Real Estate Information Archive

Blog

Displaying blog entries 1-7 of 7

Learn about Greener Living

by Preservation Properties

Newtonville Village Day

Saturday, September 29, 10am – 5pm & 6-10pm
Walnut Street, Newtonville

Please visit us at our booth on Saturday the 29th!  We will be giving out lots of information pertaining to sustainable building materials, local green companies and products that will help you live a more eco-friendly life.

 

If you truly have equity and can't make the payments you want to sell as quickly as possible.  Contact 1 or 2 real estate agents who are familiar with your neighborhood and have a conversation with them about how much your home can sell for.  They should be able to tell you what your chances of success are, and that will be dependent upon how well homes are selling in your area and price range, condition of your home, specific location, and other criteria.  My point is that you want to hear from the agent the specific data that supports their estimate of your selling price.

Only after you have that probably price will you know how much equity you actually have.  Equity on paper isn't much help - you need to know how many dollars you can pull out.

If you can't sell you are going to be hard pressed to obtain the equity, if there is any.  Once you list the home for sale there is generally a 6 month waiting period AFTER you take the home back off the market before a lender will consider giving you cash out on a refinance loan.

If you have a lot of equity (say 40% or more) you may find a private investor to loan you the money but the cost would be prohibitive.  You need to focus on getting the home sold.

Home Sweet Tax Shelter

by Jessica Hunt with Preservation Properties

Tax Tips

by Jessica Hunt with Preservation Properties

As we enter the new year I wanted to remind you of how lenders are considering self employed income and rental income.  Please use this information as a rule of thumb not an underwriting decision – only income reported on tax returns can be considered – the days of “stated income” are over!
 
If you are self employed as a Sole Proprietor your income will be taken from your filed and signed federal tax return 1040 Schedule C net income after your business expenses have been deducted.  You must have been in the same industry for at least 2 years and normally your income from the last 2 years tax returns will be averaged.
 
If you are self employed as a S Corporation your income will be taken from your filed and signed tax return 1040’s with all Schedules.  W2’s will be matched to 1040 income.  K-1 forms will be matched to corporations listed on page 2 of Schedule E.  Income will be W2 income + non-passive  income less non-passive loss on Schedule E.  You must have been in the same industry for at least 2 years and normally your income from the last 2 years tax returns will be averaged.
 
If you are self employed as a Corporation your income will be taken from your filed and signed tax return 1040’s with all Schedules.  W2’s will be matched to 1040 income.  No K-1 pass through.  Corporate Tax Returns will likely be required.  Existence of the business will be verified via the Secretary of State’s Database.  You must have been in the same industry for at least 2 years and normally your income from the last 2 years tax returns will be averaged.
 
If you are self employed as a Partnership your income will be taken from your filed and signed tax return 1040’s with all Schedules.  K-1 forms will be matched to corporations listed on page 2 of Schedule E.  Income is reported on page 2 of Schedule E.  You must have been in the same industry for at least 2 years and normally your income from the last 2 years tax returns will be averaged.
 
Rental Income:  Income as reported on filed and signed  tax return 1040’s with all Schedules.  Income is reported on page 1 of Schedule E.  Income calculation is gross rent less gross expenses.  There may be a required time of owning the property.

Water Saving Trends at GreenBuild

by Preservation Properties

This article is brought to you by our friends over at ReNest.

When green building expert, Alex Wilson, was getting ready to announce his publication's favorite products of the year, he emphasized his concern that water shortages are looming. When we look at green building and products, we need to not only be aware of energy efficiency, but also water efficiency. Next to petroleum, water is soon to be one of our scarce natural resources and should be carefully preserved as such. 

Low Flow Plumbing Fixtures
According WaterSense, flow rates lavatory faucets must be at 1.5 gallons per minute, showerheads at 2.0 gpm and toilets at 1.28 gallons per flush — many plumbing fixture companies are getting ahead of the game, with super low flow fixtures and touch free technology, which not only reduces water use, it also improves hygiene.

Delta: Over fifty-percent of Delta's faucets and showerhead collection is WaterSense certified, many of which have added features that further improve their water-saving performance. Their H2Okinetic showerhead flows at 1.5gpm while providing the feel of a 2.5gpm flow; Touch2O Technology turns faucets on and off with a simple tap, which reduces unnecessary water flow and minimizes contact with bacteria for a more hygenic experience; Multi-Flow is a toggle option on some kitchen faucets that increases the stream from the standard 1.5gpm to a higher flow when efficiency is not a concern (for example when filling pots, vases or other large containers); the Proximity Sensing Technology forms a 4" field around the body of a faucet for hands-free faucet use.
Caroma: Most dual flush toilets use 0.8gpf for the light flush, and 1.6gpf for the heavy flush, but Caroma's Smart Series of high efficiency toilets (HET) uses only 1.28gpf for the heavy, which averages at around 0.9gpf for total use of the toilets — half the industry standard of 1.6gpf! We of course still love their Profile Smart series — it has an integrated sink at the top of the toilet tank, which drains water from the sink into the tank to be used for the next flush.
Niagra Conservation: We're sure that the couple of times we've already mentioned Niagra's Stealth Toilet won't be the last. This toilet is the most efficient, and lowest water using toilet on the market at 0.8 gallons per flush, which is less than the required maximum of 1.6gpf! Find out how it works and more about the groundbreaking technology at Stealth's website.


Rainwater Reuse
In addition to using less potable water in the home, capturing rainwater is continuing to gain momentum. The majority of products we saw were geared towards rainwater storage, however there were also a few filtration systems for graywater reuse, which unfortunately is still not permitted in all municipalities.

Jay R Smith Mfg. Co.: Jay R Smith has a huge catalog and manufacturers a wide range of drainage and rainwater harvesting systems. At GreenBuild they were demonstrating their commercial and residential rainwater harvesting system, which is set up to be used for storage and potential graywater use. Their system collects rainwater, filters it, and then stores it in an underground tank for landscape and non-potable uses.
Rainwater Pillow: As we featured in our favorite products post, the Rainwater Pillow is a super simple rainwater storage system. Rather than storing rainwater in rigid, inflexible tanks, the Rainwater Pillow is esstentially like a large flexible bladder. The bag can hold between 1,000 to 200,000 gallons of rainwater and can be stored pretty much anywhere you can fit it.


More GreenBuild 2010:

(Images clockwise starting from left: Delta Touch2O; Stealth Toilet; Jay R Smith Mfg. Co.; Delta H2Okinetic)

Landlords, what repairs are too silly?

by Preservation Properties

Below, check out this great article that was just posted by Boston.com:

Every landlord needs to find his/her own balance. If the rent is competitive and the apartment is nice, a landlord can choose from a larger pool of tenants. That increases the odds of getting a tenant who reliably pays the rent, takes care of the place, and is not high-maintenance. Slumlords get slummy tenants and no one is happy. But how many tenant requests is a landlord required to do?

P. asked me:

What to do when tenant wants a repair when you think the repair is silly (one loose tile in 100 sq ft of tile)?
What happens when appliances fail in the rental (frig, dish washer etc)?

Like all things in landlord-tenant relationships, there should be room for discretion and negotiation. There is a lot of variation in expectation based on whether the rental is expensive for its type, competitive, or cheap.

The tenant is not being high-maintenance if the tenant is paying through the nose. If the apartment is top-of-the-line and is drawing a top-of-the-line rental charge, then that tile better be fixed. You, as a landlord, are collecting rent on luxury and need to provide luxury.

For a place with a moderate rental fee, if the kitchen looks fine -- except if you get on your hands and knees and stare at the floor – that’s different. It is reasonable to expect moderate rent-payers to accept imperfection until you get around to making cosmetic changes. If it really bothers them, you might do it to feel on the side of the angels. Do beware of the unintended consequences: once you do a silly repair, you may open the door for more silly repair requests.

As for the appliances. By law, an apartment must have a working stove. Dishwashers are optional. Refrigerators, washers and dryers do not need to be provided by the landlord in Massachusetts.

If an apartment is equipped with an appliance when it is rented, then the landlord needs to keep a working appliance in the unit. The tenants are used to it and should not have to do without it. So, if the apartment has a dishwasher and it craps out, get another one. That’s the general rule.
I have one exception in mind: If your apartment has a garbage disposal, I think you should take it out the next time your unit turns over. Those things constantly need to be babied and are just not worth the bother.

Do you have different advice for P.? Landlords, have you done silly repairs and lived to regret it? Tenants, do you think P. is being unfair to say a broken tile is silly?

5 Need to Knows For Novice Landlords

by Preservation Properties

Every once in awhile I get some really awesome information from InmanNews.com and this acticle is from them.  Really interesting information for landlords or anyone interested in becoming a landlord.

It's an occasionally awkward fact of life in this American economy: Scores of people who never have been landlords suddenly find themselves in the position of collecting rent checks every month because they can't sell their homes and are installing tenants instead.

Then there are the owners of vacation properties who have turned their getaways into sources of income by renting them out.

The situation is sometimes awkward when both of the above categories of property owners find themselves running a business and struggling with the bookkeeping skills and the knowledge of tax-law basics the Internal Revenue Service expects, according to an expert on small-business tax considerations.

"Many novices fail to realize that when you put a place up for rent, you're in a business," according to Abe Schneier, senior manager in taxation with the American Institute of Certified Public Accountants in Washington, D.C. "You have to have a set of books and records that properly reflect your income and your expenses."

Five things for novice landlords to know about keeping their books in a way that will satisfy the IRS:

1. You really do have to keep books, period.

"You can't keep it on a scribble sheet," Schneier said. "When the IRS agent walks through the door, he's going to throw that back at you. It's not his job to do your bookkeeping."

But it doesn't have to be complicated, he said. "It can be as simple as using (an online spreadsheet system) or knowing how to keep a ledger sheet."

Whatever the system, it needs to be exactly that -- a system -- that readily separates income and expenses and clearly identifies and details entries in both categories. Plus, landlords have to retain and organize their receipts.

2. Deductibility can be a nifty thing -- maintenance, repairs and improvements that wouldn't be of any benefit (at least immediately) to the average homeowner can be write-offs for landlords, he said.

Examples of expenses incurred on properties that landlords can deduct from their income include: advertising, cleaning and maintenance, mortgage interest, insurance premiums, legal fees, utilities, property taxes and other costs.

The IRS also allows landlords to claim depreciation on their properties -- that is, that they "wear out" over the years, just as a manufacturer's equipment becomes used or is made obsolete over time. This can be a valuable deduction, but rules are complex. The government explains them at IRS.gov and in Publication 946, "How to Depreciate Property."

3. Landlords also can deduct the costs of traveling to their properties to collect rent or to perform work on them -- but only to a point, Schneier said.

"You have to be reasonable," Schneier said. "If it's a question of driving 50 miles to collect the rent, that's one thing. But if it's a condo in Hawaii and you're going to write off airfare and expenses to visit your vacation rental in Hawaii, you can run into some trouble.

"You have to show that the visit was substantially business-related," he said, with emphasis on "substantially."

The landlord of such a property must be prepared to justify to the IRS that it was important to be there for maintenance or repairs. The rule of thumb he advises landlords to observe is that at least 50 percent of the time spent visiting that property was devoted to its business needs, such as remodeling a bathroom or replacing furnishings, he said.

"You have to be able to show something -- not just a receipt from Home Depot for a couple of light bulbs," he said.

(If you own a vacation home and rent it out most of the time, the IRS allows you to vacation there up to 14 days a year and still considers it a business, he said.)

4. Over the long run, landlords should be careful to differentiate between maintenance and improvements, he said.

That's because when it comes time to sell the rental property, genuine improvements -- the costs of replacing (not just repairing) the roof, windows or furnace, for example -- can be deducted from the basis of your interest in the property and help reduce the capital gains on the sale.

And be careful how long you hold on to the records of such expenditures: The law requires you to keep everything at least three years, but no matter how long you hold the property, at sale time you'll have to have those improvement receipts to justify your capital gains claims, he said.

5. Schneier, of course, urges landlords to seek out a tax professional in order to get the full benefit from rental property deductions, etc.

But the IRS does publish voluminous information at IRS.gov; in addition to the aforementioned guide to figuring depreciation, it also publishes a number of pamphlets that break down the details of legal and bookkeeping requirements.

Those include Publication 527, "Residential Rental Property" and Publication 523, "Selling Your Home," which has tax information on sales of homes that have been partly used as rentals.

Displaying blog entries 1-7 of 7

Contact Information

Preservation Properties
439 Newtonville Avenue
Newtonville MA 02460
Office: 617.527.3700
Fax: 617.527.2050