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Are Environmental Investigations Always Necessary When Buying a Property?

The short answer is no, the federal regulations do not obligate property buyers to conduct environmental investigations or in more correct terms, to perform a Phase I Environmental Site Assessment (ESA) in every case that there is a commercial real estate transaction. However, there’s more to this than a simple yes or no answer, which is why we will have to go deeper into this important topic. What Are Environmental Investigations or Environmental Site Assessments? A Phase I ESA is a report made for real estate that suspects potential for existing environmental contamination liabilities. These assessments are performed on both the land and the improvements made upon it. In most cases, these assessments are there to mitigate the environmental concern any side has when a real estate transaction is involved. The fear may be from the seller, the buyer, or even the bank. In rare cases, a Phase I ESA report will find problems that will create cause for another study – Phase II ESA that looks to perform chemical analysis of any hazardous substances that were found in Phase I. As these cases are rare, we are here to look only at Phase I ESA. When Are Phase I ESAs performed? As we previously mentioned, Phase I ESA is performed when there’s worry that an environmental risk might exist in connection to the property. Let’s take a look at the reasons which prompt the initiation of Phase I ESA: If any hazardous material such as gasoline, heating oil, fuel, etc. has or ......
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Real Estate Contracts and Purchase Agreements Terms Explained

Real estate contracts or purchase agreements contain legal terms like any other business agreement. As they are complicated, get them adequately explained to you.  If you’re new to the business or need to know what these terms mean because you’re buying a property, read on as this article will explain them thoroughly. What are Real Estate Contracts or Purchase Agreements? These contracts or agreements are valid, legal contracts that act as safeguards for everything related to the purchase to work in a way both parties (a seller and a buyer) have agreed. They serve as legal safeguards because, as is always the case, buying real estate involves a lot of money, and everyone, especially the buyer, needs to have assurances that everything will go according to plan and nothing will go wrong. Once a contract or agreement is signed, both parties have assured legal rights and individual responsibilities they need to follow and fulfill. However, the difficulty with these contracts is that they are often very complex and something that only a lawyer can understand. As it’s quite easy to sign a piece of paper, but it’s next to impossible to break a contract without serious repercussions, so it’s crucial for you to understand what you’re signing. That’s why you must ask about anything in the agreement that you don’t comprehend. Ask as many questions as you need until you discern the entire deal. Only then should you sign. Requirements for Validity For a real estate contract or purchase agreement to be valid, some ......
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What Happens to Your Commercial Property During a Downturn?

Benjamin Franklin once said that there are no guarantees in life other than death and taxes but I believe we can also add a downturn in the real estate cycle to that list. Having been in the real estate business for over three decades I’ve experienced first-hand multiple cycles in the market. During these phases I’ve noticed a trend, people who operate their properties with a strong management team typically forecast the market turning and prepare in advance.  The market you’re in will have a lot to do with how properties are effected, Los Angeles and a few other major metro areas typically only see a drop in value of a few percentage points while other areas can take a bigger hit. Know your market prior to making an investment and NEVER make an emotional investment that your numbers cannot support.  During a real estate market downturn, real estate investment businesses which are equipped financially have a better chance of surviving and avoiding bankruptcy. If you’re going to be a successful real estate investor, you need to learn to budget for downturns and difficult times. Here are some tips to help you succeed. 1.       Consider extending your loan term now-it’s easier to refinance with your peak cash flow. 2.       Conduct cost benefit analysis to keep your expenses in check. 3.       Have an emergency fund/reserves to cover unexpected expenses or clients that cannot meet their lease payments. 4.       If you own a commercial property with multiple leases coming up at the same time you ......
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Pros and Cons of Leasing a Fully Furnished Flat

Property owners usually face a dilemma – to lease a fully furnished suite or an unfurnished one? Which one is better? There’s no easy answer here. We’ve found that it’s best to consider the merits of one of the two – the fully furnished one. It’s always best to decide whether something is good or not by making a list of its good and bad sides. We will give you all the pros and cons of leasing a fully furnished residence, so you can get a clearer picture and decide if that’s the way you should go. The Price Some might think that the price is a negative for fully furnished apartments – as it’s expensive to equip an entire rental for your tenants. However, they are not looking at the bigger picture: fully furnished rooms will yield a higher rent making it a better long-term investment. Naturally, the price will differ from city to city, but the overall picture is clear – fully furnished always bring higher rent. Changing Tenants More Often Furnished units are usually rented by people who are only looking to stay somewhere temporarily. It usually means that your tenant turnover will be high. However, this is not necessarily the case. Some people are looking for long-term furnished rentals. Although, changing your tenants often is good for some landlords, as they get the chance to make upgrades to modify the price before getting a new tenant. Higher Deposits It depends on the state, but based on whether or not an apartment......
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The First 5 Steps To Become The Warren Buffet of Real Estate

maxresdefault.jpgIf you’re considering being the Warren Buffet of real estate you’re going to need a few profitable ideas.  Here’s 5 initial steps you need to consider to start you on your way to success. 1)      Have a Complete Understanding of Your Market Educate yourself by talking to as many real estate agents, lenders, title reps, and other investors. Keep track of market trends and what other investors are doing in the area, as they may impact your investment. Watch/listen to as many videos or podcasts that you can stand and read as many blog post as possible…NEVER stop doing this in your investing career. 2)      Choose The Asset Class You’re Most Comfortable With Many beginning investors like multifamily because at some point they’ve likely rented an apartment and that makes it somewhat more relatable. Don’t be afraid to take a look at office, retail, or light industrial investments.  Try to match your investment goals with the type of asset class you’re most comfortable with. Don’t Make Unnecessary Errors When Leasing Office Space 3)      Choose Your Strategy Are you going to buy and hold, flip or reposition? Choose the strategy that best aligns with your investment goals. Determine what your investment horizon is. Even if you plan on keeping the investment forever, you should still have an exit strategy.  4)      Funding Your Investment Know where your money is going to come from, investors (if you have investor friends and family or professionals that know the investment vehicle LLC or Corp), cash, or bank financing.......
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7 Common Code Violations that You Don't Want to Overlook

Maintaining your building can be difficult to say the least, here are 7 common items that are usually overlooked but can usually, be fixed in minutes. These tips may seem easy but they get overlooked often. 1) Missing & Broken Smoke Alarms and Carbon Monoxide Detectors - Every bedroom in the home is required to have a hard-wired smoke alarm in the room, and in the hallway outside of all sleeping areas.  Many municipalities also now require carbon monoxide detectors.  You not only need to make sure your smoke alarms are installed correctly, but also that they’re working properly.  One of the most common issues are dead batteries. New smoke and carbon monoxide detectors are tamper proof and come with a 10-year battery. 2) Hazardous Windows - Some homeowners look at windows as an added bonus, but fail to consider their condition, location, and type of glass. Your first order-of-business should be to replace windows near stairs and in bathrooms with tempered or safety-glazed glass. In fact, building codes require safety glass in new homes with windows that are near stairs and doorways, in showers, or pretty much any place where someone could slip and fall into the glass. Experts recommend that any single-pane windows be traded in for double-pane versions. Here are a few additional questions and tips to keep in mind. a) Do the frames have wind load labels?b) Is the glazing double or triple glazed to provide insulation and to resist impact? c) Are there visible fasteners to a......
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Top 5 Reasons To Invest In Rental Properties

1)      They say that more millionaires made their money through real estate then through any other means. There are of course many avenues for investing in real estate, but I’ve always preferred rental properties for various reasons: Real estate investing can be simple and straight forward to get started- The pathway to investing in real estate can be quite simple, you can start talking to experienced investors, read a few of the thousands of books available to learn the basics. Once you have the down payment saved and an understanding of property management (or hire a professional to help you manage) you can start. 2)      Ability to invest with leverage- By using leverage you can spread your investment wider and be more diversified.  Also, if interest rates are lower than what the current return on the property is, you will effectively be borrowing money for less than what you make on it, thus increasing your return. 3)      Utilizing your connections is a good investment- Utilizing your connections in the real estate industry is key to finding the right investments, in some other industries it might be considered insider trading. 4)      Stability and Predictability- The real estate market is one of the more stable and predictable investments you can make, do the proper due diligence and manage the assets with care and you will find that it will end up better than most other investments. 5)      Multiple ways to grow your investment- With a real estate investment you have multiple ways to help your money grow, rental r......
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Property Management Fundamentals: Prioritizing Goals

To be effective in any workplace, you need to prioritize your goals to get the most important things done immediately, but also be able to have sufficient time to accomplish every aspect of your job.  Once you get good at identifying where each task belongs on this list, you’ll be effective in prioritizing your work. 1. Emergencies This is a given, however emergencies are the things you absolutely are unable to ignore, but often impede on your day-to-day.  Whether it’s a plumbing issue in a unit, a tenant lock-out, or criminal activity in the neighborhood, you weren’t planning for it, but now it’s the most important part of the day.  When there isn’t an emergency going on, you should be focusing heavily on projects and organizational changes that can reduce the risk of emergencies occurring in the future.  If emergencies happen on a continual basis, then they’re getting too much in the way of your day-to-day work. 2. Procedural Procedural tasks are tasks that you do on a schedule.  You know ahead of time that they’re coming and they play a central role in the working of your company.  Procedural tasks for a property manager include billing, make-readies, minor work orders, and more.  These tasks are usually best accomplished first in the day if there aren’t any emergencies.  Once accomplished, you now have the rest of the day to work on projects and organizational changes that improve your business. 3. Projects In general, a project has a deadline.  Projects are tasks that can’t be a......
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12 Ways to Reduce Liability on a Multifamily Property

shutterstock_215430139The risks of lawsuit are great on a multifamily property.  There are a lot of ways that you can be held liable for other people’s mistakes.  It’s time to protect yourself.  There are a lot of easy ways to significantly reduce your liability when owning and managing an investment property.  Here are just some suggestions below: 1. Don’t Allow Pets on the Premises For some landlords, allowing pets on the premises is a risk worth taking to have happy tenants.  That said, injury and death has been known to occur due to pets being on the premises.  Although the pet is under the responsibility of the tenant, the landlord’s decision to allow the pets on the premises is considered part of the fault for the injury or death that occurs from an attack on another resident. 2. Require Renters Insurance of Tenants If a tenant’s guest injures themselves in the tenant’s unit, the tenant is held liable, but only as long as they are able to pay.  Let’s say that you have a tenant that can barely afford rent as it is, let alone a lawsuit.  Then somebody else is going to have to take up part of that bill.  That sometimes can be the landlord’s insurance.  If you require that your tenants have renters insurance, then they will be more likely to afford any accidental damages that happen to their guest. 3. Require that Vendors Have Insurance too There is high potential that a vendor working on your property may injure themselv......
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DIY Advice for Making Accessibility Home Modifications

Despite the disability, there’s no reason that your loved one shouldn’t be able to be safe, comfortable, and independent in their own home. In order for this to happen, however, it’s likely that you will need to make some strategic home modifications. If you’re the do-it-yourself type, you’ll likely want to tackle these home modifications without the help of professionals. Here are some tips for going the DIY route (and when you might need to contract a little help). Where to start It makes sense to start your home modifications with the easiest and the most beneficial to your disabled loved-one. Many home modifications are incredibly simple but have a major impact. You should prioritize these tasks. ● Improving lighting – it’s easier to get around and avoid injury in properly-lit spaces. This is a no-brainer. Making sure that every room has both overhead lighting and auxiliary lighting in the form of floor and table lamps are crucial. Consider LED lighting to reduce glare.● Getting rid of obstructions on floors and in pathways – make sure your loved one has a clear path to navigate all through the house. Tape down rugs and make sure they aren’t too tall. Rugs with large lips are tripping hazards.● Putting items in lower positions – this is especially important for those in wheelchairs. Make sure commonly-used items like the telephone, microwave, and other electronics are accessible. Next steps After you do all of the easy stuff, it’s time to move on to some projects that actually take a little bit of install time.......
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