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Meet Your Cambridge, Somerville & Medford Real Estate Expert!

Taylor Johnson is your local real estate specialist for the Cambridge, Medford & Somerville areas. He has a deep understanding of the community, it’s people and the real estate in these particular areas. Watch Taylor’s short introduction video! You can reach Taylor directly at Taylor@MandrellCo.com

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In this video, Patrick Wheeler of the Mandrell company shows you how to easily determine whether your real estate investment is profitable. He takes you through a simple to use rental property deal analyzer that allows you to determine return on investment, cap rate, cash on cash return and several other investment measures. Great investors know that your money is made during the purchase. Use this terrific calculator to make sure you fully understand your investment on the way in. Download now with the link below.

http://mandrellco.com/dealanalyzer

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Landlord Tip: Security Deposits

Many landlords are hesitant to collect a security deposit (SD) from tenants because they fear it is too much money for someone to pay. While I completely understand the sentiment and extending a helping hand….security deposits are designed to help you (the landlord) in the event your tenant damages the property. 

The following covers some major points of security deposits as they pertain to landlords.

How much can you ask for?

You must strike a balance, requiring a deposit that sufficiently insures against potential damage but that does not overburden your new tenants. In the state of Massachusetts, the maximum amount you can request is equal to one month’s rent. 

You must charge the same security deposit rate for all tenants so as not to trigger a discrimination issue. For example, you cannot charge your first floor tenant a $500 SD because you felt sorry for him and your 2nd floor tenant $1000 for a SD because you knew they could afford it. If unit 2 found out and decided to sue you, it would be their legal right to do so and win because you did in fact discriminate. 

How should funds be held?

Security deposits remain the legal property of the tenant until a triggering event, such as damage to the unit, occurs. Security Deposts are to be held in an interest bearing account (also called an escrow account) at your local bank. You will need a W9 for the tenant so that any interest earned on the account can be reported to the government (Yes, you can be taxed on interest). If you fail to comply and your tenant pursues it, you will be forced to pay 5 times the amount. I say…follow the law and avoid the headache. 

When can you keep the deposit?

Your lease agreement should clearly spell out which situations would warrant retaining the tenant’s security deposit; otherwise, the tenant may have a strong case against you for wrongful withholding of tenant funds. Some legitimate reasons for withholding some or all of the SD may include the following:

  • Failure to pay rent
  • Damage to the property
  • Damages exceeding normal wear and tear
  • Unpaid utilities
  • Removal of abandoned property
  • Cleaning costs

In nearly all states, you must provide an itemized list in writing detailing the costs of the expenses. If the tenant disputes the list, he or she may initiate a lawsuit in housing court, which would require you to prove that damage occurred and that repair costs were congruent with the amount withheld.

How soon should you return the deposit?

You must return unused security deposit funds within 30 days of the tenant moving out, keeping in mind that these funds legally belong to the tenant unless a triggering event has occurred. 

Being a landlord is like running a business, you need to be organized and set up systems to ensure success. For free Landlord-Tenant forms, feel free to contact us and we will gladly email them to you.

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Credit affects all major financial decisions that involve someone lending you money/credit. It should be no surprise that your credit score will also affect your mortgage rate. Your credit scores affect the kinds of mortgages you can be approved for, how much you can borrow, the mortgage rates you’ll pay and even how much you’ll pay for private mortgage insurance (PMI). It’s not impossible to buy a home with damaged credit; it’s just much more expensive.
Credit scores are instrumental in applying and being approved for a mortgage. When it comes to FHA financing at least, you will be required to have a credit score of at least 580 in order to be eligible for a loan. The higher your credit score is beyond that, the better the terms will be. With a 580 credit score you also qualify for the low 3.5% down. If your credit score is below 580, you can still qualify for an FHA loan but you will need a 10% down payment. The drawback to a 580 is that your interest rate will not be at the national average, it will most likely be slightly higher. Consult your mortgage lender for more information. (We work with several lenders who work hard to get you the best rate, to be connected to one of them, please click here)
This is why it’s so important to understand your credit score in the months before you apply for a mortgage. If you do have impaired credit history, you’ll want to work to improve your credit scores before you even apply. And if you already have good credit, you’ll want to keep it as high as possible by avoiding taking on other new debt.
We host seminars throughout the year regarding improving credit and have affiliations with credit repair companies.
For more information, feel free to contact us.

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Boston is Healthiest City of Country’s 25 Big Cities

WalletHub.com recently released a study showing Boston as the country’s healthiest city. “WalletHub compared the real-estate markets in 25 of the largest metropolitan areas across 10 key metrics. Our data set ranges from the interest rate on a first mortgage to the percentage of households that have received state or local assistance on their first housing loan”.

“As of the first quarter of 2015, for instance, about 255,000 consumers had a bankruptcy notation added to their credit reports, the lowest quarterly total since 2006. Foreclosure rates have also dipped to their lowest since that same year. In addition, lower down payments and higher approval rates for people with average credit scores indicate a growing housing market.”

Given such promising evidence of steady economic recovery, and with Boston’s current building boom, is it time to invest more into Boston real estate? Read the report for yourself with the link below. Interested in speaking with a local real estate investment specialist? Give us a call at 617-297-8641 and let talk about Boston’s future.

http://wallethub.com/edu/the-health-of-housing-market-in-25-big-cities/7664/

Source: WalletHub
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Your invited to join Boston Wealth Builders at the Quincy Marriott Hotel (September 19th, 2015) as we learn how to intelligently improve our property values. Come get a better understanding of what local appraisers are looking for when determining the values they place on property and how you can ensure your home’s appreciation. This event is free to the public but you must RSVP as seating is limited.

The residential appraisal is an integral part of the real estate transaction since appraisers are the trusted vendor for lenders in the mortgage business.  Whether you’re a real estate homeowner or an investor, understanding the appraisal process is a critical component for increasing your property value for the years ahead.  Danyl Collings, of Forsythe Appraisals, will be addressing the following items in regards to real estate appraisals:

1.)  What are the three main items appraisers are looking for when appraising real estate investment properties?  Why are they important?

2.)  What information can you provide the appraiser to expedite your appraisal process and getting the report into the lender?

3.)  Understanding your improvements to the property relative to the property’s market neighborhood and Town/City.

4.)  Why is rental income important in an investor appraisal?

Since 2009, Danyl has served as branch manager for Forsythe Appraisals, LLC – Boston Branch which provides residential appraisal services in MA, NH and RI.  In this role, he is in charge of the sales, marketing, recruiting, training and report quality and delivery for the Boston Branch.  Forsythe Appraisals, LLC is the largest private appraisal firm in the County with over 250 + appraisers throughout the United States.

To RSVP for this event, please click the link below. You’ll be asked to create a FREE account and join Boston Wealth Builders. Once you’ve become a member you can RSVP and save your seat. Hope to see you there!

http://www.BostonWealthBuilders.com

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The Mandrell Company is pleased to announce that we’ve just expanded our real estate sales and rental business into the state of Rhode Island!  We have two designated agents for the state and they are ready to serve your real estate needs. If you, or anyone you know is looking to buy, sell or rent in Rhode Island, we’d certainly appreciate the connection.

You can continue to reach us by email at Contact@MandrellCo.com or call our local RI office at 401-641-5774.

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I recently received a lead from a friend of mine about a 10 unit multifamily building going up for sale in the coming weeks. This friend knows I’m an investor and thought it would be a good opportunity for me. While I appreciate my friend thinking of me, this property one of the worse investment option I’ve ever come across….despite the price.  Here are the 8 features of this building that kept me from pursuing the opportunity.

  1. The property’s street position – The first thing I thought when I stepped out of the car was “what an awful position this building was in” It was located toward the bottom of a steep hilly street. There was no doubt in my mind that when it rains this basement would be taking on water. Upon entering the basement, it took a matter of seconds to smell the damp air.
  2. The condition of the roof – The roof was one of the things that was not very visible from the photos my friend sent. Once I arrived at the property I could see a couple immediate turnoffs. The 1st was that the roof was slate.  Slate is a great material when it’s in good condition but can be very expensive to repair. From the street I could see that the roof had already been patched and at some point and the patch was done with shingles versus the original slate material. This was probably done because the owner couldn’t afford the cost of the slate replacement. The 2 note I took was the steepness of the roof. When you’re replacing a roof the steeper the roof’s angles are the more difficult the work becomes. When the work become more difficult the price goes up.
  3. Public Transportation/ Parking – Before we entered the building I asked the owner about public transportation in the area. He replied that the bus stop was about 3 blocks “that way”. While 3 blocks isn’t very far for most people, please remember that this building is located on a hilly neighborhood in New England. Walking up or down a hill in the snowy weather is not the easiest thing to ask when you are trying to recruit good tenants. I also noticed there was parking for 6 vehicles while the building consisted of 10 units. Assuming each tenant had only one car, there would still be a few units without an open spot.
  4. Beautiful Victorian Structure – While Victorian homes are very appealing when properly maintained, the upkeep for this property style can be very costly. I don’t believe this is the best building style to choose for a rental apartment investor. This is something I noticed prior to visiting the building but the low price sucked me right in.
  5. No Uniformity – When you purchase a building with 10 plus units and none of the apartments are similar in size, shape or layout, the building become difficult to manage. For example, if I’m purchasing new kitchen cabinets for this building a would have to access each unit and measure whats needed for each individual space. If the apartments were uniform in terms of the layout, I would be able to measure one unit and multiply the order by 10.
  6. One Heating Unit – This isn’t a problem for every landlord but I personally do not like the idea of having one heating system for an entire apartment complex. Every tenant is going to either be too cold or too hot depending on the temperature you maintain in the building. Those that are too cold will consistently be calling the landlord to increase the heat and those that are too hot will a crack window to regulate the temperature in their units. In either case you have trouble. The alternative is to convert the building to separate heating systems for each unit, but this isn’t exactly a small investment.
  7. Inconsistent Rental Income – When I initially asked the owner about the occupancy of the building I was told that 9 of the 10 units were filled and rents flowing. By the time we connected with the property manager and received a tour of the building we found the it was closer to 6 units filled. I’m not sure where the disconnect happened but it didn’t appear the current owner could keep these units rented.
  8. Poor Job Market – Before we concluded our tour of this building I asked the property manager about the economic state of the city. His answer was less than encouraging and in so many words he told me that the “no one in the area could find work”. If that’s true then “no one in the area” can pay rent and this certainly isn’t the investment for me.

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There are two very important investment calculators buy and hold investors should pay more attention to. Both of these calculators are forward looking and help investors predict the future of there real estate holdings.

The 1st of these two calculators in what’s called a “compounding calculator”. The compounding feature can help us estimate property values at a given point in the future. Say for instance, we purchased an investment property today at $550,000 and we want to know where we’ll stand in 10 years. Let’s then assumed the value increases at an average of 3% per year (which is a relatively safe assumption for the Boston Market). If our assumption hold true, at the end of year 10 this property would be worth almost $740,000 which is nearly $200,00 more than we paid for the property.

The 2nd of these two is simply a mortgage calculator with an “amortization schedule” attached. Assuming you make all your monthly mortgage payments on time, an amortization schedule will show you what your (principal) mortgage balance will be after every month.

Let’s go back to our investment purchase of $550,000 and assume we purchased this property with a 20% down payment ($110,000). Let’s also assume we financed the remaining balance ($440,000) at a rate of 4%, with a 30 year amortizing loan. If we looked 10 years down the road (payment number 120) we would find a principal balance of roughly $340,000.

We the combination of these two calculators we’ve been able to make some predictions as to what our investment will look like 10 years from now. With the $110,000 down payment we were able to secure this investment property and leverage the remaining balance. At the end of 10 years you will own a property worth $740,000 and have a mortgage balance of $340,00.

$740,000 Value – $340,000 Debt  = $400,000 Your Equity.

If you sold this property after 10 year you would have nearly quadrupled your initial invest $110,000. Your equity position would have grown 400% or an average of 40% annually. This doesn’t include any cash flows you received from the property over this 10 year period.

You can find both of these calculator with the links below!

http://www.amortization-calc.com/

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

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Boston Investment Specialist

 

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Are you a landlord in the Boston area or are thinking about getting into the rental business? If so, make sure you fully understand the required and optional insurance coverage available to you. Having the right insurance in place could mean the difference between a well run real estate business and financial ruin.

Here are several insurance policies every Massachusetts landlord should be aware of:

Owner Occupied Coverage – If you purchase a multifamily building and you intend to occupy the property as your primary residence you’ll be required to obtain homeowners insurance. This insurance will typically cover the building itself as well as all the buildings fixtures. This policy will not cover your tenants personal belonging (or yours if not specifically written in the property).

Rental Property Insurance – Let’s assume you initially purchased a Boston triple decker as your primary residence and then you decide you want to move out and rent the unit you’re currently occupying.  It would be a very good idea to contact your insurance agent prior to doing so. When you initially purchased the property you paid for insurance that covers you as an owner occupant, but not as an investor. Once you move out of that property and it now becomes and investment and no longer “owner occupied”. Investment real estate requires different coverage and you’ll need to discuss these changes with your agent. If you don’t switch your policy after moving out, and attempt to make a claim, the insurance company may argue that you had improper coverage and deny any payments to you.

Vacant Property Insurance – If your property ever becomes entirely vacant for an extended period of time, make sure you alert your insurance agent. There is often a different policy needed for a property that isn’t being occupied due to a higher risk of damage. Vandalism, rodents and frozen pipes are just a few of the many things that are more likely to take place in a vacant building. Make sure you’re fully covered.

Renters Insurance – One of the best things you can do as a landlord is alert your tenants about renters insurance. If there is ever a flood, fire, break in or anything that results in your tenants loosing personal property, they are not covered under your homeowners policy.  It’s a good idea to alert them of this fact (during move in) and encourage them to get coverage. Renter’s insurance policies can be obtained for as little as $300 annually for approximately $10,000 in coverage.

Email us (Contact@MandrellCo.com) and we can send you the form we use to educate our tenants about the need for renter’s insurance.

Umbrella Insurance – If you own more than one rental property, you should speak with your insurance agent about an umbrella policy. Simply put, an umbrella policy protects you from any losses that exceed the coverage amount in your property’s policy. Ask your agent if this type of coverage would be right considering your future investment goals.

Anytime you make a significant change to the occupancy or the structure of your investment property, you want to be on contact with your insurance agent. It’s also a very good idea to review your coverage amounts and deductibles to really understand what your policy covers…and what it doesn’t.

Visit us on Real Estate Investment VideosYou-Tube for more investment real estate tips and tricks.

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Is your New Years resolution to get yourself more involved in the Boston real estate scene? Here are a few great events to get you headed in the right path.

Mutlifamily Investments 101 – Investing & Home Buying Seminar

Thursday, January 22, 2015  – 6:00 PM to

 This is a great event for first time landlords or if you’re thinking about getting into the business. The seminar will run you through all the basics of investing in Boston real estate including evaluating cash flow numbers and multifamily techniques. You can find further details and RSVP with the following link. http://www.meetup.com/Networth-Investors/events/219497293/

How To Get An 800+ Credit Score & Never Be Denied For Anything

Saturday, January 24, 2015  –  to

Are you or someone you know looking to buy a home or invest but a less than perfect credit score holding you back? This is the meeting for you! Learn the ins and outs of your personal credit and how to effectively increase your score!  For location and to RSVP click the attached link. http://www.meetup.com/Urban-Money-Matters/events/219296945/

Home Flippers Financing Summit

Saturday, January 31, 2015  –  9 to 5

Are you looking to flip houses in Mass but not sure how to get the financing? Have you heard about investors flipping property using private financing or “other peoples money”? Come learn how they’re doing from real Boston investors. This seminar will teach you how to find and recruit private money investors to fund your flips!  Seating is limited!
Purchase your tickets with the following link. http://www.eventbrite.com/e/house-flipping-finance-summit-tickets-14920536727?aff=WillieMandrell

 

 

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The Mandrell Company would like you to give a warm welcome to the newest member of our sales team, Priscila Elias!

A native of Brazil, Priscila brings her warm personality, family real estate investment knowledge and exceptional customer service to the North Shore. Priscila is an accomplished sales professional with over six years of experience in customer-focused positions. Priscila has a natural ability to find innovative solutions and works hard to ensure satisfied clientele. Through her work experiences and connection to the real estate investment industry, we know Priscila will succeed and be a real asset to the firm.

Priscila can be reached at Priscila@Mandrellco.com

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The Mandrell Company would like you to give a warm welcome to the newest member of our sales team, Elizabeth Newcombe! 

Liz is outgoing, cheerful and passionate about real estate and helping her community. Liz obtained her Bachelor’s degree from Christendom College in Virginia where she actively participated in several outreach and missionary events in the community. Her genuine passion for helping people is invaluable when maneuvering the complexities of buying/selling a home. Liz also comes from a family that is active in the real estate industry.  Her experience, knowledge and great personality will serve her well as an agent on the South Shore.

Liz can be reached at Liz@MandrellCo.com

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The Mandrell Co would like to give a BIG WELCOME to the newest member of our sales team, Joe Rodriguez!  Joe will be starting with us next week and will be responsible for residential and commercial sales in Boston’s Metro West area.  Joe is a graduate of Wentworth University and earned his Bachelor’s degree in Construction Management.  His work experience includes project management for Vantage Builders and JNL Corporate Interiors.

Through his education, work experience and serious interest in the real estate investment industry, we know Joe is an excellent match for our firm and will be a real asset to the team.

Joe can be reached at Joe@MandrellCo.com

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Are you an investor or are you in the business of speculation? Investors typically look for a cash flow return on their investment based on a sound cash flow analysis. They purchase a property when the projected ROI make sense compared to other investment options. Buying a property with little to no cash flows and hopes of appreciation is called “speculating”. There are no financial predictions, but rather a hope that the market will continue to rise and you will make a financial gain the in the future. There are two main problems with type of investing which are as follows.

1. What happens when the market goes south? If the economy tanks and your property values decrease will you be forced to sell at a loss? An investor with a cash flowing investment isn’t affected as much by down turns in the market. Despite a loss in value, the investor is still putting cash in her pocket every month when their tenants pay rent.

2. What happens when the property needs repairs? If you’re investment isn’t putting cash in your pocket and you need a new roof where are those funds coming from? You’ll now be forced to dip into your personal funds and make a further investment into the property rather than the investment taking care of itself.

Want to know how to evaluate rental property in Boston? Watch the video above and download our Cash Flow Analysis. If you have questions about the form or the video, please give us a call at 617-297-8641 or email us at contact@mandrellco.com

Download the Cash Flow Analysis here!

 

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What Are Taxes Consequences For Selling My Investment Property?

The reasons for selling a rental property vary. Landlords who personally live in and manage their properties may move and want to buy a different investment property near their new residence. A landlord may also want to cash in on the appreciation of a rental property rather than accumulating cash flows through rent. It may even be a case of a property that is losing money, either through vacancy or not enough rental income to cover the expenses. Regardless of the reason, real estate investors looking to sell will have to deal with taxes in some way shape or form.

A deferred exchange, also called a 1031 exchange (after the IRS code section that allows it), permits the seller of rental real estate to take the profits from a sale and invest them in another rental property without having to pay taxes. This is a federal tax provision that is also honored by all but two states (Georgia and Mississippi). It is referred to as a deferred exchange because taxes will have to be paid when the last property is sold. However, because there are no limits on the number of 1031 exchanges you are allowed to participate in, you could continually roll over profits into new properties and never pay taxes. You must use an exchange facilitator or other impartial third party to hold the proceeds between sales, and the transactions must conform to strict timelines.

When you sell rental property, profits, or capital gains, and losses are categorized as either short-term or long-term. Short-term profits are taxed at the same rate as ordinary income. Long-term capital gains are taxed at between 5 and 15 percent, depending on your tax bracket. Neither short-term nor long-term capital gains are subject to the social security tax. The maximum long-term capital gains rate is typically lower than the ordinary tax rate for most people selling real estate. To qualify for the long-term rate, you have to hold real estate for at least one year. Se sure to speak with your CPA or tax preparer about the specifics of any sale so you are prepared. 

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Boston Wealth Builders Seminar Are you interested in learning more about investment real estate? Would you like a great place to network with new and experienced investors? Join Boston Wealth Builders! We are a group of house flippers, landlords, wholesalers as well as many other investment industry professionals throughout Massachusetts. We gather and discuss local industry trends, new products, marketing techniques, where to find the best deals and how to finance your purchases. We meet in Boston as well locations North, South and West of the city, so there will always be a meeting near you! The group is growing at a tremendous pace and we would love to have you be part of it. Come learn a little and share a little with us! Join anytime for FREE at www.BostonWealthBuilders.com . Hope to see you at our next event!

 

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