SE MI commercial_real_estate Blog

SE MI commercial_real_estate Blog

America's Free-Falling Housing Markets

Matt Woolsey

Feb 14th, 2008

Residents of Sacramento, Calif., where home sale prices for November 2007 fell a startling 18.6% over the year before, are likely breathing a sigh of relief.

That's because homeowners there stand to benefit from the Bush administration's initiative, announced this week, aimed at helping homeowners facing foreclosure. Called "Project Lifeline," and assembled by six of the nation's largest financial institutions, which service almost half of the country's mortgages, the program allows qualified homeowners to suspend proceedings for 30 days while providing them with rewriting and refinancing assistance.

The lenders involved--JPMorgan Chase, Bank of America, Countrywide Financial, Citigroup, Washington Mutual and Wells Fargo--say they will contact homeowners who are 90 days or more overdue on mortgage payments and work with them on ways to make their mortgages more affordable.

While resetting rates on many of these mortgages are causing homeowners to default, falling prices, which lead to negative equity, are also playing a part.

Behind The Numbers

To assess which cities are hardest hit, we used data from Radar Logic, a New York-based real estate research firm. Radar Logic differs from the more familiar Case-Shiller index in that it tracks more markets (25), includes data on foreclosures, condos and new construction, and is a spot price, not a running average.

ZipRealty, a San Francisco-based real estate tracking firm that aggregates multiple listing service data, provided us with the number of homes on the market that have been relisted below their initial asking prices.

In Sacramento, 43.6% of homes on the market have been lowered in price. There are currently 36,097 homes on the market there, with very few potential buyers.

Just lagging Sacramento is Las Vegas, where between November 2006 and November 2007, prices plunged 17.2%. What's more, from December 2006 to December 2007, the number of homes on the market surged by 30%, further stalling sales, and likely leading to more price depreciation down the road.

A city you might have expected to see higher on the list-- Detroit--finished ninth. Simply put, there just isn't much further for the city's housing prices to fall; in percentage terms, it doesn't look as depressed as other (once over-inflated) markets. In some areas of Motor City, banks are literally giving homes away if the buyer agrees to bring it up to code.

Florida nabbed three spots on the list of 10 fastest-falling markets, with Tampa down 11.7%, Miami depressed by 10.6% and Jacksonville in an 8.7% decline from last year.

The one sign of good news in these markets is that construction has all but stopped, and sellers are starting to get realistic about cutting prices.

For full-year 2007, almost every market experienced an inventory spike, but in the last month of the year, according to ZipRealty's numbers, inventories started to decline nationwide. Even in Sacramento and Las Vegas, inventory numbers have started to fall, if only marginally.

Guide to Reducing Your Business Property Taxes Strategies to help you stop overpaying and start saving By Gary Stern

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Many complex issues can affect your business property taxes. If you're like most small business owners, you probably don't have the manpower or the expertise to keep track of all those issues. As a result, you could be overpaying on your business property taxes — to the tune of thousands of dollars per year. However, there are several simple steps you can take to reduce your property tax payments. One of the first steps in minimizing your tax obligation is scheduling an assessment of your property. When you do, keep the following in mind:

1. Even if commercial property values in the local market are rising, taxes at every business property are based on an individual assessment and history and may not increase as much as other adjacent businesses.
2. After you receive the new property assessment, check with an assessor to determine if the market value compares accurately with the assessment.
3. Another option is to ask your personal banker to see if he or she can appraise your property and compare that to the local tax collector's assessment.
4. Local tax collectors have been known to hike commercial property taxes beyond what the market dictates, so there is precedent for challenging assessments.

Action Steps
The best contacts and resources to help you get it done

Assess your assessment

Determine whether the assessed value of your business property fits the current market conditions.

I recommend: AVTI, a nationwide property tax consulting firm, offers valuation analysis and assessment tracking among its many services. The American Society ofAppraisers has a searchable database that will allow you to locate an appraiser in your area.

Compare your assessment to neighbors

Find out what other businesses in your area are paying to see if your taxes are in line with theirs. You may have grounds for an appeal if you're paying more than your business neighbors.

I recommend: For a small fee, Intelius gives you the ability to look up the property tax information for any address in the U.S.

File appeals

Call your local tax office to ascertain exactly how to file an appeal. Some cities have 311 numbers that can direct you to the right office.

I recommend: The National Tax Resource Group offers professional appeal services for all types of commercial real estate nationwide. These services are handled through qualified consultants in your local area.

File appeals for business personal property

Sometimes, you can reduce business property taxes through a business personal property tax appeal. This involves the valuation of equipment, furniture, computers and inventory.

I recommend: BurrWolf.com offers a number of property tax reduction services, including business personal property appeals.

Analyze additional factors

Several things can affect your property taxes, such as income and expense statements, market capitalization rates, replacement costs, costs of environmental cleanup and more.

I recommend: CBiz.com, a national property tax solutions firm, analyzes a wide variety of elements that may result in a reduction in taxes.

Consider a cost-segregation analysis

Cost segregation studies identify various components of your building that may be eligible for accelerated tax depreciation. By reclassifying certain assets in this way, you may see significant savings in your property tax obligations.

I recommend: The Griffin Valuation Group are experts in cost-segregation analysis and property tax consulting and aim to lower business property tax burdens.

Use software

Using a property tax software program can help you root out possible reductions and facilitate the appeal process.

I recommend: With ePropertyTax Office, you can track appeals, process assessments and analyze valuations.

Ensure proper zoning

Tax rates are linked to the various zoning classifications so it's a good idea to contact your local state tax office to ascertain if your zoning classification is accurate.

I recommend: Click on your state at TaxSites.com to make sure your business is classified correctly.

Tips & Tactics
Helpful advice for making the most of this Guide

• When you receive your annual commercial tax assessment, if you question it or are going to file an appeal, don't delay. In some states, you have only 60 to 90 days to file or lose the right to appeal.
• Remember that several factors can influence a change in commercial property taxes including a change of ownership or new construction.
• Ascertain whether your business is located in a designated empowerment or technology zone, which can reduce commercial taxes.

The official source of Reducing Your Business Property Taxes is Business.com

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APPEALING PROPERTY TAXES

"As real estate values rise, so do property taxes. The good news is that property taxes are the one area where fighting city hall usually pays off. Among those that are appealed, a whopping 75 percent result in a reduction of taxes." Money Magazine-Jan. 05

"The biggest thing that any individual property owner can do is make sure they aren't overassessed. The errors that take place in assessing properties are rampant," there are often tremendous disparities, for no apparent reason." MSN Money-July 05

"The biggest thing that any individual property owner can do is make sure they aren't overassessed. The errors that take place in assessing properties are rampant," there are often tremendous disparities, for no apparent reason." MSN Money-July 05

To Pay Less Property Taxes: Hire a Soldier of Fortune

By SYDNEY P. FREEDBERG and CONNIE HUMBURG, St Petersburg Times Staff Writers

Michael Hagen won at least $36.7-million in reduced property assessments in Lee County last year, trimming 16 tax bills by $588,000. Gary Appel haggled $35.8-million off the value of the upscale Loews Hotel on Miami Beach, saving $715,000 in taxes. Gregory Orcutt got $38.4-million lopped off the property assessment of GL Homes in Tampa. Savings for the big developer: $844,000.

Call them tax consultants, agents, brokers or representatives (tax reps for short). By whatever name, they share a goal: shave their clients’ property assessments - and city and county property taxes - as much as possible.

Tax reps can be mom-and-pop accounting firms with a post office box. They can be blue-chip lawyers with political clout. Or they can be promoters who hawk their tax-reduction services on the Internet.

At public hearings and - more often - behind the scenes, these hired guns dicker with county property appraisers in an appeals process marked by back scratching and slack oversight.

Florida relies heavily on property taxes for schools, police and fire protection, roads and other vital services.

Yet no state agency oversees tax reps, who number in the hundreds, or tracks how much they manage to cut each year from property tax rolls.

“It’s a game and it can be extremely lucrative,” said Tim Wilmath, director of valuation in the Hillsborough County Property Appraiser’s Office. He was once a tax rep himself.

Some reps make up to 50 percent of any tax savings they achieve. Others charge up to $450 an hour. Some make a lot of money. Others don’t.

Because the big money is in high-end commercial property, many tax reps are reluctant to take on single-family homes unless they’re worth at least $1-million. Many less affluent homeowners don’t need a tax rep anyway; they have “Save Our Homes,” which caps the amount their assessment can rise from year to year.

To help gauge the size and influence of the tax rep industry, the Times reviewed records of some property assessments that were lowered on both real estate and business equipment in 19 of Florida’s 67 counties last year. Comprehensive data was available for only six of those counties. Many others don’t track tax reps or provided information in outdated forms that made it hard to analyze. The Times also found glitches in the computer data provided by some counties.

While limited, the Times review found:

-Many of Florida’s largest companies used tax reps. In just two counties, Home Depot lowered its bills last year by $134,000, real estate conglomerate CNL by $303,000 and Walgreens, by $398,000. Sprint Nextel got $183,000 in reductions in three counties and Publix, $414,000 in four.

-The top five tax rep firms in the Times review got at least $1.8-billion in value chopped off property rolls in seven counties last year. That translated to about $36.1-million in tax cuts. The top five are Property Tax Consultants Ltd., a partnership based in Hallandale; Berman Rennert Vogel & Mandler, a Miami firm specializing in real estate law; the firm run by Gary Appel, a lawyer and real estate broker in Miami; Marvin F. Poer & Co., a national property tax specialist based in Dallas; and the property tax division of Deloitte & Touche, the giant accounting firm.

-If reps were baseball players, their batting averages would get many of them sent down to the minors. Some larger tax rep firms obtained tax breaks in fewer than one in five formal assessment appeals.

-Miami-Dade, Florida’s most populous county, had the most assessment reductions, by far. That’s where Macy’s, McDonald’s and building products titan Rinker Materials each reduced their tax bills by more than $600,000. That’s also where the family business of former Sen. Bob Graham used five reps to save $294,000 and the enterprises of singer Gloria Estefan and her music producer husband, Emilio, used one to save $8,000.

-Among celebrities who pared their taxes with the help of reps: former Miami Heat center Rony Seikaly ($22,000 on a $7.7-million house in Miami Beach); talk show host Jerry Springer ($37,000 savings on his $3.6-million home in Sarasota); billionaire businessman H. Wayne Huizenga ($59,000 on his $12.5-million home in Fort Lauderdale); and Kay O’Rourke, daughter of a founder of Winn-Dixie Stores ($174,000 on a ranch in northwest Hillsborough County).

For the little guy

In interviews, tax reps play down their big business ties, saying their goal is to keep all taxpayers from overpaying. Some say the appeals process is tilted against them. Others portray themselves as tax rebels fighting for the little guy against an oppressive government.

“What’s more fundamental than ‘no taxation without representation’?” said Appel, 45.

Tax reps say they understand the state’s arcane property tax procedures. By noodling through technical details, they say they often find faulty appraisals - from erroneous comparable sales to incorrect building measurements. Or they take advantage of loopholes, such as farmland deductions that can dramatically cut property owners’ taxes.

For the Loews Hotel, part of the corporate empire built by the billionaire Tisch family, Appel supplied information about the economics of the building: its income, occupancy rates and value of comparable hotels.

His arguments persuaded a hearing examiner to slash the Loews assessment, but it still paid about $4.7-million in real estate taxes, $2-million more than in 2005.

Appel won’t say how much he was paid on that deal or any other. He saved hundreds of property owners more than $4.5-million in four counties last year.

In June, some of Appel’s clients on Miami Beach’s ultra-expensive Fisher Island drew criticism from a union trying to organize the island’s low-wage workers. The union issued a scathing report showing how some workers’ property assessments increased more quickly between 2002 and 2005 than some Fisher Island owners.”The rich who can afford the reps get the breaks. The working poor pay more of the taxes,” said Rick Smith, a union representative.

Cows and horses

The industry got its start in the 1920s, when oil and gas companies complained that they were paying more than their fair share of taxes. Some property tax managers at oil companies left to start their own consulting businesses. Texas soon became the epicenter of the tax rep world.

As Florida’s property taxes rose, the industry gained a foothold here in the late 1970s. Some of the new firms were staffed with former property appraisers’ employees who knew just what it took to keep tax bills low.

Among the first to switch sides was Al Blake, Miami-Dade’s property appraiser in 1970-1979.

“I was at the point I was working for 50 cents on the dollar,” said Blake, 81. He denies any inside edge. In fact, he says, some of his former colleagues “resented it greatly” that he changed sides and made it even tougher on him.

Then there’s Michael Hagen, 48, a Fort Myers lawyer and real estate broker. For nine years, he was counsel for the Lee County Property Appraiser’s Office. He fought against property owners who abused agricultural tax breaks by planting a few palm trees or renting a few horses or cows in an effort to get or preserve an agricultural designation for their land, which means much lower taxes.

In 2003, Hagen left the appraiser’s office. He kept fighting, this time for the landowners and for the tax breaks.

One afternoon in August, Hagen appealed for agricultural exemptions for six property owners, including Premier Island Group, a real estate investment firm. He told special magistrate Lori L. Rutland that Premier qualified for an exemption (worth about $90,000) because it operated a horse breeding business on 15 acres.

The land, which is zoned for commercial development, had been leased for $10 to a cattleman, Steven Game. Game testified that he kept five horses on the property.

But the appraiser’s office portrayed it as a rent-a-horse facade. And the hearing examiner rejected the exemption, noting the property had no stalls or barns for horse breeding.

That setback aside, Hagen and his firm, TaxCuts1, are doing very well. At formal hearings in Lee County last year, he saved at least $588,000 for property owners like Alico Industrial Park in South Fort Myers and DiamondHead Beach Resort in Fort Myers Beach.

While county appraisers say they give no special treatment to former-employees-turned-tax reps, that doesn’t stop the reps from trying to gain an advantage. Some contribute to political campaigns. Some join trade groups. Some lobby for lower taxes or rules making it easier to win reduced assessments.

Yet only a few tax reps break into the highest income bracket.

“You can make a good living, but I’m not going to retire next year,” said Gary Strong, 45, who runs the one-man Tampa office of Fellers, Schewe, Scott & Roberts.

Last year, Strong won at least $355,000 in tax savings for clients like Palm Harbor’s Lansbrook Village, Tampa Palms Shopping Plaza and Prudential Insurance Co. in Miami. He got reduced assessments for almost every appeal petition that he filed in six counties.

That’s in stark contrast to many reps, who lose far more appeals than they win.

In fact, according to the Times review, some reps appear to do no better in formal hearings than property owners who appeal on their own.

The spaghetti strategy

Tim Wilmath, Hillsborough County’s valuation director, was earning between $80,000 and $90,000 a year from the county when he crossed over to what he jokingly calls the “dark side” in 2000. He was wooed to Deloitte by the prospect of making $300,000 eventually. But Wilmath was back at his old job within a year.

“The problem I had with the work is that you basically had to exaggerate to achieve reductions,” said Wilmath, who now earns $137,000. “Money isn’t everything.”

Because many tax reps need just a few big wins a year to earn a decent living, they go for volume. Some recruit clients by sending out mass mailings.

“We remain committed to smart, aggressive property tax advocacy to help ensure that you do not pay one penny more than your fair share of taxes,” says a letter sent in August by lawyer Jeffrey Mandler.

In seven counties last year, Mandler’s law firm, Berman Rennert Vogel & Mandler, sliced more than $11-million off tax bills of clients like Apartment Investment and Management Co., the nation’s largest owner and operator of apartment communities.

After signing up clients in droves, some reps swamp appraisers’ offices with appeals petitions that can be frivolous. In what some property appraisers call the “spaghetti strategy,” some reps throw a potful against the wall and hope that some of it sticks. Other times, they withdraw petitions at the last minute or fail to show up for hearings. The Times found several instances where more than one rep filed appeals last year for the same property.

“Have you heard of the term ambulance chaser?” Roger Alejo of the Lee County Property Appraiser’s Office asked. “We’re being swamped with sillier and sillier arguments.”

A little horse trading

Like some lawyers who appeal assessments, Gregory Orcutt doesn’t consider himself a tax rep. Founder of a now-defunct law firm that handled work for the Hillsborough Property Appraiser’s Office, Orcutt obtained one of that county’s largest tax savings last year: about $844,000 for builder GL Homes.

At the appeals hearing, Orcutt said the developer was growing Bahia grass on more than 1,000 acres, entitling it to keep an agricultural designation. The Property Appraiser’s Office argued that only a fraction of the site, which is zoned for development, was a sod farm. Special magistrate Catherine Teti sided with Orcutt.

“It isn’t anything that was shocking or out of the ordinary,” said Orcutt, 58, declining to comment on how much he was paid. GL Homes “went through the proper procedures. … That’s the way the system is supposed to work.”

Orcutt’s case was unusual because it was decided in the open before a special hearing examiner. Most cases are settled at “informal conferences” or “off the record” sessions between tax reps and county property appraisers.

Reps write, call or sail in and out of appraisers’ offices, and in some counties, they lobby the same tiny group of employees who tend to value the same properties year after year.

They negotiate and sometimes do a little horse trading. “They try to get reductions on two or three of their petitions in exchange for withdrawing the rest,” said Wilmath, adding that his office rejects such deals. If the staff makes a mistake, they fix it, regardless of who brings it to their attention, he says.

In 1990, a statewide grand jury criticized county appraisers for changing assessments, without documenting the reasons, when property owners complain at informal conferences.

Today, the paper trail for such “counter changes” is still thin. In Pinellas, for example, the Property Appraiser’s Office does not keep records of meetings between staff members and tax reps. A reporter was told to dig through stacks of pink papers in a storage box to determine why a particular decision was made.

Lax oversight goes beyond the informal conferences. Florida doesn’t require tax reps to register or report lobbying activities or expenses. The state has no “revolving door” or “cooling off” rules that bar former employees in property appraisers’ offices from contact with ex-colleagues for one or two years after leaving public service.

Ken Muller, a real estate broker in Parkland, claims on his Web site that he slashed more than $100-million from property assessments - enough to retire at 42.

Times researcher Carolyn Edds contributed to this report.

Tags: Florida Property Tax Reform, Florida property taxes, Florida real estate taxes

Foreclosures hit like a hurricane

By Times Wires

Published December 1, 2007

---

WASHINGTON

The home foreclosure crisis slamming into the nation's neighborhoods is having the effect of about "one Hurricane Katrina per month," James K. Galbraith, an economist with the University of Texas at Austin, said Friday at a forum examining the credit crisis. In the immediate aftermath of Hurricane Katrina in the fall of 2005, nearly 275,000 Gulf Coast residents were forced to move into group shelters, according to the Federal Emergency Management Agency. This October, lenders reported 224,451 foreclosure filings to drive people from their homes, according to RealtyTrac Inc., a housing data firm based in Irvine, Calif.

INVESTOR TOOL SITES

Property Taxes
Get Sales History, Current Value
Lot Size, Property Details & More.
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GOVERNMENT FINANCING & TOOLS FOR HUD FORECLOSURES & OTHER PROPERTY
http://www.fha-home-loans.com/

FORECLOSURE TOOLS
Topics include selling your own home, buying foreclosure properties, financing real estate, how to guides, and more.
http://www.bargain.com/homes/articles/


Real Estate Investing Articles
Real estate investors can browse hundreds of free real estate investing articles to increase your investment education. Topics include creative real estate, wholesaling, 1031 exchanges, asset protection, commercial real estate, hard money lenders, IRA investing, landlording, lease options, mobile homes, no money down, owner financing, rehabbing, tax liens, and more.
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Zillow - Entertaining but near Zilch value

New Tool Highlight:
http://www.zillow.com

Usefulness:
This site has quick mapping features, shows a very delayed on-market & solds info & some details from the assessors card: year built, etc.

Caution:
I found the assessor info significantly inaccurate: wrong # of baths, wrong s/f, etc.
Sales include mortgage company buy backs & loan balance, not a real sale.
"Values" show the bouncing ball the from the assessor office - no where close to realistic.

Bottom line:
After browsing the site, contact us with your info if you need

• a property tax protest
• a market analysis
• a buyer agent with current MLS data to represent you in purchase negotiations

ANNUAL HOMEOWNERS POLICY REVIEW

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We will review your policy w/ you before you go to your insurance agent.

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Rent or Buy ?
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More on Tax Free Exchanges !

http://www.1031exchangelowdown.com

1031 Exchange Deadlines

1031 Exchange Deadlines

There are two deadlines associated with a 1031 exchange.

• The 45-day deadline: In a delayed 1031 exchange, you have 45 days in which to identify the replacement property, from the day you sell your relinquished property. Once you identify the property, you have to submit the Identification of Replacement Property form, which is a written announcement of your choice, to your qualified intermediary or accommodator for the exchange. You can change the replacement property within the 45-day period if you so desire.
• The 180-day deadline: Once you transfer title of your relinquished property, you have 180 days to close on the sale. There is a caveat to this deadline though. If your Federal tax returns are due for the year in which you sold the relinquished property before the 180 days are up, you will have to complete all formalities associated with the purchase before your tax due date. This period includes extensions for time to file. In other words, unless you complete the sale of your relinquished property before October 17 of any year, you will have less than 180 days to finalize the purchase of your replacement property.

No extensions on account of weekends and holidays are allowed for either deadline.

So you want to own a rental property

Here's an eye-opening statistic: In 2005, roughly 28 percent of all homes purchased were as investment property, according to the National Association of Realtors. That's up about 23 percent from 2004. Equally surprising, about half of rental-property owners had two or more investment homes.

What do these people see in being a landlord? Extra income and excellent tax deductions, for starters, and possible appreciation of the investment. But there are pitfalls as well. Inevitably, there will be times when apartments are vacant. Property owners must be prepared to pay for all expenses themselves during such periods, which could last a few months or more. Unexpected repairs, possibly costing thousands of dollars, are another downside. And not everybody is cut out for the landlord-tenant relationship.

These are the primary things to consider:


Find out where renters want to live

Location, location, location takes on added economic urgency when purchasing a rental property. Ask your real-estate agent to show you properties that have an established rental track record going back two or three years, during which vacancies were limited to no more than three months at a time.

The best rental properties usually are in neighborhoods where there are a lot of jobs or sufficient public transportation to take people to work, shopping areas, or entertainment venues. Ideal rental communities are often populated by either Gen X-ers just starting out in their careers or senior citizens, who prefer to avoid the effort and expense of owning a home. In addition, look for neighborhoods that are on the rise, particularly where the town is putting money into roads and recreational improvements and where people are taking care of their property by doing basic things like mowing the lawn, keeping the streets clean, and maintaining the exterior of their home.

Home ownership is higher than 70 percent--a record--and finding areas with good, trustworthy tenants has become much more difficult."


Do the math

Before you buy, figure out whether the rents will cover your expenses and leave room for profit. To determine how much yearly rental income you are likely to receive, ask real-estate agents for the going rates and scan the classifieds for comparable properties in the same neighborhood. Don't forget to take into account the possibility that the property may be vacant for a month or so. Then subtract annual mortgage payments and operating expenses--insurance, utilities, projected repairs and maintenance, and landscaping. Also figure out what you can deduct, but more about that later. Ideally, income tops outlays, and what's left is called cash flow. If outlays top income, producing negative cash flow, the property is too expensive. Either negotiate a lower price or continue hunting.

Negative cash flow doesn't always bother investors, particularly if the property is in an area that has a high potential for appreciation. That's because any shortfall could be more than made up for by the increase in the price of the property when it is sold. Or so the theory goes. Also, you might be able to deduct your losses. But remember that this can be a risky strategy: Long-term appreciation is no guarantee.

In general, the best values will be found in multiunit housing, so-called triplexes or fourplexes. Often these properties cost about the same or less than one- or two-family homes and "offer economy of scale," says Norm Bour, a real-estate agent who co-hosts "The Real Estate and Finance Hour," a nationally syndicated radio show based in Southern California. "If you landscape or paint the house, for instance, you are doing it for four renters, not one or two. And if one apartment is vacant, you lose 25 percent of your income, not 50 or 100 percent." But the economies of scale work both ways. The building furnace is probably bigger than your backyard and costlier to fix than your kid's teeth. So keep in mind that some improvements and unexpected repairs can be more costly for larger properties.


Assess the tax consequences

Anything left over after expenses is taxed as ordinary income. You can depreciate the cost of residential rental property, but not the land it sits on, over 27.5 years--even if it is increasing in value. Suppose you paid $400,000 for a triplex on a sliver of property assessed at $50,000. Depreciation would come to nearly $13,000 a year, or, put another way, you could have that much rental income without paying taxes on it.

Losses from rental property can also be advantageous, but only for some people. If your adjusted gross income (essentially wages, interest, and capital gains) is less than $100,000, up to $25,000 of the shortfall from rental real estate is deductible each year. For income between $100,000 and $150,000, the deduction is gradually phased out.

Choose tenants carefully

Neophyte landlords often fail to conduct a thorough background check on prospective renters, says Vito Simone, a broker at Simone Real Estate in Baltimore. Such a lapse can be costly if the tenant stops paying rent or damages the property. Don't approve tenants until you have checked their credit and criminal histories and talked to references and employers. The lease should lay out rules about pets, parties, rent due dates, and late fees. (You can find boilerplate leases and other landlord resources for purchase on the Web at www.lawdepot.com and at www.landlord411.com.) If tenants already occupy the property when you buy, you will have to honor their lease until it expires.

You may not be thrilled about dealing with tenant problems: responding to complaints, pestering people for the rent check, and enforcing rules like making sure a tenant's permanent "guest" leaves. If so, consider hiring a reputable management firm. Such companies charge 7 to 10 percent of the monthly rent, but their value in easing landlord pain could more than make up for the cost.

consumerreports.org

Tax
Consequences of Flipping Real Estate - If you're not careful,
you'll be making big profits for the IRS.

Should
You Remodel or Move? - You can fix it up or you can buy a
new house. Here are some things to think about before you decide.

Like
Kind Exchange on Rental/Vacation Home - Using a rental property
as a part-time vacation home generally takes the property outside
of the like-kind exchange realm, says CPA George Saenz.

Selling
Your House in a Down Market - 5 Tips - It's official. It's a buyer's
market out there for home sellers. But homes are still selling, mostly
by people who know the landscape has changed.

Lowballing
in a Cooling Housing Market - Current market conditions will spur
home sellers to consider lower offers, but don't expect them to panic,
says Real Estate Adviser Steve McLinden.

Be
Patient - Home Buyers Will Return - The market has chilled in
many areas of the country but the current construction slowdown will
create new demand down the road, says Steve McLinden.

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