshop.com/microsoft-windows-7-professional-with-sp1-32-bit-64-bit/. It is important to treat your rental property search as if you were in the process of buying your primary residence.


7.Consider future resale. Features that are a concern to you will most likely affect future buyers as well.


8.Before making an offer ask your agent to provide information about comparable properties in the area. It is important to compare recent sales, price per square foot, area rents, and other relevant information to be sure you are getting a good deal.


9.Schedule a home inspection. Once your offer is accepted (with conditions) be sure to call in a professional home inspector. A home inspection will tell you if the home is safe to live in, identify any problems that need to be addressed, and help to avoid expensive repairs down the road. You may also need to get separate termite, well, septic or other inspections.


10.Establish a reserve fund to cover future repairs, vacancies, etc.


As in any real estate transaction, buying a rental property requires advance planning and that you stay on top of all the activities and details necessary for a successful purchase. Employing a Realtor with a high-quality professional support network will help to facilitate your transaction and avoid missteps along the way.



This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.