There is always a risk when it comes to real estate investing. Unknown issues can crop up which result in money down the drain. The goal is to minimize these risks as best you can to get the most profit. If you keep these three tips in mind while searching for your next real estate investment then you will be on the right track.

1. Bigger and better isn’t always a money maker

Most investors dream about a perfect location with a newly renovated and massive rental. If you find that big and beautiful investment opportunity then it might not be as good as it looks. Sometimes the fancier properties will give you a negative cash flow in comparison to more downsized locations.

You must make sure that your return rate will be at least as good as if your money was still in liquid asset form. For example let’s say that your investment money is currently sitting in stocks which give you a five percent earning rate. You must know that your new real estate investment can give you that same return, if not better. You can accomplish this by purchasing a positive cash-on-cash return property.

2. Time is money – so treat it the same way

Some properties take a lot more of your attention and time than other ones. If the property will take a lot of your time then consider that as lost profit. Properties that can be rented out to long-term type tenants are the easiest on real estate investors. If you need to spend a lot of time fixing problems and finding new tenants then you will be wasting your time. Quick time-wasters include vacation properties, properties in bad areas, or rentals near college campuses.

3. Market research is key

It is essential to know your market. Do some research and find out if the property in question is market value. A market value home will likely give a market value return, losing you some money. It is smarter to find a property that is underpriced. The only way to know if they are a good value is to keep a constant eye on the market.

4. Always risky but not too risky

As you know, real estate will always be a risk. You will put your neck out for a good property and cross your fingers that it goes well. If you have little experience in real estate then just make sure not to invest in super high risk properties. What is super high risk? Land, fixer uppers and private real estate are just some examples. Between all the variables of risk it is really easy to lose your hard earned money.

5. Consider putting money into REITs

REITs, or a real estate investment trusts, can be a smart option for investors who are interested in putting real estate into their portfolio. These are companies that own and develop real estate assets. They are publicly traded, offering a safer yet diverse investment opportunity. If you consider investing in REITs then an experienced real estate attorney can help you negotiate land use approvals, obtain loans, and plan joint ventures.

The most successful real estate investors learn how to balance their risks. Keep your portfolio diverse and your eye on the market. Contact a real estate attorney for the best outcome with real estate transactions and partnerships.

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For a businessman or businesswoman, a lease signed for the business is among the most essential documents he or she will ever create. This is true no matter how big or small the company. Understanding what is typically included in commercial leases can help one to be prepared to negotiate one in Los Angeles and elsewhere in California.

First, a commercial lease sets out the parties involved in the agreement as well as the rent that the tenant will owe. It also outlines the time period that the rent will cover. The lease furthermore emphasizes that the landlord has agreed to let the tenant occupy the particular business space.

The commercial lease further includes the conditions and terms with which the tenant has to comply. Any extra agreements concerning improvements, maintenance and amenities, such as parking, can also be highlighted in this type of document. As renting a property for a business is one of a business owner’s biggest expenses, combing through every part of a commercial lease is paramount before signing on the dotted line.

The landlord usually offers a standard lease to a potential tenant at the outset, but these types of commercial leases are usually drafted in such a way as to favor the landlord. Using a standard lease is simply a negotiating tactic used by the landlord. An attorney can help one to ensure that the lease one negotiates and ends up signing is actually in one’s best interests long term in Los Angeles and other parts of California.

Source: findlaw.com, “Commercial Property Lease Agreement“, Accessed on Jan. 26, 2017

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Purchasing a house in Los Angeles is a complicated and lengthy process. A majority of used homes feature some items requiring upgrading or replacement — for instance, rusted pipes or outdated wiring. However, in general, the seller has a duty to disclose any major defects in the house, and if this is not done, a real estate dispute may ensue.

Sellers are generally required to disclose any material defect in their properties to buyers before their sales are deemed valid. Material defects are specific issues with components or systems of home properties that might have a major negative impact on the properties’ value. In some cases, a material defect may pose a risk to individuals that is considered unreasonable.

Some types of defects happen to be obvious and thus are disclosed early on. However, other defects may not be noticed until after a person has completed his or her transaction and moved into the home. In this case, the person might have some options for correcting any wrong that has been committed, depending on the severity of the defect.

In some cases, the seller of the home featuring a material defect may be held liable for an undisclosed defect. However, in other situations, liability might extend to either the buyer’s or seller’s broker or even to the home inspector. The right legal guidance in Los Angeles can help people to pinpoint who might be responsible and then explore all of his or her options in this type of real estate dispute.

Source: findlaw.com, “Home Defects Discovered After the Sale“, Accessed on Dec. 13, 2016

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Voters in Los Angeles have approved a new measure that imposes new requirements on certain residential development projects. Measure JJJ applies to projects where builders are seeking zoning changes, such as constructing more units than allowed or in a location where building currently isn’t allowed.

Developers on these projects will be required to construct a specified number of below-market units as part of the development. The measure also requires hiring local workers at a union-scale wages.

Measure JJJ will raise costs for developers

The measure intends to create more affordable options for LA residents by setting aside up to 20 percent of the units in applicable new developments as subsidized housing. It also seeks to promote living-wage jobs.

Developers are concerned that the new requirements will raise their costs and perhaps prevent some projects from being built at all. Hiring local workers could increase costs anywhere from 8 to 20 percent. In addition, the new requirements could drive up the price of land, as developers seek property that doesn’t require zoning changes.

Unions and affordable housing advocates pushed for the measure, which voters approved by a large margin. Measure JJJ also gives incentives for developers to create housing near major transit lines. Brokers and developers warn, however, that Measure JJJ could lead to a negative effect on the local housing market.

One negative effect could be fewer small developments. Many larger developments already use union labor, even though that tends to be more expensive.

A well-meaning measure could have unintended consequences

Another key issue is the affect of the new measure on land values. Proponents of Measure JJJ argued that putting more restrictions on development would actually contribute to a decrease in land values.

This is by no means certain, however, and the opposite could easily occur. Many landowners are currently selling because prices are up. If the value drops, a significant percentage of them might wait to sell, with unpredictable effects on the market.

At the same time some investors are starting to pull back from the market, sensing a housing bubble. Though investment in prime real estate locations is still at an all-time high, it is unclear how long that can continue. Measure JJJ has added another level of uncertainty to that already uncertain picture

The possibility of litigation

It is also unclear how many project proposals that had already been submitted to the city will be exempt from the new rules. Some applications might be grandfathered in, but others might not be.

The possibility of court challenges to implementation of the rules on issues such as this is very real. If you are unsure about your situation, it makes sense to get knowledgeable legal counsel.

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A man in California who purchased a mansion in cash was under the impression that the home was 15,000 square feet in size. However, a couple of years later, he discovered that the home’s square footage was actually listed as being under 10,000 in records for the home. That is when he sued the agent of the seller as well as the brokerage firm. California’s Supreme Court in this real estate dispute recently ruled unanimously in the plaintiff’s favor, with the outcome of this legal case having implications for both homebuyers and real estate agents in Los Angeles and elsewhere.

According to the California Supreme Court, the agent of the seller had a responsibility to disclose information about the home that was relevant to the buyer. This was deemed necessary since both the seller’s and buyer’s agents worked as part of the exact same firm. This case has received a great deal of attention in the area of real estate because the industry was fearful that the court may establish requirements forcing agents to disclose information that might harm the clients who chose to hire them.

Following the recent ruling, however, people in the real estate industry indicated that they did not expect upheaval since the decision was narrow. After all, square footage-related disputes are not uncommon. However, with the court’s decision, agents will be required to exercise more caution when it comes to disclosing information, and more paperwork may be required.

Real estate agents in Los Angeles and other areas who represent the buyer and the seller have a duty to serve both clients. If the failure to disclose information leads to a real estate dispute, the buyer who feels he or she has been duped has the right to take legal action in an effort to right any wrong that has been committed. An understanding of what facts must be proved will likely be necessary to prevail in this type of case.

Source: latimes.com, “Home buyers’ and sellers’ interests must be protected when the same firm represents both, state Supreme Court rules“, Maura Dolan and Andrew Khouri, Nov. 21, 2016

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Opening a small business in Los Angeles can be a daunting task, but one of the biggest decisions one must make is whether to buy or lease business property. One of the main benefits of leasing versus buying is that the initial capital required to lease is less than that required to buy. However, several issues are important to consider when exploring commercial leases.

One reason to consider leasing, besides the fact that it can help a business person to conserve his or her cash flow, is if a business does not have enough of an established credit rating to attain a mortgage. In addition, no maintenance is required when leasing. The landlord is ultimately responsible for the property.

It can also be beneficial for a person to lease if he or she cannot find a property for sale that is suitable for the business’s needs. Choosing a commercial lease is additionally wise if a business owner has found a suitable facility but it is located in an area with declining property values. Finally, if a person is not certain that a facility will meet his or her long-term needs, leasing is wiser than buying. Furthermore, rent can be deducted as an expense of doing business.

Once a businessperson in Los Angeles has decided to lease instead of buy, the main challenge is figuring out how to negotiate or draft a lease. One mistake in either of these processes can be financially costly or lead to preventable stress down the road. Legal guidance may help entrepreneurs to negotiate, draft and review commercial leases to ensure that their best interests are upheld.

Source: findlaw.com, “Factors to Consider: Lease or Purchase of a Facility“, Accessed on Dec. 29, 2016

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No standard agreement exists for a commercial lease. In fact, it is typical for people in Los Angeles and other parts of California to negotiate the terms of a commercial lease. A few tips may help to negotiate commercial leases effectively.

First, it is important to consider rental costs prior to leasing a commercial property. Negotiating the rental amount might be possible, depending on the property’s location, market conditions and other similar factors. Other costs that are associated with the commercial property might also be considered when doing the calculations reagrding the rent, such as repairs, taxes, insurance and utilities.

In gross leases, the landlord covers the costs of repairs, insurance, utilities and taxes, with the tenant typically paying a higher rent amount but paying the same total every month. With net leases, tenants pay certain rent amounts and then also pay for repairs, taxes, insurance and utilities. With the double net lease, a tenant will pay a certain rent amount in addition to paying the landlord for property taxes and insurance. Finally, with triple net leases, tenants pay certain rent amounts and then pay their landlords for repair, tax, insurance and utility costs.

Different types of commercial leases in Los Angeles offer different benefits to tenants. Whether an industrial property, office building, mixed use or retail property is sought, the failure to negotiate a favorable lease could end up costing the tenant. A California real estate attorney can help negotiate a rental agreement that truly reflects the best interests of the client.

Source: Findlaw, “Negotiating a Lease for Commercial Real Estate“, Accessed on Dec. 21, 2016

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Drafting and executing a lease is a crucial step for both lessees and lessors in business. Making a single mistake in this complex process can be costly long term. However, an attorney can guide you through process of negotiating, drafting and then reviewing commercial leases in Los Angeles.

With the right legal guidance, it is possible to generate comprehensive industrial leases that can be used for cold storage facilities, warehouses and data centers. An attorney may also help with an office lease, whether it is for a small business or a major corporation. Retail and mixed-use leases are also essential for properties such as department stores, health clubs, entertainment centers, restaurants and malls.

An attorney can help you negotiate a commercial lease and other legal documents necessary to complete or augment your real estate transaction. For instance, you may need help drafting a property management agreement. Review and negotiation of insurance policies are also under the purview of an attorney.

Sometimes the issue for businesses does not involve putting together commercial leases but rather has to do with litigating lease disputes. For instance, there might be a disagreement about the violation of a co-tenancy clause or a conflict about rent adjustments. Other possible areas of conflict might include a disagreement about common area maintenance or confusion about how lease terms should be interpreted. With the help of an experienced real estate attorney in Los Angeles, you can fight for your best interests in these situations to achieve the outcome you desire.

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Experienced stock investors in Southern California know that real estate investment trusts (REITs) are generally a sound investment and have been doing well. Those who wisely chose to invest in REITs have likely seen favorable returns this year and over the past decade.

However, exercising some caution may also be wise in the coming months as market analysts predict next year may not be quite as lucrative.

Why are REITs popular?

REITs have made investing in real estate possible for people who want a piece of the market but don’t want to manage their own income properties.

They have historically produced high yields because of the relatively low tax burden placed on companies that own income real estate. Coupled with low interest rates, investors have been able to use REITs as a strong and reliable source of income.

With a possible rise in interest rates looming on the horizon, however, experts have expressed concern over the future of REITs.

Uncertainty in the face of increased interest rates

Many market analysts are predicting that the Federal Reserve will increase interest rates in 2017. For REITs, this could mean declining performance.

Historically, low interest rates correlate with higher returns in the stock market, making stocks more appealing than bonds. If interest rates do increase, it could drive up the price-earnings ratio of REITs, scaring away some investors.

While a sharp interest rate increase could mean trouble for REITs, they could remain stable through a more gradual rise. Because increased interest rates are typically the sign of a strong economy, investors may still be attracted to the benefits of REITs, even if they are not quite as profitable in the future.

What is next?

The next step for investors is to wait and see whether the Federal Reserve decides to raise interest rates.

For businesses that could be negatively affected by an interest hike, the waiting period is an opportunity for preparation. If you are concerned that your company could be impacted, it may be wise to consider seeking legal guidance before a change is announced.

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Under California law, real estate agents are obligated to disclose every known material fact that may affect the choice of a buyer. This same requirement applies to sellers of residential real estate. If these parties fail to abide by the law, this is grounds for real estate litigation in Los Angeles.

Real estate sellers and agents must disclose to potential buyers any construction defects of which they are aware. It is also legally necessary to reveal any clouds that might be on the title of the property. Essentially, any issues that might influence the property’s desirability or value need to be revealed.

Even in a situation in which a property is being sold as is, the seller and the broker of the seller have to disclose material facts that the potential buyer may not know that might impact the party’s decision to buy the property. Failing to let a buyer know about essential facts can be considered real estate fraud. Other types of real estate fraud that may negatively impact buyers include fraudulent title transfers and the misrepresentation of the features of a property.

Sometimes sellers and sellers’ agents may also disguise signs of mold in a building. If you are a buyer and have been defrauded by a real estate agent or seller, you have the right to take legal action. An attorney can fully defend your interests and investments through the process of real estate litigation in an effort to right any wrongdoing that has been committed against you in Los Angeles or the surrounding areas in Southern California.

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