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Tuesday, January 17, 2012

Save Time, Generate Hype and Get Apartment Vacancies Filled – All In Very Little Time

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As an apartment broker I come across many clients that simply have no idea how to contend with the tenant applications that come in for their vacancies.  But there are some things that can be done to actually make the process easier, while at the same time increasing the “rentability” of the property.  By following these tips, watch how quickly and effectively your rental process will become the easiest thing you’ve ever done!

Multi-Tasking – A Landlord’s Best Asset

The standard method of showing a vacant apartment to potential lessees is to arrange individual appointments that entail an introduction to the community, discussion about property rules and regulations, a walk-through, plus sharing information about the property in detail.  Most leasing agents go through the process over and over again – but that is not necessary!

By simply booking multiple showings at one time, you will not only save yourself time, energy and resources, but you will also be able to satisfy potential tenants’ needs in one short block of time as well.  Wouldn’t once per week showings be so much easier, leaving you more time to concentrate on other important matters during the rest of the week?  Also, while in a group, those reviewing the property will likely ask many questions and chances are others that may not have thought of those questions will also benefit from the information provided.

Peer Pressure – The Perfect Salesperson

Another fantastic advantage of doing group showings as opposed to individually showing the apartments to potential occupants is that just by virtue of others’ interest in the same property, by default you will see a heightened interest in the entire group.  The mentality of any group where everyone is vying for the same thing is that “if those other people like it, it must be good” and as a landlord you can use this to your advantage since the property will have significant tenant interest.  If you live in an area where there is less interest in rental properties this will work ideally since this can also result in a higher number of word-of-mouth references toward the property.
To learn more about how you can efficiently show your vacancy, give me a call and I’d be happy to share some insight.  And as always, I’m here to help with any and all of your real estate endeavors.
All of these can easily be avoided – simply by meeting with your Realtor to have a detailed consultation and determine the best price for your home, in its condition, within its location and relative to other properties in the area.  Since many factors determine how much you can reasonably list your home for, it is vital that you meet with a professional that can make an accurate price determination for you.  Remember, the more effectively your home is priced will result in a more positive and financially fruitful experience.

Tuesday, September 27, 2011

What are you really buying when you buy an apartment building?

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If you are investor and are looking to purchase a building, what are you really buying? You’re really buying an “income stream”. After all, you want cash flow right? And you want that cash flow or income stream to grow as you own the building. The bricks and mortar and wood are important but the income stream is where it’s at.

Now a building’s income stream can be impacted by several factors; age, location, condition, how it’s managed, and rent control.

More specifically, what you want to do as an investor is grow your net spendable cash flow. That is the cash you keep after you pay expenses, any capital expenditures, debt service or loan payments, and any income tax due on the remaining cash flow.

You can do this by keeping expenses low, raising rents to market value whenever possible, being vigilant on collecting rents and late fees, and using a good CPA, to make sure you take all of your write offs and depreciation.

I like to sell buildings that are low maintenance, easy to manage, with rents that are 20% to 30% under market. By keeping expenses in check, raising rents, and normal tenant turnover, a so so building year 1 can to a dynamite cash cow by year 3 or 4.

Look, there are a lot of buildings out there to choose from. You need a skilled guide to help analyze the numbers and make recommendations. I have help a ton of investors just like you buy multi-family properties. Call me today for a confidential discussion of your situation. There is no obligation and I am happy to share my experience and insights with you.

Monday, August 15, 2011

5 Reasons To Sell Now – and Good Reasons To Wait

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There are lots of reasons building owners decide to sell. Fortunately, the Los Angeles apartment market is pretty balanced right now. It’s not a seller’s market nor a buyers market. There are plenty of buyers for well priced apartment buildings. You need to have an experienced professional help guide you through the process to make sure you do everything right and get every last dollar you can.

Here are five common reasons why you may think it is the right time to sell.

1. The Seller Needs Cash

Who doesn’t need cash with the economy the way it is today?  Selling your building can free up your equity and provide you some quick cash to take care of other pressing matters you may have.

2. You Want To Move to a better location

Perhaps you would like a better location with more amenities for the tenants and an area that is more stable and that has better growth potential for the future.

3. Maintaining the Property Is Getting Harder With Time

Look, maintaining rental property can be time consuming and frustrating. Not everyone is cut out to be a landlord. Believe me I know. I have been through all the same problems as you may have had in owning rental properties.

4. Property Is An Inheritance With Several Heirs 

If you have inherited a building and there are several heirs, chances are they are going to want to sell. Owning and maintaining a building with several owners can be a headache. There is accounting to be done, there are competing points of view on how to run the property, and there are often disagreements among the owners. Selling the building and splitting the proceeds may be the best solution.

5. Dissolution of Business Partnership

Sometimes a partnership comes to an end. If there is investment real estate involved there are usually two choices. One is to have one partner by the other out. The second is to just sell the asset and split the proceeds. Talk to your perspective tax advisors and determine which is the right solution for you.

Thursday, June 30, 2011

Selling Your Apartment Building? Time To Make a Trip To See Your Tax Advisor

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It is no secret that today’s real estate market, especially for sellers, is not at its peak. Now, while that does mean some challenges, it does not mean that an investor cannot overcome those challenges.  Selling an apartment building entails some major tax implications and unless you are not careful, fully aware of how the system works and what potential avenues you may have of avoiding such a huge tax bite, you can take an even bigger hit on the sale.

The key is to know where to get the information you need so that, come tax time after the sale of your investment, you are not left in the cold with far less money than you expected.

Better Safe Than Sorry!

The last thing you want to find out come next April is that because you did not do a little homework, you got the short end of the stick in terms of profits on the sale of your building.  All it takes is a simple visit to your tax advisor, CPA, accountant or (if you are the ambitious type) even the library – to find out about the tax implications of selling your apartment building.  Most people do not even realize that tax is an issue with this aspect of real estate transactions.

Losing Big Time On Capital Gains

At the present time, capital gains can run anywhere from 15% to as high as 30% when you combine state and federal taxes and some states (like California) treat capital gains as ordinary income.  When you think you going to be able to walk out of one investment and into another without a tax hit especially in today’s market, it simply does not work that way.  Twenty five percent or so of your depreciation must be recaptured as well, in the process.

With our economy the way it is these days, every dime counts and a quarter of depreciation taken on a building is a huge bite out of your wallet.

Jumping From One Place To Another Has Major Advantages

The IRS has a unique tool offered to consumers called the 1031 Exchange.  This strategy has often been a success of many business-savvy individuals and real estate experts to be able to defer taxes on a property. Assuming you are moving from one property to another, similar to the first (for example if you have an investment, income or business property and you are replacing it) this can be useful.  Section 1031 gives property owners the capability to engage tax-deferred status.

If you are not going to be doing a 1031 tax deferred exchange then it is essential to meet with your tax advisor to gain insight on other possible ways to avoid a very high bill at the end of the tax year.

There IS Light At The End of the Tunnel

Despite what it may seem, there are some things that can provide some tax relief when selling your investment property.  Though your CPA or accountant is in a much better position to advise exactly how you can shave off your taxes, here are a few of the possible scenarios where the IRS may allow an exclusion from capital gains tax:

* Members of the Armed Services, Peace Corps or employees of the intelligence industry
* Mental of physical disability
* Transfer of job to another location
* Divorce or multiple births at one time, in a single pregnancy
* Death of a spouse
The bottom line is that your discussion with your tax advisor or your investigation should take place prior to putting your apartment building up for sale, so that you are fully aware of where you stand with your particular situation. Especially these days, tax professionals work to provide you the best leeway possible within the realm of the law.