Resident Retention Strategies: Three Tips to Kick Off a Strong 2012

Tags: property management
Posted in Property Management | No Comments »

Paying Up for Peace of Mind

When you add up the responsibilities, there’s much to be said for hiring a professional property manager. Going this route will cost you about 10% of the monthly rent collected — a smaller proportion for high-end properties with high rents.

Avoid outfits charging less than 8%. These managers may lowball the management fee, then overcharge for maintenance or pay kickbacks to expensive contractors. Find a management company that bills you only for what the repair contractor charges.

Among the questions you ask when choosing a property management company:

• Exactly what services do you provide?
• What references can you give me?
• Do you offer 24-hour maintenance?
• Are you bonded (in case of theft or improper handling of money)?
• Do you have errors-and-omissions insurance (to cover negligence or mistakes)?
• Do you keep each client’s funds in a separate bank trust account in that client’s name rather than a single master trust account containing all property owners’ funds? (This is especially important if you’ll be out of state and unable to exercise close oversight.)

Call us with questions, we are here to help.  (480) 382-1608

Tags: can't sell my house, property management, rental, rental home
Posted in Property Management | No Comments »

Number of Renters Continuing to Increase

While it is no secret that foreclosures have caused a shift in the number of people renting properties, it is interesting to note the numbers associated with this trend. According to an article written in USA Today; Mesa, Phoenix and Scottsdale have increased in number of homes being rented by over 30% since 2010. Many other cities have also seen major increases in this area such as Avondale and Goodyear.

With many more tenants, including former homeowners, it is important that property managers, investors and tenants alike understand the laws and rights associated with rental properties. This is especially true with investors who purchase homes still occupied by former homeowners, or current tenants. Although an owner technically may own a property, they still have to go through the eviction process to obtain access to the home if the occupants refuse to cooperate.

One woman in Oakland California broke back into her recently foreclosed home after she had already been evicted. In other cases, owners may strip the house of all fixtures (including stove, dishwasher and light fixtures) even though it is illegal. Examples like these show the importance of understanding the laws governing landlords and tenants. To learn more, talk to a professional property manager or someone educated about the Arizona Landlord Tenant Act.  You can access this through the following link; http://www.azsos.gov/public_services/publications/residential_landlord_tenant_act/ Becoming more educated will help investors, landlords, property managers and tenants eliminate or avoid problems that arise in residential housing.

Posted in Property Management | No Comments »

25 Most Deadly Building Fires of All Time

No matter which career path you take in your fire science interests, an attempt to understand the causes of fires and how they may take lives remains a concern. Recent wildfires in Texas, while sometimes uncontainable for days, often don’t take as many lives as short-lived blazes within hotels and nursing homes. A cigarette or a match thrown into the woods may take homes, but the same fire source may take as many lives within one nightclub — and it is that loss of lives that makes a fire memorable, especially when people die from suffocation, inhalation of building materials and in the crush of panic to leave a building. The skill lies in learning how to avoid those situations again…although — as you may see in the list below — history often repeats itself. The following 25 fires occurred in the U.S., and they are ranked in order of their deadliness.

Follow this link to continue reading: http://www.firesciencedegree.com/25-most-deadly-building-fires-of-all-time/

Tags: Fire Damage, relocating
Posted in Fire Damage | No Comments »

Maricopa County homeowners will see property-tax cut

Average bill to drop $60 because of declining values, budget cuts

by Catherine Reagor and Michelle Ye Hee Lee – Aug. 30, 2011 12:00 AM
The Arizona Republic

For the first time since metro Phoenix home values crashed, most of the region’s homeowners can expect a noticeable drop in their property taxes.  Maricopa County property-tax bills are being mailed this week, and the average homeowner bill is expected to decline more than $60 from last year’s bill.

The bills reflect taxes from a variety of cities, school districts and other taxation districts, which take a percentage of a property’s assessed value each year. Most of those districts raised tax rates this year, but the overall amount of taxes those districts plan to collect is down almost 6 percent.

And although tax bills are tied to a property’s assessed value, the decline is also partly because of budget cuts by public agencies across the state, which set their budgets, then adjust tax rates to match. For example, the Maricopa County Board of Supervisors decided two weeks ago to raise the county’s property-tax rate from $1.05 in 2010 to $1.24 per $100 of net assessed valuation.

At the same time, the amount the county will collect from property taxes will fall by $21.7 million because of decreased assessed home values. To deal with the revenue shortfall, the county has spread budget cuts across its approximately 50 agencies and departments. “I think that this is rather telling about the insignificance of tax rates,” said Charles Hoskins, county treasurer. “Rates have increased because values have dropped more than spending, but the reduced spending is what ultimately determines what property owners pay.”

This year’s tax bills are based on 2009′s valuations, when Valley home prices dropped a median of 15.2 percent. That was the third consecutive drop for home valuations in Maricopa County. Next year’s property taxes will be based on 2010 valuations, which showed home values fell 11 percent.

Last year, county property-tax assessments were down 3.7 percent from 2009. But not every homeowner saw a decrease in his tax bills during 2010 because several municipalities and special districts had to raise their tax rates to offset budget shortfalls. This year, Hoskins expects most homeowners to see a decrease.

Although tax bills are declining, the drop isn’t nearly as much as the plunge in home prices, which have tumbled about 60 percent since 2006. And Kevin McCarthy, president of the Arizona Tax Research Association, cautioned that not all homeowners’ tax bills will drop. It will depend on how much their respective school districts and cities raise tax rates. School districts are expected to raise taxes this year, he said. On average, property taxes from school districts make up 61 percent of a homeowner’s tax bill.

A homeowner living in Glendale Elementary School District whose property was assessed at the median value of $140,000 for last year’s taxes and $124,500 for this year’s may pay $76 more this tax year. But the owner of an equivalent home in the Isaac School District in Phoenix may pay $99 less. Both cities kept their tax rates flat, and both school districts increased their rates, but because the increase was smaller in Isaac, the total tax bill decreases.

“A blanket statement about everybody’s taxes in the county going down will be problematic on that level,” McCarthy said. “The things that might be driving some softening of the tax bill at the county level are not going to occur at the school-district level and, to a lesser extent, at a city level.”

Tax system

Property values are assessed annually, and county tax bills based on those assessments arrive 18 months later. The bills are based on a formula based on two factors: property valuations set by the assessor and tax rates set by nearly 1,500 municipalities and other tax jurisdictions. Those jurisdictions – counties, cities, school districts, community-college districts and other special districts – determine the actual tax load for any given home.

A tax bill is a composite of the taxes assessed by those many different districts. A home that is inside a certain parks district, for example, may pay higher taxes than an identical home nearby that lies outside district lines.

To set rates, the taxing jurisdictions must first figure out how much money they need to fund their budgets. Then, the district and municipalities work backward to set their tax rate. Under this system, a decline in value without an equal drop in a jurisdiction’s budget will cause tax rates and taxes to go up.All jurisdictions have a legal cap on how much they can raise tax rates, which is mandated when they are formed.

But districts can take a larger amount through local bond issues or voter-approved school-funding increases called budget overrides. This year, Hoskins said $1 out of every $5 assessed for property taxes will go toward voter-approved budget overrides and debt payments.

Homeowners’ tax bills show which taxing jurisdictions are contributing to their total assessment. The total assessed tax for all Maricopa County homeowners from all taxing districts is $3.9 billion this year. That compares with $4.2 billion last year and $4.3 billion in 2009.

Tax trends

Tax consultants believe Maricopa County has one of the most complicated property-taxing systems in the country. However, property-tax reform doesn’t draw as much support in Arizona as other parts of the nation because the state has one of the lowest tax rates.

Arizona has the 39th-lowest property-tax rate in America, according to the Tax Foundation, a Washington, D.C.-based non-profit. McCarthy said although that may be the case for residential homes, Arizona ranks about 16th-highest state in commercial- and industrial-tax rates.

The residential-home market may have bottomed out, but the commercial market still has room to decline, and business taxpayers are still seeing tax increases, he said.  “We have low homeowner property taxes, and we have high business-property taxes because we don’t generate property taxes from homeowners on an even basis like most states,” McCarthy said.

Posted in Property Tax | 1 Comment »

Ways to avoid underwater mortgage and their effects on credit score

There may be times when you default in your mortgage payments and acquire a lot of mortgage debts. Before you buy your house, you must make use of the “how much home can I afford” calculator. There are other calculators that help you decide the amount of mortgage you can afford to take out. There are a lot of ways you can get rid of your underwater mortgage with minimal affect on your credit score. Read on to know the ways you can get rid of underwater mortgage and their affects on your credit cards.

What is underwater mortgage?

This is a situation when you’re not able to pay on your mortgage and the mortgage debt is more than the value of your home. This situation doesn’t really arise on your first mortgage. But if you take out a second and a third mortgage, it may happen. Usually this situation may or may not be your fault. Sometimes due to the economic situation in the country, the value of the property in your area may depreciate and that may give rise to underwater mortgage situation.

How can you get rid of underwater mortgage?

You must try to get rid of your underwater mortgage as it may result in worse situation. There are quite a lot of ways you can avoid this underwater mortgage and build the value on your home. Take a look at the ways you can get rid of underwater mortgage and their effect on your credit score:

1. Short sale

This is one of the ways how you can get rid of your underwater mortgage. If you see that the value of your property is less than the amount you owe on your mortgage, you can opt for this option. In this, the homeowner decides to sell the property to the lender for less than what he owes on his mortgage. In some states, where the non recourse loan is applicable, you needn’t pay the deficient amount. The lender can take only the collateral and not anything else.

The positive aspect of this option is that you can avoid foreclosure and the credit score that is affected is 80 to 100 points. You may improve your score in 1 to 2 years. After that, you may take out a loan or mortgage.

2. Deed in lieu foreclosure

Apart from short sale, you can also go for deed in lieu foreclosure to get rid of your underwater mortgage and foreclosure. In this, you can deed your home to the lender in order to avoid foreclosure. The lender sells off the property to retrieve the unpaid amount of the mortgage (as much as he can). You need to sign a lot of legal documents when you’re opting for a deed in lieu.

This also gets rid of your unpaid mortgage debts and you can avoid the foreclosure proceedings too. The credit score gets affected a lot. The score goes down around 250 points but you need not pay the deficient amount. For both the cases of short sale and deed in lieu, you need to list your property before 3 months. You need to show that you’re facing financial hardships and then you’ll be taken into account.

3. Loan modification

This is better than the above two options. You can request your lender to modify your mortgage in such a way that you can make payments on it. You retain your property and you also get to increase the value for future use. The lender after reviewing your financial hardship can agree to reduce your interest rate or can increase the time limit. In really bad situations, your mortgage amount can also get reduced. But this usually doesn’t happen. You can avoid foreclosure and can also get out of underwater mortgage.

The credit score that gets lowered is also not that high. Around 150 points gets deducted if you go for loan modification program. Once you improve your credit score, you can become eligible for another loan or a mortgage.

Foreclosure can also help you get rid of your mortgage payments but the credit score gets damaged a lot and to become eligible to take out a loan or a mortgage, you need to wait for 3 to 4 years. The points that are discussed above can help you avoid foreclosure as well as help you come out of underwater mortgage.

Tags: loan mod, loan modification
Posted in Loan Modification | No Comments »

What Is Foreclosure? Does It Work The Same in Every State? How Does A Foreclosure Work?

There are 3 types of Foreclosure. They are: Judicial Foreclosure; Non Judicial Foreclosure, and Strict Foreclosure. I will describe the three, but the rules can be very different from state to state. If you are facing foreclosure you should contact someone at a title company or a lawyer to find out the rules for foreclosure in your state.

Judicial Foreclosures

A judicial foreclosure is the kind of foreclosure that involves the court system and a judge. Thus, the word judicial is used. In this type of foreclosure The Lender must sue you and take you to court. The judge must hear from you and your lender and decide whether your home should be taken by the Lender to pay them back for the money you borrowed to buy your home. The lender files a law suit or complaint in court, and records a Lis Pendis to foreclose against you.

At the start of the process, you will be served with a complaint by the court and then you will have a chance to appear in court to contest the foreclosure lawsuit.

This judicial foreclosure method is usually used when you have signed a mortgage to purchase the property. It is required by law in some states. It is an option in some others states. It can take far longer to foreclose on your home if the Lender must use this method, than if the Lender can use the Non Judicial Foreclosure method.

Non Judicial Foreclosure

The non judicial foreclosure is the fastest and most common type of foreclosure. In states that allow this type of foreclosure your Lender does not need to sue you and take you to court. If you are in default in your payments, the Lender can just demand that you pay your loan current, or he can take your home by having the county auction off your home at the courthouse. This type of mortgage loan a Deed of Trust and a Promissory Note to secure the property. If you have a power-of-sale clause in your loan paperwork for your home purchase, a non judicial foreclosure can also be used.

If your Lender is beginning a non judicial foreclosure against you, the process will be explained to you in your loan paperwork. If you find this confusing you should talk to someone at a title company, or consult with an attorney to be sure you understand both your rights, and the rights of your Lender.

You will usually be mailed a default notice from the Lender. If you don’t cure the default (usually payments which have not been made) in a specified amount of time, the home can immediately be moved to auction.

It is important to know that each state has different procedures for non judicial foreclosures. Some states allow only Judicial Foreclosures or Non Judicial Foreclosures. Some states allow either to be used.

Strict Foreclosure

The last type of loan foreclosure, and the least used, is known as Strict Foreclosure. Strict Foreclosure can only be used in a few states and is normally only used if you owe more than your home is worth.

In this type of foreclosure, if you default on your loan, the lender files a lawsuit and gives you a certain amount of time to cure the default. Your property will go back to the lender if you do not cure the default within your allotted amount of time.

Historically, Strict Foreclosure was the first type of Foreclosure used.

If you are facing Foreclosure, you should get expert advice on your rights to try to keep your home. A lawyer is the best way to find out how your County and State handle foreclosures.

You Can Ask Your Lender About Other Ways To Settle Your Problem And Keep Your House

In today’s economy, most Lenders have had to take back too many homes through Foreclosure. They lose a great deal of money with each foreclosure and end up with empty homes that are too hard for them to sell and get back the money they loaned.

The Lender would rather help you keep your house. They know the Economy is very bad. The also, know your ability to pay may have changed in this Economy. They want to help you get current on your home and keep your house. It is a-win win situation.

You can apply to your Lender for a Loan Modification. This Modification is not a refinance. It is merely the changing of the terms of your loan, such as lowering your interest in order to also lower your monthly payment. They can put all of your missed payments back into your loan, so that you can start over with just the cost of one payment.

You can do this yourself, or you can hire a professional Loan Modification Company to negotiate new terms for you. There are very good companies with good track records if you would rather use and experienced professional to help you. Be sure and ask for their costs and what you are supposed to get for payment. Get references from this company and call them to be sure that what they tell you about their capabilities is legitimate.

Danny Hammond is an expert in the field of real estate and mortgages. He has over 35 years in the industry. Due to the current economy he is partners in a company called Total Financial Solutions which specializes in helping troubled borrowers Stop Foreclosure and negotiate Home Loan Modifications. The goal is to help borrowers work themselves into a situation where they can keep their home and get lower monthly payments along with lower interest rate. Further almost all Loan Modifications can put all of the missed payments back into the loan, allowing the homeowner to become current by making just one of the new lower payments. You can visit the website of Total Financial Solutions at: http://www.mortgagepaymentmodifications.com Or Email:mortgagesolutionstoday@gmail.com

Danny and his wife also write and maintain a blog devoted to helping couples and families cope with the effects that the symptoms of menopause can have on family and marital relationships. You can visit this site at:http://www.menopausehormonesandhim.com

Posted in Foreclosures | No Comments »

ABC News – Nightline on Loan Modifications

Video Rating: 5 / 5

Fascinating

Posted in Loan Modification | No Comments »

Real Estate Investing With Self-Directed IRAs

The current real estate market presents significant opportunities for entry into the world of real estate investment. With prices lower than in years past, smaller investors are able to build a portfolio of residential rental properties with far less capital investment, while others are looking to the still-profitable apartment industry for their financial gain.

The trouble which smaller investors face, however, lies in the fact that financing the acquisition of investment properties is more difficult. Lenders are wary of outlaying their funds on more real estate (especially single family residential real estate) and the passive investors who were involved in the prior real estate boom are investing elsewhere these days. These two factors have led to an increase in an often misunderstood method of financing real estate investment: the self-directed IRA.

Ask many attorneys, CPAs and financial advisors the question “can I buy real estate through my IRA?” and the answer you hear oftentimes is “no”. That answer, however, is the result of a lack of understanding of how the IRA rules work and/or a concern that answering truthfully could lead to a loss of business (such as a loss of assets under management).

A “self-directed” IRA is an IRA where the IRA owner directs how the IRA funds are invested. The IRA is administered by a custodian who handles the inflow and outflow of funds from the account. There are several companies throughout the U.S. that serve as custodians for self-directed retirement plans. These companies do not give investment advice; to do otherwise would make them fiduciaries. Instead, they recommend to their clients qualified advisors that understand self-directed investments – attorneys, CPAs and financial advisors – and who can provide the necessary advice.

Self-directed real estate investing works best when it is done through a limited liability company (“LLC”) funded by IRA funds. A qualified attorney sets up the LLC, the custodian signs the contribution agreement on behalf of the IRA which is the owner of the LLC. Use of a LLC allows a separate bank account to be created and IRA funds to be deposited into the account. The LLC manager then can write checks for expenses related to the properties and deposit rent checks and the like. Ask most custodians and they will tell you that they prefer the use of the LLC as it eases the time and burden placed upon them for their clients’ investment activities.

Use of self-directed IRA funds, however, is not without its pitfalls. Owners must be aware of the Internal Revenue Service’s regulations on IRAs, particularly the self-dealing provisions. These rules prohibit transactions between the IRA and certain disqualified persons (the IRA owner, his/her spouse, parents, children, siblings, spouses of these persons and/or entities in which they are owners). For example, an individual cannot set up an IRA LLC and hire (and pay) a management company owned by the owner’s spouse to manage the properties.

In addition, investors who use self-directed funds are not permitted to engage in some actions that would otherwise be permitted absent the use of IRA funds. An IRA owner cannot perform work on properties which are owned through the IRA (whether they be owned directly through the IRA or by an IRA LLC). Similarly, IRA owners are prohibited from personally guaranteeing loans made to the IRA LLC.

Why all the restrictions? Because when an IRA owner takes distributions before age 59½, significant taxes and penalties are applied. The “prohibited transactions” referenced above are deemed by the IRS to be distributions and hence engaging in these types of transactions defeats the very reason why an individual would establish a self-directed IRA as an alternative to liquidation of their traditional IRA.

The use of self-directed IRA funds is not just limited to individual investors acquiring property. Multi-owner LLCs can be created which allow several investors to pool their self-directed funds to acquire larger-scale properties such as multi-unit apartment buildings or income-producing commercial properties.

Self-directed investing is a concept that is gaining widespread acceptance, especially in light of the current difficulty in using more traditional financing methods for acquiring real estate investment property. However, this financing method requires proper planning and careful consultation with qualified professional advisors in order to navigate the myriad of restrictions placed upon IRAs.

Author: Jeffrey O’Brien

Jeffrey O’Brien – who has written 10 posts on The Vanilla Shell.Jeffrey O’Brien is a partner with the Minneapolis-based law firm of Mansfield Tanick & Cohen, P.A., practicing in the areas of business law, real estate law and estate and business succession planning. Has significant experience with the formation of new businesses and he oversees the Firm’s INCubation Center®, a program designed to provide new and developing businesses with the essential legal and non-legal services in their formative years. Admitted to practice in Minnesota and Wisconsin. Named to Minnesota Law & Politics’ “Rising Stars” list for 2008, 2009 and 2010. MSBA Board Certified Real Property Law Specialist. Member, Board of Directors, American Association of Microbusinesses. Board of Directors, U.S.-China Business Connections. Author of the blog “The Business Man’s Lawyer.” Voice of the “Legal Minute” on the Real Estate Radio Hour, WCCO 830 AM and contributor to “The Advisors” on the Next Stage Business Radio Network (Blog Talk Radio). A resident of Albertville, Minnesota, he is active in the Elk River Area Chamber of Commerce, the Becker Chamber of Commerce and the Wright County Economic Development Partnership Contact the author

Posted in Self Directed IRA | 12 Comments »

Plan Your Tax Attack

Good news for Americans facing eye-popping property taxes: You can fight city hall, or whichever government body sends you this annual economic albatross.

When real estate boomed, property taxes often followed suit. So why aren’t they dropping now? First, local governments may go for years between re-assessments, so lower values may be overlooked.
  
Also, a blanket reduction in assessments would mean less revenue for local governments at a time when most are strapped for cash.

The National Taxpayers Union estimated earlier this year that up to 60 percent of the country’s real estate is assessed too high. Here’s how to make sure you don’t pay too much.

Know Where to Go

While getting your property taxes lowered is neither easy nor automatic, countless homeowners have swayed their assessor to lighten the load. However, success is up to you. Tax assessment varies across the country. So, start by learning exactly how your tax is totaled.

Next, it’s critical to closely review your bill for any obvious mistakes. It should show your assessment and taxes from last year and this year. If you find an error or feel you’re being overbilled, you have a couple of options. One is to go directly to the assessor’s office; you can probably go without an appointment. If you’re lucky, you may get a reduction right away. Or, you may be told you have to file a petition for a hearing before a magistrate. Before you go to a hearing, roll up your sleeves, do some research and perhaps even hire professional help.

One of the first things to do is to make sure the government has the right specifications for your property. These include confirming things such as the square footage under roof and the lot size. They’re not always accurate, says Michael Mila, a Chicago-area real estate appraiser who owns Chicago Appraisals LLC and operates the website TaxAppealGuide.com. Often, the assessor may have simply looked at the outside of your house before rendering judgment.

“One of my clients had a one-story home with vaulted ceilings,” Mila says. “They assumed the height reflected two stories, so they charged her for double the living space. She brought the sketch to the assessor’s office and wound up saving $1,000.”

You should have received a floor plan and boundary survey when you bought your house. Use them to determine your dimensions. A surveyor or engineer can help you here, but the cost will be $200 to $1,000, depending on the size of the property.

Locate the Problem

You’ve heard it before: The three most important factors in real estate are location, location, location. So one way to prove you’re paying too much in taxes is to demonstrate what’s wrong with yours. When factors outside the property’s boundary bring down its value, this is called external obsolescence by tax assessors. If you’re so close to a runway that pilots wave to you, or your backyard has a crossing signal thanks to the train tracks on your lot line, make the case that you have external obsolescence.

But what if the rest of the neighborhood has the same issue — say, a nearby town dump that doesn’t pass the sniff test — and roughly the same assessment? Make the case that your situation is worse. Maybe your house is next to the noisy public playground or adjacent to a parking lot for local school buses.

“You need to let the assessor know ‘I’m not like the rest,’ and ‘My location is inferior to others around me,’” says Mila.

His suggestion: Pretend you’re a buyer looking for an excuse to lowball a bid on your home.

Give Dysfunction a Function

Is your house haunted by a bad layout? Good news: That may mean lower property taxes.

Quirks inside the home are called “functional obsolescence,” says Steven Housman, president of Property Tax Experts Inc., a property tax consultant firm in Hollywood, Fla. A simple definition of functional obsolescence is: homes with features that are neither practical nor desirable. For instance, do you have to walk through a closet to get to a bedroom? Does your four-bedroom house have a one-car garage?

Functional obsolescence will make your home less fun to live in and therefore, less valuable when it’s time to sell. But the upshot is that these quirks may increase your odds when challenging your property assessment.

Keep Up With the Neighbors

Did you buy your home when prices were at record highs? Did you get re-assessed right before the property bubble burst? Then your taxes might also be inflated, particularly compared to your neighbors’ rates. Research online what everyone on the block is paying, and see whether your bill is in line with the comparable properties, says Mila. Check for the taxes on similar houses that have recently sold. If the compared tax prices are off kilter, print out your research and go to the assessor’s office with the evidence. “If you’re higher than the norm, something is wrong,” says Mila. He says the No. 1 reason challenges get rejected is homeowners don’t have their documents in order.

Hire an Appraiser

We all feel we should be paying less property tax, but obviously we have our own interest at stake. You need to demonstrate the objectivity of your opinion. And for that, it’s best to hire an appraiser. An appraiser is different from a surveyor. The appraiser’s role is to estimate the value of the property. Don’t rely on free services from online companies that purport to give market values in your area.

Assessors have been known to throw them in the trash. The assessed value should be roughly equal to the appraised value. A third-party opinion bolsters your credibility..

Appraisers are state-certified and in most areas, they have professional associations you can contact for referrals. The cost is $300 and above. Some homeowners go an extra step and hire an attorney, but before doing so you should balance the legal fees you’ll incur against any taxes you’ll save.

Posted in Property Tax | No Comments »