First, Do What You Love

by  Randy King  on  Friday, January 19, 2018

I’ve had many a conversation with people who believe that they want to step into real estate investing, and the topic of “why” ranges widely.  Many people have seen the shows on HGTV, read Rich Dad, Poor Dad by Robert Kyosaki, or otherwise have been exposed to this real estate thing and got interested.

There’s a real problem with finding what you want to do in your life on T.V.  Realize that the very first priority with a television show is to generate viewership and, hence, advertising dollars.  When that show happens to be one about rehabbing or, as they call it, “flipping”, things can really go sideways.

Real life often does not make for the best television viewing.  For example, talk to health care professionals and ask how much of the T.V. show “Grey’s Anatomy” reflects the real world.  Often, eyeballs will be rolling upwards.  Staff at Grey Sloan Memorial goes through more of their own trauma than they are servicing.  And it makes for great television – I am an admitted addict myself.

So, what’s “off” about the HGTV rehabbing shows?  Well, they only show the three most exciting things about a rehab:  1) an awful distressed property, 2) construction that goes smoothly, usually done by one star of the show (Chip Gaines comes to mind), finished on time (yeah, right), and 3) a completed project that blows your mind.  Throughout, they find points to add extreme drama, like when the mold is detected, or they need to add a $5,000 furnace -  the music gets ominous and we break for commercial.

Oh, and they always seem to net about $70,000.  “On to the next one”, the star barks.  It’s no wonder half the country thinks they can do this stuff and be a millionaire in under a year.  What you don’t see is the dozens of regular craftsmen and trades that descend on the property off-camera and do the work in a day that would take Chip over 6 months to do alone.  And have you ever seen one property that is not shown gloriously decorated and staged?  No, you have not.

As for cost, most of it is underwritten by HGTV sponsors like The Home Depot and other big-box stores and suppliers.  If Chip utters “go to Home Depot and pick that up”, it’s worth tens of thousands to them.  And most of these shows are not HGTV productions – they are massive advertisements PAID FOR by the stars’ production companies, because at some point, they will send their minions out to the Sheraton in Madison to sign you up for coaching to do this rehabbing yourself, “as seen on TV”.

Reality in this industry is far more boring.  Acquiring properties at the right price can be difficult, rehabbing can be challenging (don’t get me started on dealing with all the trades), and the finished product, while usually pretty great in comparison to the start, doesn’t blow your mind and cause potential buyers to wet their pants.  And, no, Joanna Gaines is not coming to decorate.

All in all, it’s still a rewarding business to be in, if you enjoy aspects of this stuff.  You can generally hire out those things that are not enjoyable, and tailor your own personal involvement to fit your needs.  If you are crazy enough, every so often you can strap on the tool belt and do some of the work yourself.  I do this every so often when the memory of the last project I worked on has faded.

You can also make a good living from it, and the nature of the work gives you a lot of flexibility in your schedule.  It takes someone who is self-disciplined and will get up every day and do what needs to be done.  Sitting on the couch eating Bonbons and watching Oprah is not the best use of your flexible time.

So if you’re someone kicking the tires about this, hang out at the REIA more, ask questions and maybe even come to our first property tour to get a live taste of things.  We’ll help you figure out if this is a good match for you.

 

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Beware of False Service Animals

by  Kevin Coughlin  on  Friday, January 19, 2018

One of the most effective public policy campaigns of the last few decades has been the one that taught us not to park in spaces reserved for the disabled.

A combination of robust public education and stiff penalties has helped make it universally understood that able-bodied persons should avoid parking cars there.

A newer push is underway to curb the growing practice of people passing their pets off as service animals. While most people associate the conflicts this practice presents with access to business - particularly restaurants - landlords are also increasingly impacted.

It’s not hard to see why so many people find it easy to commit this kind of self-serving fraud. The federal regulations governing the rights of individuals with disabilities to be accompanied by animals are murky. Three different federal laws govern this space and the result is an array of confusing and conflicting regulations. 

One thing all the federal laws have in common: no certificates or proof of training is required, only the word of the potential tenant.

Many states have stepped into this void by enacting stricter rules. To date, twenty states have passed anti-fraud measures. Of those, sixteen make misrepresenting a service animal a misdemeanor or petty offense punishable by fines, jail time, and/or community service.

The states that have passed laws are California, Colorado, Florida, Idaho, Kansas, Maine, Michigan, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Texas, Utah, Virginia, Washington, and Wyoming.

The growing trend in service animal fraud can make it more difficult for people with true disabilities to gain access to places they need to go. 

Property investors may see an increase in renters trying to claim service animal status for their pet. With state legislatures and courts actively settling issues regarding the rights of those with emotional, therapy, or comfort animals, many people may seek to call their pets service animals. 

REIAs in states that have not enacted service animal fraud laws have an opportunity to build new partnerships with disability groups to form a coalition in support of such laws. 

Seek out your state and local disability rights organizations, as well as any organizations representing service dog trainers. Look for training businesses or groups accredited by Assistance Dogs International, a service dog standards group. These groups have an interest in protecting the integrity of service animal status and can be valuable allies in getting laws passed in your state.

If you do plan to propose a law in your state and want to know the different ways you can craft it, a review of the various state laws on this subject can be found here:  https://www.animallaw.info/topic/table-state-assistance-animal-laws

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Beware of False Service Animals

by  Kevin Coughlin  on  Friday, January 19, 2018

 One of the most effective public policy campaigns of the last few decades has been the one that taught us not to park in spaces reserved for the disabled.

 

A combination of robust public education and stiff penalties has helped make it universally understood that able-bodied persons should avoid parking cars there.

 

A newer push is underway to curb the growing practice of people passing their pets off as service animals. While most people associate the conflicts this practice presents with access to business - particularly restaurants - landlords are also increasingly impacted.

 

It’s not hard to see why so many people find it easy to commit this kind of self-serving fraud. The federal regulations governing the rights of individuals with disabilities to be accompanied by animals are murky. Three different federal laws govern this space and the result is an array of confusing and conflicting regulations. 

 

One thing all the federal laws have in common: no certificates or proof of training is required, only the word of the potential tenant.

 

Many states have stepped into this void by enacting stricter rules. To date, twenty states have passed anti-fraud measures. Of those, sixteen make misrepresenting a service animal a misdemeanor or petty offense punishable by fines, jail time, and/or community service.

 

The states that have passed laws are California, Colorado, Florida, Idaho, Kansas, Maine, Michigan, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Texas, Utah, Virginia, Washington, and Wyoming.

 

The growing trend in service animal fraud can make it more difficult for people with true disabilities to gain access to places they need to go. 

 

Property investors may see an increase in renters trying to claim service animal status for their pet. With state legislatures and courts actively settling issues regarding the rights of those with emotional, therapy, or comfort animals, many people may seek to call their pets service animals. 

 

REIAs in states that have not enacted service animal fraud laws have an opportunity to build new partnerships with disability groups to form a coalition in support of such laws. 

 

Seek out your state and local disability rights organizations, as well as any organizations representing service dog trainers. Look for training businesses or groups accredited by Assistance Dogs International, a service dog standards group. These groups have an interest in protecting the integrity of service animal status and can be valuable allies in getting laws passed in your state.

 

If you do plan to propose a law in your state and want to know the different ways you can craft it, a review of the various state laws on this subject can be found here:  https://www.animallaw.info/topic/table-state-assistance-animal-laws

 

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Help! :) Student Housing Needed

by  Rebecca Dearing  on  Friday, January 12, 2018
Each Spring/Summer the Home Depot invites students from other countries to work at the stores located in Sandy, Brickyard, and West Valley.

On March 27th the Sandy store will have 11 students arriving from the Philippines. At this time, they have no housing. Students will stay through June with a few staying until August 10th.

If you have a vacant house (preferably with utilities connected), this would be a perfect opportunity to get it rented for a short term. Each student plans to pay $300 per month and they would prefer to stay together, if possible.

Here are other requested guidelines from the Home Depot:
  • Close (walking, bike, or bus) to the Home Depot South Sandy (135 East 11400 South)
  • One bed per student (they can purchase their own air mattress if beds are not available)
  • Can sleep several to a room (last year 8 slept in one room with bunk beds)
  • Access to a bathroom and kitchen (can share with the rest of the household)
  • Owner is required to pick up students from the airport upon their arrival

If you are interested, please contact Danielle Lueck at (801) 523-0069 x 077 or send an e-mail to danielle_r_lueck@homedepot.com.
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What’s Next for You?

by  Randy King  on  Thursday, January 11, 2018

Used to be that when you found what you did in life, that was that.  The cobbler was a cobbler until he died.  The blacksmith was a blacksmith, the engineer was an engineer, the doctor was a doctor – all until they retired or died.  Well, it’s just not that way anymore.

Some years ago, I knew somebody who was a great electrical engineer.  He was a whiz at circuit design and worked for a company around Chicago that designed and built small controllers.  One day I met up with him and he told me he was back in school.  I assumed he was going for his masters in EE.

Quite the contrary, he was in pre-med and had already arranged for an internship at a hospital across the country.  Wait, what?  No, seriously – what are you up to, I asked.  That was it – he was serious, and he actually did it.  Years later I heard from him and he was a surgeon somewhere out west.

You see, something called to him and he acted on it.  He didn’t allow himself to be pigeon-holed into being an engineer forever, even though he excelled at it.  As a surgeon, the hours were long, the disappointments huge, but the successes were massive – for him.  And if you think about it, those two worlds are not that far apart.  He spent a lot of time diagnosing and fixing circuit problems before.

What really struck me was the conversation he had around money.  It figured somewhere near the bottom of the list for him; his happiness was up at the top, and he was fully prepared to take a position at a rural hospital in a poor area of the country or even practice in a far-away land where money was no object because there really wasn’t much.  And still he would survive – probably thrive – on his joy.

What about you?  Do you feel stuck where you are?  Think that you’ve invested too much educational or life capital in what you’re doing to make a change?  Reconsider that position.  Open your mind to the wild possibilities that exist that you might like to do.  I did it, and I’m having fun.

I started out as an electrical engineer myself, with a specialty in software development.  I did some hardware work, even some power systems work, but gravitated toward software.  This eventually led me to starting a software company with 2 other guys and we thrived during the internet boom time.

While at that company, I went to a local fitness center to stay healthy, and became fascinated with this new indoor cycling craze called “Spinning”.  Somehow, I found myself becoming an instructor in this national program, then really got into outdoor cycling.  Loved it, had no idea where it would take me.

I loved the notion of cycling and teaching others to do it safely and well, so I kept learning and growing in the practice until eventually becoming a USA Cycling Coach, a division of USOC, the U.S. Olympic Committee in Colorado Springs.  While coaching with the U.S. Youth Triathlon Team, I met lots of new people, and the owner of that team and I became good friends.  He was a real estate investor.

Oh, yes – I still had my day job at the company I started, it just didn’t involve the technical heads-down work anymore, so I had lots of time to pursue this new passion.  Flying all over the country with the kids’ team and helping to grow a group that eventually because the U.S. National Champions. Eventually a few went on to be world champions, and one competed in the 2016 Rio Olympics.  I helped do that.

What I found is that I absolutely love coaching.  So, as I grew in this new real estate investor practice, getting educated, doing deals, and still working the tech side, I saw that I loved showing others how to do that and, for some, how to ride a bike efficiently.  It’s a long ride from circuit analysis.

What about you?  What do you love?  What could you do, WOULD you do if you didn’t worry about the money?  Consider it, because there’s an old saying: “Do what you love, and the money will follow.”  I can tell you that this is true.  You just have to step off the curb.

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Tax Reform Was Passed, Signed & Delivered

by  Charles Tassell  on  Tuesday, January 09, 2018

As there has been a great deal of hype on all sides of tax reform, let’s see if we can dig into the issues with more light and less heat.  Hopefully you find this helpful and instructive on items that will no doubt have lasting ramifications and unintentional consequences for many years.  The summary: The reforms should be good for real estate, with tax advantages for pass-through entities improving.  Before making decisions based on tax reform, please be sure to speak with a tax accountant up to date on the all real estate rules, as those will be coming fast and furiously from the IRS!  To start, let’s get a quick understanding about “the process” and how we got here:

The rules in the Senate, specifically those about budget reconciliation drove the GOP Tax Reform process; or more perhaps accurately, hemmed it in.  The Senate rules would not allow not budgetary items to be included in the bill, though somehow the opening of the ANWR for oil drilling was deemed appropriate.  I say that not to be tongue in cheek or sarcastic, but to highlight that the rules of the Senate can be rather extensive and somewhat archaic.  Nothing illustrates that more the Byrd Bath, or Byrd Rule, named after Sen. Byrd of WV, who was prolific in his ability to ear mark projects (and have them named for him throughout the state).  This provision limits a budgetary item from being either “extraneous” to the budget or would significantly increase the federal deficit beyond a ten-year term.  Those definitions, and the reference to the 10-year life span of legislation for the Senate, are key.

Second Amendment advocates may remember that the “Assault Weapon Ban” approved by the Senate had a 10-year life, as do many bills passed they pass.  This is especially true of bills that would expand the deficit beyond the 10-year time frame.  So…a budget item must have sufficient financial offsets, per the Senate’s staff accountants, The Congressional Budget Office.  Which then leads to a trade-off of budget items.

Think of it this way, your budget includes travel, car payments, shelter, clothing, school fees, etc.  In December you decide to set your car payments & mortgage/rent for 12 monthly payments, but you’re only going to spend on travel for the first 3 months, clothing once a quarter, and lastly school fees only twice a year.  If you increased any of those, your budget goes out of whack – ignoring that the US is already deficit spending 30%+ of its budget.  So you may make the trade-off (gamble?) that spending for travel will drop to the first two months and you will increase the mortgage/rent – permanently.  That works for this year, budget-wise, but next year (or the next ten-year Senate cycle) you still have to live with that “new” base-line expense.

With that understanding, it is important to note that the deficit restriction, self-imposed by the GOP, was $1.5 Trillion.  Each tax cut has its own “expense” or cost to the budget.  As the dust settled, some were set to start immediately, others like the quarterly clothing expenses in our example above, start at different dates.  Additionally, some of the items, like the travel allowance, are set to expire or sunset on specific dates.  Is your head spinning yet?

Now that we know those details…let’s dig into the specific details of the bill.

The flagship piece of the puzzle is the reduction in corporate tax rate.  This rate was reduced from 35% to 21% – and it is permanent.  This reduction moves the US from one of the highest rates in the world to among the lowest.  The Trump Administration’s goal, in sync with Congressional GOP leaders, is to make the US a haven for Corporations world-wide.  (click here for more details charts – prefer table #1.)

The next key item is that of the Individual tax rates lowered for 80% of tax payers.  There are 7 tax brackets (listed below)

2018 Income Tax Brackets

The goal was to simplify the system so that with standard deductions, which were nearly doubled: Singles from $6,500 to $12,000 and for Couples from $13,000 to $24,000.  Part of the reason for the increase was to remove the personal exemption line item and consolidate the process.  Ideally, most taxpayers will be able to use a post card format to submit their taxes…needless to say, we are still always away from that goal.

The child tax credit was doubled to $2k and a non-child dependent was added for elderly parents, but then only at $500.  Additionally, these tax reforms are to sunset in 2025.  The goal of the current Administration and Congress is to make these permanent and even improve on them, but alas that will need to wait for the next bill.

SALT anyone?

The State and Local Tax deduction (SALT) was one of the most hotly contested and philosophically charged issues.  The argument is that if those deductions are allowed, then low tax areas are subsidizing high tax areas, because people in high tax areas don’t pay as much to the federal government due to local and state taxes creating such a large deduction.  Most of the Republicans come from low-tax areas and Democrats from high-tax urban areas, so the political divide was substantial.  However, there were some Republicans from high tax states, and a concern for low-income workers who would be harmed by the elimination of the deduction.  So, a $10K cap on deductions was implemented.  For comparison, the average New York City tax payer deduction exceeds $50K.  The cap helps low income workers, but doesn’t soften the blow very much for those in areas that have decided to tax, tax and tax again!  Corporations are still allowed to deduct SALT, while individuals with pass through entities are capped at $10K.

Pass through entities – Where Real Estate Investors Live!

The vast majority of real estate investors utilize pass through entities like Limited Liability Companies.  There was a lot of hype on these entities, the rates and various proposed modifications. In general, Pass Through Entities received a tax cut as well.  The details are a bit more complicated.  Bloomberg News, stated it this way,

“The bill sets several restrictions for the type of pass-throughs eligible for the deduction and how much they’re allowed to claim, based on the wages the entity pays, the amount of equipment the entity purchases, and how much the owner earns. It excludes many service businesses from the tax break.”

During the tax reform debate, there was significant concern that if the separation between corporate rates/benefits and pass through entities became too great there would be a mass conversion from pass through entities to corporations.  Experts (economists) do not believe that is the case presently, though as numerous wealth, finance and business outlets have noted, this will be a conversation to have with your CPA, as there are still significant benefits to the flexibility of pass through entities, especially with the capturing of depreciation, expanded expensing provisions and the lack of corporate tax layering.

While there is a 20% tax reduction in the reform for pass through entities, there are provisions to limit active owners who receive a salary from re-characterizing their income so as to avoid taxes.  Passive investors are treated a bit more friendly – and in this area more than any other, they will need to have a specific conversation about their situation with an up to date tax consultant.  Click here for more information from Alistair Nevius and The Journal of Accountancy.

Pass-through income deduction

For tax years after 2017 and before 2026, individuals will be allowed to deduct 20% of “qualified business income” from a partnership, S corporation, or sole proprietorship, as well as 20% of qualified real estate investment trust (REIT) dividends, qualified cooperative dividends, and qualified publicly traded partnership income. (Special rules would apply to specified agricultural or horticultural cooperatives.)

A limitation on the deduction is phased in based on W-2 wages above a threshold amount of taxable income. The deduction is disallowed for specified service trades or businesses with income above a threshold.

For these purposes, “qualified business income” means the net amount of qualified items of income, gain, deduction, and loss with respect to the qualified trade or business of the taxpayer. These items must be effectively connected with the conduct of a trade or business within the United States. They do not include specified investment-related income, deductions, or losses.

“Qualified business income” does not include an S corporation shareholder’s reasonable compensation, guaranteed payments, or — to the extent provided in regulations — payments to a partner who is acting in a capacity other than his or her capacity as a partner.

“Specified service trades or businesses” include any trade or business in the fields of accounting, health, law, consulting, athletics, financial services, brokerage services, or any business where the principal asset of the business is the reputation or skill of one or more of its employees.

The exclusion from the definition of a qualified business for specified service trades or businesses phases out for a taxpayer with taxable income in excess of $157,500, or $315,000 in the case of a joint return.

For each qualified trade or business, the taxpayer is allowed to deduct 20% of the qualified business income for that trade or business. Generally, the deduction is limited to 50% of the W-2 wages paid with respect to the business. Alternatively, capital-intensive businesses may get a higher benefit under a rule that takes into consideration 25% of wages paid plus a portion of the business’s basis in its tangible assets. However, if the taxpayer’s income is below the threshold amount, the deductible amount for each qualified trade or business is equal to 20% of the qualified business income for each respective trade or business.

An article on CNN-Money also points out that, “The 20% deduction would be prohibited for anyone in a service business — unless their taxable income is less than $315,000 if married ($157,500 if single).”  So, if you separate the service, maintenance, or management company responsibilities, a global review may be in order.

Live-in Home remodeling?  If you and your spouse take on the task as a daily effort, or they put up with your ongoing renovations, please know that this tax reform still has a carve out to protect up to $250K for Singles and $500K for Couples in capital gains from selling a house, as long as it was a primary residence for two of the last five years.

Landlords were thrown a bone in that moving expenses are no longer tax deductible, except for certain military exemptions.  One less incentive for renters to move about and cause turn-over costs.  Why moving expenses were ever deductible in the first place is the real question!

A couple of final items worth noting for investors, if your lofty goals of becoming a wealthy land baron come true, know the new estate tax exemption has been raised to approximately $10M for singles and $20M for couples.  Additionally, if you are on your own for insurance you will no longer be penalized for not purchasing a federally approved plan – the ACA mandate (aka Obamacare) was removed.

There will be plenty more written about this as the accountants breakdown each phrase, the IRS issues regulations and “clarifications” and of course the occasional tax precedent via the courts.  In the meantime, enjoy a rousing conversation with your partners and adapt to the new tax scheme.

 

Charles Tassell is the Chief Operating Officer of National REIA.

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KISS Your Way to Riches

by  Mike Jacka  on  Monday, January 01, 2018

Something peeked your interest in real estate. Maybe it was the Flip this house, or Flipping Vegas or any other the other 100 reality TV shows that have nothing to do with reality but makes for entertaining TV.  Maybe it was a radio ad from some national guru looking to build their business in your market and they want you to join their team.  Maybe it was an ad on Facebook telling you that it is so simple to make $30k a month without even getting out of bed.  Maybe it was a friend that really did flip properties or a relative that owned several rental properties.

Whatever the reason is that you decided to give real estate investing a try, you soon realized that there is a lot to know and the real estate business can seem overwhelming when you are first starting out.  I know because I felt that way in the beginning and now I mentor students through the minutia all the time.

In one of my early mentoring sessions with my mentor, he said something to me that I just laughed at, at the time but later realized how profound that statement was that he repeated to me over and over until I finally got it.

He said; if you want to get to where I am, you need to KISS your way to Riches.  Keep It Simple Stupid. Read More...

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New Location Announced for Networking Luncheons

by  Rebecca Dearing  on  Wednesday, November 22, 2017
As the success of the Utah REIA Networking Luncheons has exceeded the capacity at the Red Robin in Murray, starting December 12, 2017, the Utah REIA will be hosting the Networking Luncheons at the Salt Lake Community College, Miller Campus, Miller Free Enterprise Center (MFEC), Room #203 located at --9750 South 300 West, Sandy, UT 84070. 

What is so great about this facility is not only does it have room for growth, but it also provides more flexibility when it comes to lunch.  Not only will you have the opportunity to bring your own lunch, but there is also a full blown cafeteria (that opens as early as 6:30 a.m.and starts serving lunch at 11:00 a.m.) complete with hot food, a grill special, a salad bar, sandwiches, and a convenient store at the Culinary Institute building just down the parking lot.

Click here for a map of the Miller Campus.  


Feel free to grab your food early and join us at the MFEC in room #203 for networking beginning at 11:30 a.m.

The presentation will then begin at 12:00 p.m. and go until just about 1:00 p.m.leaving enough time for questions and prize give-aways.

If you have any questions regarding this change, feel free to contact Rebecca Dearing personally by calling or texting (801) 647-8862 or by sending an e-mail to rebecca@utahreia.org.
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Must Do, Should Do, Could Do

by  Randy King  on  Monday, November 06, 2017

When you’re rehabbing a house for re-sale, you’re faced with deciding which approach to take to make that house sellable without overbuilding.  How do you do that?  Well, largely, it comes from experience and mentorship, but there are some general “rules-of-thumb” that you can employ to help you choose.

We break our rehab lists into three categories; the “Must Do” list are those things that would prevent a retail buyer from obtaining a loan (FHA restrictions), or something that will surely be caught on a house inspection that we would have to fix anyway.

These things include an old (15+ years) furnace, an old (10+ years) water heater, a fuse box or a breaker panel manufactured by Federal Pacific Electric (FPE) or Wadsworth, a decaying or “frito-ing” roof, broken or damaged components such as doors, walls, windows, flooring, cabinets, or countertops, or certain “handyman special enhancements” that are clearly code violations, just to name a few.

The next list is the “Should Do”, and it includes things that are likely to sway buyers into the “buy it” camp.  Since kitchens and bathrooms are the biggest factors in house-buying decisions, these are things like updating the kitchen and bathroom cabinets and countertops, faucets, sinks, and lighting.

This is where things get a little fuzzy.  Depending on the current market, some of these things can slide between the “Should Do” and “Could Do” list.  If the market is strong and houses are flying off the shelf, you don’t have to do quite as much, although doing so can cause a house to move fast.

This is, of course, where your mentors and REALTOR partners come in – they can help advise you on what is appropriate in the current market in the neighborhood where you are working.  Keep in mind that you’re not trying to do the least amount of work to get by; you’re trying to do the appropriate amount of work to have a good product without overbuilding.

The final category, the “Could Do” list is reserved for markets with high competition and/or low retail sales.  These are the things that, when done, make a huge difference in the property.  And, like I talked about above, some of these could slide into the “Should Do” list in certain situations.

For example, removing a wall to create an open floor plan is potentially a pricier option that has the possibility of creating a big “wow” factor and thus selling the house quickly.  Or you could use higher-end finishes in the kitchen and/or baths, adding unexpected features like a steam shower or a beautiful backsplash in the kitchen.

All of this, of course, is subjective.  Each investor needs to analyze the situation to determine what is necessary for the rehab, and considering the time of year that the property will be entering the market.  But how can you be sure of any of this?

Until you’ve gotten the experience under your belt to just “know” the answer, you must rely on your REALTOR partner and your mentors or colleagues to help you understand.  Even more accomplished investors are always checking-in with others on this point, just to remain neutral.

The final word on this is to make sure that YOU are the one ultimately calling the shots on what’s needed for your rehab.  While builders can be awesome assets in the design department, remember that their price goes up right along with features.  So don’t let “feature-creep” crater your budget.

 

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Avoiding Bad Tenants

by  Jonathan Kirk  on  Saturday, November 04, 2017

Minimize your risk of getting a bad tenant by following these important pointers:

 

Screen Every Applicant

Background checks should include five steps:

  1. Credit

  2. Criminal

  3. Financial (income, employment, overall stability)

  4. Current landlord reference

  5. Previous landlord references

 

Verify these five areas to increase the likelihood of successfully weeding out applicants who lie or misrepresent information to try to hide their bad history. A good screening process will help save you the hassle and headache repairing damage, collecting lost rent, and paying an attorney, like Jonathan Kirk at Kirk Law, to collect lost rent and the cost to repair any property damage.

 

Kirk Law recommends that you use Western Reporting for tenant background checks because they check the “blind spots” that other background screening companies don’t check. Quite frankly, they are the best. Don’t cut corners. Use Western Reporting.

 

Follow Rental Criteria

Verify that each applicant meets certain criteria, which may include things like:

  • photo identification

  • employment (minimum time at current employer)

  • income (a maximum percentage of the household income for rent payments)

  • rental history (addresses and names/contact info of landlords from past 5 years)

  • credit history (no collection accounts or no bankruptcies within 2 years)

  • criminal history (sex-offenders or criminal convictions suggesting a present threat to the owners, neighbors, or property)

 

Immediately notify an applicant who qualifies, and get them to sign the lease within 24 hours or move on to the next applicant. Don’t try to pick the “best” applicant. If you use your gut feeling, you may accidentally discriminate against a protected class, like familial status. But remember, Utah law requires you to disclose rental criteria before accepting an application fee.

 

Contact Kirk Law at 801-980-0388 to evict a bad tenant, collect money for rent or damages, or to defend you against allegations that you discriminated or violated Fair Housing laws. Kirk Law will provide superior legal services at reasonable rates. With over 60+ years of experience, you can count on the attorneys at Kirk Law to take care of you! Visit our website: www.kirklawutah.com.

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