Robert's Blog

1st Quarter 2008 Rental Survey for Placer County (Rocklin, Roseville, Lincoln, Loomis, Granite Bay)

Robert Ortiz (RNB Property Management) — Mon, 05 May 2008 00:57:54 -0500

In order to help you make the most informed decision, InfoTracker provides the analysis of the statistical rental data of more than 20 property management companies within Placer and Sacramento counties. This unique compilation of valuable information is released once a quarter in The Landlord Today and is exclusively available to RNB Property Management. Because RNB Property Managers have direct access to the InfoTracker database which includes detailed information such as age, square footage, deposits and other property information they can accurately depict today’s current market rents through an RNB Comparable Rental Market Analysis.

Diamonds in the Rough

Robert Ortiz (RNB Property Management) — Mon, 05 May 2008 00:42:06 -0500

Conditions favorable for income property purchase

Current conditions in the real estate market are resulting in favorable circumstances for those looking to buy income property. As more subprime loans reset in 2008, anticipate another wave of short sales and foreclosures to appear, and with the Feds announcing that their priority is the economy, expect interest rates to stay relatively low.

Low interest rates and almost bottom-out prices are creating new investment opportunities and a healthy correction for the real estate industry. Investors have no trouble finding bread and butter properties that create cash-flow with a down payment of 20% or less. The only problem is that the best of these properties under $250k go pending very quickly, and investors are competing with multiple offers that are often above asking price and sometimes involve all cash.

As homeowners lose their homes, how is the rental market affected? We all require the basic necessities of life, and one of them is shelter. With the rise of foreclosures, the transition from homeowner to renter has become more common, and it's been difficult not only on FICO scores, but on many egos. Most homeowners refuse to move out of their 2500 sq ft home into an apartment or condo, preferring to rent a house, and even then, most will not even consider anything under 1300 sq ft. These new renters are willing to pay a premium for a house that is clean and shows well.

FICO: More than a number

Screening Tenants

There may be some concern, as a landlord, that if potential renters defaulted on their mortgage, they will default on their rent.

The truth of the situation is, the majority of transitioning homeowners were doing just fine paying their mortgage until their loan reset. Their new monthly payments almost doubled, while their income remained unchanged; one can easily see how their new mortgage payments became an issue for them.

So how do you screen these tenants? Rather than focusing on the FICO score, look at their other trade lines, such as car loans, credit cards, etc. If the majority of their trades are in good standing with zero to very few 30, 60 and 90 day late payments, and/or they have only a foreclosure, you may be screening a sound prospective tenant who has a history of paying on time. On the other hand, unfortunately those who have tried to survive through a foreclosure nightmare by sacrificing their trades in good standing have made it almost impossible to qualify for a rental. So, if you decide to consider an applicant who has foreclosed, don't neglect to verify your other objective rental standards. Although many have made a huge financial mistake that has cost them homeownership, we have found that many ex-homeowners still
take pride in their homes.

Optimistic Outlook

With a struggling economy and record-setting foreclosures, many paint a picture of bleak times. For those with a more optimistic viewpoint, looking to purchase a new income property or fill a vacant one, there are many "diamonds" waiting to be found. The current real estate market, as with the rest of the economy, will undergo changes, but for those with an optimistic view, the current inflation can be looked upon as an opportunity that can include good prospects in buying rental property at favorable interest rates, along with an increase in rents.

By Robert A. Ortiz, President/CEO

For more information regarding

RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com

Tenancies in Common for Today’s Real Estate Investor

Robert Ortiz (RNB Property Management) — Mon, 05 May 2008 00:37:49 -0500

By The Burton Law Firm

The tenancy in common (TIC) can be a very useful form of co-ownership. Tenancies in common are the "default" form of joint property ownership in California, so if the title documents do not specify a different form of joint ownership, it is generally presumed that a tenancy in common exists. However, a person who owns land outright may create a TIC in order to pass the property to another person for estate planning purposes.

Features of Tenancies in Common

A tenancy in common is one way of taking title to real property. In a TIC, multiple owners each hold title to an undivided interest in the whole property. Each owner has a right to use and enjoy the entire property. So if one owner holds 1% of the entire title, that owner may utilize the entire property for his business. However, that owner may not destroy or ruin the value of the land or its utility for other co-owners. If he or she does so, that owner may be liable to the other co-owners. Tenants in common do not have a right of survivorship with one another. Thus, if one co-tenant dies, the deceased co-tenant's interest passes by testamentary instrument or operation of law to the co-tenant's beneficiaries or heirs. The other co-tenants do not automatically acquire the interest, as would occur in a joint tenancy with right of survivorship.

TICs in Estate Planning

TICs can be used as an estate planning device. In this context, TICs let a donor transfer a low-value interest in high-value property to another person during the donor's lifetime. With careful planning, this can reduce the donor's taxable estate at death while minimizing gift tax consequences during life.

The TIC works in the following manner. The donor already owns a piece of property and wants to pass it on, usually to a family member. The donor would give a tenancy in common interest to a new owner (the donee). A tenancy in common interest is not as valuable as a fee simple interest in the entire property due to the reduced marketability of the interest, the limited freedom of use of the property, and potential limitations on transferring the interest to a third party. By creating a tenancy in common interest valued under the annual gift tax exclusion amount, the donor may transfer the TIC interest without incurring gift taxes. And since the value of the gift is lower than the value of the piece of property actually transferred, the donor is removing a large portion Therefore, the donor transfers a low-value interest in a high-value property

For a rough example, assume that D wants to transfer a TIC interest in real property to D's grandchildren. The property is worth $250,000. D creates ten TIC interests, one for each grandchild, and ensures that each interest has a discounted value equal to the annual gift tax exclusion amount ($12,000 in 2007). D gives all ten interests to the grandchildren, which totals $120,000 in gifts. But due to the devaluation of TIC interests, the ten TIC interests actually dispose of a much higher value of property, perhaps around $180,000. Therefore, D has reduced his taxable estate by $180,000 while only making $120,000 in gifts and not incurring any gift tax. Using the TIC has allowed the donor to pass on property which has been assigned a greatly discounted value.

There are some disadvantages to using a TIC, however. First, the donor gives up control over the portion of the property transferred as a TIC interest. If the donor desires the interest back, he or she must purchase it from the donee. Second, once the donee receives his or her interest, the donee is free to treat the property as the donee sees fit. The donee could use the property for a purpose not intended or even contemplated by the donor. Third, the donee is free to transfer the TIC interest to a third party. This could prove a rude surprise for the donor, who no longer is dealing with a trusted donee, and instead must now deal with a complete stranger. Fourth, the donee could sue for partition of the property and a court could order that the property be either physically separated, with each co-tenant receiving his or her share and dissolving the tenancy, or that the property be sold and the proceeds divided according to the respective interests of the co-tenants. Finally, the donor may recognize taxable gain on the value of the property transferred to the donee, and thus gift taxes may be owed. However, by utilizing the annual gift tax exclusion amount, this need not be of great concern to the donor.

Conclusion

You should speak with an attorney before creating a tenancy in common to serve your tax or estate planning legal needs. Although a TIC might be right for your situation, other legal options will often provide greater flexibility for you and your family while still meeting your planning objectives.

For a more in depth review of this subject, please see: www.lawburton.com, news/resources.

The Burton Law Firm

555 University Avenue, Suite #275

Sacramento, CA 95825

Phone: (916) 570-2740 Fax: (916) 570-2744

www.lawburton.com

info@lawburton.com

Disability Guidelines - Part 5 (Who must comply and who does and does not qualify as disabled)

Robert Ortiz (RNB Property Management) — Mon, 05 May 2008 00:34:03 -0500

In our last article we began discussion of the May 17, 2007 Department of Justice disability guidelines. The new guidelines state that "Any person or entity engaging in prohibited conduct - i.e., refusing to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford a person with a disability an equal opportunity to use and enjoy a dwelling - may be held liable unless they fall within an exception to the Act's coverage. Courts have applied the Act to individuals, corporations, associations and others involved in the provision of housing and residential lending, including property owners, housing managers, homeowners and condominium associations and others involved in the provision of housing and residential lending, including property owners, housing managers, homeowners and condominium associations, lenders, real estate agents, and brokerage services. Courts have also applied the Act to state and local governments.

Under specific exceptions to the Fair Housing Act, the reasonable accommodation requirements of the Act do not apply to a private individual owner who sells his own home so long as he (1) does not own more than three single-family homes; (2) does not use a real estate agent and does not employ any discriminatory advertising or notices; (3) has not engaged in a similar sale of a home within a 24-month period; and (4) is not in the business of selling or renting dwellings. The reasonable accommodation requirements of the Fair Housing Act also do not apply to owner-occupied buildings that have four or fewer dwelling units."

Who qualifies as a "person with disability"

In the new guidelines it states that "The Act defines a person with a disability to include (1) individuals with a physical or mental impairment that substantially limits one or more major life activities; (2) individuals who are regarded as having such an impairment; and (3) individuals with a record of such an impairment.

The term ‘physical impairment' includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus infection, mental retardation, emotional illness, drug addiction (other than addiction caused by current, illegal use of a controlled substance) and alcoholism.

The term ‘substantially limits' suggests that the limitation is ‘significant' or ‘to large decree.'

The term ‘major life activity' means those activities that are of central importance to daily life, such as seeing, hearing, walking, breathing, performing manual tasks, caring for one's self, learning and speaking. This list of major life activities is not exhaustive."

Who does not qualify

The Act states that "juvenile offenders, sex offenders, by virtue of their status, are not persons with disabilities protected by the Act. Similarly, while the Act does protect persons who are recovering from substance abuse, it does not protect persons who are currently engaging in the current illegal use of controlled substances. Additionally, the Act does not protect an individual with a disability whose tenancy would constitute a ‘direct threat' to the health or safety of other individuals or result in substantial physical damage to the property of others unless the threat can be eliminated or significantly reduced by reasonable accommodation.

The Act does not allow for exclusion of individuals based upon fear, speculation, or stereotype about a particular disability or persons with disabilities in general. A determination that an individual poses a direct threat must rely on an individualized assessment that is based on reliable objective evidence (e.g. current conduct, or a recent history of overt acts). The assessment must consider (1) the nature, duration, and severity of the risk of injury; (2) the probability that injury will actually occur; and (3) whether there are any reasonable accommodations that will eliminate the direct threat. Consequently, in evaluating a recent history of overt acts, a provider must take into account whether the individual has received intervening treatment of medication that has eliminated the direct threat (i.e. significant risk of substantial harm). In such a situation, the provider may request that the individual document how the circumstances have changed so that he no longer poses a direct threat. A provider may also obtain satisfactory assurances that the individual will not pose a direct threat during the tenancy. The housing provider must have reliable, objective evidence that a person with a disability poses a direct threat before excluding him from housing on that basis."

Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations.

For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007.

DISABILITY GUIDELINES – PART FOUR

Robert Ortiz (RNB Property Management) — Wed, 23 Apr 2008 22:58:33 -0500

DISABILITY GUIDELINES - PART FOUR

(Who does not qualify as a "person with disability")

By: Gary Link, Attorney at Law, Sacramento, CA (916) 447-8101

In our last three articles we discussed the new Department of Justice disability guidelines, identified who is responsible for compliance with the Act and who qualifies as a "person with disability."

The Act does not allow for exclusion of individuals based upon fear, speculation, or stereotype about a particular disability or persons with disabilities in general. A determination that an individual poses a direct threat must rely on an individualized assessment that is based on reliable objective evidence (e.g. current conduct, or a recent history of overt acts). The assessment must consider (1) the nature, duration, and severity of the risk of injury; (2) the probability that injury will actually occur; and (3) whether there are any reasonable accommodations that will eliminate the direct threat. Consequently, in evaluating a recent history of overt acts, a provider must take into account whether the individual has received intervening treatment of medication that has eliminated the direct threat (ie. significant risk of substantial harm). In such a situation, the provider may request that the individual document how the circumstances have changed so that he no longer poses a direct threat. A provider may also obtain satisfactory assurances tha the individual will not pose a direct threat during the tenancy. The housing provider must have reliable, objective evidence that a person with a disability poses a direct threat before excluding him from housing on that basis."

DISABILITY GUIDELINES – PART THREE

Robert Ortiz (RNB Property Management) — Wed, 23 Apr 2008 22:57:43 -0500

(Who qualifies as a "person with disability"?)

By: Gary Link, Attorney at Law, Sacramento, CA (916) 447-8101

In our last two articles we introduced the new Department of Justice disability guidelines to our readers, and identified the persons and entities who are responsible for complying with the Fair Housing Act relating to persons with disabilities.

The term ‘substantially limits' suggests that the limitation is ‘significant' or ‘to large decree.'

In Part Four of this continuing series of articles regarding disability accommodations, we will discuss who does not qualify as a "person with disability".

DISABILITY GUIDELINES – PART TWO

Robert Ortiz (RNB Property Management) — Wed, 23 Apr 2008 22:55:23 -0500

(Who must comply with the Act)

By: Gary Link, Attorney at Law, Sacramento, CA (916) 447-8101

In Part Three of this continuing series of articles regarding disability accommodations, we will discuss who qualifies as a "person with a disability".

How to Prepare for a Loan as a Real Estate Investor in Today's Market

Robert Ortiz (RNB Property Management) — Thu, 17 Apr 2008 23:18:37 -0500

The real estate market is certainly on a historic roller coaster ride. Yes, unfortunately, there are countless folks that are being caught up in the foreclosure storm that is sweeping across the country right now, but on the flip-side, this is creating significant investing opportunities for others. The following are actions that you can do to best prepare yourself to take advantage of some of these opportunities when they present themselves.

1-Start with the End in Mind: Be clear on what your desired financial outcome and work strategically backwards to your current position. Specifically, how far out into the future are your milestones and how does this compare to your current situation and available resources.

2-Credit: Lenders are becoming much more risk adverse and your credit history is becoming much more important. Do whatever you can to get your middle FICO score at 700 or higher. Tips to improve your score are: (A) Keep credit card balances at lease 25 or 50% of allowable balances. (B) Avoid a mortgage late at all costs. Underwriters evaluate a 12 month historical window regarding this point. (C) Strategically use one or the other spouse's credit only if possible. This potentially creates more options on your ratios as well as a potential backup plan if one spouse's credit becomes damaged.

3-Employment/Income Source: (A) Lenders need two years experience in the same or related field of work. Stated income borrowers may provide a CPA letter, business license, or entity formation paperwork that shows a two year history. Full documentation borrowers may provide 12 months bank deposit history in lieu of pay stubs so plan accordingly. (B) Stated income needs to make sense in comparison to a data source such as http://www.salary.com/. Make sure your job title (especially if self-employed) measures up to your true job duties in alignment to your income. Also, consider alternate job titles such as property manager, marketing consultant, or home improvement provider, if applicable, rather than real estate investor. Lastly, avoid using entity names such as Real Estate Investors Be Us, LLC. This may limit your options down the line. (C) Rental income is typically discounted 25% so plan accordingly.

4-Down Payment/Reserves: (A) Plan on a down payment of 15-25%, depending on your income type. Funds need to be seasoned two months or be prepared to provide an explanation of sourcing if less. (B) Plan on having 2-6 months of you subject property monthly expenses (worst case of total monthly expenses on credit report) left in your accounts after close of escrow (non-vested retirement discounted 30%). It's in your best interest to maintain this even after purchase of the property to cover expenses in case you experience occupancy or maintenance challenges. (C) Consider partnering or joint venturing with other parties if you need to augment your resources.

5-Compatibility of Loan Terms: (A) Make sure your loan product is compatible with current real estate cycles and your exit strategy. Always give yourself room for worst case scenarios when choosing adjustable rate products and prepayment penalty terms. (B) Make sure you are aware of existing loan terms regarding prepayment penalty, any adjustments, and existing debt-to-value ratios. In certain circumstances, especially in this declining market, it may even make sense to refinance before your rate adjusts rather than be caught in a circumstance where your options are limited. If you are unsure of these terms, contact your mortgage advisor to help you get clear.

6-Develop Team: Real estate investing is a team sport and should be treated as a business. Make sure your current team of advisors, including but not limited to, property manager, mortgage provider, CPA, attorney, and Realtor are real estate investment savvy and preferably own real estate investment themselves. That way they are personally vested in keeping up with the latest developments. Lastly, make sure your advisors are proactive and strategic and don't be afraid to trade up if you need to get referrals from competent advisors to fill in other gaps.

Real estate investing can be a great source of long term wealth building if done prudently. Position yourself to take advantage of the real estate opportunities in our current real estate cycle. Happy Hunting!

Todd Newington, CMPS
Certified Mortgage Planner

Branch Manager

First Priority Financial, Inc.
todd@superiorloanteam.com
http://www.superiorloanteam.com/
916-549-1190 mobile
916-687-6868, ext. 1 office
916-760-1895 fax

Holding Title as Community Property With Right of Survivorship

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:30:25 -0500

This article is for informational purposes only. Nothing in this article should be understood as legal advice, and no attorney-client relationship is created by it or the information it contains. Consult with a licensed attorney if you require assistance in a legal matter. This article is protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of The Burton Law Firm. You may not alter or remove any trademark, copyright or other notice from copies of the content.

Ownership of real property can take a great number of forms. The difficulty is deciding which form of title is right for you, your family, and your business. The facts of your situation will determine how title to property should be held, and properly selecting title form may involve transferring or re-titling property you already own. This article will provide an overview of a new form of title that many people are not yet familiar with: community property with right of survivorship (CPWROS).

Prior to 2001, married couples had to perform a bit of strategic planning when taking title to property. But the California legislature wanted to make it easier for California married couples to take advantage of federal tax benefits. On July 1, 2001, a new form of title was created: community property with right of survivorship. This form of title utilizes the right of survivorship feature while allowing a step-up in basis for community property.

Right of Survivorship

The right of survivorship feature allows the deceased spouse’s property ownership to immediately pass to the surviving spouse upon the first spouse’s death. Generally, no court administration is needed, thus avoiding the time and cost of the probate process.

Step-Up in Basis for Community Property of Both Spouses

A step-up in the basis of property provides an important tax benefit. When you acquire and maintain real property, you invest a certain amount of money in the form of purchase price and improvements. This investment becomes your basis in the property. When you sell or dispose of the property, you recognize a capital gain equal to the current fair market value of the property (i.e., what you sold it for) minus your basis. So if the property has appreciated in value over time, you want your basis to be as close as possible to the fair market value so that you can reduce gain. Reducing gain reduces the taxes that must be paid. A step-up in basis allows you to increase your basis in the property without recognizing any gains, which is a good thing. In a way, stepped-up basis is like the government handing a free investment.

CPWROS provides a large step-up in basis for property owned by a married couple in California. In a joint tenancy, the federal taxation system only allows a step-up in basis for the deceased spouse’s joint tenancy interest. Thus, the surviving spouse receives a stepped-up basis in the property equal to the fair market value of the deceased spouse’s joint tenancy interest.

But with CPWROS, when the first spouse dies and leaves property to the surviving spouse, the surviving spouse receives a step-up in basis both for the deceased spouse’s one-half interest in the community property and for the surviving spouse’s interest in community property. So the surviving spouse acquires a stepped-up basis in all of the community property, not just the deceased spouse’s share.

Conclusion

The goals, finances, and assets of your marriage and your business will all play a role in determining how you should hold title to real property. It is important to note that a properly drafted revocable living trust will provide these and other benefits as well. You should consult with an attorney to help determine whether holding property as community property with right of survivorship is right for your situation.

By The Burton Law Firm

For a more in depth review of this subject, please see: www.lawburton.com, news/resources.

The Burton Law Firm 555 University Avenue, Suite #275 Sacramento, CA 95825 Phone: (916) 570-2740 Fax: (916) 570-2744 www.lawburton.com info@lawburton.com

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management Rocklin

Disability Guidelines - Part One (Department of Justice Disability Guidelines)

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:28:43 -0500

On May 17, 2004, the United States Department of Justice presented guidelines regarding landlords (housing providers) making reasonable accommodations available to tenants and others under the Fair Housing Act (the “Act”). The Department of Justice and the Department of Housing and Urban Development (HUD) are jointly responsible for enforcing the federal Fair Housing Act which prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, familial status, and disability. One type of disability discrimination prohibited by the Act is the refusal to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling.

Prohibited acts: The guidelines state that “The Act prohibits housing providers from discriminating against applicants or residents because of their disability or the disability of anyone associated with them and from treating persons with disabilities less favorably than others because of their disability. The Act also makes it unlawful for any person to refuse to make reasonable accommodations in rules, policies, practices or services, when such accommodations may be necessary to afford persons with disabilities equal opportunity to use and enjoy a dwelling. The Act also prohibits housing providers from refusing residency to persons with disabilities, or placing conditions on their residency, because those persons may require reasonable accommodations. In addition, in certain circumstances, the Act requires that housing providers allow residents to make reasonable structural modifications to units and public/common areas in a dwelling when those modifications may be necessary for a person with a disability to have full enjoyment of a dwelling.”

In Part Two of this continuing series of articles regarding disability accommodations, we will discuss who is responsible for complying with the Act.

By Gary Link, Attorney at Law

Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations. For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007. Because laws may change please contact the law office to affirm continuing validity of the contents of this article.

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management Rocklin

Tax Saving Strategies for Real Estate Investors

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:27:26 -0500

There are many tax saving strategies that attract investors to real estate investments. Paying capital gains on profits at 15% rather than up to 35% on ordinary profits is one such strategy. There are a variety of other ways to save your dollars. In each Landlord Today article, we will focus on one tax saving strategy you or your current tax preparer may not have thought about.

Make the Most of Depreciation. As mentioned above, most know that depreciating their properties brings tax savings, but a lot of investors miss valuable depreciation deductions because they don’t know how to make the most of them. The following steps will help you get more annual depreciation to save tax dollars:

Step 1: Divide basis between “land” and “improvements.” Remember land provides no depreciation, so the goal is to assign as much as possible to depreciable improvements. The IRS suggests you use local property tax assessments. You can use any allocation (such as bank appraisal or your insurer’s estimate of replacement costs) so long as you show “reasonable basis.” Don’t forget that driveways and sidewalks crack, landscaping needs replacing, and pipes from the house to the street deteriorate over time. Consequently, you can depreciate land improvements over 15 years. If you miss those assets, you lose money!

Step 2: Split out components of the building to get shorter depreciation periods. Buildings depreciate over 27.5 years for residential property and 39 years for nonresidential property. But isn’t a building a collection of components? Of course it is. Buildings include structural components like walls, roofs, furnaces, and windows that are integral to the building. These depreciate over the traditional 27.5 and 39-year periods. But buildings also include personal property that depreciates over just 5 years. It makes sense that if you allocate part of your purchase to that personal property, you’ll boost your depreciation during the first few years you own your property. These are probably the years you need it most! Personal property examples include cabinets, countertops, dishwashers and carpeting.

By Richard Lagomarsino, EA

Richard is the president of FTMS Inc. Go to www.ftms.net for more helpful information.

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management Rocklin

LLCs for Real Estate Investors

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:25:28 -0500

This article is for informational purposes only. Nothing in this article should be understood as legal advice, and no attorney-client relationship is created by it or the information it contains. Consult with a licensed attorney if you require assistance in a legal matter.

Whether starting a new business or reorganizing an existing business, one of the most important decisions an entrepreneur will make regards the form the business will take. Given the wide variety of business forms, such as corporations and sole proprietorships, it can be difficult to choose between them. The limited liability company, commonly known as an LLC, has become a popular option.

Advantages One of the first and most important advantages of the LLC form is the limited liability it provides to members. Members subject to a lawsuit may have their interest in the LLC attached, but the assets of the LLC will generally remain outside a creditor’s reach. And if the LLC is the defendant in a suit, barring special circumstances, the members are not personally liable for the LLC debts. Second, LLC operating agreements often contain limitations on transferring member interests. These usually cause member interests to be less valuable to a creditor, thus making the LLC useful as an asset management technique. Third, the LLC works well as a real property management tool because it allows for continuity in property ownership and can limit liability of members as discussed above. Because the LLC owns the real property and is the landlord in any lease agreement, long-term leases can continue uninterrupted even if the LLC membership changes. Finally, an LLC can play a role in a comprehensive estate plan. Often, a member has substantial property but does not wish the property to be broken up at the member’s death. The member may transfer the property to the LLC and then gift fractionalized shares of his or her membership interest to relatives. The property remains intact, while the benefit of the property has been passed on to the next generation. This technique commonly affords estate and gift tax benefits as well.

Disadvantages As with any business form, there are disadvantages to the LLC. First, an LLC generally requires more effort and expense to create than a sole proprietorship or partnership. The LLC must be specifically created as an LLC and annual fees are required by California. Second, while not as rigid as a corporation, the recordkeeping requirements of an LLC are still substantial. Similar to a corporate charter, the LLC operating agreement should be written out and strictly followed; business records and minutes of meetings should be kept in accordance with the operating agreement. The tracking of “Capital/Member Accounts” can prove difficult, as these accounts reflect the value of the each member’s ownership interest and include the liabilities of the LLC, capital contributions of members, and income distributions by the LLC. Third, while holding property in an LLC might limit its value to creditors, it might also limit the ability of a member to readily sell his or her interest to a willing buyer. Finally, LLCs carry with them a number of inherent tax consequences which might limit their desirability to investors, especially those depreciating assets against other income.

Conclusion Using an LLC may help a business and its owners protect themselves from liability and improve the stability of the company. But the LLC has its drawbacks, as well. You should consult with a qualified attorney to help determine if the LLC is the right answer for your business interests.

By The Burton Law Firm

This article was significantly shortened for printing considerations. For the full article, entitled “LLCs for Real Estate Investors,” please refer to www.lawburton.com under “News/Resources.”

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management Rocklin

When the Rent is Unpaid, Act Immediately!

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:14:39 -0500

The legal process of evicting a tenant in California for non-payment of rent is among the most streamlined of legal proceedings however, starting that process is often delayed by the hesitancy of the landlord in serving a "Three Day Notice to Pay Rent or Quit" upon the tenant.

When a tenant has not paid the rent when due, landlords are confronted with a difficult decision as to whether a "Three Day Notice to Pay Rent or Quit" should be served immediately or not. Although it is a troublesome decision to make, I recommend that the "Three Day Notice to Pay Rent or Quit" be served upon the tenant right away!

The failure to serve the notice immediately may result in a tenant claiming at the eviction trial that the landlord "waived" the right to receive rent on the first day of the month, that the landlord and the tenant verbally "worked a deal" for rent to be paid later in the month, or that the landlord should be "estopped" (prevented) from demanding that the rent was due on the first day of the month because the landlord has often accepted rent late. Judges may listen to these "phantom" defenses because they have heard many cases where the landlord waited for the problem to just "go away" or that the landlord did indeed work out some type of verbal "deal" with the tenant.

Prompt service of the "Three Day Notice to Pay Rent or Quit" will hopefully eliminate the possibility of the tenant claiming a defense at a trial, set a precedent for the future that the landlord will be insisting upon prompt and timely payment of rent, and most importantly place the landlord in control of the rental payment duty of the tenant.

Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations. For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007. Because laws may change please contact the law office to affirm continuing validity of the contents of this article.

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management Rocklin

Position Your Property with InfoTracker

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:12:29 -0500

One of the most important decisions you can make when leasing your income property is accurately positioning it within the rental market. Given the dynamic real estate trends that we are currently experiencing it is a challenge to determine the appropriate market rent that will minimize the days-on-market, increase tenant retention, and maximize your cash flow. In order to help you make the most informed decision, InfoTracker provides the analysis of the statistical rental data of more than 20 property management companies within Placer and Sacramento counties. This unique compilation of valuable information is released once a quarter in The Landlord Today and is exclusively available to RNB Property Management. Because RNB Property Managers have direct access to the InfoTracker database which includes detailed information such as age, square footage, deposits and other property information they can accurately depict today’s current market rents through an RNB Comparable Rental Market Analysis.

So you have a CRMA in hand, now what? What is most important to you? Tenant retention? Vacancy rate? Survey says… “Cash flow”. In reality you have three choices: position yourself above, below or at the current market rents. Some believe that if you position yourself above the rental market you will attract a higher class of tenants because naturally they can afford higher rents but you risk having fewer applicants and more days-on-market. Others have found that a higher rent dissuades more qualified applicants because they have the right to be “choosy” which in turn leaves you with a pool of unqualified applicants desperate to pay the above market rent. Those interested in less risk may opt to compete head-to-head with other rental owners. Here the best in show wins. You must optimize the physical appearance of your property because the cleaner and more properly maintained the sooner it will rent. We have found that conservatively positioning yourself slightly below the rental market allows for tenant retention, lower vacancy rates and ultimately higher cash flow. We all know all too well the cost of turnovers. In the end the choice is yours but before you decide to position your income property within the rental market make sure you have the numbers in hand.

Robert A. Ortiz

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management Rocklin

Placer County Welcomes RNB Property Management, Inc. May 2007

Robert Ortiz (RNB Property Management) — Wed, 16 Apr 2008 22:10:01 -0500

RNB Property Management, Inc. is a California-based real estate company that offers property management services in Rocklin, Roseville, Lincoln, Loomis, and Granite Bay. Their first regional office opens in Rocklin, California on May 1.

“RNB Property Management is designed for investors by investors,” said CEO Robert A. Ortiz. Ortiz also manages day to day operations at this pristine office which boasts some of the most talented and experienced real estate professionals in Placer County. Following his graduation from the University of California, Davis, Ortiz soon pursued a career as a Real Estate Agent. Subsequently, he became apprentice to one of Sacramento’s top producers. At the height of Ortiz’ successful career he began to further his entrepreneurial aspirations. He became partner and CEO of RNB Property Management, Inc.

As Vice President and Assistant Office Manager, Bethany R. Landon brings not only property management experience but a sound background in customer service. Landon’s hard work in the community and her attention to detail allows her to see the needs that must be met within the property management industry.

The Rocklin office is overseen by veteran and respected Real Estate Broker and partner David F. Landon. David has three decades of experience investing in and managing real estate property. He will use this experience to guide the team based at the Rocklin office. Cass O. Landon, partner and acting CFO has held other high executive office positions as President/CEO of a once local $30 million company that he later developed into a nationally recognized $300 million industry leader. He not only holds a MBA in business finance from University of California, Los Angeles but is a real estate expert with over 30 years of real estate investment experience.

This team has taken both their talent and experience to develop a truly professional business model that will revolutionize the real estate management industry. “We started out with the basics by writing a 40 page business plan along with a concise policy and procedure manual” says Bethany. The policy and procedure manual integrates RNB’s system dependent business model with California landlord laws and the federal, state, and local fair housing laws which regulate the rental housing industry.

RNB Property Management, Inc. specializes in Single Family Residential housing and offers their clients the most technologically advanced services available today. From true virtual tours to Bill Gate’s vision of a digital nervous system, RNB provides real estate investors with tools and services that will revolutionize property management forever.

For more information regarding RNB Property Management, Inc. please call 916-435-2424 or visit us online at www.RNB2day.com or Property Management in Rocklin