Real Estate Investing Through REITs

Power and wealth are measured in terms of the amount of the land or buildings you owned. The 20th century saw the rise in the stock and real estate investing. This business still proves the most profitable business. Real estate investment trusts can be the easiest and convenient way for the beginners to earn a profit without any hazard.


This is the comprehensive guide for the beginners in Real Estate Investing. The first Real Estate Investing Trusts formed after the passing of Real Estate Investment Trust Act 1960. The act had some drawbacks. It required the executives in charge for hiring a third party. It requires to hire a third person to provide management and property leasing service. In the next act Tax Reform Act 1986 these restrictions were waived off. After 13 years the Real Estate Investment Trust’s modernization act was passed.The 1999 law allows Real Estate Investment Trusts to form taxable subsidiaries in order to provide specialized services to tenants.

Requirements for Real Estate Investment Trusts Status.

Every real estate investor who invests in Real Estate Investment Trusts should have passed these 4 tests. In order to retain its special tax status.

  1. The Real Estate Investment Trust investors should distribute almost 90% of their annual taxable income, except capital gains.
  2. The Real Estate Investment Trust investors should have invested its 75% assets in real estate, mortgage loans and shares.
  3. The Real Estate Investment Trust investors should derive their rental income and gains from the sales at least 75%. 95% of the gain should come from dividends, interest, mortgage interests and securities sales.
  4. The Real Estate Investment Trust investors should have 100 shareholders almost. The significant thing is you should have less than 50% outstanding shares.

In order to avoid double taxation, Real Estate Investment Trusts offer some other benefits which are:

Professional Management.

Real Estate Investment Trusts allow you to hire a professional and experienced manager to manage your property. Professional management is a compulsory factor. You do not have to manage all alone. You can hire a professional and experienced manager.

Decrease the level of Personal Risk.
Real Estate Investment Trusts can decrease your personal risk. In simple investment you need a huge amount of capital to invest. For that you have to borrow loans from different people and banks. But in Real Estate Investment Trustsyou can start investing from very few dollars. That decreases the level of personal risk.

Liquidity.
In Real Estate Investment Trusts you have daily price quotation unlike traditional real estate investment. REITs offer you liquidity of your assets. Despite the fact, that the quoted price in Real Estate Investments may fluctuate daily. It is the safest investment, unlike conventional investment.

Some Excellent Tips for Retirement or Income for Living Expenses.
Real Estate Investment Trusts are suitable for the people who are getting retire soon or has been retired. They can seek best investment real estate investment trusts. Real estate investment trusts can give potential income and return on capital to the retired people. They can earn by investing just and earn money by just sitting at home.

This could be beneficial for them.This investment will be helpful for the retired people in bearing their living expenses. Real Estate Investment Trusts can give you greater stability in times of market crises. The term equity Real estate investment trusts refer to a corporate entity. It is involved in the acquisition, management, building, renovation, and sale of real estate.Equity Real estate investment trusts generally operate in a specific area of expertise.

Some examples in which you can invest are:

  • Residential Real Estate Investment Trusts.
  • Retail Real Estate Investment Trusts.
  • Office and Industrial Real Estate Investment Trusts.
  • Healthcare Real Estate Investment Trusts.
  • Self-storage Real Estate Investment Trusts.
  • Hotels and resort Real Estate Investment Trusts.

 

6 Advantages of Hiring a Property Manager

The most tough thing is life is to hire someone for a job you do. I guess so. In my experience I have two jibs that I gave up that was a hardest part.

One of was to hire a furniture supplier. I loved my job. I had been a furniture supplier for 10 years. I had to give up when I hurt my back. After that I jump onto contractor job. After that I have entered in real estate investment and note investing business. So, it is no longer made sense for me being in that trade.

The second one was property manager. I had been a property manager at a real estate company. Later that company merged with another real estate company. The new merger had already a rental department so they did not allow their agents to do property management.

When this happened the rules changed, I have to find a property management company for my clients then. They were investors with multiple properties. At this point I had to find property manager for my own rental properties. I have entered into the note investment and because of that I had not enough time to do it by myself.

Fortunately, I met a couple who was reliable and was in this job from couple of years, so, I met an experienced couple who used to manage my property management. I knew the wife from a long time. When I was new in this business once I met her. She has very good experience in property management. She was one of the top real estate broker. She was also a lawyer at the district court that was a plus for me. She dealt with the tenants and their complaints as well. The couple was having a good reputation around the town. She was a political member also. So, lots of benefits I could enjoy. I quickly hired them as my property managers.

Here the 6 Best Advantages of Hiring a Property Manager.

  1. Affordable.

It is not expensive all the time. Hiring a property manager is much affordable. I also never thought of it but it is a fact. When I hired a couple as my property manager they saved lot of tome of mine. They are reasonable. They give you time saving and money saving factors. So, outsourcing could be the best decision.

  1. They offered great 24hour call service.

They offered you 24/7 call service. In any case of emergency, they are just a call away. They offered you full time emergency services like plumbing, heating, electric problems. If you are having a busy life then this is the best service you can have. They will handle everything and give you best services you can have. This is best for daily the people who have busy daily routine.

 

  1. They Maintain Records.

The most important factor is they keep and all the records. They track and maintain everything like rents, repairs, all the expenses that occurred, track of all the utilities, all the expenses covered by contractors. This would give you a complete and easy information to scrutinize. You have to just hand over the records to your accountant and enjoy the best year ending.

  1. Representative in court.

As I am having a busy schedule. At the same time, I have a hearing in court. It is not possible for me to do both things at the same time. I have some important meeting to attend. And at the same time the court hearing is important as well. So, at this point they can represent me in court. They deal with the legal formalities. This is an ease for me. I can run my business and they deal with the court.

  1. They are compliant.

They emphasis on compliance which is very appreciate able thing. They pay keen attention to drawing up leases and screening tenants. They screen for things like eviction record, criminal background, credit history, credit histories and laws. They emphasis on the compliance. They pay full attention on licensing requirements, local ordinances and rules and regulation of the state. They stay up-to-date with every new ordinance or law.

  1. They Handle my Presence where Needed.

They are not just representatives but also meet the requirements of several inspectors of town. So, the thing is they not only do property management and hiring tenants, they do lots of related work which saves my time. There are lot of formalities which I have to complete for my new tenants and I am unable to reach there because of busy schedule. They use to manage all my deeds and low down my work load and it saves lots of time.

Disadvantages.

If you have multiple properties to manage then the disadvantages could be the cost and control.

Cost.

If you have multiple properties then the biggest disadvantage could be the cost cutting.  It would be difficult to manage then.

Control.

If you hire a property manager then most probably you lose the control over all the matters regarding your property.

7 Advanced Tenant Screening Tips

In case you have been a landlord from a prolong time. You may had met many nightmare tenants. They were unpaid tenants and they could come in any shape and from everywhere. They cost hundreds of dollars in shape of property damage, legal bills and court fees.

I had been gone through this many often. I am going to share some tips with you in order to which you can identify the horror tenants. You will be able to judge these types of tenants when they handing over rental applications to you.

Some of the tips for screening of tenants that may protect you from horror nightmare.

Bad Employees Make Bad Tenants.

As a landlord you must talk to the employers of the applicants. They better know the condition of their employees. They confirm you the income, employment and leave of the employees. You can ask lots of questions from their employers and able to get all information about your new tenants. You could find all the answers in the subtlest way. Their reputation may get transparent to you. Do they complete their projects? Do they perform their tasks on time? What about their timing and schedule? Are they proactive? Are they responsible?

Debt Status of Tenant.

Many of landlords just keep eye on FICO score on the credit report. They do not even bother on the debt status of the applicant. They may be under heavy debt and would not show this while filling application or when under discussion with you. You must take information about the debt status of the tenant. You may ask their employers, their old landlord or visit the bank and check the status.

Dirty Deeds of tenants.

Some people are not up to mark. They are dirty. Some of them are abusive to the property where they use to live. If you want to know that how will they treat your property, check out their current home. It will give you a clear picture of the future of your property. You can do many of the things for visiting their current home. You pay a visit to their current home as a neighborhood. You may tell them you want to move in here. Or as a landlord you go to their home with notice and lease papers for new home. And able to decide whether you want to give them your property or not.

You may find many of your questions by visiting the applicant’s current home. You may find some clutter or mess around there but its fine. No one is perfect. If you find some holes in walls, food littering the kitchen, trash and dirty walls, damaged doors then I am sure you find your answer.

Do not Bear White Lies.

when you meet your applicant and catch any lie, do not let it go. A one lie is indicator of a new lie. So, do not bear any one lie even. People who speaks lie regarding their application they actually prove that they will deceive you in future for their self. Do not think about it. Reject application spontaneously. If you catch any lie then the ball is in your court. Take an instant decision and reject their applications.

They may claim while renting out your property that they have no pets, but if you see signs of pets around their current home when you visit. They say they earn $5,150/month from their job, but their HR department says their income is $4,500. These are the unavoidable lies.

Not every Landlord will to Lie.

The best decision is to meet the old landlord. He will give you the honest scoop about the tenant. Ask him different questions. How long they lived there? Do they pay timely? Because of this you will get clear picture of new applicant. You will be able to take best decision whether to hire him or not. Keep in mind do not meet only one landlord. Visit previous 2 or 3. One may be lie to you but everyone will lie to you.

Criminal background.

Criminal background is important to check. Do not reject them if a minor case comes up to you while investigating. Criminal check and balance is illegal nowadays countrywide. All the crimes are not same it may vary. Do proper investigation about the back ground. Crimes may be like any big fraud, murder, possession of illegal items etc.

Eviction.

Check their previous back ground and if the record shows eviction during last five years. Do not rent out your property to them. Eviction report is most important thing. Many of the landlords make reports in personal grudge but beware of any fake and flawed report.

You should screen all the application keenly as well as let the applicants know that every single expense while screening will be bother by them.  He will be responsible to pay all the fees regarding reports, criminal background examination and all these things. Beware of dead and fraud tenants. Find best tenants who will pay you in time and keep your interest best.

Security Deposit Tips and Tricks

Did you know that security deposits don’t just protect the average landlord, they actually can only protect against minor damage? It doesn’t cover major damage, and while if it may cover the damage for partial recarpeting, it won’t do the full thing. It also may not cover the unpaid rent, and some states may go as far as to bar the landlords from using the security deposit in order to cover rent. But, in some states where landlords can use it for that purpose, one or even two month’s rent won’t cover the losses that the person is forced to have when they evict, so how can you protect yourself? Well, here are a few ways to protect yourself so that you don’t come out in the red after having a tenant in your space.

First, you’ve gotta tenant-proof the property, making it so that it’ almost like a defensible fortress against barbarian hordes. Tenant proofing means that you should replace the carpets with flooring, use glossy paint on the walls, put some door stoppers down, or even invest in putting shoe racks there, and you can also put in aggressive lease clauses to demand good behavior from the tenants.

You should also avoid any applicants that do complain about deposits.  You should definitely watch this, because usually if they are making a noise either they’re lying, or they don’t have money to pay for rent. Those that are cool with paying the deposit usually are stable, and they typically have emergency savings, and a fund to help with this. So, they can be trusted. The other will typically have issues with paying rent, and they may also have issues with the damaging property.

You can also inspect the prior property that the person had. If you don’t want more damage, you should look to see how the applicant treats their home. If they’re respectful and don’t create an impact, and they take pride in their homes, they can be trusted. The opportunities, can’t be and that will be something that you should definitely consider.

With the lease, you should make sure that you’re specific on what normal wear and tear is.  You need to have a certain amount of leeway, and you should also specify what is exactly normal wear and tear, and you can from there leave the lease to draw the line on that.  By doing so, you can have a good control over what is put up, and sometimes, you can even take this to court. If they don’t follow this, they will get the deposit deducted, and usually, the clients will follow the lease agreement.

You should also not specify all of the deposits, because under the law, all of the refundable deposits are under the same limits, and usually, the deposit is two month’s rent, and all of the refundable deposits do fall under that. So you’re not helping yourself by setting up different deposit types, and often, this creates a limit that is self-imposed that you can deduct. So, if you collect about 150 dollars of rent for a deposit, and there is 500 in that cleanup, the tenants could make a case that you can only take up to 250 dollars of that for the cleanup, and not deduct money from the main deposit, so you should watch out for this.

You should also make sure that, when you begin with this, you do a move-in inspection and document everything.  If you want to protect the property, if nothing else, do this. Make the inspections and create a report.  You should do this with the new renter so that you can look at each case, and every single time, take photos of this and create a digital file. That way, in the end, you can get anything that is beyond the realm of normal wear and tear paid for by the tenant as they moved out.

When you’re getting a tenant into your property, you don’t want to come out in the red on the security deposit, and you can make it so that they’re able to be held accountable by doing all of these various different actions. For more, you can consult experts at point BrEEze real Estate to make sure everything stays fool proof at your end.