The tax situation
Q: Mr. Jeffries, I have been reading and enjoying your columns for a long time. My last couple of letters and e-mails, you expressed your column was about real estate advice. This question is about real estate, it would seem that the councils in Lee County and Cape Coral either don’t care or are in a position that it doesn’t affect them.
During our real estate boom and taxes were high, all they did was spend, spend, spend and create new positions, projects. Now that the economy and real estate is so terrible people are losing their homes to foreclosures or are about to, all of our (we voted for) officials can think of is property taxes. Higher taxes (especially in Cape Coral big milage rate increase). Our council should be ashamed of themselves with their proposal of such an increase in milage rate- anycommon sense? This increased rate causes not only hardship on homeowners it makes investors, first time buyers, and people who can just afford living think twice about buying or trying to no avail. Maybe a 1 cent sales tax, cutting salaries and some benefits, salaries are still as large as when real estate was booming (double dipping of retirement etc) shorter hours or other ways that doesn’t hurt and discourage so many people other than taxes? These people are supposed to be working for us the people- NOT staying in that easy position that they enjoyed during the real estate boom. Our state, county and local officials should REALLY get involved. Maybe they should look into the lenders deficiency judgments and other bad practices that only benefit lenders NOT home owners. Mainly get real about our tax situation that affects everyone mentioned. Thanks for your response (your opinion?)
Bill L., friends and concerned citizens
A: Bill L., friends and concerned citizens, your e-mails/letters would have taken my entire column. I interviewed 20 people concerning this question only. Neighbors, friends, business owners and investors (not one wanted their name disclosed). Of the 20 people interview 19 agreed 100percent (didn’t expect that?) The 20th person worked for the city, county, state or federal government and did not want to comment. I can’t comment and my opinion doesn’t matter, but thanks for the many comments on these subjects from all of my readers.
Now for the continuation of last week’s making money in real estate.
Earmark part of the rent you collected towards your principal. Example: When a student (I know) wanted to buy residential here in Florida, the seller was willing to finance the $120,000 purchase but wanted but wanted 10 percent up front. The student only had $10,000. To close the deal, he gave the seller preference on the property’s cash flow- the first $200 in rent each month- until the additional $2,000 was collected.
Managing the property
Hire a management company if you don’t want to manage the property yourself.
Typical cost: Depends on the property management (especially in this economy). Many will treat you fairly. Factor this in when you assess the net income of a prospective purchase. Ask for referrals from landlords in the area.
Run a credit and criminal check on any prospective tenants. Ask for references from employers and past landlords. Companies such as Intelius (www.intelius.com) can run background checks for a fee.
Charge more than the monthly rent for the security deposit. Otherwise tenants may skip the last months rent and tell you to use the deposit instead.
Keep two months rental income in reserve to protect against vacancies.
Make sure you have adequate property and liability insured rental properties.
Helpful resources: Landlord.com provides forms such as lease agreements, as well as on-line calculators.
National Association of Independent Landlords (www.nail-usa.com) has links to state laws.
I will continue next week: Raise your credit score to cut finance charges.
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty, Inc.
4040 Del Prado Blvd., Cape Coral, FL
239-540-6659 Office 239-542-7760 Fax