Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/206598
LEGAL BRIEFS Proactive Profitability These 10 ideas can help landlords save money. The bad news is that investment property costs increased when taxes increased in January. Interest rates have also increased. The good news is that savvy landlords can take proactive measures to improve the bottom line now and in the upcoming new year. With the help of experienced legal counsel, landlords and investment property owners can consider the following suggestions for increasing their properties' profitability. 10 Tips to More Income 1. Refnance. As predicted, interest rates have climbed but still remain historically low, so now is the time to take advantage of low rates, available fnancing, and rising property values before the window of opportunity closes. Before you decide to refnance, compare the expected savings and income with the expected expenses and risks, and determine if and when the benefts outweigh the costs. Te costs can include appraisal, inspection, legal, title, and other fees, and any penalties for early payment of the existing loan. Te risks can include restrictions and guaranties in loan documents. Te benefts can include lowering payments, accessing needed cash, avoiding balloon payments, reducing or extending the loan term, reducing the amount of debt, improving loan terms, and increasing income by using loan proceeds to make improvements. Review your properties to minimize your costs and risks and maximize your benefts. 2. Reduce Taxes. Have you considered a real estate tax appeal before the deadline? Even landlords who lease on a triple-net basis should consider fling timely tax appeals to lower their property taxes. In this economy, tenants are extremely sensitive to additional costs; this move avoids losing tenants because the taxes being passed through are too high, helps existing tenants survive by saving money, and attracts new tenants who are comparison shopping among potential sites. Another way to obtain tax benefts is through 1031 exchanges. 3. Plan. Consult with counsel to discuss and update your plans and options, including estate planning, exit strategies, and business succession planning. An experienced trusts and estates lawyer can ensure that the maximum amount of your money stays where you want it, instead of going to Uncle Sam. 4. Reduce Responsibilities. Update all your documents and procedures to reduce your responsibilities. For example, you can clearly require tenants to perform and pay for all obligations, including, without limitation, all construction, compliance, utilities, maintenance, repairs and replacements. And you can reduce responsibilities by improving procedures, from installing energy efcient lighting and equipment, to improving negotiations and vendors. Commercial Investment Real Estate Siede Preis/Getty Images; Craig Dingle/Getty Images t by Jerry A. Nelson, Esq.