Archive for the 'Contracts & Negotiations' Category
Thinking of Renting Your Place? Follow These Steps and Save Lots of Headaches!
Posted by Chad Basinger | Leave A Comment »
Perhaps you are a homeowner who is unsuccessfully trying to sell your home and have decided that renting it out may be the better (or only) option. Or, you may be one of the more fortunate homeowners’ out there who do not have to sell, but simply rents out your property as a source of additional income. I realize the past few years have been tough on homeowners, but I do know that any of my clients in my previous life as a financial planner who were really well off had accumulated their wealth through real estate. However, real estate as an investment is a whole other discussion that will be left for another article. The focus here is on the prudent steps to take if you are going to rent out your property.
If Richard Dawson (from the grave) were to survey 100 people the key to having a successful rental unit, unequivocally the top answer would be……..
1. Find a Quality Tenant/LesseeYes, it may seem obvious, but how many times has this come back to bite you? Naturally, you’d like to think that friends, relatives, coworkers, or other members of your network would be the best choice. However, we often have to expand our search to include people we don’t know through advertising in the paper or online through sites such as Craigslist. Whether it is someone you know or not, you still must do your due diligence.
Make sure any potential tenant fills out an application form that provides the following: name, employer, salary, previous landlords and references (don’t just make this a formality…actually contact the references!) You’ll also need their Social Security number and signed authorization to check credit reports and criminal history. If you hire an online agency to provide background checks, make sure it is accredited by the Better Business Bureau
You will want to conduct a thorough background check on the potential tenant by:
- Running credit reports. You can conduct your own research through the three big credit reporting agencies — Equifax, Experian or Transunion — as long as you follow the guidelines of the Fair Credit Reporting Act.
- Checking criminal history. Search state and local records online or find an agency.
- Checking references, contacting employers and talking to previous landlords. Don’t overlook this important step!
2. Protect Your Rights with a Lease You will want to have a written lease which clearly states each party’s rights and obligations. Given that laws vary among areas, you will want to make sure that your lease is applicable to where your property resides. It is strongly encouraged that you have a local lawyer draft and/or review your lease to help avoid legal problems down the road.
While the lease may be tailored to your situation, at a minimum it should include the following:
- Lease term: month to month if you want flexibility, annual for stability.
- Security deposit: one month minimum- also pet policies and related deposits
- Rental due date and late penalties
- Responsibility for repairs
- Routine upkeep, maintenance, and repair responsibilities-make it clear who is responsible
- Names of all tenants and any special rules related to behavior
- HOA matters: 1) dues-who is responsible 2) any special rules that must be followed
- Arrangements for showings, if you plan to put your home on the market while it’s being rented. This is where you will really want to have a tenant who is tidy!
- Eviction terms, such as not paying the rent or damaging the property
3. Determine How Much Rent to Charge Your place is only worth what a willing party will pay for it. Check local newspapers, online resources or neighborhood rental signs for value comparison. Be realistic about rent levels. The rent may be lower than your mortgage payment, but if you want to find a tenant, the rent must be comparable to what’s in the market. Every month you go without a tenant is cash flow lost.
4. Protect Your Property with Insurance For your primary residence, you have a homeowner’s policy, which covers the structure, damages and your belongings in the house. As a landlord, you’ll need rental home insurance, also known as fire insurance. This policy covers your home’s structure, legal costs, medical expenses and loss of rental income, if repairs are needed. Since you are not responsible for the tenant’s belongings, you should encourage tenants to buy renters insurance. Contact your insurer to let them know you will have a rental and to discuss the options which make sense for you.
5. Hire a Management Company Fees are charged primarily for two services: 1) finding a tenant: includes advertising and background checks and 2) managing the property. Monthly management includes collecting the rent, charging late fees, handling repairs, and dealing with early vacancies and evictions. The fee charged by the management company may be a percentage of rent or a flat rate.
As far as finding a property manager, you may ask friends or a real estate agent for recommendations. Either way, you may want to make sure they are part of the National Association of Residential Property Managers. Whomever you decide to go with, make sure you understand fully what services they will provide.
6. EvictionsHopefully, you have followed the above steps, but this may not be enough to preclude a possible eviction situation. You’ll need an attorney to evict a tenant. Provided the tenant does not move out willingly, you’ll have to go to court, and the sheriff needs to come out and physically removes the person.
Summary
I’m sure you have all heard of a horror story involving a tenant. In fact, I just played golf with a friend the other day and he had a lease agreement in which the tenant was to buy the property at the end of the lease. Lo and behold, the value of the property was not what it was once worth by the time the lease was up, so the tenant took his frustrations out on the property itself and basically destroyed it. Needless to say, a lawsuit has ensued. There is no surefire way to guarantee a smooth rental situation, but you can definitely stack the cards in your favor if you follow the steps outlined above. Do your due diligence up front to prevent headaches on the back end (speaking of back ends….I’ll end by saying to make sure to CYA…Cover Your A..!
Chad Basinger, REALTOR®, CPA, CFP®
858-997-3704
chad@chadbasinger.com
Related Posts: Contracts & Negotiations, Investment Properties, Moving Tips & Advice, Rentals
Are You Looking for a Successful Career In Real Estate?
Posted by Eileen Schwartz | Leave A Comment »
Windermere Academy Now has openings for New Agents and Agents that don’t have the success they want or need!
Our extensive Windermere Academy New Agent Training Program has opening for our next series of courses beginning on June 14th, 2010.
The Windermere Academy takes newly licensed agents through an extensive training program that not only includes the contractual education which is of the utmost of importance, we also cover, Branding, Marketing, Lead Generation, Business Planning, Technology and an in-depth study of Title, Escrow, Lending, Home Inspections & Termite Inspections.
(A Recent Graduating Class)
Our notable program offers high levels of success to new agents allowing them to build a foundation for a prominent career in residential real estate. Our very unique specialized program offers tools and training not being offered by any other company in San Diego County.
We offer a mentor program that follows the extensive training to ensure the highest level of service to the consumer and the highest level of education for our agent. Our mentors have specialized knowledge and have been trained how to get a new agents up and productive quickly. Mentors are only selected as mentors if they are proven real estate leaders in their community and the industry.
If you are newly licensed or have been licensed and not having the success you want where you are at currently give our Director of Education & Training a call of a one on one interview to be considered for our upcoming sessions. Call Eileen Schwartz (760) 931-6111 x 117 or cell (760) 803-4663
Related Posts: Agent Services, Careers at Windermere, Carlsbad, Carmel Valley, Contracts & Negotiations, Del Mar, Downtown, Education, Encinitas, Escondido, Fairbanks Ranch, Great Real Estate Deals, International Real Estate, Join Windermere, Just for Fun, La Costa, La Jolla, Leucadia, Market Trends, New Homes, New Listings, Oceanside, Pacific Beach, Picture Perfect San Diego, Poway, Rancho Bernardo, Rancho Penasquitos, Rancho Santa Fe, Real Estate News, San Diego, San Marcos, Santa Luz, Sellers, Valley Center, Windermere, Windermere Agents, Windermere Managers, Windermere Offices, windermere foundation
Quick Tips on Short Sales and YOUR Credit
Posted by Brian Olenik | Currently 1 Comment »
SHORT SALES & YOUR CREDIT
One of the most frequent questions that homeowners want
to know is what happens to their credit score as the result of
a short-sale. Here are a few points to remember.
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1) When you negotiate a short-sale, the homeowners may
still owe the difference between the mortgage balance
and the discounted sales price. This amount can still be
collected via a “Deficiency Judgment.” If granted, this
judgement may adversely affect the homeowners and
their credit report (not unlike other judgments).
.
2) The best way to avoid the deficiency judgment is to ask
pursuit of any deficiency judgment.”
.
3) Remember that the difference between the mortgage
balance and the short sale may be declared as income on
their tax return by means of a “1099.”
In dealing with any short sale, the homeowner should always
speak with their accountant and/or attorney to see how this
sale will affect them.
Brian Olenik
858-776-7683
brian.olenik@corinthiantitle.com
Related Posts: Buyers, Contracts & Negotiations, Financial news, Foreclosures, Picture Perfect San Diego, Real Estate News, San Diego, Short Sales, Windermere, WindermereSanDiego.com, foreclosure options
FREE Home Buyer Seminar!
Posted by Micheale Zazo | Leave A Comment »
Get Answers to All of Your Home Buying Questions!
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Is Buying a Home the Right Choice for You?
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Do You Qualify for the $8,000 Tax Credit in the new Stimulus Plan?
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What are the Tax Advantages of Home Ownership?
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Why is NOW such a Great ”Buyer’s Market”?
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How Much Home Can You Afford?
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How Much do You need to save for a Down Payment?
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What are the Advantages of Working with a Buyer’s Specialist?
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How do You Find Foreclosures (REO’s) and Distressed Properties?
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Who Generally Pays What Fees in the Real Estate Transaction?
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What is the Step-by-Step Process to Buying a Home?
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Where are the “Best Deals” in San Diego?
Encinitas Community Center
1140 Oakcrest Park Drive
Saturday, March 28th
10:00am – 11:00am
A Complimentary Brunch will be Served!
Seating is Limited
Please RSVP to 760.412.0241 or mzazo@Windermere.com
Hosted by Micheale Zazo
Related Posts: Activities & Events, Agent Services, Area Statistics, Buyers, Cardiff, Contracts & Negotiations, Education, Encinitas, Find A Home, Great Real Estate Deals, Leucadia, Market Trends
Up to $8,000 Tax Credit for Qualified Home Buyers!
Posted by Micheale Zazo | Currently 1 Comment »
Home Buyers on the fence about buying their first home may want to consider the American Recovery and Reinvestment Act’s tax credit that could mean up to an $8,000 break on their taxes. Not only will this tax credit lower a home buyer’s tax liability by the amount of the credit, but these first-time homebuyers may reap additional benefits when filing their tax return now and for years to come while they own the home.
The recently revealed American Recovery and Reinvestment Act of 2009, has some important changes over the tax credit program that was previously offered.
§ Tax Credit has been increased to $8,000.
§ Homes have to be purchased between January 1, 2009 and December 31, 2009.
§ No repayment/recapture clause for homes sold after 36 months of occupancy and ownership.
Other qualifying details of the program include:
1. The Tax Credit is for home buyers (either spouse if filing jointly) who have NOT owned a principle residence during the three-year period prior to the purchase. Ownership of vacation property or rental property does not disqualify home buyers from this program.
2. The maximum credit is $8,000 or 10% of the home purchase, whichever is less.
3. The credit is available for homes purchased on or after January 1, 2009 and before December 31, 2009.
4. To qualify for the full tax credit, married couples’ modified adjusted gross income (MAGI) should be under $150,000 and single filers’ MAGI should be less than $75,000. Partial tax credits may be available for married couples with MAGI incomes of over $150,000 but under $170,000 and single filers with incomes over $75,000 but under $95,000. If married couples who qualify for the first-time tax credit file separately, they would both claim 5% of the home purchase or $4,000 each (whichever is less) on their tax returns.
5. Home buyers who qualify for this program, but who do not intend to purchase a home till the end of 2009, may elect to alter their tax withholdings (up to the amount of the of the tax credit) in order to save up money for a down payment. However, if the purchase of the home does not occur, the taxes must be repaid to the IRS.
6. There is no recapture or repayment clause IF the home is owned for at least 36 months.
7. The effective date of purchase for new construction (even if buyer owns title to the lot) is the date the owner first occupies the house. So even if construction began in 2008, as long as the home and buyers qualify for the tax credit, they will be eligible if they take possession any time during 2009. However, new construction bought from the builder is only eligible if the settlement date (closing) takes place between January 1, 2009 and December 31, 2009.
8. The law allows taxpayers to elect to treat qualified 2009 purchases as a 2008 purchase so that they can receive the tax credit on their 2008 tax returns.
9. The full amount of the eligible tax credit is refunded to the buyer, regardless of whether the buyer has paid an equivalent amount in taxes.
It is recommended to consult with your tax advisor / accountant to determine whether you are eligible for this tax credit before making any decisions or changes to your tax status.
Now is a great time to be a buyer in San Diego County. Call me today to start the search for your next great HOME! Micheale Zazo 760-412-0241.
Related Posts: Buyers, Coastal Living, Condos & Townhomes, Contracts & Negotiations, Find A Home, Uncategorized
