If you’re interested in becoming a real estate investor, this video will help you avoid a few common mistakes. The first mistake is when investors rush to fill their property. It is far more expensive to remove an individual from your property than having a vacancy for a month or two. Rushing leads to an improper screening of the tenant.
The second most common mistake is the mishandling of the security deposit you receive from the tenant. It is important to do a walk through of the property with the tenant to address the condition that the property is in. The money that is given to you by your tenant is not your money, it should be held separately in an escrow account under their name and social security number. You are simply holding this deposit for what could potentially be a problem.
Another mistake is understanding that this investment is a business, not a hobby. Your tenants are your customers. A book with great pointers on this topic is “Secrets of a Millionaire Landlord.”
With a business comes a team, having a team is a huge part in this investment. The mistake is made when you believe you can handle an investment alone. Having professionals involved is a key role to this investment. Make sure you have your agent, closing attorney, mortgage professional, financial adviser and CPA lined up for each investment you make.
The number one thing to avoid is fearing the investment. Investors sometimes do not start soon enough, but this is where wealth is created. Do not hesitate! A book to help with this step in getting started is “Rich Dad Poor Dad.”
If you have any questions on becoming a Real Estate Investor, contact Stiles Law by calling (781)319-1900.
Stiles Law has an important reminder for you: Real ID’s are due to be updated by October 1st, 2020. Why we are reminding you of this? That is because Lender and Title Insurance Companies are going to be looking at us, Closing Attorneys, to verify your identity. Head down to your local Registry of Motor Vehicles or AAA office to get your real ID today and stay ahead of the game. If you have any questions regarding the Real ID, contact Stiles Law by calling (781) 319-1900.
This week, we’re answering another viewers question: “We saw your 1031 Exchange video and really enjoyed it, but what is the deal with these “opportunity zones”?”
In 2017 the Tax Cuts & Jobs Act (TCJA) was enacted and introduced the concept of Opportunity Zone Funds. As a real estate investor, it is a huge benefit to understand what an Opportunity Zone Fund is.
This act has created certain zones within our country where they have declared that they need assistance. These are areas with depressed markets: The businesses are down, real estate is down, socioeconomics are down. With that being said, it would be idealistic for an investor or someone who has capital gains to pay, take those capital gains and put them in an equity fund and invest in those areas. If they invest in those areas, their taxes will be deferred. If an individual invests in such funds, for 10 or more years, they eliminate the Capital Gains Tax.
So, when you sell and you have capital gains, you can put those funds into one of these “O-Zone” Equity Funds and distribute within a community.
If you are looking for help in understanding these funds and how they could maximize your overall wealth, contact Stiles Law by calling (781) 319-1900.
Recently. the governor signed legislation in hopes to even the playing field between hotels and short-term rentals. This change is directly affecting investors who have bought multiple condo units to then rent out through AirBnB. Through these multiple purchases, these investors have created a sort of virtual hotel where they have been able to run a central office anywhere, regardless of where their units may be. Despite running their virtual hotel, they have not been paying the same fees and taxes as a traditional hotel. This legislation is aimed to address this issue in hopes to achieve fairness across the board.
Recently, in Boston specifically, Mayor Marty Walsh, signed a bill that pulled back the ability to enter short term rentals. AirBnB initially was unhappy with this, and a lawsuit ensued. Since the lawsuit has been resolved, AirBnB is now enforcing that measure. Ultimately, the new law requires that a person who owns a short-term rental will be restricted to only hosting through their primary residence. AirBnB is now compliant with the city, so if an individual has a property that is not registered with the city, the application will not list it on the AirBnB website.
The restrictions are as follows:
1. If you own a house, you are able to rent out a room of your primary residence.
2. If you own a house and you are going away and during that period you would like to rent out your home, you are able to do this.
3. If you own a two/three family, you are able to rent it out, but are limited to only renting out one of the units. 4. You can only be a host for one property in the city of Boston.
These changes are meant to address Boston’s shortage of apartments to rent. Long-term rental properties are now returning to the market. 2,000-2,300 units are now open for long-term rental, so while this may be detrimental to some investors, it has led to opportunities for others to buy condos.
If you have any questions about renting or purchasing a condominium, contact Stiles Law by calling (781) 319-1900.
Another question came in from a viewer asking: “I have a friend who is also a neighbor who would like to purchase a portion of our land, can we even do that?”
The simple answer is that it depends, but more than likely you will be able to. There are a few things you’ll want to think about first. The first question you will need answered is if giving or selling this portion of land will put you in a non-conforming status. You’ll want to confirm with your building inspector that you will remain in conformity with your town zoning bylaws.
You also need to take your mortgage into consideration. If you have a mortgage on your property and you sell your land to your neighbor, that land will need to be in compliance with your lender. You will have to get a partial release of that mortgage which will allow a parcel to be excluded from the mortgage contract.
Something else you will want to think about is granting an easement. An easement is the right to use land you don’t own. Regardless, you’re going to want to gain the services of a licensed engineer, a professional to gather measurements and map everything out so that you are able to have these documents recorded properly with the registry of deeds.
Your last option in this situation could potentially be a land swap. If it is at equal value you can do it without money being exchanged. This still requires a land surveyor, who would measure it out and create new parcels. Once created you would then trade those through the quitclaim deeds and then record them at the registry of deeds.
If you have any questions about selling your land or taken part in a land swap, contact Stiles Law by calling (781) 319-1900.