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.
There is a case that came down that is relevant to the process of conducting a foreclosure. Thompson v. JPMorgan Chase Bank, N.A., No. 18-1559, 2019 WL 493164 (1st Cir. Feb. 8, 2019). In short, lenders and servicers were not using the precise language of the default provision in the mortgage when notifying borrowers of their impending foreclosure. The United States First Circuit Court of Appeals ruled that Massachusetts law required “strict compliance” when a lender exercises its right to foreclose. Id. citing Pinti v. Emigrant Mortg. Co., 472 Mass. 226 (2015). So what does that mean for the buyer or subsequent owner of a foreclosed property?
If you are buying a bank-owned property, before spending any money, confirm with the bank if they are compliant with Thompson v. JP Morgan Chase. Your attorney and title insurance underwriter will review the notices that were sent against the default provision contained in the mortgage. If the notice is not identical, the foreclosure may be deemed invalid. If the lender has complied with the requirements of Thompson, then the transaction will proceed as an ordinary bank-owned purchase.
Overall, It is clear that Thompson is a case where if you are looking to buy a bank-owned property it slows the process down quite a bit. With that, it halted a lot of purchases. If a closing was derailed because of Thompson, we can help you. Call us at Stiles.
\If you have any questions about buying a bank-owned property, contact Stiles Law by calling (781) 319-1900.
What happens when you open your tax bill for February 1st and it is an unexpectedly large number?
There can be several different reasons that your taxes went up. One reason could’ve been an override in the town (ex: a new high school). Another is that the tax rate could’ve gone up. But the one reason that will be discussed is the possibility that the rate of your own home goes up.
In order to find out if that is the reason, look at your bill or check your property card. Your property card can be found online or at the assessor’s office in your town. A property card has info from last year to this year and will tell you how much your home is assessed for and how much your property is assessed for. Assessed value is the value that the town gives it.
If a home was purchased in your neighborhood for a lot of money, sometimes that then increases the property values for the whole neighborhood. If you don’t think that number is fair, then you can file an abatement with the town. You have to file the tax abatement before February 1st and it has to be thorough. The abatement is essentially a long application trying to prove the value of your house.
Before you file that abatement, you’ll want to compare your house to other houses that are in your neighborhood and are the same type of house. You can pull up all other properties in the town near you to get an idea of what similar houses are worth.
If you have any questions about your home, contact Stiles Law by calling (781) 319-1900.