NC LEGISLATURE SAYS IF YOU DON'T PAY YOU CAN'T STAY

The NC Senate and House have both passed an act that would require a tenant to post Rent in Arrears to stay the summary ejectment judgement when appealing an eviction. The Governor has not yet signed this bill to my knowledge. NO MORE FREE RENT FOR FREELOADERS.

LONDON HAS HIGHEST OFFICE RENTS

According to a survey by CB Richard Ellis, London has replaced Hong Kong as the city having the highest office rents. The annualized rate in central and west end London is $116 per square foot.

HOW DO TAXES AFFECT PROPERTY VALUES?

Taxes affect property taxes in two ways. Property taxes paid by the owner reduce net operating income. This reduces the income value of the property. Does that mean that on a net lease where the tenant pays the taxes, they don't matter?

Here they matter even more. They are especially important on industrial properties. Employers have to consider payroll taxes, inventory taxes and state and local income taxes as well as impact fees. Anything that raises the cost of using one location over another increases the TCO or total cost of occupancy. That makes the property less competitive and reduces the rent one can charge.

There is a flip side to this issue. Frequently, higher taxes go along with better municipal services that make a business or building less expensive to operate. Also, higher taxes may accompany a higher quality of living, making a location more desirable.

USING REAL ESTATE TO BUILD AND PRESERVE WEALTH.

We have examined the process of goal-setting. How will real estate help us to achieve these goals? Real estate is a multi-faceted investment vehicle, and it fits different investors' needs well.

How can one be an investor with no money? Real estate or small businesses are almost the only ways I know.

Someone who has a job with good cash flow can buy real estate with low equity and use the income from his or her job to supplement the cash flow on the property while the investment grows.

Someone with free time and basic maintenance skills can let real estate provide part time employment. The big advantage in both of these strategies is that the investment is sheltered while it grows.

For the person pumping cash into the property, there will be tax losses. For the person putting time into the property, there will be no self employment tax on their earnings from this "part time job". There will be no write off for the labor, either.

Only the IRS could classify real estate as a passive investment; but for someone with a good job, good financial discipline and not too much time real estate still has some advantages. This individual should be able to buy properties with 20 to 30 percent down and a positive cash flow. This sets up a self-funding investment plan.

Real estate is the only investment that can use high leverage to advantage. The stock market allows only 50% margin; and it would be a rare stock whose dividends would make the payments on the loan. Only by selling the stock can the financing be liquidated. When you sell, your silent partner, the IRS, is there to share the glory.

The most important discipline in investment is not to eat your seed corn. Do not let the government eat it either. The next issue will cover acquisition strategies.

CENSUS BUREAU TALKS TO MULTIFAMILY PROPERTY OWNERS.

Biggest complaints with government were parking restrictions and property taxes. These complaints came behind ADA and rent control.

The survey also found that a large percentage of the property owners were unaware of Section 8.

The racial makeup of the owners were 82% white, 8% African American, 4% Asian and 6% Hispanic. Over 50% were between the ages of 45 and 64.

The main capital improvements made were renovations of bathrooms and kitchens and upgrades to HVAC systems.

WHO CARES HOW YOU DO IT IN NEW YORK?

Maybe we all should. A court in New York has held in favor of a tenant, that rent should be treated as any other indebtedness; and that 30 days notice is required before eviction proceedings can begin. What does this mean for the rest of us?

My leases have a "waiver of notice clause." Is that good enough? NC allows for a security deposit of only1 ½ months rent. Consider the loss that could be encountered with a requirement for 30 days notice before eviction.