Who is Nick Sidoti?

MREIA is a Proud Member of National REIA
Volume 12 Issue III
March
2009
Our Next General Meeting is Monday, March 16th, 2009
6:30 pm. Registration; Pre-meetings; Visit the Vendors
7:00 pm. M embers O ffering Deals.
7:15 pm. Announcem ents from the Board.
7:30 pm N ational Speaker N ick S idoti
“D R. CA$H FLO W ,” TH E CA$H
REGISTER LAN D LO RD ,
is com ing to M REIA
on M arch 16th!
Learn his secrets on how you can get
Two or Three tim es M ore Rent than You Are N ow Getting,
M ailed To You Each M onth from Governm ent Agencies.
Com e hear how N ational Speaker N ick Sidoti, “D R. CASH FLO W ” took a sim ple idea and
turned it into a H IGH CASH FLO W - LO W H ASSLE EM PIRE.
“D R. CASH FLO W ” w ill teach you how you can D O U BLE YO U R REN TAL IN CO M E
with SPECIAL N EED S H O U SIN G.
H e will share how to rent to collage students, veterans, governm ent agencies, and other
custom ers who will pay you big bucks (2 or 3 tim es m ore than m arket rent) for a little extra
conveniences.
N O ! This is not section 8, and N O , you do not need licenses or special perm its.
YES! You will be blow n away by the possibilities and the profit. Learn first hand why
KIPLIN GER FIN AN CE M AGAZIN E called N ick Sidoti “TH E CASH FLO W KIN G."
See Page 5 for m ore inform ation.
Metropolitan Real Estate and Investors Association, Inc.
Your Board of Directors
President
Vice President
Secretary/Past President
Treasurer
Editor
Past President
Audio/Visual Chair
Legislative Awareness Chair
Hospitality
Lending Library Chair
Meeting Site Chair
Membership Chair
Registration Chair
Vendor Chair
Web Design Chair
Dan Schwartz
Joe Tevlin
Nick Zampetti
Bob Lee
Dan Schwartz
Frank Barillari
David Leidy
David Corsi.
Diane Stewart
Angela Fan
Nick Zampetti
Peggy Martini
Chuck Martini
Scott Linde
Vince Condello
(201) 791-4639
(866) 416-4378
(201) 343-8629
(908) 272-9491
(201) 791-4639
(732) 904-8919
(201) 965-3288
(732) 923-1410
(732) 249-9343
(201) 889-9026
(201) 343-8269
(201) 410-5017
(201) 410-5017
(732) 777-6857
(610) 258-7058
President@mreia.com
VicePresident@mreia.com
Secretary@mreia.com
Treasurer@mreia.com
Editor@mreia.com
P1President@mreia.com
AudioVisualChair@mreia.com
LegislativeAwarenessChair@mreia.com
rei_di2ski@yahoo.com
LendingLibraryChair@mreia.com
Secretary@mreia.com
Membership@mreia.com
Registration@mreia.com
Vendor@mreia.com
WebDesignChair@mreia.com
Inside This Issue
March General Meeting
From the President’s Desk
Vendor Index
Who is Nick Sidoti
Legislative Update
Special Focus: Service Animals
Making Offers
Getting a Better Deal
Competent Parties
New & Renewing Members
Failing Banks
Cover
3
4
5
6
7
14
15
16
16
17
Investing in Single Family Houses
Selling a House Today
Attracting Tenants
Qualifying Tenants
Management Tips
No Children Allowed
Weekend Signs
Vendor Spot: Budget Rentals
Our Vendor Member Offerings
Free NJ Bar Foundation Events
Installment Sale Proposal
18
19
20
22
23
24
25
25
26
45
46
About MREIA
We are a not-for-profit Real Estate Educational Organization and a member of
The National Real Estate Investors Association.
The elected and appointed officers are unpaid volunteers.
DISCLAIMER
We do not render legal, accounting, tax, investment or other professional services or either through the Metro or at general meetings. We
disclaim all liability for actions (or inactions) taken as a result of any communications between the Board of Directors, appointed officers and the
membership.
We do not officially endorse any product, project, person or organization. Before making any investment decision, you are urged to seek
advice from qualified and competent professionals and to use due diligence before using any product, services or ideas presented in the Metro
or at general meetings. At times the Board may take particular positions or points of view on matters regarding the real estate industry. Said
positions do not represent solicitations.
Our speakers are permitted to sell any products or services they may have to offer our members or guests.. The opinions expressed by the
speakers and writers do not necessarily reflect the opinions of the Executive Committee or Advisory Board.
Volume 12 Issue III
2 of 47
March, 2009
FROM THE PRESIDENT’S DESKDESK
Signs of Possible Drug Activity
I don’t think that previous issues of the Metro have addressed a potential problem that if not
dealt with could become a serious legal and financial disaster. Even though you might have
someone managing your properties, you still need to be certain that those representing you
have educated them to spot potential drug activity.
Below are some examples of suspicious activities:
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•
•
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•
•
•
•
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Heavy traffic quickly entering and exiting a house, especially late at night
Neighbor complaints about noise or peculiar behavior by tenants or visitors
Rent payments in cash, especially large amounts for more than one month’s rent
Visitors do not appear to be friends or family
Valuables being exchanged
Money being observed that is exchanged for small packages
One person remaining in a car while another enters a house
Powerful interior lights remain on for 24 hours a day
Windows always completely blacked out or covered
Drug paraphernalia found such as small pipes, syringes, zip lock bags
Lookouts (especially younger people) posted or hanging around during heavy traffic hours
Valuables such as TVs, cameras, or electronic equipment being brought in
People observed hanging around (with constant use of cell phones)
Tenants not paying the rent, utilities, not maintaining the dwelling and evidence of damage
Suspicious loading and unloading of vehicles
Suspicious activities that stop when police are in the area
Possession of firearms
Heavy additional locks, doors or window bars added and limited access to the premises
Vicious dogs on the premises
Tenants own a very expensive vehicle, out of proportion to the monthly rent
Observation that the license plates have been changed
Frequent late night “deliveries.”
A Drug User May Have The Following Symptoms:
o
o
o
o
o
Aggressive behavior/ paranoia
Twitching, convulsions, irrational repetitive behavior
Extremely irritable, severe depression or hallucinations
Unable to eat or sleep for many days
Physical appearance: sunken eyes and cheeks, rotten teeth, dry skin sores, pale complexion
It would not be a bad idea to develop a relationship with the local police department, especially with the person
who is responsible to handle drug activity. I have heard and read articles about owners whose buildings were
confiscated because of failure to evict sellers or users of “dangerous controlled substances.” Months would go
by before an owner was able to regain control of the building. You are in a much better position if you seek the
advice and cooperation of law enforcement personnel BEFORE they take any action. In one situation I heard
about an owner who gave a key to the police so that they could easily enter the house. At least they would not
have to seriously damage the door to gain entry!
Dan Schwartz
Volume 12 Issue III
3 of 47
March, 2009
Vendor Table of Contents
Please see Page 25 for MREIA’s Spotlighted Vendor
Accounting Services
Serico & Dubnik, PC
PG
34
Appraisal Services
Mercury Chattel Appraisals
PG
Construction & Renovations
27 Mawa Contracting Services
R.E.I. Solutions
PG
38
44
Credit Repair & Counseling
Win Win Real Estate Group
PG
33
Financing Services
Advisors Mortgage Group, LLC
Home Cash Direct
Mac Investment Co., LLC
Somerset Financial
Stonehenge Group
The Tony Croft Team
Wells Fargo
PG
Home Buyers
39 Home Vestors
35
31
39
29
37
38
PG
40
Home Inspections
NJ Best Home Inspections
PG
28
Home Staging
Staging Works
Pg
26
PG
36
32
26
Investment Counseling
Peace of Mind Mgmt., Inc.
PG
34
Investment Services
Attn: Investors (DELETE)
Entrust Northeast, LLC
Jeff Essex Investments
Prosperity Home Solutions
Rivers of Income
PG
Legal Services
34 Levitan & Frieland, PC
29
27
28
31
PG
34
Member Discounts
Kiuken Brothers
PC Richard & Son
Ricciardi Brothers Paints &
Suppplies
Sherwin-Williams: Paints &
Supplies
PG
42
38
Mortgage Services
Barclay Funding
Chase Home Lending
PG
Painting Services
37 Certa Pro Painters
27
PG
34
Pest Control Services
Pest Plus Pest Elimination
PG
41
Properties for Sale
Everyday Home Buyer, LLC
PG
Property Management
26 Freedom Property Management
PG
26
Real Estate Agencies
Re/Max Best Realty
Shiver Real Estate Agency
Weichert Realtors
PG
27
29
29
Resident Screening
Screening Works
PG
Title Agencies
31 Noble Title Agency
PG
28
Video/Photography Services
WJK Productions
PG
30
Insurance
Best Insurance Co.
State Farm Insurance
Wellworth Insurance Group
43
27
Our Vendors & Sponsors support us and help us maintain our low membership dues.
Please contact them first when you need a product or service.
Volume 12 Issue III
4 of 47
March, 2009
Who is 1ick Sidoti?
“Unique. Creative. Entertaining. Exciting. Weird. Nuts.” These are all words
that have been used to describe Nick Sidoti, “DR. CASH FLOW,” the New York
landlord with the prescriptions and home remedies for what ails you and your cash flow woes.
Nick has a knack for not only making great money in real estate deals and rental properties
but also, having a good time doing it. Better yet, he has a gift for teaching others his “highly
effective methods” in a way that’s not only easy to understand, but is tremendously
entertaining at the same time. His “DR. CASH FLOW, The CA$H REGISTER
LANDLORD, presentation will leave you rolling in the aisle and remembering the vitally
important, cash producing points he drives home with humor. Nick and his alter egos (yes
there are several) will show you how to give your income a giant boost and make tenant
problems disappear by using creative property management techniques.
Here's just a taste of what you may learn:
$ How to keep your sanity, prevent ulcers and still have tenants
$ How to get tenants to leave your units in top shape if and when they move
$ How to dramatically reduce headaches while you increasing profits
Nick has been a full time investor since 1979 and the national expert on student
and special needs rentals.
• He is a seasoned investor, author and columnist and has lectured to thousands at real
estate organizations and conventions across the country since 1982.
• His credentials include being a Registered Apartment Manager, RAM, certified by
the National Association of Home Builders.
• He is an award-winning columnist for his column, “DR. CASHFLOW", which is
featured in numerous national newspapers and real estate publications.
• He was on the National Board of Advisors for Financial Freedom Report and is the
president of Western New York Real Estate Investors, Inc.
You can’t afford to miss the opportunity to hear this informative,
entertaining speaker’s mini-seminar that will teach you how to double
your cash flow and also reduce your tenant headaches!
Volume 12 Issue III
5 of 47
March, 2009
NEWSBRIEF: LEGISLATIVE UPDATE
Every Cloud has a Silver Lining
by Dave Corsi, MREIA Legislative Awareness Chair
The downturn in the national economy as well as in the real estate market has created a
unique opportunity for investors. Congress is acting busy, busy, busy, attempting to solve
the financial crisis. Because they are totally incapable of reducing spending, they are
scurrying around looking for:
•
•
Programs to stimulate the economy
Programs that will raise revenue
Along these lines we are looking to help. We have proposed changing the tax code to allow dealers (rehabbers,
wholesalers, flippers, builders, etc) to take installment sale tax treatment when they hold a note and mortgage. A
person or entity that buys and sells property on a regular basis may be deemed a dealer by the IRS. There is no
concrete definition as to exactly how many deals a person has to do to be labeled a dealer.
Installment sale tax treatment allows the note holder to pay taxes on the money as it is received. Current law
disallows these dealers from electing to take installment sale tax treatment. The current rule is that the a dealer
taking back a note, will have to pay tax on his/her entire profit in the year of sale.
To illustrate: a rehabber purchases a property for $100,000. The rehab & holding expenses are $25,000 for a
total of $125,000. The rehabber finds a buyer for $150,000. The rehabber agrees to hold a note for their
$25,000 profit for 10 years at 6%. The monthly payment is $277.55.
In the above example assuming the property is sold on Jan 1st with the first payment due on February 1st. For
that year, the seller / rehabber will receive $3,053.05. If the rehabber is in the 30% tax bracket, the taxes owed
would be $7,500. even though the amount they received is $3,053.05. So the rehabber/seller will have to come
up with an additional $4,446.95 ($7,500 - $3,053.05). This obviously creates a hardship.
Prior to the Tax Reform Act of 1986, if an investor sold a property and took back a mortgage, the taxes owed
would be paid as the money is received.
Since 1992 we have been trying to get the law changed back to the old system. With the economy in dire straits
we redoubled our efforts to get this rule changed. In the past year we have had countless meetings with
members of Congress and their staff. It appears our efforts are finally bearing fruit. Congressman Bill Pascrell
from North Jersey will be sponsoring a Bill that will allow dealers to use installment sale tax treatment. If it
passes and becomes law, it will be a great win/win for everyone. For the government, increased revenue, job
creation and less burden on financial institutions. For investor/ dealers a great opportunity to build cash flow.
To learn more about how changing the installment sale tax rules will be a great benefit, please read “The
Installment Sale Proposal” on Page 46 & 47 or go to the Legislative Corner of www.mreia.com.
Soon we will be making a call to action for our members and the real estate community throughout the
nation to contact their legislators.
Dave Corsi is a Past President of MREIA and has made presentations at MREIA meetings and the Learning Annex.
Volume 12 Issue III
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March, 2009
LANDLORDING: TENANTS WITH SPECIAL NEEDS
Editor’s Note: The information below has been collected from various government agencies. Today, there
is a great need for trained “service animals” to help people with various disabilities. This is the first time
the Metro has collated and made the information available to MREIA members. Please note that tenants
with service animals are usually very responsible individuals and are long term tenants-resulting in fewer
turnovers for the landlord to deal with.
Also included below are sample letters that may be used by applicants, tenants, health professionals,
and/or managers.
SPECIAL FOCUS: SERVICE ANIMALS
Reasonable Accommodations
The Federal Fair Housing Act, the Americans with Disabilities Act, Section 504 of the Rehabilitation Act, and local
fair housing laws require that housing owners and managers provide reasonable accommodations for applicants and
residents who have disabilities. Reasonable accommodations are changes in rules, policies, practices, or services that
are necessary for a person with a disability to have an equal opportunity to use and enjoy a dwelling. Allowing
residents who have disabilities to live with their service animals is a reasonable accommodation.
Under fair housing laws, a person is considered to be disabled if he/she has a sensory, mental or physical condition
that substantially limits one or more major life activities (such as walking, seeing, hearing, working, etc.). Some
people have a disability-related need for service animals to assist them with the functional limitations caused by their
disabilities. Service animals are not pets.
What Is A Service Animal?
Service animals assist people with disabilities to deal with the effects of their disabilities. The most common service
animals are dogs, but they may be other species (cats, monkeys, birds, etc.).Service animals may be any breed, size or
weight. Some, but not all, wear special collars or harnesses. Service animals are not required to have special licenses,
to be certified, or to have any visible identification. There is a difference between service animals and “social
animals” who are trained to function in hospitals and nursing facilities and are not recognized under Federal law.
The purpose of this article is to address how Federal and other laws affect landlords.
NOTE: In some situations, a person with a disability may require more than one service animal, where each animal
provides a different type of assistance. For example, an individual may need both a hearing dog and a seizure alert
animal.
How Do Federal, State And Local Fair Housing Laws Define Service Animals?
HUD compliance guidelines define assistive animals as “animals that serve as a reasonable accommodation for
persons with disabilities by assisting those individuals in some identifiable way by making it possible for them to
make more effective use of their housing.” The ADA defines a service animal as "any animal that is individually
trained to do work or perform tasks for the benefit of a person with a disability."
What Do Service animals Do?
Service animals perform various tasks and provide services for people with disabilities, who can train their own
service animals. Here are some examples:
• Guide – serves as a travel aide for a person who is legally blind.
• Hearing or Signal – alerts a person with hearing loss or deafness when a sound occurs, such as an alarm or a
knock on the door.
(Continued on Page 8)
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March, 2009
(Continued from Page 7)
• Mobility Assistance – helps a person who has a mobility or health disability. They may carry, fetch, open doors,
ring doorbells, activate elevator buttons, pull a wheelchair, steady a person while walking, help someone get up after
a fall, etc.
• Seizure Response – warns a person of an impending seizure, or provides aid during a seizure, such as going for
help, standing guard over the person or activates an alarm to a monitoring service to send help.
• Therapeutic Assistance – aids people with cognitive or psychological disabilities, allowing them to live more
independently. These animals may bring an emergency phone during a crisis, call 911 or the suicide hotline, turn on
the lights in a dark room, bring medications, bark for help in an emergency, assist a person with panic disorder in
coping with crowds, etc. A service animal may help to relieve symptoms such as anxiety, depression, stress and
difficulties regarding social interactions. If you have questions about this topic, you may wish to consult with an
attorney, or contact one of the fair housing agencies.
Service Animal Policy-Guidelines For Landlords and Managers
Reasonable Accommodation Process
When an applicant or resident with a disability makes an accommodation request, consider the request promptly,
and grant it when reasonable. When someone inquires about living with a service animal, follow the reasonable
accommodations policy.
Determine Whether You Need Verification
• If the person’s disability is obvious or otherwise known to you, and if the need for the service animal is also
apparent, do not request any additional information about the disability or the need for the accommodation. For
example, a blind person with a guide dog does not need to verify his disability or need for the dog.
• If the disability is known, but the accommodation need is not apparent, request only information necessary to
evaluate the disability-related need for the accommodation. For example, if you know a resident has depression and
s/he wants to have an assistance dog, request documentation of the disability-related need for the animal.
If neither the disability nor the need is clear, ask for proof of both. For example, if someone with no obvious
disability asks to live with a service animal, request that the person document both that he or she has a disability as
defined under fair housing law and that there is a disability-related need for the animal.
Who Should Provide Verification
When verification of disability status or disability-related need is appropriate, you can require that the individual
provide written verification from a doctor or other medical professional, or other qualified third party who, in their
professional capacity, has knowledge about the person’s disability and the need for reasonable accommodation.
Written verification should be provided by someone with sufficient knowledge and training to verify that the
applicant or resident meets the fair housing definition as a person with a disability, and that there is a disabilityrelated need for a service animal. Remember, you cannot require someone to provide details about his or her
disability.
When someone requests to live with a service animal, management will provide a prompt written response (see
sample letters).
(Continued on Page 9)
Volume 12 Issue III
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March, 2009
(Continued from Page 8)
Rules For Service Animals And Pets
• If residents are allowed to have household pets, you cannot charge an additional pet deposit or fee.
•
Do not place limitations on the size, weight, and type of service animals.
•
Both service animals and pets can be required to meet the same reasonable behavior rules
•
You can require service dogs or cats to be licensed, if required in your municipality and if you require
licensing of pets.
•
Remember that a household may have a service animal and also pets
•
If the housing community has a “no pets” rule – you must allow service animals.
•
Do not place limitations on the size, weight, and type of service animals.
•
You can apply reasonable behavior rules to service animals.
•
You can require service dogs or cats to be licensed, if required in your municipality.
•
You should charge the same general cleaning or damage deposit that is charged to all residents.
•
A resident with a service animal is liable for any damage the animal actually causes.
Animal Care And Supervision
The resident has the responsibility to care for and supervise the service animal. The resident should retain full
control of the animal at all times. This generally means that when the animal is in common areas, it should be on
leash, in a carrier, or otherwise in the direct control of its owner. When around other people or animals, the service
animal should be well behaved (no jumping, snarling, nipping, excessive barking). The resident is responsible for
the safe removal of animal waste products.
What about leash laws?
Each situation must be considered on a case-by-case basis. You may enforce local leash laws. However, per
U.S. Department of Justice, leash law enforcement may need to be modified for a service animal to be offleash briefly to perform a particular task. Also, where physical disabilities may make it difficult or impossible
for an individual to hold a leash, exception should be made to leash law requirements. This does not change
the requirement that the animal be under the direct control of the individual with a disability. If the animal is
not under the individual’s control and is behaving in a threatening or destructive manner, you may choose to
ask the person with a disability to remove their animal until it is under appropriate control.
Removal Of A Service Animal
If a service animal is unruly or disruptive (aggressively jumping, nipping, etc.), the manager may ask the resident to
remove the animal from a common area. If the animal’s inappropriate behavior happens repeatedly, the manager
may request that the resident not bring the animal into common areas until steps have been taken to mitigate the
behavior (such as refresher training), or ask that the animal be removed from the residential premises. Management
may designate certain areas to be off limits (swimming pools, sauna rooms, etc) to services animals. However, the
service animal could be in the immediate area if other people are available for assistance.
(Continued on Page 10)
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March, 2009
(Continued from Page 9)
What About Others Who Are Afraid Of, Or Allergic to Animals?
A fear of or minor allergy to dogs or other animals is not a disability, so management does not need to
“accommodate” in those situations. In rare cases, a person’s allergy may be so severe that animal contact may cause
respiratory distress. In those situations, the allergic person may also request an accommodation, such as keeping
the animal and the allergic person separate, as much as is possible.
Sensitivity And Awareness
You are advised that you and your manager is properly trained about service animal policies, including the following
rules:
• Allow a service animal to accompany the resident at all times and everywhere in the community except where
animals are prohibited for safety reasons (such as in a pool or sauna).
• Do not separate or attempt to separate a resident from the service animal.
• Do not pet or talk to a service animal when it is working--this distracts the animal from its tasks.
• Do not feed a service animal, because it may have specific dietary requirements.
• Unusual food or food at an unexpected time may cause the animal to become ill.
• Do not deliberately startle a service animal or make noises at the animal (barking, whistling, etc.).
• Be aware that many people with disabilities do not care to share personal details.
• If other residents complain that they are not allowed pets and want to know why an exception was made, state
that your community complies with the fair housing laws. You can also refer your residents to the community’s
accommodation policy.
Service Animal Policy: Guidelines For Residents
Request For A Service Animal Accommodation
If your tenant needs to live with a service animal because of his/her disability, a request should be made to you for a
reasonable accommodation. It is best that any requests be submitted in writing, but verbal requests are acceptable.
Verification Of Tenant’s Disability And Need For A Service Animal
The tenant may be asked to provide written verification that he/she has a disability and that the accommodation of
a service animal is necessary to give him/her an equal opportunity to use and enjoy your housing community. If you
asks for said verification, the tenant should obtain a signed letter from a doctor or other medical professional, or
other qualified third party who, in their professional capacity, has knowledge about said disability and the need for a
reasonable accommodation. Information does not have to be provided about a specific disability or about the
specific tasks the service animal performs. (See sample letters below)
Animal Care And Supervision
•
•
•
•
The tenant is responsible for the care of the service animal.
The tenant must supervise the animal and retain full control of it at all times. This means that while the
animal is in common areas, it is on a leash, in a carrier, or otherwise in the tenant’s direct control. When in
the presence of others, the animal is expected to be well behaved (not jumping on or nipping at people, not
snarling or barking, etc.).
You are responsible for the proper disposal of animal waste. Carry equipment to clean up your service
animal’s feces whenever the animal is in the common areas. Properly dispose of waste and/or litter. If you
need assistance with cleanup, arrange for such help through family, friends or advocates.
You are responsible to keep the animal free of internal and external parasites and to be fully vaccinated
against common diseases such as rabies, distemper and viruses. The animal should wear a current rabies tag
and owner ID tags are also recommended.
(Continued on Page 11)
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March, 2009
(Continued from Page 10)
Sample Letter: Request For Reasonable Accommodation
Applicants or residents may use a letter with this type of language when requesting to live with a service
animal as a reasonable accommodation. Use of this form is not required, but it is recommended that you
document accommodation requests in writing.
Date:
To: {Name and address of landlord or manager}
I have a disability as defined by the fair housing laws. I use a service animal to assist me with the functional
limitations related to my disability. My service animal enhances my ability to live independently, and to use and
enjoy my dwelling fully.
Type of service animal (dog, cat, etc.): ____________________________________
As an accommodation for my disability, I request that you:
[
[
[
[
]waive your “no-pet” policy
]waive your pet weight / height restrictions
]waive your pet deposit or fees
]other: _________________________________________________________________________________
I have attached a letter from my doctor or other medical professional, or other qualified third party who, in their
professional capacity, has knowledge about my disability and my need for a reasonable accommodation. The letter
verifies that I have a disability as defined in the fair housing laws, and that I have a disability-related need for a
service animal.
Please advise me of your response to my request for an accommodation by [date____________].
(sign letter)
Print your name, address and telephone number
Sample Letter: Reasonable Accommodation Letter from Qualified Professional (on
letterhead)
This is a sample letter for use when supporting a request for a service animal as a reasonable
accommodation. It should be submitted by a doctor or other medical professional, or other qualified third
party who, in their professional capacity, is in a position to know about the resident’s disability and need
for a reasonable accommodation.
Date: __________________________________
Dear {name of housing owner or manager}:
I am a {insert your professional title, such as doctor or other medical professional, or other qualified third party who has knowledge
about the disability} of {________________________name of resident}. I verify that he/she meets the definition of a
disabled person under the fair housing laws.
(Continued on Page 12)
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March, 2009
(Continued from Page 11)
I also verify that he/she has a disability-related need for a service animal to assist with the functional limitations
relating to his/her disability. The animal needed is {a dog, cat, bird, etc.}.
Sincerely,
Name
Title
Address and telephone number
Sample Letter: Response To Request For Reasonable Accommodation
Management staff may use this type of letter when responding to a request from a resident who wants to
live with a service animal.
Date: __________________________________
Dear {resident name}:
We have received your request for a reasonable accommodation. We understand you want to live with a service
animal in our housing community. We also received the letter from your {service provider} confirming that you have a
disability as defined by fair housing laws and that you have a disability-related need for the animal.
We agree to your request for your service animal live in your apartment. We will
[ ] waive our “no-pet” policy,
[ ] waive our pet weight/height restrictions,
[ ] waive our pet deposit/pet-related fees, and {insert other agreements}.
Our rules require residents who have animals to follow noise regulations, to dispose of animal waste properly, and
to ensure that the animals do not cause property damage. As noted in your rental agreement, you will be responsible
for any damage caused by your animal.
We welcome your animal to our community!
Name:
Title:
Address and telephone number:
Insurance Issues
Some insurance carriers refuse to cover a rental property, substantially increase the cost of coverage, or adversely
change the terms of their policies if a person with a disability resides in the rental dwelling with an assistance animal
that is of a breed of dog that the carrier considers dangerous.
HUD and the U.S. Department of Justice have issued a joint statement on “Reasonable Accommodations Under
the Fair Housing Act”. This statement notes that an accommodation is unreasonable if it imposes an undue
financial and administrative burden on a housing provider's operations. If an insurance carrier would cancel,
increase policy costs, or adversely change policy terms because of the presence of a certain breed of dog or a certain
animal, HUD states that this imposes an undue financial and administrative burden on the housing provider.
(Continued on Page 13)
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March, 2009
(Continued from Page 12)
A housing provider should substantiate any claim regarding the potential loss of or adverse change to the insurance
coverage by verifying such a claim with the insurance company directly and considering whether comparable
insurance, without the restriction, is available in the market. If there is evidence that an insurance provider has a
policy of refusing to insure any housing that has animals, without exception for assistance animals, the insurance
provider may be violating federal civil rights laws prohibiting discrimination based upon disability.
For more information, see:
“Insurance Policy Restrictions as a Defense for Refusals to Make a Reasonable
Accommodation”, www.fairhousing.com/include/media/pdf/insuranceguidance.pdf)
“Reasonable Accommodations Under the Fair Housing Act”,
www.hud.gov/offices/fheo/library/huddojstatement.pdf
Resources & Questions
Americans with Disabilities Act Information Line, U.S. Dept of Justice 800-514-0301 or visit www.ada.gov and
www.usdoj.gov/crt/ada/animal.htm
Delta Society National Service Dog Center 425-679-5500, www.deltasociety.org 875 124th Ave NE, Ste 101
Bellevue, WA 98005-2531
U.S. Department of Housing and Urban Development
U.S. Department of Justice 800-514-0301
For additional information about service animals, see the Joint Statement of HUD and the Dept. of Justice, “Reasonable
Accommodations Under The Fair Housing Act.” Online at
www.hud.gov/offices/fheo/library/huddojstatement/pdf
Volume 12 Issue III
13 of 47
March, 2009
BEGINNER’S CORNER: NEGOTIATING WITH SELLERS
Making Offers!
by Scott Britton
I want to talk a little bit today about making offers. This is where the rubber meets the road for successful real
estate investors!
There are two strategies to consider:
1. Making Offers in the Blind! [Also known as shot-gunning offers] This is where you make your purchase offer
before you look at a property.
Think of this as testing motivation. With this system, you write a lot of offers in an effort to find someone who
really needs to sell... and will entertain a large discount or creative offer.
The success rate of this type of offer-making system is very low. And... you have to be able to take some heat. A
very high percentage of your offers will be rejected. Be prepared for this and don't get frustrated. It's the nature
of the system.
2. Making Offers After Talking With the Seller! This method of making offers has a very high acceptance rate.
Getting in front of motivated Sellers is a function of your marketing. These offers are generally the outcome of
talking with the Sellers one-on-one and asking them questions about their
situation.
A high percentage of the time, you will make these deals orally first... then reduce them to writing. As a result, a
high percentage of these offers are accepted because the terms have already been agreed upon.
The key to this method is cranking up your marketing efforts in an effort to attract motivated Sellers to you.
Loosely qualify them over the phone then set the appointment. Obviously, this method works best with
homeowners. The first method works best with REO properties.
Lastly, you need to be sure you have an "Inspection and Approval" clause in your Purchase Contract to protect
yourself (and buy some time)!
Making offers on your own properly structured contracts is imperative. Keep these with you at all times and be
prepared when the opportunity arises! Reprinted by Permission. Visit www.RealEstateSuccess.com
Volume 12 Issue III
14 of 47
March, 2009
BEGINNER’S CORNER: DEALING WITH SELLERS
Getting a Great Deal When You Buy Properties
by Robert L. Cain
Some investors always seem to get great deals. The properties they buy are always below market value. They get
terms that seem impossible. Is it just luck? Are they simply in the right place at the right time? Do they just have the
"touch"? None of the above.
Like anything worth doing, buying property takes practice. It is something that anyone with persistence and
determination can succeed at. You simply have to master the techniques.
Here are the rules:
1. Know the market.
2. Find out the seller's real need or needs for selling.
3. Make an offer which solves the seller's immediate needs.
4. Focus on making the deal, not dickering over details.
Know The Market
People usually got into the rental property business with the idea of making money. Obviously some people are
more successful than others doing it. The most successful are those people who make good buys. In order to make
good buys, you have to know what a good buy is.No matter what the condition of the real estate market , there are
good buys available, especially in the lower end. But, that's where most of the rental property is.
A good real estate agent can and will keep you updated on what houses are selling for. There is a big difference
between what houses actually sell for and what some people try to sell them for. Six months of data for the area
where you're looking for houses will give you an accurate picture of the housing market. A good real estate agent, if
you work with him or her regularly, will also not even call you about properties which are over-priced and/or
wouldn't help your investment program.
Finding The Real Need To Sell
One investor, who specializes in single-family rentals, saw an ad for a three bedroom home in a good neighborhood
for $79,900. He knew that sounded like a good price for the area. He called his agent to find out more. After some
investigation the agent got back to him. He had talked to the listing agent, who had told him that she had just
presented a full-price offer to the sellers that afternoon. But the sellers wanted to think about it. That had
immediately sent up a red flag to the agent. Why would a seller have to think about a full price offer? With some
more digging the agent had discovered that the price wasn't the seller's biggest concern. There were some repairs
that the other offer asked for. The offer wanted the sellers to paint the kitchen, fix a dripping faucet in the
bathroom, polish the hardwood floor in the dining room and clean the rug in the master bedroom. The sellers were
balking at the offer because the husband had to be on his new job (an important promotion) in ten days in another
city. He was training his replacement at the time, and that demanded that he spend even more time at work. His
wife was leaving in 48 hours for the new city to look for housing. It was quickly apparent to the agent, and to the
investor when he heard it, what the real problem was.
Solving The Seller’s Needs
The investor looked at the house. Saw that it was in good condition and a good value. He immediately wrote
another full price offer, but without the contingencies for cleaning and repair. His agent presented the offer. The
sellers accepted on the spot. The investor wasn't concerned about the minor things such as dripping faucets and
scuffed floors. Every time he had a vacancy, he had to fix those. A real estate agent’s job is to solve people's
problems. There are those who don't do it, many create more. But that doesn't mean that isn't their job. In this case
both the investor and the agent were able to do just that, and everybody was happy. The sellers got their home sold
with no hassles and the investor got a good piece of investment property.
(Continued on Page 16)
Volume 12 Issue III
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March, 2009
(Continued from Page 15)
Make The Deal; Don’t Get Hung Up On Details
The investor won on this sale because he focused on buying the property, not worrying about the small stuff. The
reason the people who made the first offer lost is that they wanted everything to be perfect. That is despite the fact
that all the repairs they demanded could have been taken care of in a few hours over a weekend.
Reprinted by permission. Robert Cain is a nationally-recognized speaker and writer on property
management and real estate issues. For a free sample copy of the Rental Property Reporter or Northwest
Landlord call 800-654-5456 or visit www.rentalprop.com.
Competent Parties
by Albert Lowry, Ph.D
In order for a contract to be legally binding, you have to deal with competent parties. This term applies to heirs as
well as to the authorized representative for a group of property owners. You can also encounter similar problems
with corporate or trust officers. Investors have been known to put together a deal with a corporate or trust officer
only to find out later that he was not authorized to sign the paper. The same applies to husbands and wives. What
happens if the husband signs, but the wife doesn’t? Is it a legally binding offer? Is a lawsuit possible? Yes, there is a
possibility of a lawsuit. It may be a binder offer, at least for half of the team, but that half of the team can be sued
and the cost come out of both their pockets. Reprinted by Permission. Taken from Albert Lowry’s “Real Estate Investor
Newsletter” May 2004 Issue. The author is an internationally known expert in real estate investing. More than 350,000 students
have taken his courses. He is one of the founders of MREIA.
FEBRUARY NEW & RENEWING MEMBERS
Afranis, Andrea
Daginawala, Zoeb
Piso, Timothy
Borgart, Shlomo
Davidson, Donald
Razzano, Vincent
Brinder, Bryan
DiBenedetto, Noelle
Schooley, Robert
Brouillard, Al
Donahue, Thomas
Trentacoste, Robert
Camp, Celia
Green, Eric
Weissman, Peter
Chopra, Ritu
Pappalardo, David
Cohen, Mace
Patel, Umesh
Volume 12 Issue III
16 of 47
March, 2009
NEWSBRIEF: WHAT ARE THE BANKS DOING?
My Calendar Of Dedication
by Steve Dexter
I'm not going to bore you with yet another retrospective all the dastardly events of 2008- a year of record misery:
the largest bankruptcy, bank failure and Ponzi scheme in U.S. history; $720 billion in write downs and losses by
financial institutions; 30.1 trillion in market valuation wiped out, causing many billions of taxpayer bailout dollars to
be pledged- we know there is more to come.
Here is my take on recent happenings:
It will take time for the now-nationalized home mortgage market to return to something resembling normalcy.
Banks are very risk adverse; you got to be clean as a whistle to qualify for the historically low interest rates around
these days. They are hoarding all the bailout TARP money like a fat tick, afraid to lend even to themselves.
Failing banks and government intervention programs stir up so much dust that lenders cannot see their way.
But know one thing-IT WILL COME BACK; it's just that nobody knows when exactly. Says Hank Paulson, our
Secretary of Treasury, “In my judgment we are closer to the end of the market turmoil than the beginning," he said
last May 16th, 2008 in a speech in Washington to business leaders. "Looking forward, I expect that financial
markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the
recovery of the housing sector."
Paulson also said, "We are seeing signs of progress as capital and credit markets stabilize" The markets are
considerably calmer now than they were in March."
Other supposedly smart minds are guessing, as well. In the meantime, we need to prepare ourselves for more
tumult and get ready for distressed opportunities wherever they are.
At a spectacular real estate seminar ocean cruise I went on this last December, I listened to my mentor, Jack Miller
(www.crewealth.com) who told us to construct our own Wheel of Fortune. After we came back from our daytime
shore excursions in Cabo San Lucas, Mats Alan, and Puerto Vallarta we were treated to wisdom from the Master.
The Wheel of Fortune is a portfolio strategy There are three components: income, growth, tax shelter and liquidity.
Write down which asset class you are now possess, and perhaps are overloaded with. I will cover a few now and do
more portfolio analysis in my seminars
1. Income Assets-positive cash flow real estate, bonds, commercial and retail rentals, high dividend stocks, T-Bills
and CDs
2. Growth Assets- Leveraged houses, stocks, land, in-fill lots and precious metals
3. Tax Shelters- Pension Plans, IRAs, Roth IRAs, 401(k)s, Real Estate Depreciation, Oil and Gas Depletion and
Sep IRAs
4. Liquid Assets-Cash Deposits in banks, Stocks, Mutual Funds and Cash Value life insurance
Reprinted with Permission. For further information, visit www.stevedexter.net, call (888) 993-9399,
(949) 494-1676 or e-mail stevedexter@hotmail.com or visit www.moneyforeclosures.com
Volume 12 Issue III
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March, 2009
BEGINNER’S CORNER: INVESTING DECISIONS
What Should Single Family House Investors Do Now?
by Jack Miller January 9, 2009
Single family houses offer three primary investment benefits: They can be bought and financed to provide net rental
income without regard to appreciation potential and still make a lot of sense. I know a Californian who has bought
a dozen or so houses in a small town in Iowa. There is very little appreciation because the population isn’t growing,
but there is a strong rental market because of a local college. The houses he paid $15,000 for a few years ago are still
worth about the same, but they stay rented for $500 per month. Even allowing for 40% shrinkage due to operating
costs, that boils down $3600 per year net return, or more than 20% yield on his cash investment. He’ll have
recovered his entire investment in less than five years and from then on, it will all be gravy whether or not the
houses ever appreciate, or even sell for that matter.
Single family houses are most often bought by investors for appreciation. That’s certainly one of the major
ways that a single family house can create profit, but where prices are rising swiftly, holding a house for
appreciation is often at the expense of years of negative cash flow. So long as an investor is well heeled
enough to only finance a house to the point at which it breaks even on cash flow, holding long term for
appreciation can be a great idea. Unfortunately, except in areas where there is very high appreciation and where
lenders are willing to permit owners to refinance to capture this value, very few highly leveraged investors have the
staying power to hold on long enough to reap this harvest. We’re seeing this loss of equity in almost every market
where growth has slowed, or lending has tightened.
Because of very favorable taxation, upscale single family houses used as personal residences can produce as much
after tax profit as an investment house that loses money each year. This is because the investor’s negative cash flow
is buying a great lifestyle in a nice residence in a neighborhood where schools, amenities, and infrastructure is better.
When the house is sold and all gain captured tax free, buying and selling a personal residence every two years can
build an estate about as fast as any other form of house ownership, with a lot less stress and anxiety.
Of course it’s possible to temper one’s enthusiasm and to buy fewer houses with less leverage and more cash flow
and to wait while the tenants pay off the mortgages, That’s what I did, and what most of the truly wealthy single
family house investors I know have done; but it requires patience that few investors in today’s market possess. So
my advice to them is to buy a nice house and move in; and to buy fewer negative cash flow houses.
Reprinted by Permission. This article was first published at Cash Flow Depot . To sign up to receive your own
FREE weekly real estate lessons plus FREE Bonuses go to www.CashFlowDepot.com. Jack Miller has appeared at
MREIA meetings and is an international speaker and active investor, specializing in single family houses. He
writes a monthly investment newsletter and conducts seminars on Exchanging, Management, Portfolio Strategies
and Options.
Volume 12 Issue III
18 of 47
March, 2009
DR CA$H FLOW
HOME REMEDIES FOR
REAL ESTATE I1VESTORS
by 1ick Sidoti, R.A.M. Article #93
Q. Nick, I love reading your column, and all the
creative ideas and information I get from it. I have a
house that I need to sell, and the market in my town
is moving very slowly. With all of your creative
management ideas, I am sure that you must have
some creative ideas for selling a house. Would you
share them with us?
A. I am going to assume that you have already
tried all the standard methods, you’ve put house in
top condition, you have tried pricing it slightly
below market, you’ve tried open houses, and the
best real estate agent. Now is the time for the
unique approach.
This is an idea for an aggressive seller. Put your
house on the market for $99. Here’s how.
Have an essay contest. In order to enter the contest,
folks will have to write 250 words or less on “Why
I Want Your House”. Each entry must be
accompanied by $99. If you originally wanted to
sell your house for $80,000, set the rules so that you
must receive enough entries to cover your sale
price, your advertising cost, the lawyer’s fee, the
escrow fees, and all other costs of holding the
contest. Let’s say that you have determined that you
must receive 1700 entries. This will gross you 1700
X $99 = $168,300, almost twice what the house
would have been worth on the open market.
Remember, you will have to pay the attorney, the
advertising, and all the other costs of selling the
property.
I would suggest that you place all of the money that
you receive in an escrow with an attorney. Be sure
to put a deadline on when the entries need to be
received in order to be considered. The rules should
provide for the return of all funds if 1700 entries
aren’t received.
Pick a neutral party to judge the contest. You might
want to pick the criteria for the winner (i.e. writing
ability, originality, need for the home, or reason.)
Be sure that you state that family and friends of all
those involved are not eligible.
You may be wondering if this is legal. Is it
gambling? In some states it may not be legal.
Contact your State Attorney General’s Office and
ask. The New York State Attorney General’s office
has ruled that there is no problem as long as it is
done in an up and up fashion. How is that for noncommittal?
As far as it being gambling, the main factor that
distinguishes gambling is whether or not skill is
required. If sufficient skill is required it is a contest
with contest entry fees. Of course it is a gamble of
all of your advertising and costs to set up the
contest. Good luck.
Nick Sidoti, R.A.M. is a registered apartment manager, licensed real estate agent, investor, lecturer, author of
several real estate courses, an award winning columnist, and President of the Western NY Real Estate Investors.
For information on Nick speaking before your real estate group, courses information or to submit questions for
Nick’s column, please email drcashflow@adelphia.net, visit www.drcashflow.net or call 716-773-2980.
Reprinted by Permission.
Volume 12 Issue III
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March, 2009
LANDLORDING: SCREENING AND KEEPING TENANTS
How To Attract Tenants
by Vena Jones-Cox
Here I thought it was just me, but as I’ve travel around the country talking to landlords, I’ve found that there’s a
nationwide shortage of tenants. To be perfectly accurate, the problem isn’t that there are no tenants around—the
problem is that the vast majority of applicants are either a) felons, b) liars, c) serial evictees, d) broke, or e)
compulsive destroyers of rental properties. The few renters out there who are decent prospects are also extremely
picky about price and condition—think of it as a buyer’s market for renters. Those who have something to offer
want to name their own price and terms.
There are, in my opinion, two reasons for this phenomenon. The first is that we—yes, we, the housing providers of
America , have done a TERRIBLE job of training tenants how we want to be treated. There are too many landlords
out there who will take any tenant that comes along with money in hand, which means that renters who behave
badly never see any repercussions to their actions. They destroy their homes, don’t pay their rent for months on
end, get evicted—and go do it all over again with the next landlord. Over the course of the last five years or so, an
enormous number of “newbie” landlords have entered the housing market who don’t even know how to properly
check a tenant’s references, who believe the “why I can’t pay the rent” stories they’re told month after month, who
are slow to evict because they don’t understand the process, and who generally run their rentals like a money-losing
hobby instead of a business. But it’s not all their fault—in 16 years as a landlord to over 1,000 total tenants, I’ve
received exactly two calls from other landlords for tenant references. If we were ALL more proactive about making
sure that our tenants were a) properly screened, b) properly managed and c) properly punished for infractions of the
lease, they’d quickly learn that treating one landlord badly means no place to live.
The second reason for the tenant shortage is, of course, the easy availability of mortgage money in recent years. Our
best tenants—the ones with jobs, credit cards, cars, and slightly iffy credit—have all gone out and bought their own
homes with payments that are cheaper than rent. Lenders have skimmed off the cream of the tenant crop, leaving
us with the real dregs (look, ma, I mixed THREE metaphors in one sentence!).
So what are we to do? The same thing that homeowners do in a buyer’s market—make our product better than the
competitions’. Here are some suggestions.
1. Do what you can to keep your good tenants. It’s a whole lot cheaper to keep the good tenants you have
than it is to find new ones. Unfortunately, we tend to ignore the folks who pay on time and don’t complain. And
yet they’re your best bet for avoiding expensive, frustrating vacancies—so talk to them and see if there’s
anything they need. 60 days or so before their lease is set to expire, pay them a visit and ask if they’d like any
maintenance services or upgrades. Offer to paint one of the rooms or add a ceiling fan when they sign a new
lease. In the fall, if you live in a cold part of the country, send someone around to clean the gutters and service
the furnace. In other words, show your tenants that you value them as customers, and take care of any problems
that might be making them think about moving.
(Continued on Page 21)
Volume 12 Issue III
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March, 2009
(Continued from Page 20)
2. Make sure your units are in prime shape inside and out. The best tenants can afford to be picky—so if you
want to attract them, you have to lay the right groundwork. But assuming that you keep your rentals in good shape
to begin with, this can be relatively inexpensive, especially as compared to months of vacancy. Basically, you need to
make sure that your units look good and smell good. Fresh paint and carpet are cheap and give the right impression.
Cleaning the unit thoroughly—including the windows, the tub, the basement, and all of the corners attracts a clean
tenant. Replace all the lightbulbs. And for heaven’s sake, exterminate your units—and don’t leave the traps out for
the applicants to see!
One of the biggest mistakes I see landlords make is not making their units spotless—and, in apartment buildings,
this includes the common areas. Clean up and paint the halls and the laundry area, because a good, clean tenant
wants to live with other good, clean tenants. Walking through a lobby or hallway strewn with discarded junk mail is
enough to turn off the best tenants in itself. Whether your rental is an apartment or a house, clean up the yard. Beer
cans, papers, or the last tenant’s garbage around the outside of the property might keep your perfect tenant from
even coming in. And one last note—I’ve noticed that the applicants for both my higher-end and lower-end rentals
are very concerned about utility costs this winter. If you haven’t replaced the windows in some of your units, now’s
the time.
3. Offer special deals to attract lots of interest. The more applicants you have, the choosier you can be about
your future renter. Ever wonder why those big apartment complexes offer “$100 move-in specials” in November
and December? Because they WORK—and trading a lower security deposit for a quicker rental to a better tenant is
usually a financially saavy move.
Another come-on that I like—but haven’t used myself—is a 12th month free rent offer. With this deal, the tenant
who pays for the first 11 months of his lease on time and in full gets the 12th month free. It’s usually offered in the
hard-to-rent Christmas season—and advertised as a way for the tenant to save his rent next December for
Christmas presents.
4. Market the SERVICE as much as you market the unit. Within a particular neighborhood, there isn’t too
much variation in available apartments or rental homes. They tend to look about the same, cost about the same, and
offer about the same amenities. So how can you set yours apart? Well, one of the biggest complaints I hear from
decent tenants is, “My last landlord wouldn’t fix anything.” This could mean one of two things—and a thorough
screening will tell you which—either the tenant did a lot of damage to his last house or he’s someone who wants to
live like a decent human being. If it’s the latter, you can appeal to his “problem” by emphasizing how well you will
treat him if he moves into your rental. We recently began offering (and advertising!) a 48-hour repair guarantee on
our rentals that basically says that if we don’t respond to a major repair request within 48 hours, the tenant gets a
refund of his rent for the time period that the repair went unmade. This guarantee tells the tenant that we, unlike
many other landlords, will be responsive to his needs—or pay up if we aren’t! And there are other services you can
market, too—free basic cable or satellite service, discounts for early rent payment, and so on. Since a unit is a unit is
a unit, any “add-ons” that you can come up with that don’t cost you a ton of money really help to attract tenants.
5. Know that, as always, there’s an upside here: now is a GREAT time to pick up cheap, high-profit “trashflow” properties. Landlords are bailing out of the business in droves thanks to the high vacancy rate they’ve
experienced. These properties usually need quite a bit of updating—which is why the owner has vacancy problems
to begin with, of course—but it’s a good time to collect these properties for your portfolio.
6. And there’s light at the end of the tunnel. There’s a wonderful new trend afoot that I expect to accelerate over
the next few years. Those same “good” tenants who purchased properties in the last decade or so are turning out to
be bad homeowners, and are coming back to us as good tenants. The last 2 houses I’ve rented (both with less than a
month vacancy, by the way) have been taken by applicants with jobs, cars, credit cards—and a brand new
foreclosure on their records. As always, the world—and the real estate market—will turn.
R e printed by Permssion from the Goddess E-Letter, August, 2006. Visit www.regoddess.com for a free 3-month trial
subscription of the Real Deal Newsletter. One per household, please.
Volume 12 Issue III
21 of 47
March, 2009
LANDLORDING: FINDING THE RIGHT TENANT
Go Ask Alice
by Robert L. Cain
Alice called me just in time. From time to time she calls, needing my consultation about how to handle
issues with her rental properties. This time she almost got sucked into a bad tenant’s scam. Fortunately,
she had the sense to realize that there was something about this applicant that smelled like three-day-old
fish.
On paper he looked good. After all, earning $98,000 a year with the tax returns to prove it meant he would probably be able
to pay the $1400 a month rent. But, as is often the case in situations such as these, it was too good to be true. The first clue
should have been the rental application he filled out.
The first thing we need to do when we receive a rental application is to look at it before the applicant leaves. Alice didn’t do
that. She waited until she went to check it out before she discovered that there were blank places on it. One of the blank
places was the phone number of a previous landlord.
The first rule when you get a rental application is to look at it to be sure there are no blank spaces. The phone number of
the previous landlord is an important item to “forget” to include. A blank space on a rental application means we hand it
back to the applicant and tell him or her the application is not acceptable until it is completely filled out-to our satisfactionnot his or hers. Remember, we are in charge, not the applicant.
Because Alice had read my landlord manual (Profitable Tenant Selection), she knew how to find the phone number of the
previous landlord, even if the applicant didn’t provide it. She called and got a property management company. The property
manager told Alice, “I’ve been trying to get a hold of him.!
Huh? Why would a previous landlord, one where the tenant moved out (according to the rental application) four years
earlier, need to get in touch with this tenant? That was because this applicant had a current lease with this property
management company. Yes, he had rented the apartment in 2002, but he had never let the lease expire as claimed in his
rental application. Who was living there now? Who knows? And it doesn’t matter, because this tenant is still responsible for
the rent on that apartment.
I asked Alice if the applicant had listed that lease as a current obligation on his application. He had not, of course. That’s
two red flags this applicant ran up. First, the blank space and second the omission of the current obligation on the rental
application. Time to reject.
But Alice is desperate. She needs to get a tenant in her rental house because it has been vacant for several months. Of
course, the only two times a landlord gets into trouble are when he or she is in a hurry or when he or she feels sorry for
someone. Alice was in a hurry. Fortunately, I talked her out of having anything to do with this applicant. After all, if he had
already lied or misstated twice on the application, you have to figure there’s more that would come out with more thorough
checking.
Alice said she had had an applicant a month earlier, whom she described as “really nice,” who had a regular job of some five
years, but rode motorcycles and restored antique cars (not in the rental). She had never called me about them, the
motorcycles and the antique car restoration disqualified them in her mind. To her credit, she said she would call them and
see if they were still interested.
Yes, Alice called me just in time. And I hope she can get the antique care restorer as a tenant. The point of this story is that
sometimes the applicants who seem the best are far from it. Bad and marginal tenants are expert at sliding past unwary or
hurried landlords. Better no tenant than a bad tenant. Go ask Alice.
Copyright 2008 Cain Publications, Inc. Reprinted by permission. Robert Cain is a nationally-recognized speaker and writer
on property management and real estate issues. For a free sample copy of the Rental Property Reporter or Northwest
Landlord call 800-654-5456 or visit www.rentalprop.com.
Volume 12 Issue III
22 of 47
March, 2009
LANDLORDING: MANAGEMENT IDEAS
Tips On Management From Mr. Landlord
Accentuate The Positive
How do you tell a prospective resident who asks that you do not offer a particular property amenity that they are
looking for? Here's the response from one experienced landlord – “I stress the PLUSES at my units. For example,
I answer truthfully when the question comes up about parking. The warts of my ten unit that there is no way I can
solve are.... There are ten 1 bed/1bath apartments and five parking spaces. The spaces are assigned by seniority. We
have two units that are no car tenants and no expectations of wanting/getting a car. The new kid on the block gets
to park on the block. Sometimes this is a deal breaker. It is what it is.... I yam whut I yam, Toot Toot (can of
spinach in hand with bloated forearms). An applicant today said, ‘with the price of gas not having a parking space
isn't all that important. Might be a good thing!’ ”
Instead of focusing on the negatives, I highlight possible positive features of my apartments by informing
applicants that there is a on-site laundry though. There is also a propane BBQ for the tenants’ use. There are
benches that are secured in the "Garden courtyard." Property Warts? Plant a flower over the warts. Shine up the
positives. Many warts of a property aren't noticed nor all that important to some tenants. Above all, be honest ...
you can be honest in a positive way!
The Most Dangerous Dog Breeds According to Geico
The list of dangerous breeds according to one major insurance company, Geico, was shared recently by one of
MrLandlord.com contributors. The most dangerous dog breeds are:
Akita
Chow Chow
Pit Bull
Wolf Hybrid
Alaskan Malamute
Doberman Pinscher
Presa Canario
American Staffordshire Terrier
Great Dane
Rottweiler
Bull Mastiff
Husky
Staffordshire Bull Terrier
Many insurance companies will not provide insurance for rental owners if you allow these dogs in your properties.
In fact, there is talk of some insurance companies notifying landlords that no dogs can be permitted at all. It would
be wise to check with your insurance company regarding allowing dogs as pets by residents and ask your insurance
agent if there are any prohibitions in the insurance policy.
Retain Tenants In A Tough Rental Market
When tenants have a lot of choices and your competitors are offering specials, here's a few tips:
1) Take a look at your vendors and maintenance. Do you have the best you can find? Are they being personable to
your tenants as well as doing good work?
2) Take care of repairs yesterday and make sure the work is done right the first time. Better yet, do preventative
maintenance.
3) Do some extras to let the tenant know you care about them.
4) Make sure the kids are happy. If the kids are not happy, the parents will start looking for another place to live.
Regarding #4: Last weekend we threw a pool party. Mostly the kids showed up to eat free pizza, get
balloons/water toys and play supervised games in the pool. They had a ball and it gave them the idea that where
they live is "THE place to be". They also went home and told their parents about the fun they had. Several parents
came by the office to say "thanks." The best part is that the parents get an afternoon off while the kids are
entertained. It's all about creating an efficiently run, fun community...makes them want to stay.
Reprinted by Permission. For a free sample newsletter, call toll-free, 1-800-950-2250, or visit www.mrlandlord.com
to win a free landlording book.
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March, 2009
LANDLORDING: FAIR HOUSING DISCRIMINATION CASE
HUD Charges Chicago Landlord With Violating Fair Housing Act
Landlords allegedly discriminated against families with children
HUD News Release. Contact person: Shantae Goodloe (202) 708 0685
WASHINGTON. The U.S. Department of Housing and Urban Development announced today that it has charged
Chicago landlords Martin and Mary Giarelli with housing discrimination for allegedly refusing to rent to families
with children and making discriminatory statements. The Fair Housing Act prohibits housing discrimination
based on a person's family status.
The case was initially brought to HUD by Interfaith Housing Center of the Northern Suburbs (IHCNS), a Fair
Housing Initiatives Program agency that conducts fair housing testing activities in suburbs north of Chicago. In
response to a complaint it received about one of the Giarelli's one bedroom apartments in the city of Highwood,
IHCNS conducted several fair housing tests to determine if the Giarellis discriminated against families with
children.
In January 2007, IHCNS testers posing as single mothers with one child were told that the apartment was very small
and only suitable for one person. Those testers were not offered the opportunity to view the unit. On the other
hand, testers who posed as single or married apartment seekers with no children were afforded an opportunity to
view the apartment. At no time were the married testers told that the unit was too small for two adults. In fact, the
Giarellis allegedly told one tester who posed as a single renter, "We want to make sure we have a quiet environment;
no children, no smoking, and no pets."
After IHCN referred the case to HUD, the Department conducted a follow-up investigation and found that the
Giarellis' actions did constitute housing discrimination.
"When you discriminate against families with children, you rob them of the ability to secure safe and affordable
housing that all Americans should have," said Kim Kendrick, HUD Assistant Secretary for Fair Housing and Equal
Opportunity (FHEO). "Landlords must follow the requirements of the Fair Housing Act and understand that
discriminating against people because they have children is against the law."
Housing discrimination charges heard before an administrative law judge carry a maximum civil penalty
of $16,000 for a first offense, in addition to actual damages for each complainant, injunctive or other
equitable relief, and attorney's fees. Sanctions can be more severe if a respondent has a history of housing
discrimination. Parties also have the right to elect to have their cases heard in federal district court.
HUD News Release No. 07-097. HUD’s Office of Fair Housing and Equal Opportunity and its partners in the Fair
Housing Assistance Program investigate approximately 10,300 housing discrimination complaints annually. People
who believe they are the victims of housing discrimination should contact HUD at 1 (800) 669-9777 (voice), (800)
927-9275 (TTY). Additional information is available at www.hud.gov/fairhousing.
Weather and O ther Alerts
Rarely is it necessary to cancel a m eeting. (flooding, snow, ice, power outages, etc).
If you are not sure that the m eeting/event will take place:
1. If we have your e-m ail address, we will attem pt to notify you.
2. W e m ay be able to post the inform ation on www.m reia.com .
3. Call 201-343-8629 or 201-791-4639 for up-to-date inform ation.
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March, 2009
MARKETING: SIGNS
Q & A - Ask the Expert
by Mike Jacka, President, Minnesota REIA
Q: Do you put out signs on Friday and then pick them up on Sunday night like so many people
recommend to avoid getting a fine? Amanda Dockendorf
A: No, I put them out whenever I have the time. I have only had to pay one $100 fine in the past seven years. The
fine does not scare me. The cost of the one fine is less than the cost of some of the ads I have run for one day.
However, if you do put the signs out on Friday evening and pick them up Sunday night you won't be losing as many
signs as I do. On the other hand, you would do a lot more work on the weekends then I would care to do. The
bottom line thought is to get your signs out there where people will be able to read them. The more signs you put
out over time, the more signs will remain and remain visible.
Reprinted by Permission. RealEstatePromo.com does not give legal, tax, economic, or investment advice. Real Estate Promo
disclaims all liability for the action or inaction taken or not taken as a result of communications from or to its members, officers,
directors, employees and contractors. Each person should consult their own counsel, accountant and other advisors as to legal,
tax, economic, investment, and related matters concerning Real Estate and other investments. Copyright© 2003-2007
RealEstatePromo.com a Real Estate Investment Group. All rights reserved.
Vendor Spotlight
Every month (featured in alphabetical order on MREIA’s home page),
vendors who offer vendor discounts will be highlighted. Last month
Kuiken Brothers Company(building supplies)was spotlighted.
This month’s featured Vendor is Budget Rent-A-Car. With their
Corporate Discount number you are guaranteed their lowest available
rate!
Whether you’re renting at the airport or in your neighborhood, Budget has great deals
for you! Because we are members of National REIA, you may use your Budget
Customer Discount (BCD) number to save even more on your next getaway! No
matter what kind of vehicle you need, you'll find it at Budget. Choose from a large
selection of cars, available at any of their convenient airport or neighborhood
locations.
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March, 2009
SAVE MONEY!!!
•
•
Get Your Air Conditioning Serviced
•
•
•
Lower Utility Bills
Install New High Efficiency Air Conditioning and Heating
Equipment
Be Comfortable All Year Round
We Also Provide Piping and General Repair Services
Serving MONMOUTH, OCEAN, AND MIDDLESEX
FREEDOM PROPERTY MANAGEMENT, LLC.
Call George (732) 890.9093
email: gjmtgent@optonline.net
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March, 2009
Need Cash for More
Investments?
Visit our website to enter the
details of your
Real Estate Note for a
Free quote.
Sherwin Williams Discount Cards
MREIA is a member of National REIA. Sherwin
Williams offers significant discounts on their
paints and products through NREIA.
If you have not already received your free discount
card, request one when you attend the next
MREIA meeting.
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Need Your Short Sale
Negotiated?
Outsource the Work to Us!
Email Us Today at
info@riversofincome.com
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Harry Frieland
Levitan & Frieland, P.C.
Counselors at Law
26 Columbia Turnpike
Florham Park, NJ 07932
(973) 966-0153
111 E. 35th St.
New York, NY 10016
(212) 432-3800
Please Let Us Know
If you are a member and have any suggestions as
to how we can improve MREIA, whether it be the
website, the newsletter, events, or anything else that
you believe would help us to better support you,
please feel free to click on “Suggestion Box” located
on the left side of the home page.
You are required to enter your Membership
Number and PIN number to submit your suggestion.
CertaPro Painters
(800) Go-Certa
www.certapro.com
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1EW JERSEY STATE BAR FOU1DATIO1
Founded in 1958, The New Jersey State Bar Foundation is the charitable and educational Foundation of the
New Jersey State Bar Association. Free Law-Related Seminars for the Public
Calendar of Upcoming Events
ATTE1D A1 EVE1T
There are many informative seminars and conferences you can attend, presented by attorneys and experienced
practitioners in specialized areas. These free programs are held at the New Jersey Law Center in New
Brunswick unless otherwise specified.*
Admission is free but advance registration is required for all events. To get event details and to register
online, select from the event listing below or choose by date in the calendar. You also can register by calling
1-800-FREE LAW.
Event Listing:
•
April 07, 2009 Law and Disability Conference 9:00am-1:00pm (tentative time)
•
June 04, 2009 Wills and Estate Planning 7:00pm-9:00pm
*Location of the above seminars: The 1J Law Center: One Constitution Square, New Brunswick, NJ
08901
Tel: (732) 249-9000 or 1-800-FREE-LAW
Fax: (732) 828-0034
Email: info@njsbf.org
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March, 2009
Installment Sale Proposal
In light of the downturn in the real estate market coupled with the President and Congress’s efforts to pass a
stimulus package, we would like to propose a change in the tax code that will move the economy onto more solid
footing. Changing the tax code to allow builders and rehabbers (groups defined as “dealers” under the Internal
Revenue Code), to use installment sale tax treatment would benefit all parties involved along with the nation as a
whole.
Prior to the ‘Tax Reform Act of 1986,, investors, builders, dealers and rehabbers were allowed to elect Installment
Sale Tax Treatment. Briefly stated, Installment Sale Tax Treatment allowed any person or entity to hold a note and
receive payments over an extended period, and pay the tax owed as the money is received. The Tax Reform Act of
1986 disallowed “dealers” and builders” from enjoying this tax treatment. From that point to the present, the entire
tax is due in the year of sale, without any regard as to when the profit was actually received.
For example, a property in need of repair is purchased for $100,000. It needs $40,000 in repairs and after fix up will
be worth $175,000. Prospective buyers love the property and would like to purchase it. They have $15,000 to put
down. The bank will lend them $125,000 for a total of $140,000. The rehabber/seller would be willing to receive
their profit over time by taking back a second mortgage of $35,000 in monthly installments, for instance $275.00
over 15 years.
If the property closing takes place in January, the seller/rehabber will receive $3,300 in payments ($275 x 12). If they
are in the 30% tax bracket they will owe in Federal taxes $10,500. Since they only took in $3,300 they will have to
come up with $7,200 in additional taxes. This punitive situation has kept many from holding notes and mortgages.
Another concern is if the buyer defaults, the seller/note holder will have to amend their tax return, as they did not
receive the anticipated profit that was reported.
Banks, credit card issuers, etc. are allowed to pay tax on income as it is realized. We believe this allowance
should be extended to businesses in the real estate and construction industries as well.
Many builders and rehabbers would welcome the opportunity to create notes and mortgages if they were allowed to
pay the tax in the year that the money is actually received. It would help them create a solid predictable cash flow to
even out their business activities, thereby helping to keep the national economy on a pro-growth path.
The following are some examples of the positive benefits that allowing for Installment Sale Tax Treatment will
create.
Stabilize the Balance Sheets of Financial Institutions – with private parties (rehabbers and builders) holding
mortgages, many of which would be in a junior lien position, notes and mortgages issued by financial institutions
would be more secure. The financial institution’s notes would have a lower loan to value ratio, resulting in more
safety and liquidity.
Financial Institutions Exposure to Foreclosures - with private parties holding junior liens and wishing to
protect their investment, if the home owner / mortgagor gets into financial distress, these private parties would be
better equipped to deal with the situation on a more personal, results oriented basis. This will have the effect of
providing an extra degree of safety for the financial institutions first (superior) mortgages.
Lower Risk to Fannie Mae and Freddie Mac – As the loans insured by Fannie Mae and Freddie Mac carry a
lower LTV ratio, they would be of less risk and higher quality thereby putting less strain on their portfolio. They
would have more access to capital. Risk would be spread among the thousands of investors who will be holding the
second mortgages, not to the government, its quasi-government agencies, and the taxpayers.
(Continued on Page 47)
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(Continued from Page 46)
Strengthen the Financial Health of Builders and Rehabbers– By allowing Installment Sale Tax Treatment to
be taken by Builders and Rehabbers, more properties could be sold quickly, creating a safe predictable cash flow
and a more stable tax base.
Improvement in the Nation’s Housing Stock – By allowing rehabbers to elect installment sale tax treatment,
properties in rundown neglected areas would be rehabbed, thereby creating jobs and economic growth in these
communities, increasing property values and it would be done with private dollars. Taxpayer exposure would be
minimized and blighted communities would spring back to life as vibrant, desirable neighborhoods.
Create Employment Opportunities in Construction and Ancillary Businesses – by allowing builders and
rehabbers to use elect installment sale tax treatment, the number of new houses and renovations will rise. This will
create jobs; in the construction trades, for manufacturers of building materials, building supply dealers, real estate,
property managers, bookkeepers, etc.
Stabilization of Real Estate Values allowing for a Steady and More Predictable Tax Base – with financing
more plentiful and risk diminished, property values throughout the nation will have a more solid foundation and
can avoid precipitous ups and downs. The result? A more predictable and stable appreciation of values that will
create a more stable tax base.
Help Keep Home Ownership Levels High – With the builders and rehabbers able and willing to provide some
of the financing available, the number of Americans that will be able to own their own home will increase.
Increase Government Revenues – With a change in the tax code, thousands of builders, rehabbers, investors and
dealers, throughout the nation would be ready, willing and able to buy, renovate and improve properties. Tax
revenue will increase exponentially and flow into the government coffers. The tax rate would be based on “ordinary
income” and paid as it is received.
Because of the above inequity in tax treatment over the last twenty years, many investors, dealers, builders and
rehabbers have passed on many potential opportunities that could have resulted in “win-win” situations for all
parties involved. By once again allowing groups to elect and take installment sale tax treatment, all parties will
benefit.
Thank you for your consideration.
Yours truly,
David Corsi
Vice President, New Jersey Association of Real Estate Professionals
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