The Massachusetts South Shore Real Estate Blog: Benefits of Wintertime Investment in Real Estate

The Massachusetts South Shore Real Estate Blog: Benefits of Wintertime Investment in Real Estate

Winter Wonderland

Typically there’s a thick blanket of snow covering everything in sight–and if there isn’t, it won’t be long until there is. It is for this reason that the real estate market is notoriously slow in the winter months. While it’s tempting to curl up with a steaming cup of cocoa and a good book, this is actually one of the best times to purchase real estate. Numerous factors, which we will outline here, combine to make this time of year a buyer’s market for novice purchasers and high-powered investors alike.

Interest Rates are Still Low: Okay, so this isn’t because it’s winter.  Fed policy has helped to keep rates historically low. While none of us have a crystal ball, investors and home-buyers could see significantly higher rates in the not so distant future.

Fewer Buyers: Get ready to dust off your Econ. 101 notes–as demand drops and supply remains relatively constant (or at least if demand drops more sharply than supply), we should expect prices to drop as well. Most other buyers, whether to avoid the slush or moving their children during the school year, will be drinking their cocoa rather than pounding pavement (or ice, as the case may be). In addition to lower prices, buyers will enjoy greater negotiating power as there are fewer standby offers (or even interested buyers) for the Seller to rely upon. Further, chances are that if the property is on the market during the winter months it has been on the market for longer than the seller wanted and as such is motivated to sell. Wintertime bidding wars are rare.  All of this plays to the advantage of the buyer.

Agents will have Fewer Clients: Since there are fewer buyers during the winter months, Real Estate Agents will simply have fewer clients to tend to. This means each client will receive a larger portion of the Agent’s attention, and by extension, even greater searching and negotiating power.

Lower Loan Application Volume: When fewer homes are sold, lenders have fewer applications to process. Similar to the greater attention from Agents, loan processors will likely have more resources to dedicate to your application which should improve speed and smoothness of the loan application process.

You Get to See the House at its Worst: Yes, you read that correctly. At base, selling a house is selling a product. There’s a reason that most listings show the property in the middle of spring or summer, covered with lush vegetation and manicured landscaping: it helps to increase the buyer’s perception of the property’s value. Buying when the property is covered with snow, sand, salt, and ice removes the emotional “wow” that fair weather primping can have. Additionally, prospective buyers will have a better idea of the condition of essential systems—for example, whether the furnace adequately heats the space. Leaks, cracks, and other cold weather problems will also manifest themselves more readily in the dark winter months.

While it might feel counterintuitive to start your search while the frigid winds are still howling, the intrepid buyer is more likely to score a deal than the one who is waiting for the springtime thaw.  For additional considerations about whether this is the time to invest in real estate, check out our past Article: Is It Time To Buy That Investment Property Or Second Home?

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Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2015 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

The Massachusetts South Shore Real Estate Blog: Congratulations–You Bought an Investment Property–Now What?

The Massachusetts South Shore Real Estate Blog: Congratulations–You Bought an Investment Property–Now What?

Buying Investment Property

 

Last time, we took a look at the reasons why it is still a great time to invest in real estate. There are many types of investment properties ranging from multi-family homes to a vacation rental. This week, we’ll focus on real estate investments that include tenants. Many investors will focus exclusively on the acquisition of a property and the long term management of tenants that occupy it. Many first-time investors gloss over an important part of the process: establishing the landlord-tenant relationship. Here are the tips that you need to know before a tenant moves a single box into your new property.

 

Why Can’t I Save Some Money and Find My Own Tenant (on Craigslist)?

There is a recurring theme in many of our articles and that is: utilize the services of a Real Estate Professional. Finding a tenant is no exception. First and foremost, a good agent will act as a screen, minimizing the risk of getting saddled with a crummy tenant. Though you probably already have a general idea from information gleaned from your research before buying the property, an agent will also help you set the proper rental amount for the market. Perhaps most importantly, finding your own tenant will increase the likelihood that you will have to re-read our next article dealing with the eviction process in Massachusetts.

What do I need to do to Protect my Investment?

Your property is a valuable income-generating asset. The wrong tenant can cause damage to the premises, disturb your other tenants, and occupy your property while not paying rent, here are four quick and inexpensive ways to minimize the risk of being hitched to a bad tenant:

  1. Check their Credit Report: Documented history of timely payment of debt is a useful indicator that the Tenant will make timely rental payments to you. Further, making payments on time is a hallmark of a responsible consumer which supports the inference that the prospective tenant will treat your property responsibly.
  2. Ask for References: Some clients are surprised to hear this, but who would be a better judge of a tenant than their prior landlord? If the tenant refuses, that supports the inference that they didn’t get along with their prior landlord and that they may not get along with you.
  3. Don’t Settle: This is the time to trust your gut. Meet with your prospective tenant face to face. Your life experiences should give you a good idea of how they will perform. While you certainly want to push cash flow into the black, don’t settle for a tenant that you feel isn’t going to be a good fit. You may be able to cover your new mortgage payment, but you’ll likely spend many thousands of dollars (and many hours wishing you listened to your gut) to fix your new headache.
  4. Call Back: Call from a few different phone numbers that the prospective tenant won’t recognize. If they don’t answer, they may be ducking other creditors.

So I Found a Tenant–Now What?

  1. Get it in writing: Let me say that one more time: get it in writing! Your experienced attorney who helped you purchase the property can also help you to draft a written lease. This document will guide the landlord-tenant relationship. Resist the urge to use a form lease you found in a dark corner of the internet as most are not well drafted nor designed with Massachusetts law in mind. A written lease settles issues ranging from the monthly rental amount to the types of pets, if any, your tenant can keep. In the event of a dispute, it will be helpful to reach an expedient solution. Be sure to provide your tenant with signed copy of the lease as soon as possible.
  2. Establish a Record of the Property Conditions: We all carry a camera in our pocket–now let’s use it for something more useful than taking pictures of your food and posting it online! Before your tenant moves in, take pictures of every room, every fixture, down to the last detail-preferably with the tenant in each picture. If your tenant is camera shy, email the pictures to your tenant and ask that they respond with an acknowledgment that each is a fair and accurate representation of the current condition of the premises. It’s tedious and feels silly, but in the event of a dispute, you’ll have strong evidence to refute your tenant’s claim that the damage was a preexisting condition.
  3. Hold Your Tenant’s Money Properly: Nothing is more deflating in an eviction proceeding than the tenant claiming you’ve mishandled her money–especially the security deposit. This mistake can cost the landlord thousands of dollars in damages and months of unnecessary legal proceedings. Save your deposit slips. Keep a ledger of every payment with the date, amount, and what the payment is being credited to (remember: unlike a mortgage, rent is paid in advance–usually on the first day of the month). Contact your attorney for advice on this subject.

These tips should help to protect the hard-earned dollars that you’ve invested in your new property. Additionally, and perhaps more importantly, it will help you to avoid the eviction process. If you are forced into that undesirable situation, these tips should help you to prevail, more quickly, more inexpensively, with less inconvenience.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog, further Bob Bonkley was compensated for his likenesses and appearances in the same.

 

The Massachusetts South Shore Real Estate Blog: Considerations for Future Real Estate Investors

The Massachusetts South Shore Real Estate Blog: Considerations for Future Real Estate Investors

Real Estate InvestorIt has been two long years since last writing the blog article Is It Time To Buy That Investment Property Or Second Home? Those of us who have been in the real estate industry (or even those of us who have watched the evening news with any regularity) know that the real estate market has changed markedly during this time. Notwithstanding, one fact remains constant: now is still a great time to buy real estate as an investment. Just as was the case in 2012, I don’t have a crystal ball, but there are some factors that suggest that it may be time to invest.

  • Low Rates (for Now): Those of us that remember the shoulder pads and bag phones of the 80’s also remember double digit mortgage interest rates. In addition to our improved collective style, we also enjoy very low interest rates. I won’t speculate (use my non-existence crystal ball) as to when the Fed will raise rates; however, many believe it’s not a question of “if,” but a question of “when.”
  • The Season: The race to move before school starts, while the weather is nice, and while volume is high is coming to a close. As it usually does in the Fall after the Spring-Summer rush fades to changing leaves and the thought of snow, the Seller’s market will likely give way to a Buyer’s market.
  • Stability: the fire sales of 2012 are gone (mostly). The bargain foreclosure has given way to the more predictable. While the impressive potential for quick gains may be largely over, stability should give more casual investors a greater degree of comfort.

I gave you a “few things to think about” back in 2012 (seriously, if haven’t yet clicked the link back to that article, you really should). Here are a few more considerations that the real estate moguls of tomorrow should consider:

  • What are my long and short term goals? am I looking for income generation? What is the amount of time that I can realistically dedicate to managing my investment? Do I have the skills to “flip” a house? How long do I want to own this property? Do I want to use the property, rent it, develop it, etc? Do I have the professional connections to realize my investment’s potential? Considering your goals and abilities will help shape your investment strategy.
  • What is the strength of my current real estate professional network? successful real estate investors are surrounded by great brokers, real estate attorneys, and mortgage professionals (to name a few). This is no coincidence. Spend the time to establish a relationship with your most important “partners” to make sure you are represented by knowledgeable, efficient, and experienced professionals.

Successful real estate investors usually aren’t looking to “get rich quick”; rather, they understand that it’s a “slow roast.” They are careful and measured, relying on planning and the advice of industry professionals. Now is a great time to invest: take the time to consider your objectives, assemble your team, and get out there to find your next investment.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy. Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog, further Bob Bonkley was compensated for their likenesses and appearances in the same.

The Massachusetts South Shore Real Estate Blog: Why Buyers may not be Adequately Protected without a Homestead

The Massachusetts South Shore Real Estate Blog: Why Buyers may not be Adequately Protected without a Homestead

Massachusetts Homestead DeclarationThis week we’re coming back to discuss a topic that many of this season’s new home buyers should be considering—declaring an estate of homestead (more colloquially “declaring” or “filing a homestead”). Here’s the most common scene at closing: “Mr. Smith, did you know you have a right to declare a homestead today?” Mr. Smith looks back inquisitively, invariably thinking: “I’m buying a two bedroom condo in Southie—aren’t homesteads giant tracts of land in the undeveloped wilds of the west with names like dusty gulch?” Instead Mr. Smith says: “I’ve heard of this—could you tell me more?”

The simplicity of the concept of declaring a homestead (more accurately “establishing an estate of homestead”) is obscured by its name. While you could declare a homestead on your tumbleweed cattle ranch—and we would usually advise you that this is a good idea—you can declare a homestead just as easily on your two bedroom ranch on the cape.

What is a Homestead? Declaring a homestead protects the homeowner against certain types of unsecured debts (and by implication, creditors) from being satisfied by forced sale, execution, attachment, levy and the like. In short: you cannot be dispossessed of your home to satisfy unsecured debts with an effective Homestead Declaration.

Who can claim an estate of homestead? Anyone who owns the property (is on the deed) and who uses the property as his/her primary residence (sorry, no vacation or investment properties). Married couples can join a declaration together—non-married owners must file separately.

What’s the protection limit? By declaring an estate of homestead, protection increases from the “automatic homestead” of $125,000 to $500,000. Two qualifying owners over 62 years of age (which the Homestead Act so callously calls “Elderly”) or owners who are disabled are protected in an aggregate amount up to $1,000,000 from unsecured creditors.

It’s at this point in the explanation that some of our clever Buyers lean back and smirk. We have to break the news to them that a homestead does not protect the owner against their lender foreclosing on their mortgage or against tax liens. While this is a shame from the Buyer’s perspective, the protection offered by filing a homestead is still robust. Here’s an example: you’re driving home from another long day at the office when a minivan pulls out in front of you. Before you can slam on the brakes, you rear end the minivan, which results in serious injury to the passengers of the vehicle. While this in itself is horrible and unavoidable, the worst is to come. You’re sued by the driver of the minivan (lawyers—am I right?), and you lose. Worse yet, you haven’t declared a homestead. In order to satisfy judgment, the Judge orders your home to be sold to satisfy the hefty sum.

If you had declared a homestead, you would still owe the award of damages; however, you wouldn’t be forced to sell your home to satisfy it (assuming of course the judgment is for less than the protection limit).This encapsulates the real benefit of declaring a homestead.

After seeing the various costs, fees, and charges of buying a house, many buyers are skeptical that such protection can be purchased affordably. Most are surprised to learn that a lawyer will draft and file a homestead declaration for less than the cost of a nice dinner. This is one of those instances where if it sounds too good to be true, it isn’t.

In almost every case, we advise our clients to declare a homestead. It’s short money to obtain robust protection. While the name “homestead” may conjure unintended images of covered wagons and rolling prairies, it fits with the notion that a person’s right to their home is something that should be strongly protected. It also happens to be one of the better bargains when buying a home.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog, further Bob Bonkley and Molly Moraine were compensated for their likenesses and appearances in the same.

 

The Massachusetts South Shore Real Estate Blog: An Explanation of How to Take Title with other People

The Massachusetts South Shore Real Estate Blog: An Explanation of How to Take Title with other People

Buyers are often a little surprised to learn as the closing approaches that an important decision remains: “how would you like to take title?”  Confusion with this topic is understandable: this concept uses arcane terminology and is not generally discussed outside of the context of buying property. It’s high time that this important concept is discussed so that Buyers can make an informed decision.

The Basics: In most circumstances, if you are purchasing a property by yourself, you don’t have any decisions to make–you will take the property “individually.” There are three ways to take title with another person–tenants in common, joint tenants, and tenants by the entirety. Contrary to what these names suggest, these terms have nothing to do with leases or renting. Each refers to a different kind of ownership of property shared between two or more people.

  • Tenants in Common:  Under this form of co-ownership, two or more people each own a share of the property. These shares can be unequal in size and can be freely transferred without the other owner’s permission. Each owner has a right to occupy and use all of the property. Tenants in common have no right of survivorship, that is, if one of the owners dies, that person’s interest would pass under their estate by will or intestacy.
  • Joint Tenants: Unlike tenants in common, joint tenants have equal shares of the property. Each may use or occupy the entire property. Possibly the most significant difference between a tenancy in common and joint tenancy, joint tenants have an automatic right of survivorship, that is, if one owner dies, the other owner(s) will be vested with the deceased owner’s interest in the property.
  • View More: http://aliciaschneiderphotographers.pass.us/noonanTenants by the Entirety:The law treats married individuals who elect to take title as tenants by the entirety as one person. Importantly, tenants by the entirety enjoy an automatic right of survivorship–though technically speaking, nothing transfers at the death of the other spouse as each owned the “entirety” of the property. Further, neither party can transfer his or her interest in the property without the permission of their spouse and any encumbrance, e.g. a second mortgage granted by one spouse, does not encumber the non-granting spouse’s interest in the property. Similarly, the creditors of one spouse cannot levy against the property interest held by the other spouse.

Sophisticated real estate investors have many more options when it comes to taking title. There are vehicles in which the investor can take title, including: realty trust, investment trust, limited liability company, corporation, just to name a few. These vehicles can provide tax benefits, limitation on liability, and greater anonymity, but the intricacies and benefits are too numerous to discuss here. With rare exception, the vast majority of residential consumers will take title individually, in a tenancy in common, joint tenancy, or tenancy by the entirety.

Each of these types of ownership has advantages and disadvantages. Prospective owners should evaluate their specific situation and needs, with the help of an experienced Real Estate attorney, to be sure that they are selecting the right form of co-ownership.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog, further Bob Bonkley and Molly Moraine were compensated for their likenesses and appearances in the same.

 

The Massachusetts South Shore Real Estate Blog: 10 Tips to Survive a Sale and Purchase of Real Estate on the Same Day

The Massachusetts South Shore Real Estate Blog: 10 Tips to Survive a Sale and Purchase of Real Estate on the Same Day

Bob Bonkley introduces Molly Moraine to the exciting world of Real Estate blog fame.

There are few things more daunting to a potential Seller/Buyer than attempting to close on a sale and purchase on the same day—also known as “back to back closings.” While most transactions will be completed without a hitch, here are 10 Tips that every Seller/Buyer should consider when attempting a back to back closing:

  1. Use one Real Estate Professional Team: whether an attorney or a broker, make sure to use a single professional to be your point of contact, either should be familiar with your mortgage professional.  All of this helps to limit errors due to miscommunication.
  2. Make Sure the Dates Align: this one seems simple, but you’d be surprised—be sure the Offer (and eventually P&S) sets the closing dates of the sale and purchase as the same day. Make sure the financing contingency dates align properly–the contingency date for the Buyer of your sale should occur before the contingency date for your own purchase.
  3. Use the Right Contingency: when drafting an offer, make sure to insert a very particular contingency which makes your performance as a Buyer “contingent upon receipt of the proceeds from the sale of the Buyer’s home located at 123 Main Street, Anywhere, Massachusetts.” This is different from a sale contingency, as conceivably you, as Buyer, could have sold but not yet received good funds to bring to the next closing, or worse yet, the Purchase and Sale Agreement has been signed but your sale subsequently falls through.
  4. Utilize a Power of Attorney: it is very common for a Real Estate attorney to attend and sign on behalf of a Seller at closing. The Seller does not need to attend.  This frees up the Seller to focus on other things such as coordinating with movers, going to the bank or making last minute adjustments with the closing attorney for their purchase.
  5. Understand that you have to be “On Record” before Moving In: some are surprised to learn that signing the paperwork and tendering the cash to the Seller are not enough to get the keys to your new home; rather, the Buyer will be the true owner and given access only after the deed is recorded with the applicable County Registry of Deeds.
  6. Understand the Realities of Funding: the lender will wire the loan proceeds to the closing attorney. This wire can take time to arrive; therefore, early morning closings are unlikely to record and fund until midday. Keep in mind that the first transaction must fund and record before funds can be wired to the closing attorney for the second transaction–it would make sense to leave ample time between the two closings.
  7. Notify other Parties in the Chain of Transactions: in most cases, when closing attorneys are part of a chain of closings they work together to coordinate the closing schedule, and thus the transactions go very smoothly. If you wait until the week prior to closing to mention this to your closing attorneys, you may have unnecessary and otherwise avoidable scheduling problems.
  8. Try not to Schedule for the End of the Month: many Buyers prefer to close at the end of the month, most famously to avoid paying prepaid interest—a false economy worth debunking in a future article perhaps. Scheduling a closing in the first two weeks of the month: 1) usually results in greater attention by lenders and attorneys, 2) means shorter lines at the recording desk, and therefore, faster transactions, and 3) more flexible schedules for all involved Real Estate Professionals.
  9. Consider Inserting a Use and Occupancy Agreement in the Offer: a Use and Occupancy Agreement (called a “U/O” or “U and O” by people in the know), permits a Buyer access to a property for a period prior to closing or alternatively allows a Seller to remain on the property for a period after closing. This can relieve some of the scheduling conflicts that are inherent with a back to back closing.
  10. Roll with the Punches: remaining flexible helps to facilitate the transactions with the least amount of stress possible.  Sometimes creative solutions are necessary. There is no doubt that back to back closings can can be hectic and stressful, but it’s easy to forget that for all your troubles you’re getting a brand new home!

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog, further Bob Bonkley and Molly Moraine were compensated for their likenesses and appearances in the same.