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Hollywood Real Estate Law Blog

What should I know if I'm buying my first rental property?

Sure investment bets are a bit like unicorns. They don't exist. Any investment carries some risk, however negligible. But the good news is that there are ways that you can lower your risk of losing money on your investment in rental properties. Read on for some suggestions on what to do before making the leap into landlord territory.

Secure your funding

What 1031 exchange deadlines do I need to be aware of?

The amount of taxes that you have to pay when you sell off your Florida home can be quite high. This is why many sellers take time to apprise themselves of the different tax savings options that they can pursue to minimize their tax burden. The 1031 exchange is often one that sellers pursue.

A 1031 exchange is a process by which you can defer making capital gains tax payments on any property you sell. You have to locate another home to purchase by a set deadline to be allowed to re-invest those proceeds tax-free though.

Real estate limited liability corporations can lower your taxes

If you are a real estate investor, then you're well aware of how saving every little dollar is key to being able to get into investing in your next fix and flip. Keeping your tax burdens low is one of the benefits associated with setting up a real estate limited liability company (LLC).

Real estate LLCs function a bit differently from other types of corporate formations. This incorporation structure exempts you from paying taxes that you may derive from your business dealings. If this sounds too good to be true, then you're not alone. There's an explanation for why you don't have to pay corporate taxes on the funds that your corporate LLC generates.

What may your closing costs include?

When you buy a new home, you need to bring money to closing. This can be a significant amount, so it's important to talk to your lender in advance to make sure you know exactly what you're looking at. The cost varies from one purchase to the next, depending on a lot of factors, but you could be looking at thousands of dollars in fees.

If that's surprising to you, your first question may be what those fees are supposed to cover. Again, it varies from purchase to purchase, but the following are a few of the more common things that may be included:

  • The underwriting fee
  • The transfer taxes
  • The title search carried out by the title company
  • The property taxes
  • The survey fee
  • The home inspection fee
  • Prepaid interest
  • PMI, or Private Mortgage Insurance
  • The origination fee
  • Title insurance
  • Home insurance
  • The courier fee
  • An escrow deposit
  • The application fee
  • The appraisal fee
  • And more

The pros and cons of a 1031 exchange

There are advantages and disadvantages to any decision that you make. When these decisions have implications on purchases that are hundreds of thousands of dollars, it is important that your decision is well-thought out and thoroughly researched.

It's common for real estate investors to consider engaging in a 1031 exchange and for them to wonder whether there could be any negative repercussions. The following is an overview of the key pros and cons of 1031 exchanges for real estate investments.

Tips for rapid success as a real estate investor

Real estate investment has a reputation for being a great way to accumulate wealth. While this is true, the reason that not everyone succeeds in real estate investment is due to the fact that risks need to be taken. Those who are successful over time have a tried and tested strategy for choosing investment properties and generating profit steadily and predictably.

If you are considering making a real estate investment but you don't know where to start, you should take the time to learn some of the most basic principles. The following are some tips for the best approach when starting out in real estate.

What is the purpose of limited liability companies?

Limited liability companies (LLCs) are a popular choice for those starting a business. In particular, they are very popular with those who invest in real estate. If you are considering investing in real estate development in Florida, you may be wondering what purpose an LLC could have for you.

The primary purpose of an LLC is to protect the business owner from personal liability if the business loses significant assets. In other words, LLCs mitigate risk. Those investing in real estate will know the importance of risk mitigation and how it can affect overall success. The following is an overview of how LLCs benefit real estate investors.

Why do people opt to lease a commercial space?

You're thinking about starting your own business, and you naturally assumed that meant buying the physical property for the company. You figured it was the first step to take. However, in talking to others about your plans, they suggested renting.

You worry that renting just gives you yet another way to spend the company's money, which you'll never see again. If you buy, at least you own the property itself, and you can theoretically sell it to recoup what you invested.

Before you sell your investment property, strategize

Every so often, investors manage to seal the deal on the perfect piece of property. Whether by accident or out of some kind of foresight, they're able to buy an investment property at a very low price, only to see the market suddenly take off. The value of their investment suddenly triples in value, virtually overnight.

There's a stab of pain, coming, however, if the investor wants to sell. More than likely, the Internal Revenue Service (IRS) will impose a significant amount of capital gains taxes on the sale. Essentially, capital gains are considered taxable income on goods that are quickly "flipped" for a heavy profit.

Should I invest in a rental property?

Many people dream of having a way to earn a passive income since it creates freedom and allows investors to gain wealth over time. However, it's common for prospective investors to have hesitations and worries about taking the plunge, because they are concerned about the risk involved.

The new year is a great time to think about ways that you can start to create a passive income for yourself. If you want to invest in a rental property so that you can gain rental income over time, the following are some reasons that you should take action sooner rather than later.

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Jeffrey Feinberg, P.A.
4651 Sheridan Street
Suite 200
Hollywood, FL 33021

Phone: 954-962-8889
Fax: 954-966-6259
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