How to Rent my Single Family Home in New Jersey

Until lately no one even knew how many single family rentals there were in New Jersey.  It took the Census Bureau, not the speediest source of information, to make it official.  The Census Bureau’s Property Owners and Managers Survey, based on 1995 data, was recently updated to document the explosive growth of single family rentals.

Now a new study, one of the very few to look into the single family rental segment, is filling in the gaps.    By CoreLogic the new study found that single family rentals are $3 trillion business today and account for 21 million rental units, 52 percent of the entire residential rental market.  In other words, the number of single family rentals in the market today has surpassed apartments.

Single family rentals are very distinct from multifamily and they behave very differently.  Unlike multifamily, millions of single family rentals are listed on MLSs by real estate brokers, many of who represent new owners in acquiring investment properties.  As the for-sale inventory has trended down since 2005, the rental share rose 13.3 percent last year alone.  As of the end of last year rental closings were up 11.5 percent year-over-year while prices fell 9.8 percent during the year.  Demand is strong.  The national average months’ supply for single family rentals was 4.5 months in December compared to 6.2 months for homes listed for sale.

While renting your single family home in New Jersey may seem as easy as posting an ad on Craigslist, we recommend that you set aside some time to prepare your single family rental before you leap into the world of finding and managing tenants.  Here are seven essential steps that every landlord should take:

  1. Get an Insurance Policy

Purchasing landlord insurance (also known as rental property insurance) is one of the most important steps to take before renting your home.  In addition to the things covered in a typical homeowner’s policy, landlord insurance will protect you from major damage done by tenants, as well as from legal actions they may take against you.  Be aware, though, that rental property insurance will not cover your tenant’s personal property, they’ll need to purchase rental insurance to cover their belongings.

  1. Enlist an Accountant

Assuming you’re not an accountant or deeply familiar with rental tax laws, it would be wise to enlist an accountant to help you sort through the tax implications of renting your house.  An accountant will help you  figure out what records you’ll need to keep in order to navigate Schedule E come tax time.  He or she can also help you figure out how to minimize your tax bill by helping you choose the right depreciation strategy.

  1. Have a Lawyer Review your Lease Agreement

A real estate lawyer can help ensure that your lease agreement does not contain any illegal provisions, while also protecting you from the financial harm that could result from tenants exploiting loopholes in your agreement.  A good lease agreement will specify the ways tenants can and cannot use the property, how many people can occupy the rental, what insurance is required, who is responsible for paying utilities, and what will happen if the tenant doesn’t uphold his or her obligations.

  1. Establish Criteria for a Tenant

Working within Fair Housing Act guidelines, outline a set of criteria your rental applicants will need to meet, and put these down on paper to hand out to potential tenants when you show them the property. These criteria should include acceptable monthly income levels and credit scores and the number of tenants who may occupy the house.  You should also lay out your smoking and pet policies.

  1. Get Your Paperwork Ready

Beyond the lease agreement, there are a number of forms you’ll need to have on hand before renting your house out. These include rental applications, credit check authorization forms, any disclosures your state requires, move in checklists, move out forms, and various notices to tenants.

  1. Get a Home Inspection

Having your home inspected by a professional will help you fix any critical maintenance issues before your tenants move in.  This will help protect you from potential legal issues, while also saving you from having to answer multiple maintenance phone calls within the first few weeks of renting your property.  Having home inspections both before a tenant moves in and after he or she moves out will also provide third-party documentation of any damage caused by the tenant.

  1. Clean, Paint, and Landscape

There’s no substitute for a through deep cleaning and a fresh coat of paint when it comes to brightening the interior of your rental home.  While trendy upgrades may be optional, if you want to attract the most qualified tenants, this basic rental hygiene is required.  Likewise, it’s important to make sure that the lawn and garden surrounding your rental house is neat and tidy before you post the “For Rent” sign.


10 Things Your Competitors Can Teach You About Landlording

bookhddrw_300Investing in rental properties looks like a great idea on paper. You just buy a place in a nice area, find tenants and let the cash roll in. Yes, this sounds like a great, simple, moneymaking plan, but as your competitors know, landlording is no easy gig! There is a lot of chance involved. You can have a great property, but getting and keeping the right tenants is the main key to success. If you are new to landlording it is sure to say that your competition (other area landlords) probably have years of experience behind them. If you could sit and discuss strategies to successful landlording, your competitors might provide you with the following advice:

#1: Keep Your Expectations Reasonable

Have the goal of positive cash flow, but don’t expect to be purchasing a million dollar mansion and taking that ski vacation to the Alps in a limited amount of time. If you keep your expectations in check, you won’t be tempted to jack up the rent and push out good tenants.

#2: Find a Balance between Earnings and Effort

Being a “hands on” landlord is great, but if your current income may not seem as immense when you are putting in another full-time shift working on your rental property. There are property management firms that will run your rental property generally for a small percentage of the rental income, so you aren’t putting an absurd amount of time into your investment or losing an exceptional amount of your ROI.

#3: Know the Rules

Federal and state laws outline your responsibilities and liabilities as a landlord, so you can’t claim ignorance when something happens. You will have to do some reading; nevertheless, it is better to spend 20 hours in the library than in the courtroom!

#4: Have the Property Inspected

One of the best ways to avoid costly unexpected expenses is to have the property inspected by a professional before you sign on the dotted line. Property inspections are very reasonably priced in many areas and compared to the amount of money than can be dropped on unexpected repairs, is a wise investment choice.

#5: Make Sure Your Leases Are Legal

If you make a mistake on the lease, you will find it more difficult to litigate if a tenant violates the terms. Have a lawyer draw up any and all documents related to your property. As with inspections, it may cost you a bit now, but will save you money (and headaches) in the long run.

#6: Take the Time To Call References and Run Credit Checks

Too many landlords rush to fill a vacancy rather than taking the time to make sure the prospective tenant is a better option than an empty property. If you have time, you may want to drive by a prospective tenant’s current living space and take a peek around. If they are keeping their current home in shambles, that is most likely what your property will look like when that tenant lives there. Also, be sure to ask for professional references. A prospective tenant’s mother or Aunt Mary will mostly likely give a glowing reference, while an employer or current neighbor may provide a more detailed account of what you can expect if you are to enter into a lease with the prospect.

#7: Join the Landlords’ Association in Your Area

Joining an association will provide you with a wealth of experience as well as sample leases, copies of laws and regulations, and lists of decent lawyers, contractors and inspectors. Some associations may even allow you to join before you buy a rental property. Additionally, an association will allow you the opportunity to network with other landlords in the area and learn more about your competition.

#8: Make Friends with a Lawyer, a Tax Professional and a Banker

A network including these three professionals will be essential if you want to increase your real estate holdings now or in the future. Look for professionals that specialize in real estate laws, taxes and financials.

#9: Make Sure You Have the Right Kind of Insurance

After learning the rules, you will need to buy insurance to cover your liability. You will need the help of an insurance professional to select the proper package for your type of rental property. The insurance industry is highly competitive, so shop around for the best agent and prices.

#10: Create an Emergency Fund

This is essentially money earmarked for unexpected expenses that are not covered by homeowners insurance. There is no set amount for an emergency fund, some say 20% of the value of the property, but anything is better than nothing. If you are getting current income from a property, you can pool that money into an emergency fund.

How Costly Home Repairs are like a School Bully

costly home repairsReal estate investors can see great gains when purchasing an investment property.  Unfortunately, there are some major perils that can befall a house and put a serious dent in the value of that asset.  These costly repairs can come at you much like a school bully on the playground.  Many of these perils are much more insidious than a fire or natural disaster.

Monthly residual cash flow can be attractive incentive to become a landlord.  Landlords collect rent each month, pay their mortgages and pocket the rest of the cash.  What the public doesn’t see, however, is that successful property management involves managing people, forecasting repairs and maintenance, covering untimely losses and unexpected costs.  This includes monthly maintenance.  Landlords can keep their properties in tip-top shape and tenants happy by reinvesting a portion of rental income and performing monthly maintenance.

Costly home repairs that can seem like a school bully

1)  Foundation:  If you have bowed basement walls, cracks in walls or floors or a tilting chimney, you may be aware that these are signs of a problem foundation.  But many tenants don’t realize that difficulty opening and closing doors and windows can also be early signs that the home is shifting.  And whether you have a new home or an old one, foundation problems often require major repairs – and a big cash outlay.  Foundation problems can be caused by the type of soil the house is built on, an improperly laid foundation or drainage problems.  Whatever the cause, a bad foundation is bad news and, depending on the severity of the problem, can cost the landlord well over $10,000.

2)  Mold:  Unlike major water damage, such as that caused by flooding, minor or hidden water damage in your investment property, perhaps from a defective water pipe, hot water heater or window seal, can cause just as much damage – and you may not notice it right away.  Similarly, if your property suffered through a flood in the past and did not adequately dry out, mold can also thrive.  And the more humid the area in which you live, the harder it will be for you to get rid of mold and keep it from coming back. According to the Environmental Protection Agency, if the mold growth in your home is larger than 10 square feet or was caused by sewage or other contaminated water; it’s time to call in a professional. Although insurance may cover some of the costs depending on your policy, the cost of mold remediation is about $3,000 per wall and that doesn’t include the cost of replacing any mold-infected materials such as drywall, carpet or ceiling tiles.

3)  Water Damage:  If your investment property isn’t water tight, this isn’t something you can ignore.  Beyond the possibility of mold, long-term water damage can cause rot, which can lead to all kinds of expensive repairs to the structure of your property.  It’s difficult to estimate the cost of this type of repair, but it can easily run into the thousands depending on how much wood needs to be replaced and how intrusive the repairs are.

4)  Sewer Line Problems:  The portion of the sewer line that extends out from a home and onto city property is often the homeowners’ responsibility when it comes to repairs.  Sewer line problems are most common in older neighborhoods, where the line may have sagged or has been damaged by tree roots.  If your property has slow running or gurgling drains, frequent backups in your plumbing system or sewage smells outside, these may be indications of a problem.  Again, your insurance policy may cover this cost, expect this doozy to cost anywhere from $5,000 to $15,000 for a 100-foot sewer pipe.

So how do landlords prepare and minimize the damage done by these “bullying” home repairs and even smaller monthly maintenance and repairs?  While there are no hard and fast rules on monthly maintenance costs for rental properties, Fannie Mae suggests a property owner allocate 2 percent of the property value annually. That means if a property is worth $150,000, the landlord should save a minimum of $3,000 for maintenance costs.  Landlords should include anything that keeps the property in livable condition for occupants as a maintenance cost.

Allocating monthly maintenance costs includes first reviewing monthly expenses outside of the landlord’s mortgage, taxes, insurance, external property management fees and utilities.  Routine maintenance includes monthly costs to maintain the exterior curb appeal and interior common areas of the property, if it applies.  The property owner should include landscaping, exterior and interior cleaning, garbage and recycling collection to his monthly maintenance costs as well.

Landlords should plan to include additional costs that arise periodically to the monthly maintenance budget.  This includes repairs to the building’s heating, cooling and electrical systems, plumbing, and roofing.  Landlords should include minor carpentry, window repairs, occasional painting and cleaning costs as tenants move in and out.  Any supplies purchased on a regular basis should also be included like air filters, hardware fixtures or light bulbs.

Monthly maintenance is one of the anticipated costs of ownership for landlords and property managers.  A rental property owner also should plan to set aside cash for emergency repairs, rental vacancies, and capital replacements of the roof and heating and cooling unit depending on the property’s age.  Depending on vacancies, they may set aside money for infrequent costs such as advertising and tenant screenings.  Be prepared for these unexpected costs and don’t get stuck losing your lunch money to these unwanted home repair bullies!

13 Things about Successful Landlords that Real Estate Agents Won’t Tell You

successful landlordsA successful landlord is one who doesn’t feel like pulling their hair out every time the phone rings.  It’s someone who actually looks forward to the beginning of the month when the rent checks start coming in.  It’s someone who runs a tight ship with systems that can handle the big waves that are bound to come. Success is possible as a landlord, if the right steps are taken.

1) Treat Your Business Like a Business

Many landlords do a terrible job at running their business and this is largely because they don’t see their business as a business.  In other words, they treat their investing like a hobby.  However, when you treat your landlording with the respect, systems, and organization that you would treat any other business venture, amazing things can happen.

2) Screen Out the Bad Apples

Perhaps the biggest mistake landlords make is letting in the wrong person.  This can lead to late rent, trashed homes, and costly evictions. This ties well with number 1, because people treat their business like a hobby and refuse to follow even simple due diligence on the people who will be living in their properties.  What would a bank say if you walked in, completely unqualified with no income and a 450 credit score, and asked for a large loan?  A bank doesn’t run on emotion, and you shouldn’t either.  So screen like your business depends on it… because it does.

3) Treat Your Tenants with Respect

Don’t allow personal feelings to get in the way of a business relationship.  Tenants want to be treated fairly and be seen as an equals.  Treat each tenant with dignity and respect and it will come back to you in success.

4) Don’t Be Too Nice

Your job as a landlord is to be fair, not to be nice.  Being “nice” will give your tenants and others the invitation to walk all over you and take advantage at every turn.  By allowing your tenant to break the rules, you open yourself up to years of struggle and compromise that will ultimately lead to huge financial losses.  There is a difference between respectful and being nice.  Choose wisely.

5) Get Help

With over 28 Million real estate investors in America, there are bound to be countless investors in your town who can help you out during tough times.

Whether it’s the phone number for a plumber, help dealing with a tough eviction, or just reassurance that you are doing the right (or wrong) thing, reach out to other landlords for help.  Landlords love to “talk shop” so look for opportunities to open the conversation.

6) Be Knowledgeable

To make landlording an easier task, you need to be well equipped to handle the problems that you will face.  The best way to do this is through education.  Books, courses, and mentors are all great ways to improve your abilities. Listen to podcasts, talk with other investors, and teach others what you know.

7) Create a Policy & Stick to it

If you are running your rental business off the top of your head, making up the rules as you go, you are opening yourself up for a lot of hassle.  Tenants will know if you are making rules up on the spot, so having a written policy (that your tenant has) will make life much easier.  Rather than trying to explain why a certain action is not allowed, you simply can refer to the policy.

8) Quality Product = Quality Tenants

While this isn’t a hard and fast perfect rule, in general the quality of your tenant will depend largely on the quality of the home you are providing.   By providing a better-than-average home you will set a standard for the kind of tenant you attract and keep.

9) Set Office Hours

Do you want to fix repairs at 10:00 at night?  How about receiving phone calls at 6:00 am?  As a landlord you get to set your own hours.  You should publicly let all your tenants know that you are only available at certain times for examples between 10am- 4pm on weekdays.

10) Get a Google Voice Number

A neat tip you can also try relating to the previous tip is to sign up for a free “Google Voice” account – which supplies you with a phone number that is forwarded to your own cell phone.  Give all your tenants this number and set up a business voicemail on that line.  All business related calls go to that number but your phone (or multiple different phones) will ring and can be answered.

11) Know When to Outsource

Many repairs can be easily fixed.  Many more cannot.  If you are extremely handy with construction and tools you may be tempted to do all the repairs yourself.  While this might be a good idea, it also may not.  Just because you can do something doesn’t mean you should.  In order to be a successful landlord, you need to balance cost savings with enjoyment.

12) Be Organized

Have all the forms you need organized neatly in your file cabinet, have your procedure written down for all common problems (vacancies, repairs, etc.) and keep your maintenance contacts organized neatly for easy retrieval.  Keep current with your accounting.  Have a clean office. These, and many other organization tools, may seem small and trivial but they are one of the most important ways you can keep your business a business that succeeds.

13)  Always Charge a Late Fee

It may seem cruel – but you should always charge a late fee, and make it known ahead of time about this policy.  Most tenants make a lot more money than just what rent is, but not enough money to live each month. As such, they must constantly prioritize what gets paid and what doesn’t.  By being strict with late payments, you place “rent” higher on the priority scale than other obligations. Additionally, the extra income when rent is late is a nice compensation for the stress of not getting rent on time.

5 Worst Things About Selling my Probate House

When planning your estate and preparing for your death, you’re required to lay out a comprehensive last testament and consequently name an Executor for it.  This is the individual who will represent you in the execution of your last wishes after you’ve passed away, hence the need to pick out a person whose character, dependability and integrity are in agreement with your needs and values.  That notwithstanding, Executors face a number of challenges when selling a home through probate.

#1 – Large Probate Estate

Consider the size of the deceased’s estate directly proportional to the challenges of the Executor, the larger the probate estate, the harder the Executor’s work.

For probate estates valued in the millions, you’ll be kidding yourself to think that you can handle it all on your own.  You will definitely need some expert help in auditing and valuation, because such big estates are predisposed to taxes on both the state and federal level.

As an Executor, you’re mandated to oversee the settlement of all the estate’s liabilities and taxes should be top on that list. This is a sensitive and serious aspect that should be treated with as much gravity for larger estates attract more liabilities.

#2 – Additional Expenses

One of the greatest fears that many Executors confess to is that of financial liability otherwise known as fiduciary responsibility.

Countless expenses are incurred when selling a house in probate.  As if that’s not enough, the entire probate process is expensive enough, leaving more and more people strongly considering any other alternatives just so they can avert probate.

In reality, Executors are not expected to dip into their pockets per se (unless if voluntarily), but it is their responsibility to ensure tip-top management of the deceased’s estate; and with an expectant survivorship looking up to the Executor for their inheritance, any additional expenses funded from the estate are a burden enough.

#3 – Dissatisfaction of Heirs/Beneficiaries

There are countless situations that could bear dissatisfaction from the heirs and beneficiaries, with the Executor on a strategic receiving end.  Discontentment and discordance amidst the beneficiaries can be the most emotionally overbearing challenge Executors face, and it doesn’t make it any easier if the Executor is a member of the deceased’s family, or one among the named beneficiaries.

There could an unimaginable number of reasons for tension amongst beneficiaries of an estate (with jealousy and inbred rivalry coming top on the list).

It’s unbelievable how heirs can become utterly stubborn and difficult to deal with!  They can adeptly complicate the Executor’s work with issues such as sibling rivalry, perceived “unfair sharing” among many other concerns (petty or otherwise).  The beneficiaries undeniably come out tops as the greatest culprits in making the Executor’s life as unbearable as can be during the entire probate period.

#4 – Finding a Buyer – Getting a Good Price

Would you rather buy your takeout straight from the counter or get it at home after you’ve had to enter a contract with the food joint, given them your credit card details, home address, health records (food allergies and all)—the whole nine yards?

A great deal of protocol is involved in the selling and buying of probate houses, and home buyers aren’t the biggest fans of such protocol, wouldn’t it be easier to just get your takeout without the formalities of a travel visa? From not-too-pleasing disclosure forms to appearances at court hearings and a transaction that could take so long to mature; it’s not hard to see why many buyers shy away from houses in probate.

On the flip side, some home buyers believe that they can strike a better deal and hence get greater bargains when buying a house in probate and this could be a selling point for Executors looking to make a quick-home sale.  It’s one thing to find a buyer and a whole other to get a good price, both of which can prove challenging for the Executor, and especially to those with no prior experience as executors of an estate.

#5 – Time Taken to Sell the House in Probate

The procedure in selling probate houses is grueling, complicated, thorough and most importantly, governed, legally bound and carried out under the strict direction of probate courts.

The duration could be shorter if the Executor is granted full authority to process the transaction without necessarily going to court for an approval.  However, if the Executor acquires limited authority to sell the probate house, then it could take a long while before the house is actually sold.

It could be anything from a few months to over a year, between the Executor’s petition to sell the house and the actual transfer of property title to the new owner.  For everyone’s sake, it’s important not just for the Executor to know this and hence be psychologically prepared, but also for all other involved parties to get in on this fact.

The beneficiaries could cause a stir if it takes longer than anticipated, and the buyers might threaten to sue.  By putting everyone on the same page, you’ll be making your life and work so much easier.

From dealing with multiple parties to acting as the pacifist among feuding beneficiaries, to being liable as a fiduciary trustee of the estate, the Executor’s job is not as fun as shooting hoops but it doesn’t have to be as hard it’s imagined to be.  If you’re elected as an Executor, know what’s expected of you, acquaint yourself with the highs and lows of the job!

5 Tricks Everyone Should Be Using to Lower their New Jersey Property Taxes

Property taxes across the U.S. have increased by nearly 20% from 2009 to 2013 according to the National Association of Home Builders. The median annual real-estate-tax payment was $1,917 in 2013, up from $1,614 in 2009.  Over the same period, home prices in major urban centers fared badly, decreasing 31%, according to the Standard & Poor’s/Case-Shiller 20-City Composite Index.  New Jersey is no exception to the increase in property taxes.  For example, I recently heard about a New Jersey home  buyer whose property taxes have gone up by 47 percent over the past seven years, while their home’s value plummeted by 22 percent.  The following five handy tips can help residents of The Garden State lower their property taxes:

#1:  Decode Your Assessment

The first step in launching a challenge is understanding the way your assessment is calculated.  While most counties and cities mandate that assessments represent 100 percent of market value, what the house would go for with a willing seller and a buyer, fractional assessments are common.  You could very well get a notice in the mail assessing your property at $100,000 when you know you could sell it for more than $200,000. You think you’re getting away with something, but if the fraction your taxing authority uses is 40 percent, you’re actually paying more than you should in property taxes.  You can find out what fraction your taxing authority uses by calling the assessor’s office.

Once you’ve calculated the assessed value for your home, if you think the figure is high (and, thus, your taxes), you’ll need to file your appeal immediately.

#2: Get Your Property Record and Check it Thoroughly

Most local governments allow residents roughly 10 days to 30 days to appeal their assessment after notification.  To figure out the timeframe in your county or city, check your reassessment noticeor call your local assessor’s office.

It is incredibly important to ensure that your assessor has accurately described your property.  To do this, you  will need to review what is called the “property record card,” a summary of the characteristics of your home.  Make sure there isn’t an extra bedroom, say, or three bathrooms instead of two.  Extra features can drive up the value of your home.  You can usually find a description of your home on your assessor’s website.  If not, you might have to visit the assessor’s office.

If you have made substantial changes to your home, a refurbished basement or new marble counter tops, you might want to be a bit wary of an appeal, since it could have the unintended effect of driving your assessment even higher.  But property-assessment advisers say you shouldn’t be too careful.  If you feel your property is being overvalued by more than a few thousand dollars, it usually is worth the effort to appeal.

Similarly, look closely at the assessor’s description of your home to ensure that any characteristics that would drive down the value of your property, repeated flooding in your backyard, for instance, or a leaky roof that would be expensive to replace, are duly noted.

#3:  Grab Those Tax Exemptions

New Jersey offers senior citizen, veteran, disability, and homestead exemptions that lower the assessed value of a residence.  These deductions can add up to hundreds of dollars a year, but they’re not automatic.  Qualified homeowners must apply.  Applications are available at the tax assessor’s office and, in many communities, a town or county’s Web site. The deadline for filing is usually the day the assessor sets your property tax status.

#4:  Launch a Genuine Challenge

If the property tax record data is correct and you’ve claimed any exemptions, but you believe your home isn’t worth nearly as much as the town says, it’s time for an official challenge.  Prepare to put in some hours and effort to prove your case.  You’ll be in an adversarial position and winning will require a solid, fact-based argument.

Your aim is to establish the actual market value of your house, how much you’d get if you sold it.  The assessor will evaluate the market value you’ve put on your house against the valuation of similar houses in the same taxing district.

Unfortunately, the real estate crash has complicated this type of challenge, since the assessments on many of your neighbors’ homes don’t reflect their plummeting market prices.  So, a more fruitful avenue might be establishing your home’s actual market value.  To do this, you could hire an independent appraiser (typical cost: about $350 to $500).  Check with your assessor’s office first, though.  Some jurisdictions will not accept an outside appraisal; others require the appraiser to report his findings in person, which adds to your expense.

Alternatively, you could collect sales price data on five to 10 houses that went for at least 10 percent less than your assessed value during the quarter before the last assessment.  A real estate agent or professional appraiser might do this or you could use online real estate listings.  Remember, the definition of market price is what you’d get if you had a willing buyer and a willing seller, so don’t include foreclosures or short sales in your sample.

Once you have the information, arrange an informal visit with the assessor.  If you can come to an agreement, it could save you from making a formal presentation.  If you can’t, find out when the assessment review board meets and get on its calendar for an appeal.

#5:  Win Your Appeal

Three things will help you build a strong case that your assessment is excessive: facts, figures, and pictures.  But review board members will be swayed not only by the substance of your argument, but by your style.  A few tips on presentation:

  1. Watch someone else do it.  If you can, attend an appeal board meeting a few days or weeks before yours to see how the members respond to a presentation.  Tailor your approach accordingly.
  2. Keep it short and sweet.  Be friendly and stick to the specifics of your appeal.  Don’t make arguments about the national real estate market or the evils of taxes.  You’ll be allotted around 10 to 15 minutes to speak.  Don’t use it all.
  3. Hold your ground.  Some board members may ask provocative questions such as “Would you sell your house for the assessment you’re suggesting?”  Don’t bite.  Instead, respond by getting back to the case, saying something like: “I’m here to discuss my assessment and believe I’ve demonstrated that it’s out of proportion with 10 comparable properties in my neighborhood.”
  4. Show and sell.  Give the board pictures of homes similar to yours but with significantly lower assessed values.  And show photos of your house’s features that should be subtracted from its value, if it’s on a busy street, for example, or the view is terrible.  Distribute handouts so every board member can follow your argument.  These documents will also be a useful reminder when the board reviews your claim, which might not happen for some time.

If the board decides against you the next stop is court.  The conventional wisdom has been that only the most egregious over assessments were worth the expense of hiring a lawyer to go to court.  But the calculations have changed.  After all, your assessment review board may be turning down appeals simply because it needs to balance the town’s budget.  The court will have no such conflict of interest.

We Buy Houses Companies. Learn how to find an honest one.

The idea of selling your house to a We Buy Houses company is unconventional for sure.  However, typically these companies are individuals who either rehab the house or want to fix it up and rent it out.  Like any industry there are some dishonest people trying to tack advantage of people in search of making the most money possible…No matter who they hurt.  Don’t let a few bad apples spoil your entire perception of all home buyers.

There are some fairly easy ways to find out if you are dealing with a good, credible company.


Among the honest people in the house buying industry, having a good reputation is very important.  Much of their business is word of mouth and through relationships that have developed over time.  This is all good to know, but how do you know you are dealing with a credible company?  Here are a few things you can check on…

Better Business Bureau

This should be your first stop.  If a person feels they have been taken advantage of or just had issues with a company they can report them to the BBB.  All these reports and reviews of the company are freely available to everyone.  If you can’t find any reports on the company that means they might be new or are a good company.

Are they a Local Home Buyer?

Knowing the area and knowing the people of an area is important for a home buyer.  Many times they live in the community themselves.  Another reason to work with local home buyers is that they can give you the best price for your home because they know you may live in the nicer part of town.

Will be okay with lawyers?

Honest buyers should be transparent.  They should be willing to divulge and be honest about their intentions.  Having said that, having lawyers involved in the selling process should not be a problem for your potential buyer.  Many times the buyer will have their own lawyer as well.  If both sides choose to use attorneys then all contractual items will be handled by them.

Proof of other transactions they have closed

A final, but good question to ask is if they have proof of other home purchases that have closed in the past.  This simply proves that the buyer has gone through the process before and everything should go smoothly.  Your home will be sold and you will get your money in a timely manner.

Young businesswoman (real estate agent) with hose model and keys


Nothing builds bad feelings like a company who doesn’t return your phone calls.  An honest home buyer will always be reachable by phone or email and if they are not will return phone calls within 24 hours.

Another bad sign is when they miss meetings or are late.  All these things are traits of dishonest and disorganized people.  Reliability is a sure sign that your buyer will follow through on what is said and agreed upon.

Proof Of Funds

If the buyer offers cash, make sure they can show you proof.  A bank statement, a letter from their lender or any other acceptable proof of funds.  Usually the buyer will not be willing to show a bank statement, however it is acceptable to have their bank write a “proof-of-funds” letter saying the money is available.

Background Check

You can never be to safe or sure, so it is a pretty good idea to do a back ground check on the buyer.  If you are still unsure of the buyer after talking with them you can do a background check.  A good place to get started is at the Government Public Access website.  If the buyer has nothing to hide they should have no problem allowing you to do this.

Use your Gut

When it is all said and done it really all comes down to your GUT.  Even if they have passed every test and seem like a good person.  Trust your gut because  you’ll never regret going against your better judgement.


Before You Sell Your Rental Property…Read This

The life of a landlord has so much more to it then collecting rent checks on the first of the month.  Don’t be ashamed if you have come to the conclusion that it’s not for you anymore.  You should be given high praise for trying something as challenging as a rental property.  Before you sell the property you must first make sure it is the right move.  Answer the following questions and it will help your final decision.

Why do you want to sell?

You may have had a steady stream of bad tenants or maybe you are moving across the country.  The answer to this question might be easy but it might not be.  It is a great idea to talk with a successful landlord in your area to see how they handle their business.  In the end maybe the reason you are selling is the direct result of something you can change.  And this change might drastically improve your situation and feelings towards your rental property.


450_houses-1113tm-pic-1679Do you know about 1031 exchange?

Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

For more information about 1031 exchanges you can go to the


What will your capital gains taxes be?

If you are a first time landlord you may not realize that capital gains tax is going to cost you more then on your personal residence.  The amount depends on how long you have owned the rental property.  Less then 12 months you are in short-term capital gains territory.  Long-term gains apply if you hold it for more than a year.

How to calculate this goes beyond the scope of this article, but you can find the information you need by following the links below…


Is selling a Tax Loss vs Tax Gain?

Let’s assume you do expect a tax loss from selling a rental property you’ve owned for more than a year. That loss will be a Section 1231 loss.  It certain circumstances this can be good for you.  The losses can be used to reduce income.  Also you may have a net operating loss.  If the Section 1231 loss is large enough to reduce your other income below zero. If any of the net operating loss is left over after going back two years, you can carry the rest forward into future tax years to offset future income (for up to 20 years). Alternatively, you can choose to not to carry it back and just carry it forward for 20 years.


Do you want the headaches of a rental property anymore?

The number one reason landlords sell their rental properties is because there are just to many headaches involved.  From evictions, tenants not paying, tenants constantly calling to fix issues or just having trouble filling your vacancies.  A bad rental can bring a lot of stress into your life and can affect your family and health.  There is no shame in selling and moving on.

Selling a House? What you need to know

Selling a house in New Jersey can be full of surprises.  To get top dollar requires you to put time and money into your house in order to get it to it’s peak condition.  It seems like everyone wants a “move in ready” or “turn key” house.  Unfortunately the costs to get it in those conditions can be shocking.  To prepare yourself it is a good idea to do your homework.  A great place to start is to answer the following 7 questions.

What is your Time Frame?

Life will most likely dictate the answer to this question.  You might have to move because of a job transfer and can only afford to carry two mortgages for 3 months.  How about you inherited a house and the taxes are draining you dry.  Sit down and figure out exactly how long you can afford to own the property.  Sure you’d like to sell in in 60 days but you should know how long you actually can go.

What needs repairs?

Before listing your home for sale it’s important to identify what needs to be repaired.  These items will assuredly be spotted by your buyers inspector.  When this happens they will lower their offer by asking for a concession or even back out of the contract.  Nothing is worse then losing a deal on something you could have fixed before hand.

Even if you have to call in an inspector yourself, it is a great idea to find all your house’s trouble spots.  At this point you can then get estimates on what it actually costs to fix these items.  You can then make an educated decision on whether to fix the items or not.  Also  you now know if the concessions the buyer is asking for are reasonable.

Please also realize that you need to disclose all known repair items or you could be sued after the fact.

How much you will pay in Commissions and Closing Costs?

These are huge expenses when selling your house.  If you don’t have a lot of equity in your home, closing costs could eat what ever equity you do have.  Some of these fees can be negotiated out or avoided all together.  However you must know about the fees before hand in order to put together a plan that will help you avoid them.

Every state’s fees are different so make sure you check with a lawyer/title company to get the latest costs.  Below are the typical items you will see on your closing statement as well as the average costs for the state of New Jersey.

Average Origination Fee Charged by Lender = $1,568
Average title and third party fees = $2,507
Average Total Fees = $4,075

Here are the average cost breakdowns…

Origination Fees charged by the lender

Points $490
Application $345
Document Preparation $75
Broker, Orginator or Lender $1,112
Processing $495
Tax Service $79
Underwriting $200
Wire Transfer $25

Third Party Fees

Appraisal $407
Attorney, Closing and Settlement $553
Credit Report $14
Flood Certification $10
Employment Verification $15
Inspections $125
Postage/Courier $75
Survey $675
Title Search and Title Insurance $1775

* this information is from

What is the value of the property as it sits?

Knowing the value of your property in “as-is” condition is highly recommended.  This will be what you can expect to get for your home if you do not do any repairs or upgrades.  Having an idea of what this value is will help you make a decision on what to do next.  Should you spend money to replace the roof, upgrade the kitchen or even fix the flood damage in the basement.  There is no sense in throwing good money into a property if you won’t get it back and then some.

How much will it cost to fix the house up?

After figuring out what the “as-is” value of your home is and what needs to be repaired it’s time to figure out how much it will cost to fix the place.  Best way to do this is get a couple of contractors in to give you an estimate of the items on your list.  You will then have a good idea of how much it will cost to fix everything.

Are you emotionally attachment to the house?

Nothing prevents a home from selling more then an emotionally attached owner.  The problems with emotion is it artificially inflates the value of the home…In the owners eyes only.  Did you grow up in the house?  Did you raise your family there?  It is tough to let go sometimes, but you can’t let those memories make you see something that isn’t there.  Your buyers will certainly not see it.

Treat the sale of the property as a business transaction.  Refer to the property as “the property” or “the house”, stop using the word “Home”.  Home has a direct line to your emotions and will affect your decisions.

What qualifications do you require your buyers to have?

It’s a good idea to write down the profile of your minimum qualified buyer.  This way when the offers start coming in you can easily check your buyer profile and make a decision.  Below is a list of items you should consider…

Pre-approved/cash.  A buyer that is pre-approved for a mortgage or has cash (and can prove it) is the ideal buyer.  Many offers will come in that says the buyer is “pre-qualified”  this doesn’t mean they can get a mortgage however.

Down payment amount. Determine the minimum you’ll accept for the down payment.  The standard in NJ is 20% to 25%.  A buyer who can afford that is a strong buyer in my book.

What contingencies (inspection, financial, other?).  In most cases an offer will have at least an inspection and financial contingency.  Anything more then those usually signifies that they buyer isn’t 100% serious about following through with the offer.  Make a list ahead of time of which contingencies you are okay with and if you get an offer that has more then it’s easy to dismiss it.

Closing Costs. It is pretty common these days to split closing costs with the buyer.  You have to make the determination at how much you are willing to give up.  Like everything else it’s a good idea to setup guidelines ahead of time so your decision is a logical one not an emotional one.


Final Thoughts 

If you need to sell your house quickly you have to be flexible with your asking price and I Buy Houses in NJ, any condition.  Instead of trying to get what you want for the house you’ll have to determine what you NEED for the house.  Do you need to pay off some debt or pay off estate taxes?  Houses can be a great investment but they also can be a huge burden if you can not sell it.  Knowing everything that you can about your house can go a long way in making the right decisions.


How to Screen Tenants in 5 Easy Steps

If you are going to see success as a landlord you must have good tenants.  It is the life blood of the business.  There is no quicker way to fail then have tenants who don’t pay and/or don’t take care of your property.  Not only does it affect your business it will also affect your mental state.  The good news is that getting a good tenant is not about luck, but about doing your home work.

Bad tenants have certain tendencies that you can discover by doing the following 5 steps.  As you begin your due diligence just keep in mind that it’s more important to get a good tenant then it is to avoid a month without rent coming in.  Even if it means multiple vacant months…You should have planned for vacancies any way right?

Screening Tip #1:  Have Them Fill Out a Rental Application

tenant screening

A rental application is where you will get an applicants personal information.  It will be the basis for building their tenant profile.  It is important to have a good rental application, so don’t just go making one up.  Get one from an experienced landlord that you may know or by joining a local real estate investing association.

What to Look for on a Rental Application:

  • Employment History.  This is where you establish their stability.  How long has the tenant been at their current job? Has he or she switched jobs multiple times in the last few years?  Usually people who constantly change jobs do so because they have problems following rules.
  • Income.  Quite simply can their income cover the rent without over extending themselves?
  • Financials.  Bank accounts and credit cards, including balances and minimum monthly payments.  An applicant might have the monthly income for rent but if they are in debt and have other money obligations they won’t be able to pay the rent.
  • Previous rental information.  Addresses, amounts of rent paid, and reasons for leaving. Are there any gaps in rental history, or are the names and contact inf0rmation for any landlords missing from the application?
  • Pets and Roommates.
  • Personal references. Names, how long they have know them and phone numbers.

Screening Tip #2: Run a Credit Check

Look for a history of late payments, collection accounts or major issues such as bankruptcy.  While even the most responsible people will have a few late payments, look for a pattern or multiple months behind.  If the tenant has maxed out all of his credit cards, carried hefty loans or has several unpaid balances, he may struggle to keep up with the rent payment.  Make sure they have a reasonable debt to income ratio.  This will help you feel more comfortable that they will be able to meet your rent requirements.  As part of the rental application you’ll need to get permission to run a credit check.  It is illegal unless you get written permission.  When looking at the credit report you want to learn two main things about the applicant…History and Debt.

Screening Tip #3: Run a Background Check

To further build on the applicants profile you’ll want to get a background check done. In your application you are most certainly asking them to list any criminal convictions. They may list them or they may not, but it is your job to validate what they put on the application. Even follow up with minor infractions to make sure they are giving you the full story.  Three items you want to look for in a background check…

  • Evictions. If you find out about any evictions you may want to reconsider renting to that person.
  • Criminal Records. You are allowed to discriminate against someone with a criminal record. I for one would not want to rent to someone who has been convicted of a crime. You will have to make your own decisions on how comfortable you are.
  • Public Records. Here you will want to find out about any legal problems they may be getting sued for. Such things as unpaid rent, child support or other financial matters.

Screening Tip #4: Talk to them

Some of the most useful information you can find out about a potential tenant is by just talking with them. You won’t want to grill them with question after question, just be friendly and start up a conversation. A few points of information you can try to get out them are…

  • Pets
  • If they are looking for a roomate
  • Do they smoke or do drugs
  • Are they personally responsible for another’s well being

It can be tough to pull out some of this information but with some practice you’ll become an expert. Again though, you have to remember that you can’t take what they say as the full truth. Use your best judgement and do a little follow up to confirm what you have been told.

Screening Tip #5: Show up at their current residence unannounced

This is one of my favorite screening methods. There is no better way to find out who you are potentially renting to then seeing them in real life. The key is to show up when they aren’t expecting you. No time to clean up or have a friend watch their dog.  You just tell them you were in the area and needed to drop off a form for them to sign. You won’t want to do this for every applicant you get, only to make a final decision.

Doing the proper due diligence on potential tenants will go a long way to making you a success when renting out your property.  Bad tenants are every where and many of them are experts at deceiving landlords who are desperate to fill their vacancies.  Remember to always budget for vacancies and never compromise on your standards because an applicant has a sob story.  This is a business after all.

Bonus Guide – Ultimate Tenant Screening Guide

For a great guide to screening tenants I’ve found this very useful.  The guide has a very good infographic that will walk you through the steps to the ultimate tenant screening.