Financial Benefits of Real Estate

November 21, 2017

Trends in San Diego Residential Real Estate Present Opportunities for Investors

Author: Staff

Successfully investing in real estate—with “success” covering a wide range of outcomes that generally all involve financial returns—requires careful research and planning. The old adage that the three most important considerations in real estate are “location, location, location” certainly holds true for San Diego real estate investing. Familiarity with the area in which one intends to invest is essential, along with knowledge of current market conditions and trends in both the area and the broader region. As of late 2017, the San Diego residential real estate market appears to offer many potential opportunities for investors, but as with any venture, it also presents risks. A few factors for prospective investors to consider are how the area compares to similar locations in other cities, property values and prices, trends in new construction, and the potential for rental income.

A “Hot” Real Estate Market

November 13, 2017

What San Diego Real Estate Investors Should Know About House Flipping

by Bona Law PC

Author: Staff

House flipping has been a popular form of real estate investment for several years, even inspiring several television programs. Unlike many types of real estate investments, house flipping is a very “hands on” process, often requiring a significant investment of time in addition to money. This includes not only repairs and remodeling, but also extensive research into the neighborhood and surrounding area. Once a prospective house flipper has done their homework, it can be a lucrative type of investment. San Diego real estate investors should consider both the potential risks and the possible rewards of house flipping.

What Is House Flipping?

September 25, 2017

Ground Leases: What California Real Estate Investors Should Know

by Bona Law PC

Author: Staff

A typical lease agreement involves a landlord (lessor) that allows a tenant (lessee) to use real property owned by the landlord, in exchange for the payment of rent. The landlord owns the real property and all of the improvements, while the tenant owns any personal property they bring with them. This works for short-term periods, during which the landlord does not plan to make any major improvements to the property.

Another type of lease, known as a “ground lease,” allows landlords and tenants to enter into long-term agreements involving the development of real property. California real estate investors can be involved in ground leases as landlords, such as if they want to extract value from a large parcel of land; or as tenants, such as if they want to develop a property for commercial purposes.

August 10, 2017

What California Real Estate Investors Should Know About Commercial Leases

by Bona Law PC

Author: Staff

Real estate investment can take many forms and offers many ways to obtain a return on one’s investment. Some investors purchase real property in order to make improvements and sell it, while others may purchase property with the goal of leasing it for rental income. Leases on real property can be broadly divided into two categories: residential and commercial. While residential leases are subject to a wide range of legal restrictions aimed at protecting tenants, commercial leases allow far greater flexibility. Both types of leases involve their share of risks, from the hassle of collecting unpaid rent to the possibility of serious damage to the property. Commercial real estate investors in San Diego should be aware of the opportunities—and liabilities—that commercial leases have to offer.

How Are Commercial Leases Different from Residential Leases?

July 26, 2017

What California Real Estate Investors Should Know About Residential Leases

by Bona Law PC

Author: Staff

Investing in real estate involves far more than just buying and selling land. A real estate investment can consist of a complicated web of assets, obligations, and contractual relationships. This latter category is crucially important for California real estate investors to understand, since the duties created by contracts can have far-reaching effects. Leases are a type of contract in which the owner of real estate (the “lessor”) allows someone (the “lessee”) to use that real estate as their home or for business purposes. A lessor has multiple duties under a typical lease agreement, and California law imposes numerous additional obligations on lessors in residential settings.

What Is a Lease?

A lease is a contract between a lessor and a lessee. According to the statute of frauds, a lease agreement must be in writing. It is possible—but generally not advisable—to have an enforceable oral agreement for a month-to-month lease.

The lessor provides the exclusive use of the leased property, and the lessee pays rent. If either party fails to fulfill their obligations, they may be liable to the other party for breach of the lease. California law makes a distinction between residential and commercial leases. It generally imposes more restrictions on lessors in residential lease agreements.
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July 12, 2017

What Is the Difference Between Real Estate Syndicates and Real Estate Investment Trusts in California?

by Bona Law PC

Author: Staff

Real estate investments have generated income for investors for about as long as the concept of private ownership of real property has existed. The fundamental concepts of real estate investment have not changed much over the centuries, but relatively recent innovations allow investors to entrust their money to professionals, freeing them from direct responsibility for managing investment properties. Real estate syndication allows investors to contribute capital to a development project under the management of a syndicator. Real estate investment trusts (REITs) own and manage portfolios of real estate holdings. Syndicates and REITs differ from each other in several important ways. Potential investors should understand these differences before deciding where to put their money.

Syndicates versus REITs

The most fundamental difference between syndicates and REITs involves their relative size and scope. REITs are, essentially by definition, larger than syndicates. They have more investors, and they generally manage portfolios aimed at longer-term holdings. Guidelines for the structure and management of REITs are found in the federal Internal Revenue Code (IRC).

Syndicates tend to be less formal than REITS, with fewer specific legal guidelines or restrictions. They are usually limited to a small number of development projects and therefore tend to focus on holdings and revenues on a shorter time scale than REITs. You can read our many articles about real estate syndication here.

April 11, 2017

The Golden Rule of Real-Estate Investing: Does the property qualify as investment property for a Section 1031 Exchange?

by Bona Law PC

1031-exchange-photo
Author: Matthew Riley

Matthew Riley is an attorney with Bona Law, primarily focused on antitrust, commercial litigation, real-estate, and federal administrative law.

In my first blog post for Titles and Deeds I introduced what I consider the “Golden Rule” of real estate investing—Section 1031 Like-Kind Exchanges. As promised, I’ve returned to help you understand the fundamental rules governing these exchanges, so you can determine whether you may be eligible to enjoy the financial benefits of this rule.

March 28, 2017

The “Golden Rule” of Real Estate Investing: Like-Kind Section 1031 Exchanges

by Bona Law PC

Author: Matthew Riley

Matthew Riley is an attorney with Bona Law, primarily focused on antitrust, commercial litigation, real-estate, and federal administrative law. Prior to joining Bona Law, Mr. Riley’s legal practice emphasized transactional work involving real estate and mergers and acquisitions. Matthew’s professional passion is to educate and to clarify complex areas of the law to help clients achieve their goals. Matthew Riley graduated from the University of Kansas School of Law in 2013 and is licensed to practice law in Illinois. He is in the process of obtaining his admission in California.

No one wants to pay taxes, and most, if given the option, would pay less. The United States Tax Code declares certain events taxable (ex. receiving wages, selling property), and establishes rules to assess how much a taxpayer owes on those events. In some cases the Tax Code empowers taxpayers to choose which tax rules apply, and thereby, how much tax is owed. Therefore, knowing the tax rules and how they apply to certain taxable events can result in significant and beneficial tax consequences for you and your business.

March 10, 2017

Why Should I Invest in Real Estate?

by Bona Law PC

Apartment-Building-Real-Estate-300x201

Author: Jarod Bona

Our first blog post at Titles and Deeds will examine why you might want to invest in real estate in the first place. Our website is focused on real-estate investors, so it makes sense for us to articulate why we believe real-estate investing is a good idea.

This article will focus more on beginning or basic investing as readers that are already flipping shopping malls or buying and reconstructing large apartment buildings already know why they should invest in real estate.

Before delving into some of the advantages, however, we will be very lawyer-like here and explain that real-estate investing isn’t always successful. It doesn’t always work like you see it on television. You might lose money. In fact, if you are in the game long enough, there is a good chance you will lose money on one or more projects. And real estate isn’t necessarily easy money in the first place.

You might eventually find yourself sipping margaritas on the beach thinking about all the passive income flooding into your checking account as you watch one wave after another splash into the sand. But it will take some smarts and hard work to get there. You will have to supply the hard work, but with this blog we will help to facilitate some of the smarts.

Real-estate Investing Presents Many Options

If you don’t like flipping houses, you can buy and hold apartment buildings, or develop commercial properties, or buy tax liens, or lend private money, or lease vacation-rental properties, or participate in any number of different types of investments.

You might pick one type of investment, learn everything about it, and specialize. Or you could bounce around, depending upon the state of the market and the economy—there is an optimal strategy for every market. Or, more likely, you start with one type of real-estate investment and move on to another as you gain experience. For example, some investors start with a flip to gain cash, then purchase multi-family or apartment buildings for long-term wealth.

Real-estate Investing Offers Unique Financial Benefits

The most obvious financial benefit of real-estate investing is leverage. Leverage is the use of borrowed capital (or some other instrument) to increase the returns of your investment. Using leverage is particularly common for real-estate investments, as most purchases incorporate some type of debt financing.

When it works, the financial benefits of real-estate investing are fantastic. You can often purchase a properly by putting down thirty-percent or less of your own cash. If you have renters in your property and you have invested wisely, the renters will effectively pay your mortgage interest, insurance, and taxes, along with some of the loan’s principal, and leave some cash left over for you or your business.