What to include in a Rental Application.

If you don't already use a written rental application for your property, you should strongly consider implementing one right away. There are many reason on why you should have a written rental application perhaps such as offering you protection should

someone whom you did not select as a tenant decide to pursue a discrimination claim against you. If you have documented the entire application process and the reason/s for not selecting that applicant, you can produce the application and related paperwork to prove your innocence. A written application also makes it easier to check a tenant's references. You'll have all the information you need available in one place, making your job easier and less time-consuming.
Here are some important points to include in a rental application:

Start with personal information. Get your applicant's full name, current home address, work address, phone numbers, and Social Security number drivers licences number and email address.
Include emergency contacts. In the event of an emergency, you may need to reach your tenant's next of kin or another family member. This information also may come in handy if you need to track down a tenant who has skipped out without paying rent.
Ask for references. Ask for at least three different references from your applicants. You also may wish to ask for the contact information for a previous landlord.
Ask about past problems with landlords. Ask the applicant if he or she has had problems with landlords in the past or has had trouble paying rent on time. Aslo the reason for moving there present and past locations
Include a code of conduct. The code of conduct in the rental application must be signed and agreed upon by your applicants. This can help dispel any confusion as to what behavior is and is not acceptable and also should include expectations such as noise level, trash, and pet policy. It can also provide evidence of agreement to the code of conduct should you ever be called upon to produce it.
State the rent and deposit amounts. Include these amounts on the written application to eliminate confusion and accusations that a lower rent amount was promised. Include the length of the rental period, if any, and timing for any possible increased in rent.
Ask for permission to check their credit history or background.If you plan on running credit checks for your new applicants, you will need their authorization. This can be as simple as a paragraph within your application that can be signed or initialed to show acceptance. You can also use an additional document if you so choose.
Inform the applicant that while the home is insured however the policy does not cover their personal belongings and you would recommend the applicant to purchase rental insurance.

Exercise Caution when decking those halls

It’s easy to get swept up into the “spirit of the holidays” but when that spirit includes holiday decorating on rental properties, landlords can quickly fall on a slippery slope when it comes to Fair Housing complaints.
Remember, religious beliefs are protected under anti-discrimination laws. What that means on a practical level is far from clear, but here are some tips to consider:
Religious discrimination rules distinguish between “common” areas like the leasing office, elevators or lobbies, and private residences.
In common areas, avoid overtly religious symbols, like nativity scenes and crucifixes. Courts have found other familiar holiday decor to be “religiously neutral” and therefore a safe bet for decorating. These includes trees, menorahs, Santas, candy canes, lights, and wreaths.
Don’t create the impression that one religion is favored over others. Someone entering for the first time should not be able to pick up on a religious preference, and existing tenants should feel welcome to participate in any celebration or observance. For instance, if residents request equal exposure in holiday displays, include those symbols along with any others.
Within the private residence, allow tenants to display their personal religious symbols. That may include the outer face of their front door.
Call your lawyer if there is any doubt or question about what is appropriate. Fair Housing complaints are expensive to deal with, even if you win.

1099 Bill For Landlords Repealed

As you may or may not recall, there was a significant new tax consequence and reporting requirement introduced for landlords within the Small Business Jobs Act and the healthcare reform bill passed in 2010.

This new reporting requirement was introduced to help the IRS better monitor landlord property expenses by requiring a 1099 to be filed for all independent landlords for payments during the year to any vendor or individual exceeding $600. Examples of 1099 recipients would include: gardeners, landscapers, contractors, property managers and repair services.

Earlier this year with support from Realtors, landlords, and landlord associations such as the NARPM all contacting their representatives to object to this over-reaching reporting requirement; both Congress and President Obama got the message and decided the filing burden was too great for smaller landlords. The requirement for rental property owners to file 1099′s was repealed in May of 2011. The senate voted 87-12 to approve the repeal and it was signed shortly thereafter by Obama.

This is good news for landlords, your 2011 taxes just got a lot easier as you do not now have to collect tax information from your vendors, nor report it on the 1099-MISC form as proposed in the Small Business Jobs Act.

Tips for Lowering your Heating Bills by David Lowe

Farmer’s Almanac is predicting below average temperatures for 75 percent of the country.

Here are five things owners and landlords can do to get ready and reduce their utility bills — and they are easier to do now when it is still warm than wait until winter.
Caulk and seal all windows and doors. Ensure their is no outside air leaking into the house. Also, add insulation to your attic and crawl spaces.
Change your air filters.
Service your furnace or boiler now. Not when the first cold hits and the HVAC companies are the busiest. Also, many utility customers don’t realize that they have an annual service plan that includes a free annual tune up. Check with your utility company first.

Install a programmable thermostat. One of the easiest ways to save by setting back the temperature at times when the home is unoccupied. ControlTemp thermostats can run on a schedule to automatically adjust the temperature through the day and tenants are prevented from disabling the schedule.

Check www.energystar.gov for a list of rebates in your area for energy saving products. Some utilities and municipalities are offering great rebates.

Hurricane Irene Readiness Information

Massachusetts Emergency Management Agency information on Hurricane Irene


Hurricane Irene, a Category 3 storm currently located in the Bahamas is expected to impact Massachusetts as early as this weekend. As of 11:00AM today, the National Hurricane Center's projected track shows Irene passing by the Outer Banks on Saturday, making landfall on Long Island Sunday evening, and passing through Massachusetts Sunday night and Monday morning as a Category 1 or 2 storms, with the possibility of a weak Category 3. Irene is still several days out, however, and the projected track could potentially be off by as much as 200 miles and the projected timing by 6 to 8 hours.

Weather Forecast:

Precipitation: Some isolated thunderstorms are possible tomorrow afternoon and evening. Rains associated with Irene may begin as early as Saturday afternoon, with the bulk of precipitation coming Saturday night through Sunday night. A total of 5 to 10 inches of rain are possible in Massachusetts. There is a significant risk of stream and river flooding, but it is too early at this time to identify which basins are most at risk.

Winds: The most damaging winds will be located to the right of Irene's track. Winds in Massachusetts are forecast to be Category 1 (74-95mph) or Category 2 (95-110mph) but Category 3 (110-130mph) winds are not out of the question. Exact timing of the arrival of damaging winds is highly dependent on Irene's forward speed; Sunday through Sunday night are most likely, but an increase in Irene's speed could bring significant winds as early as Saturday night.

Coastal Flooding: The magnitude of coastal flooding will depend on the exact track, speed, and intensity of Irene, as well as its timing with respect to high tide. The most severe flooding will occur along south-facing coasts, but some flooding is also possible on east-facing coasts if Irene arrives near high tide.

Marine/Beaches: The risk of rip currents will increase starting tomorrow and is expected to remain high through the beginning of next week. Depending on Irene's forward speed, seas may begin building Saturday night and could reach 20-30 feet by Sunday, with the highest seas being to the right of Irene's track.

Online Resources:

For additional information and resources, visit:

Massachusetts Emergency Management Agency at www.mass.gov/mema

Federal Emergency Management Agency at www.fema.gov

National Hurricane Center Website at www.nhc.noaa.gov

National Weather Service – Taunton at www.weather.gov/boston

National Weather Service – Albany, NY at www.weather.gov/albany

Mass211 at www.mass211.org

An Ounce of Prevention .....

A seasoned landlord shared his experiences at the last move out.
His tenant had been in the property long enough to have two more children, and now was moving into a bigger property.
And this landlord could see what was coming next.
“Long-term tenants always seem to do a bad job when they move out,” he explains.
In fact, the longer someone has been a tenant, the harder it is to remember what the place looked like before they moved in, or what the lease says about the move out.
This case was no exception. “I was at the property a couple days before the move doing some repairs,” he continues. “I don’t think this tenant understood that cleaning was her responsibility.”
Of course, every tenant wants their deposit back. The move out can quickly lead to a landlord tenant dispute.
Here, our landlord asked the tenant if she would like to do a walk thru a little early–a “pre-walk thru” if you will, so the landlord could counsel her on what would need to happen in order to get the deposit back. “I really didn’t want to be the one cleaning this up,” he says.
Propping a baby on her lap, the tenant took copious notes, and then got to work.
In the end the unit was clean as a whistle, and the tenant will be getting her deposit back– a true win-win.

FREE Energy Saving Programs

Have you heard about Mass Saves?

If not then you really need to head over to the web sight. This money saving program sponsored in part by National Grid and NSTAR that offer crazy incentives for landlords to upgrade properties through Energy Efficeiency Programs.  The programs include FREE energy audits, No interest loan, Instant Coupons and Rebates.

5 Financial Ratios Every Income Property Owner Should Know

Whether numbers are your forte or not, there are certain ratios and calculations every property manager should understand. Following is a look at five key ratios that apply to your property management business, how to obtain them, and what they tell you.

1) Vacancy Rate
Your vacancy rate demonstrates the number of units available or unoccupied versus the total number of units available for rent on a property. The lower your vacancy rates, the better. The formula for this is simple:

Vacancy rate = Total number of unoccupied units in a property ÷ Total number of units in a property

This total can then be converted into a percentage.

While average vacancy rates vary from region to region, according to a January 2011 article on MHN Online, “[President of Axiometrics, Inc. Ron] Johnsey’s forecasts call for the average vacancy rate to drop in 2011 to 5.8 percent—a solid statistic considering apartment properties aim for vacancy rates of 5 percent for optimal rent increases.”

Note that your occupancy rate can be easily determined by subtracting your vacancy rate from 100 percent. For example, with a vacancy rate of 7 percent:

100% – 7% (vacancy rate) = 93% (occupancy rate)


2) Depreciation
Depreciation helps you determine how much value your property has lost over time due to age and wear and tear. Depreciation is considered an expense and will come into play as a write-off when completing taxes. Note that depreciation is completed over a 27.5 year period and applies only to the actual building on the property, not the land. To calculate depreciation:

Purchase price – Land value = Building value

—then—

Annual depreciation = Building value ÷ 27.5


3) Operating Expense Ratio
The operating expense ratio is simply the ratio between total operating expenses and the gross income of your property. This total amount shows how much of your property’s income is being used to actually support and run the property. Operating expenses include those expenditures that support the operation and maintenance of a property. Gross income is the actual yearly income—this may include not only rent, but also income from things like laundry machines and parking fees.

Operating expense ratio = Operating expenses ÷ Gross income

This total can then be converted into a percentage.

4) Capitalization Rate
The capitalization rate (or cap rate) will help you determine the actual value of a potential investment property, beyond the actual property’s more straightforward appraisal value. In other words, how much can you really expect to make off of this property, once expenses and operating costs are accounted for? To obtain this figure, you’ll need both the operating income and recent sales prices for comparable properties. Once you have both of these amounts, you can figure the cap rate, which will help you determine exactly how valuable a potential investment property will be for you or the potential property owner.

Cap rate = Sales price of a comparable income property ÷ Net operating income of comparable income property

This total can then be converted into a percentage.

5) Net Operating Income
Like cap rates, calculating the net operating income (NOI) of a property will help you determine how valuable it will actually be. In order to determine this figure, you will need to calculate both your gross potential income and vacancy and credit loss (in other words, the realistic loss of rental revenue due to vacancies, etc. based on previous years’ statistics). You can then complete the following calculations.

Gross operating income = Gross potential income – Vacancy and credit loss

—then—

Net operating income = Gross operating income – Operating expenses

Whether you’re attempting to gain a better understanding of where an existing property currently stands or how much a potential property investment will ultimately pay off, the black and white numbers provided by the formulas above will help provide a clear picture of how your current (or future) properties are actually performing.

Painting Like a Pro

A sure-fire way to make your home look better, prolong the life of your siding and add resale value all at once is to give the exterior a fresh coat of paint. But with a contractor paint job running in the thousands of dollars, you may be considering undertaking the task on your own this summer. If so, here are some tips and a couple of tools that can help you get the job done quickly with professional results.

Proper Preparation

Proper preparation of the siding is absolutely essential to a good-quality, long-lasting paint job. Loose and peeling paint must be removed first and the edges of the remaining paint feathered down to create a smooth surface for the next coat. Painting over old paint that is not well-adhered is pretty much a guarantee that the new paint job will fail. There is no way around this less-than-enjoyable task, so just resign yourself to it.

But while you can’t avoid it, you can make it a little easier by using some power tools. One, you might want to consider is Wagner’s PaintEater. The PaintEater is a hand-held electric tool that is somewhat similar to a disc sander, but instead of using sandpaper, it uses a 3M disc made from spun fiber. The fiber disc is aggressive in removing paint, but its unique design prevents the old paint from clogging up the sanding surface, so you get a lot more work done without constantly replacing the paper.

The PaintEater removes loose paint quickly, and will also feather down the edges of the remaining paint for a better, smoother surface. It can be used on wood, masonry and cement, but be aware that the rotary motion and aggressive paint-removal disc make it unsuitable for siding shingles or textured siding.

In addition to a tool such as the PaintEater, you’ll also need a hand scraper and a sander to take care of the corners and the hard to reach areas. With any of these tools, be sure to wear eye protection to shield your eyes from flying paint chips — which can be surprisingly sharp and dangerous — as well as a dust mask or respirator to protect you against inhaling the dust.

When you’re done with the scraping, the bare surfaces need to be primed to protect the wood and provide good adhesion for the top coat. Use a good-quality exterior primer that’s compatible with your top coat, and apply one or two coats on all bare surfaces.

When preparing the siding on an older home, you need to be very aware of the possibility of lead paint. Even if the home has been repainted with latex, one or more of the underlying layers may contain lead. For more information about testing for and removing lead paint, contact the Environmental Protection Agency (EPA) online at www.epa.gov/lead, or by phone at 1-800-424-LEAD (424-5323)

Airless Painting

Professional painters rely on airless paint-spraying equipment to apply paint quickly and cleanly with minimal overspray. You can rent a professional-grade airless sprayer, but the occasional user might want to consider investing purchasing a airless sprayer such as Wagner's Paint Crew Plus.

Designed with homeowners in mind, the Paint Crew Plus has a 2800 PSI piston pump that’s driven by a 1/2-horsepower electric motor, so you have plenty of power for spraying a variety of finishes. The sprayer features a pressure selector that allows you to vary the pressure between 1000 and 2800 PSI, which is very helpful in choosing the best pressure for the finish you’re working with. Higher pressures are needed for spraying many of today’s exterior latex paints, and you can dial the sprayer down to a lower pressure to give you better control and less overspray when working with thinner materials.

The Paint Crew has wheels and a telescoping handle for easy transport, as well as a 2 1/2-gallon paint hopper that’s removable for easier cleaning. You also get a 25-foot high-pressure spray hose, a professional-grade metal spray gun and a reversible spray tip. A convenient hose wrap holds the hose when not in use, and there is a storage area for additional spray tips. Also included is a roller-arm assembly, which attaches to the hose in place of the spray gun, allowing for faster rolling of interior surfaces.

With this or any other type of airless sprayer, NEVER point it at anyone. The high-pressure pumps used with airless sprayers are capable of pushing paint through a person’s skin, so be sure you read and understand all of the safety precautions.

Repeal of Expanded 1099 Requirements

President Signs Repeal of Expanded 1099 Requirements


APRIL 14, 2011 from Journal of Accountancy
On Thursday, President Barack Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (HR 4; 1099 Act), which repeals both the expanded Form 1099 information reporting requirements mandated by last year’s health care legislation and also the 1099 reporting requirements imposed on taxpayers who receive rental income enacted as part of last year’s Small Business Jobs Act (PL 111-240). The Senate approved the bill on April 5, and the House voted in favor of it on March 3.

In March 2010, the Patient Protection and Affordable Care Act (PL 111-148) (part of the health care reform legislation) expanded the 1099 reporting requirements to include all payments from businesses aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation), and to include payments made for property, starting with payments in 2012. The 1099 Act repeals the expansion to payees that include corporations by removing IRC § 6041(i). It repeals the expansion to cover payments for property by removing the language “amounts in consideration for property,” and “gross proceeds” from section 6041(a). The act also removes IRC § 6041(j), which granted the Treasury secretary authority to issue regulations under section 6041, including “rules to prevent duplicative reporting of transactions.” These changes are effective for payments made after Dec. 31, 2011 (when the new rules were to take effect), and they revert those portions of section 6041 to how they were before the Patient Protection and Affordable Care Act.

The Small Business Jobs Act enacted a requirement that individuals who receive rental income issue Forms 1099 to service providers for payments of $600 or more. It did this by specifying that “a person receiving rental income from real estate shall be considered to be engaged in a trade or business of renting property.” The 1099 Act strikes IRC § 6041(h) in its entirety, effective for payments made after Dec. 31, 2010 (the original effective date of section 6041(h)), placing individuals who receive rental income in the same position as if the expanded information reporting requirements had never been enacted.

As a result of the repeal, the 1099 reporting rules continue unchanged: Namely, under IRC § 6041(a), “All persons engaged in a trade or business and making payment in the course of such trade or business to another person” of $600 or more must report the amount and the name and address of the recipient to the IRS and to the recipient. The Code applies this requirement to payments of “rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income,” and the Treasury regulations add, “commissions, fees, and other forms of compensation for services rendered aggregating $600 or more” as well as interest (including original issue discount), royalties and pensions (Treas. Reg. § 1.6041-1(a)(1)(i)).

This required information must be reported each calendar year for payments made during that calendar year.

The AICPA had advocated strongly for repeal of both provisions and as one of the only organizations advocating against the rental property requirement was a driving force in its repeal. When the Senate passed the bill on April 5 and sent it to President Obama for his signature, AICPA President and CEO Barry Melancon described the repeal as “a victory for taxpayers.”

Increased Penalties Not Repealed

The 1099 Act did not repeal the increase in the information reporting penalties that were mandated by the Small Business Jobs Act. The first-tier penalty under IRC § 6721 for failure to timely file an information return was increased from $15 to $30, and the calendar-year maximum from $75,000 to $250,000. The second-tier penalty was increased from $30 to $60, and the calendar-year maximum from $150,000 to $500,000. The third-tier penalty was increased from $50 to $100, and the calendar-year maximum from $250,000 to $1,500,000. For small business filers, the calendar-year maximum increased from $25,000 to $75,000 for the first-tier penalty; from $50,000 to $200,000 for the second-tier penalty; and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard increased from $100 to $250.

The increased penalties will be adjusted for inflation every five years.

The Small Business Jobs Act also similarly increased the penalties for failure to provide correct payee statements in addition to the information reporting penalties (IRC § 6722).

The increased penalty amounts were effective Jan. 1, 2011, and remain in effect after the repeal of the expanded 1099 reporting requirements.

BED BUGS ARE BACK

There is little doubt that bed bugs are making a strong comeback. With this in mind I've taken a proactive approach to avoid the problem by educating my tenants before the flea market and yard sale season begins. I'm crossing my finger that an ounce of prevention in this set of circumstance will go along way. The following is the letter sent:


Dear Tenant,

Bed bugs are making a come back. Once thought to be eradicated from North America, the legendary little pests known as bed bugs have been making an unwelcome comeback in hotels and homes. Recently reports of bed bugs problems have already been reported throughout Salem and the North Shore. Because bed bugs are very efficient hitchhikers, infestations can easily occur and spread quickly. Typically, bed bugs are quite comfortable stowing away in luggage, clothing, beds, mattresses, furniture and other household items. To prevent the infestation of bedbugs it is important to inspect all goods before bring them into your home. Be especially mindfull of items you may pick up at yard sales and second hand stores. Moreover, since people tend to discard onto the curb infested property, often times furniture items left outside for rubbish removal is the greatest source of bedbugs.

The best way to avoid the problem of bed bugs is by a thorough inspection of property. Bed bugs are large enough to see by eye. They can live in almost any crevice or protected location. They tend to congregate in mass but it is not uncommon to find a single bug or eggs scattered here and there.

Enclosed is a phamplet entitled “Your Guide to Bed Bugs” published by Pest Control Technology media group. Please take the time to read this comprehensive brochure not only does it provide with useful information about understanding bed bugs but the illustrations are especially helpful in identifying bed bugs.

Home Office as a Deduction

The home office deduction is a confusing topic for many taxpayers. Can I only take it if I am self-employed? What if you’re not self-employed, but work at home frequently? And isn’t it true that the IRS is more likely to audit you if you take the deduction?
Because of these types of concerns and questions, many taxpayers that are entitled to this deduction do not take it.
The home office deduction may be taken by anybody who uses their home, or part of their home, for business purposes. The IRS does have strict regulations that must be met to qualify for the deduction.

Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly–
As your principal place of business. As a place to meet or deal with patients, clients, or customers in the normal course of your business. In any connection with your trade or business where the business portion of your home is a separate structure not attached to your home. "Exclusive” is a key term in determining if you qualify for the deduction. By exclusive, the IRS means that the part of your home you are deducting is used only for business. Because of the above two restrictions, it is usually much easier for self-employed workers to take the home office deduction, assuming they have properly set up an area of the house which would qualify. However, if you are an employee who works at home, there is also a chance that you may qualify. In order to qualify, you must meet the “convenience-of-employer” test. This essentially means that the work you do at home must be at the request or convenience of your employer. If this is the case, you may qualify for the deduction assuming all of the other rules regarding exclusivity and regularity are followed. There are two types of deductible expenses relating to the use of a portion of your home as a home office—direct and indirect expenses.

1. Direct expenses relate to the actual work space. This includes repairs and paint inside your home office.

2. Indirect expenses relate to the house that the office is inside and are only partially deductible. Utilities, insurance, and mortgage interest are examples of indirect expenses. These expenses are only deductible based on the square footage of your home office to your total home. For example, if your office is 20% the square footage of your entire house, you can deduct up to 20% of your indirect expense as a home office deduction.

Now some people argue that taking a home office deduction will lead to an audit. Subsequently, many taxpayers have decided that it is not worth the supposed risk. This could be a mistake. Any deduction you are entitled to, you should take. If you keep accurate records and meet all the IRS regulations for the deduction, you should discuss this deduction with your CPA.

IRS will be scrutinizing rental properties

Audit: IRS needs to better examine rental real estate
By Bernie Becker - 03/09/11 03:27 PM ET
The IRS needs to step up its examinations of tax returns that contain losses from rental real estate, a new audit has found.

A new report from the Treasury Department’s inspector general for tax administration found that, if the IRS’s compliance initiative program reviewed more returns dealing with rental real estate, the government could collect an additional $27.3 million over five years.

“Given the magnitude of underreporting in our voluntary system of tax compliance,” Russell George, the tax administration inspector general, said in a statement, “even small improvements in the IRS’s examination of tax returns with rental real estate activity could increase taxpayer compliance and generate substantial additional revenue to the federal government, helping reduce the tax gap.”

The inspector general looked into the matter because of a 2008 Government Accountability Office report that said that more than half of taxpayers who at least dabbled in rental real estate during the 2001 tax year misreported that activity, leading to $12.4 billion being wrongly reported. (According to the IRS, roughly 7 percent of 2001 individual tax forms contained rental real estate activity.)

For its part, the IRS did not agree with the $27 million figure computed by the inspector general. But it did agree with the audit’s recommendations, including one that called for revising a certain tax form.

The Markets: February 28, 2011

March 01, 2011
MARKET WEEK: FEBRUARY 28, 2011
The Markets

Despite three straight days of selling that included back-to-back triple-digit losses, the Dow managed to stay above 12,000; the S&P did the same with the 1300 mark. However, the domestic equity indexes lost anywhere from a quarter to a third of their year-to-date gains to profit-taking from the recent multi-week rally and unease about political conflict.

Market/Index 2010 Close Prior Week As of 2/25 Week Change YTD Change
DJIA 11577.51 12391.25 12130.45 -2.10% 4.78%
NASDAQ 2652.87 2833.95 2781.05 -1.87% 4.83%
S&P 500 1257.64 1343.01 1319.88 -1.72% 4.95%
Russell 2000 783.65 834.82 821.95 -1.54% 4.89%
Global Dow 2087.44 2241.29 2194.22 -2.10% 5.12%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 3.30% 3.59% 3.42% -17 bps 12 bps
Last Week's Headlines

As the rebellion in Libya spiraled out of control, oil prices reached their highest level since fall 2008.
Home prices in the 20 cities tracked by the S&P/Case-Shiller index fell by an average of a full percent in December. Prices are now down 2.4% from the previous December, and average prices for the fourth quarter of 2010 were at roughly the same level as in the first quarter of 2003.
January sales of existing homes were up 2.7% from the previous month, according to the National Association of Realtors®. However, the Commerce Department said sales of new homes fell 2.4% in January compared to December.
The economy grew more slowly in the fourth quarter than the Commerce Department originally estimated. The 2.8% revised figure was down slightly from the original 3.2% estimate. The Bureau of Economic Analysis said higher consumer spending, exports, and residential investment were offset by a decline in nonresidential fixed investments, slower private inventory investments, and reduced federal, state, and local government spending.
Eye on the Week Ahead

Investors will keep a nervous eye on the conflict in Tripoli, assessing the potential impact that higher oil prices might have on the economy. Also watched will be the congressional conflict over the budget deficit as the March 4 deadline for raising the nation's debt ceiling approaches. Finally, Friday brings unemployment data.

Key dates and data releases: Personal income/spending, pending home sales (2/28); U.S. manufacturing, construction spending (3/1); Federal Reserve "beige book" report (3/2); labor productivity and costs, U.S. services sector (3/3); unemployment, factory orders (3/4).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Checking twice: Tenant Move in and out list

Even if you do not ask for a security deposit it is always a good idea to have an apartment condition statement signed by both you and the tenant. The following is a handy check list for you and your tenant to go over as your Tenant moves in. Once completed have them sign the bottom then when it is time for the Tenant to move out take the signed copy as you conduct a walk through with them.






____ All receptacles and switches work, proper polarity checked
____ GFCI receptacles tested and working
____ Switches and receptacles are the proper color
____ All device plates installed straight and tight to the walls
____ Light bulbs installed in all fixtures and all in working condition
____ Telephone Jacks working
____ Cable TV Jacks working
____ Network jacks working
____ Door Bell working
____ Toilets all working
____ Faucets all working
____ Showers, bathtubs, and whirlpools all working
____ No scratches, chips or nicks on any plumbing fixtures
____ Hot water heat, each zone working properly
____ Painting satisfactory in all rooms, closets and stairways no touch-ups required
____ Walls, no dents, scratches, nicks or bad finish
____ Windows all working and sealed properly
____ Doors all working and sealed properly.
____ All the glass windows and doors good with no cracks or chips
____ Wood floors properly installed and finished with no stains or marks
____ Carpets properly installed with no stains and all seams match
____ All interior wood trim and moldings in place and properly installed
____ All Air Conditioning working properly
____ Heating units working properly
____ Appliances like the washer, dryer, and oven ect. are all working properly
____ All cabinets and counter tops checked for scratches, nicks, cuts, cracks or chips
____ All tiles checked for scratches, nicks, cuts, cracks, or chips
____ All cabinet doors open and close properly
____ All cabinet hardware installed properly
____ Check all options such as garbage disposal, multi jet showers, steam baths, saunas, intercoms, concierge phone, alarm system, etc.
____ Received all instruction manuals, directions and warranties
____ Fireplace works properly, Draft and damper working
____ Make sure all the keys are accounted for
____ Check all the common areas of the building

Are Fannie Mae's & Freddie Mac's to Be a Thing of the Past?

The Obama administration released its proposal to change the role of the government in the mortgage market.
The intent of the administration is to reduce the federal government’s role in mortgage insurance and rely more on the private sector to determine mortgage rates and qualifications.
Michael D. Berman, CMB, Chairman of the Mortgage Bankers Association is pleased with what is now on the table. “We are gratified to see that one of the concepts they articulate closely tracks MBA’s proposal, released eighteen months ago, that visualizes a workable, commonsense system driven by private capital. Our proposal envisions an explicit, but limited, government guarantee of lower-risk mortgage-backed securities. The guarantee would be paid for by fees used to build a fund to protect taxpayers. We continue to believe that this is the most prudent approach, one that places the primary risk on private investors and ensures sufficient liquidity during times of economic stress in order to provide affordable mortgage finance in all types of mortgage markets. Our proposal directly addresses the problems that caused the failure of the Fannie Mae/Freddie Mac system.”
The proposal that went to Congress suggested three approaches: phase out Fannie and Freddie, but keep FHA to guarantee some percentage of mortgages; charge fees to consumers to pay for insurance; or have the government serve as a reinsurer. Right now, Fannie and Freddie guarantee roughly half of all mortgages. These options are likely to decrease the number of borrowers qualified to purchase a home, and drive rates higher as the market adjusts.
Secretary Geithner indicated that, regardless of the plan ultimately adopted by Congress, it will take about five years to phase in — and phase Fannie and Freddie out. Geithner also indicated that there have been discussions regarding the impact the plan will have on the rental market, as more and more potential home buyers find they no longer qualify for mortgages with new insurer rules and higher rates. In an interview over the weekend, he made reference to a possible government program to help renters, but offered no details.

HOW TO AVOID TENANT PROBLEMS

Bad tenants are a huge problem. When you have good tenants in your rental property, everything runs so much more smoothly. Even if you think you are pretty good at detecting problem tenants and avoiding them, some can still get past the best screenings by the best or landlords or property managers . So, be cautious to not depend on your own first impressions of tenants and do the most thorough screening that you can.

Here are some helpful tips that may assist you as you try to avoid having any problem tenants move into your property.
Before you even consider a tenant, they should complete a rental application. The application should only be accepted if it is completed in full. Be careful to follow all Fair Housing laws to the letter. Any infractions could land you in hot water with a discrimination lawsuit. As a general rule, you are not permitted to deny anyone the ability to rent housing based on race, religion, family status, etc.

Be sure to verify the identity of any potential applicants with a photo identification. Be sure that any driver’s license number information is documented on the rental application. Take the time to copy the photo identification so that you have a record of this. Invest the time and small cost to obtain a background check. Failing to do so can lead you to possibly accept tenants that have criminal or bad financial histories. This can help you avoid tenants that have previously failed to pay rent or cause property damage.

A credit check is imperative. Before you do this, you do need to obtain permission from an applicant. Make this a standard part of your rental application, because you will need the Social Security number of the applicant to do so.

Obtain references from any applicant. Included in the references should be the previous landlord so that you can get an idea of what kind of tenant the applicant may be. If there was a problem, it may not have been reported to any authorities and may not show up on a routine credit report or background check. Character references, such as a boss, previous neighbor or other person associated with the applicant should be contacted as well. Never fail to contact the references!

Lastly, be sure to include a specific code of conduct in your rental application and your signed lease. The code of conduct should explicitly state expectations and consequences. This document should be signed and dated by both landlord and tenant.
Adhering to these guidelines will help you avoid many of the common problems that landlords and property management companies encounter.

According to Jeffery E. Taylor, aka “Mr. Landlord,” there are 18 essential tips that all new landlords should know. They are:

1. Treat landlording as a business. Develop a system and a set of written procedures for all steps in your rental process.
2. Get a good state-specific lease and be sure your lease is clear regarding all expectations you have for your residents’ responsibilities. (Many leases make too many assumptions of what is to be expected.)
3. Believe in yourself, but do not believe anything put on the rental application. Verify it all.
4. Thoroughly screen your applicants. Along with running credit checks, be sure to check eviction records and possible criminal background on all applicants.
5. Get the cooperation of your residents and start advertising and showing rentals BEFORE the lease is up.
6. Fill vacancies faster by reaching out and serving a “niche” target market.
7. Keep your relationship between you and your residents in a business-like manner and treat all residents with respect.
8. Conduct regular inspections of your properties.
9. Enforce your rules consistently and immediately.
10. Keep good records and document everything.
11. Use Craigslist and postlets.com to advertise your rentals. They’re free.
12. Look for ways to reward your long-term residents even if in only small ways.
13. Join and participate in your local landlord association to get continued support, education, and encouragement from other landlords. Also seek out one or two mentors.
14. Become extremely familiar with the state landlord tenant laws where your own rental property.
15. Learn as much as you can about your local rental market and what other landlords and managers are charging, offering, and doing.
16. Always look to expand your business network with other landlords, contractors, suppliers, professionals, and community contacts. Network with individuals who are growing, progressive, and honest.
17. Seek further training and education.
18. Don’t give up! Don’t let the small percentage of rental challenges take your focus off your big goals.
Landlording is not a get rich quick scheme, but can generate long-term wealth when done correctly.
About the author:
Jeffrey E. Taylor, C.P.L. is CEO of Mr. Landlord, Inc., a national property management consulting firm—coaching over 50,000 landlords annually. He is the publisher of the Mr. Landlord Newsletter, the largest circulated real estate newsletter in the country, with over 10,000 monthly subscribers. Jeffrey Taylor has been interviewed on numerous radio talk shows and quoted in hundreds of publications, including The Wall Street Journal, Smart Money, and Personal Finance Magazine. Known to thousands as Mr. Landlord, Jeffrey Taylor is the author of a dozen publications, books, and reports on various aspects of rental property management.

Senate Backs 1099 Repeal

Reforming the Reform: Senate Backs 1099 Repeal

The Senate today didn’t repeal health care reform, but it did get rid of a provision that would impose a major paperwork burden on small businesses next year.

All 47 Republicans voted for an amendment to repeal the health care reform law enacted last year, but all 51 Democrats present voted against it. The amendment, which would have been added to legislation reauthorizing the Federal Aviation Administration, needed 60 votes in order to be approved.

But by an 81-17 vote, the Senate did pass an amendment that would repeal a health care reform provision that requires businesses to file 1099 forms with the Internal Revenue Service any time they spend more than $600 a year with any other business. That requirement, which is scheduled to go into effect in 2012, is a significant expansion of the current 1099 reporting requirement, which applies only to payments to unincorporated service providers.

Senators agreed with small businesses that complying with this requirement would be a nightmare. The only question was to how make up for the revenue that the provision was designed to generate. In theory, third-party reporting of payments to businesses makes them less likely to hide income from the IRS.

The amendment that passed directs the Office of Management and Budget to tap up to $44 billion in unspent funds appropriated for other purposes to cover the revenue that would be lost by repealing the 1099 requirement.

That’s the approach Republicans prefer, but many Democrats wanted to raise taxes on oil companies and multinational corporations instead. They contend Congress shouldn’t hand over spending decisions to the executive branch.

The amendment sets “a terribly dangerous precedent,” said Senator Daniel Inouye, a Hawaii Democrat, who chairs the Senate Appropriations Committee.

Difficult decisions on how to reduce spending lie ahead, he said, and its Congress’ responsibility to determine where these cuts will be made. Delegating these decisions to the executive branch “may be politically expedient,” Inouye said, but it also is “thoughtless and rash.”

Nevertheless, the Senate’s decision to tap unspent money to pay for the cost of 1099 repeal makes it much more likely to be agreed to by the House, which already passed total repeal of health care reform. Business groups hope 1099 repeal is enacted quickly because businesses would need time to change their accounting systems if the requirement does go into effect next year.

Business groups opposed the tax increases in the Democratic amendment, contending raising taxes on oil companies would increase energy costs.

“This amendment will cost good-paying manufacturing jobs,” said Aric Newhouse, senior vice president at the National Association of Manufacturers. “Discriminatory tax policies that pick ‘winners’ and ‘losers’ and pit industry sectors against each other undermine U.S. competitiveness, innovation and job growth.”



Read more: http://www.portfolio.com/views/blogs/capital/2011/02/02/senate-votes-to-repeal-1099-health-care-requirement#ixzz1D018wRw6

Is becoming a Landlord for you

Tempted to buy a rental property as an investment? Make sure you have the characteristics to handle becoming a landlord!
One of the most common ways to invest in real estate is to buy a house or small apartment building and rent it out. According to the latest American Housing Survey, there are more than 33 million rental housing units in the U.S., about 60 percent of which are owned by individuals.
Acquiring a rental property sounds like easy money-you'll acquire equity in the property while someone else pays the mortgage. But dealing with maintenance and business issues-not to mention the occasional ornery tenant-isn't a job for everyone. Before you hang out a vacancy sign, ask yourself if you have the skills to handle the job of landlord:

Commitment
Being a landlord is a hands-on job, and you don't get to set your own hours. If a tenant calls in the middle of the night to report a burst pipe, you must deal with the problem. That's why experienced landlords suggest living no more than 45 minutes from your rental property.

Patience
Landlords who try to fill vacancies as quickly as possible may wind up with less-than-ideal tenants. No property owner wants to leave a rental unit empty for long. But taking time to screen applicants is always worth it. You should do a credit check, ask for and follow up on personal and business references and call the applicant's previous landlord.

Fairness
Screening your applicants doesn't mean you can reject them for reasons such as age or race. If you do, you can be sued for discrimination.

Savvy
You don't need to be a lawyer or accountant to be a successful landlord, but a little knowledge of the law and accounting principles helps. You need to be familiar with the laws governing landlord and tenant relationships in your community, and understand the tenant's rights as well as yours as a landlord. Bookkeeping skills and knowledge of relevant tax rules will help you keep tabs on the profitability of your investment.

Detachment
Many good landlords are friendly and approachable. But beware of becoming too chummy with your tenants-you may need to be firm if someone falls behind on rent. If you're a doormat, some tenants will treat you like one.
Do-it-yourself skills
If you can wield a hammer, wrench and trowel, you can save money and make sure repairs are handled promptly. If your handyman skills are limited to mowing the lawn, you'll need to hire skilled workers, and the expense will cut into your return on investment.

Tolerance
Being a landlord can be like having a roommate. You'll have to put up with habits that may not jibe with yours, as well as the occasional damage to your property-particularly if you're renting out a furnished unit. Make sure you can deal with this.
Few people possess all these qualities, but four or five are essential to making it as a landlord. If you're not landlord material but still want to invest in rental property, consider hiring a property management company to look after repairs, rentals and so forth. This could cost 10 to 15 percent of the total rental income from your property, so make sure your investment will still pay off.

Rental Agreements: Clauses to consider

Important Clauses To Add To Your Lease Agreement
by Wayne Gathright

While the basic lease provisions are important, most of the time, a basic lease agreement is not enough.
In addition to incentive clauses, there are many other important clauses that landlords often tend to neglect, yet these can be invaluable if there is ever a dispute. Here are some examples of clauses that can be added to your lease agreement:

Parking. Spell out how many vehicles (cars, boats, motorcycles, etc.) you will allow to be parked at the residence? Where?

Residential Use. Can the tenants run a business? What kind?

Garage Sales/Auctions. Will you permit these? How often?

Notification of Change of Status. Require that the tenant update you on changes, for instance, employment.

Subletting. Is it allowed? How many new residents? Notification

Co-signers. Should you add another responsible party as a guarantor?

Partial Payment of Rent. What will happen if you receive only part payment?

Returned Check Fee. How are you going to handle returned checks?

Bankruptcy. What if your tenant files for bankruptcy?

Lease Violations. What are your rights? What are the tenant’s rights?

Tenant’s Absence. What if the tenant disappears? Can you get into the rental?

Furniture Lien. Can the tenant’s possessions be takes?

Increase in late fees. Can you charge additional late fees if the tenant is often late?

Judgment collection. Who pays?

Utility bills. What if the tenant defaults?

Emergency repairs. What if you have to cut off the water for repairs?

Problem neighbors. How do you handle complaints?

Disasters. What if you can’t fulfill your landlord obligations because of a disaster?

Illegal activity. Make sure you can take action against drug use, explosives, firearms, etc.

Quiet Enjoyment. You should insure that the tenant cannot intrude on other people’s rights.

Smoking. Make sure your rules are clear.

Pets. How many pets? What additional deposit? What about additional cleaning costs?

Yard Upkeep. Make sure your property looks neat and is safe.

Health and Safety Codes. Be sure your tenant doesn’t violate these.

I hope these ideas make you think about how important your tenant lease can be. With the right rental agreement design, you can create a lease that will protect your property, promote timely rent receipt, motivate your tenants, and protect your legal rights as a landlords.

Wayne Gathright is president of WG Software, Inc., developers of the Tenant File Property Management Software. He has over 30 years experience in consulting and software development for real estate. Mr. Gathright also markets a product for easy creation of leases called The Lease Designer, that allows the user to select from several prewritten leases, choose from over 200 prewritten rental clauses, and add house rules templates to the lease. A user can write their own leases and clauses, modify the existing templates, or import leases from other programs.

Guest Post: What is a Reverse Mortgage?

By Steve Stenganelli
Reverse Mortgage Basics

A reverse mortgage is a type of loan that certain eligible homeowners can get to tap into the equity in their home. Unlike traditional loans, they do not require the same sort of underwriting so no income, asset or credit checks are needed. And unlike a traditional loan, there is no monthly repayment for any amounts borrowed. Repayment of the loan’s principal and interest starts only after the homeowner dies or the home is sold.

To be eligible for such a loan, all owners on the property title need to be at least age 62.

For the most part, reverse mortgages, also referred to as RMs, are backed by the federal government through the FHA (Federal Housing Administration) that administers the program.

Myth: The Bank Keeps the House

These types of mortgages have been around for many years (since the late 1970s) and have gone through many changes.

One misconception about these types of loans is that a homeowner loses the house to the bank because of certain terms of such loans when they first came out. In the way way past, banks would take the title to the home. But that is far from the reality for these types of loans now. The property title remains with the homeowner.

How A Reverse Mortgage Limit Is Set

The amount of money that a homeowner gets is based on current age, life expectancy, and appraised value. With this information, the bank will determine the credit line or limit that the homeowner can tap. The lender will apply an interest rate to the amounts outstanding and add it to the balance owed (and subtract the interest accrued from the amount of credit line that is available). Eventually, when the homeowner dies or moves out of the home then the lender will require repayment.

The total amount that is owed is capped as a percentage of the property value which is assumed to appreciate at a certain rate during the owner’s life expectancy.

A homeowner can move out and sell the property and keep the proceeds above whatever the payoff amount is. If the homeowner dies and the property passes to his estate, his heirs can sell the property or refinance it and keep it.

The cost for such a loan can be pricey. Even with recent administrative changes reducing origination fees from the standard 2% of the loan amount, these loans can cost upwards of $12,000 for a $250,000 or $300,000 credit line amount. Although traditional credit and income underwriting are not required, all the other costs associated with a closing like title work, title insurance, recording fees, mortgage insurance and underwriting are still needed.

Why Would A Homeowner Consider A Reverse Mortgage? Comparing Some Options

Why would a homeowner opt for this? Let’s face it. Most folks would prefer not to move into an assisted living facility or a nursing home if they can avoid it. So a reverse mortgage is a good option for those who want to age in place in their home.

It provides a cash flow to help support the costs of running the house. And it taps the equity that a homeowner has built up over time that can be used to pay for essentials like medicine or home renovations to make the home safe and useful for an aging homeowner.

Yes, home equity lines or loans are also an option. They can be even cheaper certainly on the origination side since so many banks offer them with no closing costs. But the homeowner must make a payment each month even if it is just the interest only that is typically required for the first five or 10 years of the line. And if the owner doesn’t have the cash to make that payment, then there is the risk of a foreclosure.

As a former mortgage banker, I would see situations where an elder couple would call me after having refinanced the loan several times. Each time they had to incur closing costs and because their income or credit may have slipped they would only qualify for more costly loan terms that could put them at greater risk of losing the house down the road.

Downsides for A Reverse Mortgage

Setting up a reverse mortgage as a line of credit will not jeopardize Social Security benefits and is not counted as an income source for tax purposes. On the other hand, if the homeowner is receiving Medicaid, then it could be counted as an assessable asset that may limit qualification for such benefits.

Some folks who are facing bankruptcy have opted to go the reverse mortgage route. Jesse Redlener and David Burbridge, attorneys who specialize in these matters, told me of the case where a couple transferred the title from joint ownership (husband and wife) to just the wife. Then they completed the reverse mortgage process. And the husband who now owned no other property filed for bankruptcy. The courts considered this a fraudulent transfer of the property and the assets available for the credit line now became eligible to pay off the husband’s other creditors.

Get More Information From Your Planning Team

The bottom line here is that before making a serious money move you really need to bring in the professionals to help navigate through the minefield. Actions have consequences and this is an area where a good team of advisers (banker, financial planner, attorney) can help.

For more information on reverse mortgages, you may want to call Bob Irving of First Integrity Mortgage, LLC, a licensed reverse mortgage originator.

Rental Application References

Asking for references on a tenant application is important for a variety of reasons. However, collecting references is a worthless exercise unless you check the applicant out. At the very least contact the current and previous landlords. The most important reference to verify is actually the previous landlord and not the current. Sometimes the current landlord will gloss over the facts in order for the tenant to move out quickly whereby the previous landlord can be completely candid since that tenant no longer resides in an apartment they own. Ask about:

The tenant’s payment habits
Whether they follow rules
Do they respect the property
Living habits and guest that visit
Would they rent to this tenant again?

You will be surprised what you can learn in just one phone call.

Other references include friends and relatives. These references are critical to you so that you know who you can rely on in the event of an emergency or to locate the tenant once they’ve moved out. Be sure to cross check the phone numbers of references to be sure that they are from the same geographic area that the prospective tenant claims to be from.

To obtain a FREE RENTAL APPLICATION email the salem landlord

10 OUTSTANDING Reasons to be a MEMBER of...

THE GREATER SALEM LANDLORD ASSOCIATION

1. Understand the rules of housing court to be an effective plaintiff.
2. Stay current with developments in the industry through our monthlymeetings, website and blog
3. Learn about pending laws and regulations that impact landlords and influence legislators with your opinions.
4. Have access to Massachusetts specific materials, including landlord manuals, forms and sample leases
5. Find ways to lower your expenses and run your business more effectively.
6. Learn ways to limit liability from tenants, guests and workers.
7. Learn how to avoid fines for discrimination and code enforcement.
8. Prevent lead paint poisoning by learning the laws and their impact on your business.
9. Meet and learn from other members who are eager share solutions to common landlord problems.
10. Become part of the strong voice of property owners group North of Boston

*Bonus* Members have access to the member only section of the website

What Massachusetts Property Owners Need to Know About Snow Removal

In light of the yesterday's " 2011 Blizzard" massive snow accumulation thought it important to clarify a property owners responsibility for snow removal. A new law took effect in July 2010, when the Supreme Judicial Court ruled in the case of Papadopoulos v. Target Corporation.

The ruling means property owners now must take reasonable care to remove all snow accumulation from their property and keep accessible areas safe to travel. Previously, Massachusetts property owners enjoyed a special exemption from liability for "natural accumulations" of snow and ice. An injured person had to demonstrate the accumulation was "unnatural," such as a snow pile created by a plow.

The ruling means snow removal is now a requirement. If a property owner fails to use reasonable care in clearing snow and ice from their property and someone is injured as a result, the property owner can be held liable. Subsequently, shovel early and often.” Additionally some cities and towns have adopted their own policies in regards to snow removal. Such as in the city of Boston , snow removal is required for the full width of the sidewalk or a minimum width of 42 inches. Throwing snow in Boston city streets is strictly prohibited. Boston residents have 6 hours after snowfall to remove snow & ice. Business owners have 3 hours to remove snow & ice, regardless if the snow and ice are caused by nature or from a city plow.

Check with your city or town to see what the “snow rule” is there.