Archive for

Arboriculture and Preventing Tree Hazards

Arboriculture and landscaping go hand in hand. Many land development projects incorporate trees as an important aesthetic feature because they add to the beauty of a structure or landscape. However, without proper development planning and maintenance, trees can pose a hazard.

Developing structures around trees can be tricky. Plants and foliage that already exist in areas that are being developed need to be inspected for health. Trees can get hit by heavy construction machinery and become damaged. Even if they remain standing, their structural integrity will have been compromised and can eventually cause damage to a building later on. Construction sites thus benefit from arboriculture support that encompasses tree inspection, protection and preservation plans. This way, they can work around trees without damaging them.

In areas that experience harsh weather, severe winds can cause a tree’s branches to break and hit people, vehicles or buildings, and become road hazards. This is especially true in areas where the roadsides are lined with trees. In some cases, the danger can be lessened by choosing tree species that can withstand harsh weather conditions. Arboriculture should thus be taken into consideration during road planning.

Foliage that already exist around houses, buildings, parks and other areas frequented by a lot of people need to be regularly inspected. They may already display symptoms of decline and failure that the untrained eye may not recognize. Trees that are subjected to improper maintenance can also become hazardous. For instance, a tree whose crown gets in the way of power lines may get pruned. This can contribute to decay and tree failure and may lead to damage of property if the tree falls.

With proper inspection, maintenance and arboriculture support, tree hazards can be detected and avoided. Keeping trees healthy will ensure that they remain a beautiful part of the landscape for years.

Buying Rental Property With Your IRA

Are you tired of your retirement funds being tied up in the stock market, making money for brokers instead of you? One of the best-kept secrets in the investment world is your ability to buy investment property with funds from your IRA. Why is it such a secret? Because it’s you making an investment with your money, and the folks on Wall Street have nothing to do with it, and therefore don’t make any money on it. The ability to do this has been around since 1974, and the way you do it is through a self-directed IRA, which is one of the least known investment vehicles in the marketplace today.

The number one rule to be aware of is that property purchased with IRA funds cannot be used for personal use. Doing that risks the IRS coming after you for taxes by declaring the transaction to fall under the “prohibited” list. But this method of buying is ideal for investment property, like a rental house or multi-unit structure. Also eligible are raw land, timberland and office buildings to be leased-out to businesses. And when done properly, you can let the properties appreciate and not pay the IRS any taxes on the value or the gains until you retire.

When a property is purchased with a self directed IRA, it is the IRA that hold the title to the property. The income from rental flows back into the IRA and that money can be funneled into a variety of investments typically held in an IRA including stock, bonds, mutual funds and money market accounts. So you need to run your IRA property like a business. Make sure all income goes in and all expenses get paid by the IRA. Doing this will keep you on the up and up with Uncle Sam. And if you sell the property, all the money you make on the transaction goes in there too, tax deferred.

If you’re looking at college costs looming on the horizon, the income from rental properties can come in handy. Money taken out of an IRA can be used for college costs without facing the early withdrawal penalties. It isn’t usually recommended by financial professionals to use retirement funds for college, but it is there in a pinch, and you’ll take comfort in knowing the rental income will be there to replenish the funds after graduation.

In order to set up a self-directed or real estate IRA, you’ll need the services of an approved IRA trustee, custodian or third-party administrator. Nearly all self-directed IRA firms in any incarnation will require you to hire a property manager. While it costs you a little each month, they will handle maintenance and rent collection and ensure the property taxes are paid on time. Just remember that all of the expenses for the property purchased by your IRA must be PAID by the IRA. Maintenance, property taxes, improvements and similar expenses all fall into this category.

If you want to flip houses, using this method is a great way to finance it because all the income from the sale of the house roll back into the IRA with no capital gains tax. Buying and reselling a home with non-retirement funds puts part of the profit earned up for grabs by the tax man.

Using IRA funds to purchase investment property can provide cash flow and really beef up the size of your retirement fund. And best of all you have control over what is going on with your money, and you have peace of mind knowing your cash is invested in a tangible asset. 

To search for suitable investment or rental properties by cash flow, down payment and more, you can visit InvestorLoft.com and use their investment property search engine to locate properties that might be a fit for your portfolio. To open a self-directed real estate IRA, do a Google search for “self directed IRA custodian” or “real estate IRA” for a list of companies to contact. Be sure to ask about fees, minimum account balances and more.

Common Issues In Rental Property Management: Tenant Application And Screening

I recently walked out of court with a client after a trial. Although we had won, my client was shaking his head in self-blame, interrogating himself about why he had ever rented to this tenant. Although my client’s ordeal was largely over-we had obtained judgment against the tenant for possession and $8,000.00 in rent, costs, and attorney’s fees-the judgment was not so much a measure of victory as it was a measure of loss, a public reminder of how much my client had allowed a bad tenant to get into him, how much he was now out of pocket for subsidizing the living expense and broken promises of a liar.

Not a month goes by in my practice that I don’t hear clients utter the same phrase-sometimes in more colorful language-at least ten times: “I never should have rented to this guy. I never should have rented to this guy.” In the case mentioned above, after the tenant fell behind and my client started looking into his background, he learned from a previous landlord that the tenant had a prior eviction. At the time of our trial, the tenant was also under indictment for mortgage fraud and had a prior criminal conviction for possession of counterfeit government bonds.

My curiosity piqued, I did my own superficial background check on the tenant and found that, since 1995, this particular tenant had amassed six eviction judgments in his real name and two more under an assumed name, a total of eight evictions in just fifteen years. So how did this tenant-from-hell wind up in my client’s rental property? The need to ask the question is even more confounding when one considers that the rental was a new build, a four-bedroom house, rental price $3,200/ month, nice neighborhood, the kind of place that many qualified applicants would be happy to call home. My client didn’t need bodies. What was the reason, then, that my client’s rental property became home to The Convict and Serial Evictee?

Easy. My client didn’t screen. He didn’t verify the application nor did he run credit. Why? Because the tenant had made such a convincing appearance. He was mature, friendly, a good conversationalist, wore nice clothes, drove an expensive car, had a pretty girlfriend, and told a nice story about needing a house to start a family. The tenant also looked good on paper. He was, in short, an accomplished con man. Convinced that he had found the right man, my client skipped the verification process and signed a lease. And-when the rent started dribbling in, late, and the bad checks and broken promises outnumbered the timely payments-he soon came to regret it.

Every landlord-tenant relationship must begin with the same thing: a thorough application. Get a form application online, at Office Depot, or from your nearby landlord association. Just make sure that the application asks for the applicant’s full name, driver’s license number, social security number, and the last five years of home addresses. Most importantly, verify the information. Make the tenant show you his driver’s license and social security card. This information will also help out collection efforts later should you wind up getting a money judgment against the tenant.

The application should include current and past employment information for five years, banking information, and vehicle information. Make the tenant verify the information on the application by producing three recent pay stubs, three recent bank account statements, and a current title for any vehicles. Some landlords even require two or three years of tax returns. The application should also include references-the most recent landlords if possible-and emergency contacts. This information will provide essential information about the tenant and will also come in handy later should you ever have to collect a judgment against the tenant.

The next step is to run the applicant’s credit. The reports that you order up should include a combined credit report (i.e. a compilation report from all three major credit reporting agencies), an eviction and civil records search, a criminal database search, and employment and rental verification. You may charge the tenant the actual cost of the background check not to exceed $42.00. Sometimes the tenant, rather than pay the fee, will offer up his own credit report. Don’t accept it; get one of your own.

The report will provide the information that you’ll need to make an informed decision about the prospective tenant. You’ll also be able to compare the report with the application and draw a conclusion about the prospective tenant’s propensity for truth telling. The purpose of the report is not only to assess the prospective tenant’s financial capacity and creditworthiness. You also want to weed out the liars. Take a pass on any prospective tenant that supplies inaccurate information, refuses to provide information, or who has recent eviction judgments.

I’m writing this article at the end of October 2010. In just this month, I have worked on seven eviction cases where the tenant had an eviction judgment within the last two years. That’s just my practice, this month, and seven cases that I know about (i.e. where I learned about the prior evictions from my clients). There may have been others. The point is that bad tenants abound and you need to protect yourself from them.

Bear in mind some characteristics that I’ve discovered about tenants with recent evictions. First, they’ve learned a little something about the system. In other words, they know how to delay. Second, they don’t fear the system. They’re not afraid of court, judges, lawyers, the sheriff. They know the time periods and they know how to plan. Also, their credit is already wrecked so they don’t fear the hits to their credit that an eviction judgment and money judgment will bring. Trust me, you don’t want these people unloading a moving truck in front of your rental.

The deadbeat tenant usually has a string of financial victims. He’s just trying to make you the next one. Whether that happens is up to you. Remember, though, that a prior landlord paid an attorney to take an eviction case through to a reportable judgment so that he could warn the world about the tenant. If you fail to screen, you are effectively nullifying that suffering and cost borne by the prior landlord. Don’t make the past irrelevant, screen.