Commercial Lease vs. Residential Lease: 5 Key Differences

Though commercial and residential leases both are written contracts for the use of real estate and share some common features, the two differ in several significant ways. If you work in either or both areas of real estate, then you should understand the five key differences between a commercial lease and a residential rental agreement.

Allowed and Required Uses of Property

The terms themselves point to one key difference: one type of lease relates to commercial property and the other concerns residential property.

  • Commercial leases concern spaces that produce or sell products or services, such as a retail store, warehouse, office, parking garage, or restaurant. The leases usually specify the types of business operations permitted on the premises. Some commercial leases require certain days and hours of operation.
  • Residential leases relate to spaces where people live, such as an apartment or house.

Residential leases usually prohibit the use of the property for most types of commercial activities, and commercial leases typically prohibit the use of the property as a living space.

Length of Lease

The duration of the lease can vary for both types, but generally:

  • Commercial leases tend to be for longer periods, usually a minimum of three to five years. Often the lessee has an option to renew once that period expires.
  • Residential leases typically are for one year, followed by a month-to-month basis.

Legal Protections

Tenants under a residential lease have several legal protections that do not apply to commercial tenants, in part because commercial tenants are presumed to have more resources and knowledge in negotiations and in part because people’s shelter is a basic need deserving of protection. These protections vary by state and, in some cases, by city. Residential tenants usually are better protected from eviction and rent increases than commercial lessees. For example, landlords must give residential tenants advance notice of rent increases and cannot evict arbitrarily. Additionally, security deposits for residential tenants are much more stringently regulated, both in the allowed amount at the beginning of the lease and the permitted deductions at lease end.

Responsibility for Maintenance and Repairs

Though both types of tenants are obligated to keep the property in a reasonable condition, responsibility for completing repairs and performing significant maintenance differs.

  • In commercial leases, the tenant usually is responsible for the majority of maintenance and repairs. The specific division of duties will be outlined in the lease. The landlord typically is responsible just for maintaining the physical building and common areas.
  • Residential leases usually allow tenants little responsibility for repairs. The tenant must notify the landlord or landlord’s property manager when something breaks in the unit. The landlord then is responsible for taking action within a reasonable time period for essential repairs, and the landlord must provide that the housing be safe.

Common Areas

Both types of tenants frequently enjoy the benefits of the property’s common areas, which are those areas and amenities shared by all tenants of that property. However, there is a difference in how the costs of those areas are paid.

  • Many commercial leases include a provision for common area maintenance, or CAM, charges. These are the costs of maintaining the shared areas of the property, such as maintaining the landscaping, vacuuming the lobbies and hallways, and re-paving the parking lot. Tenants might be assigned a pro-rata portion of the CAM, which assigns a percentage based on the tenants’ percentage of total square feet. These charges can fluctuate month to month.
  • Residential leases rarely require separate payment for common areas. Instead, monthly rent is a fixed amount.

Summary

Generally, commercial leases are for spaces where products are made, things are sold, or services are provided. They cover longer timeframes, include provisions for contributing to common area expenses and contain fewer tenant protections. Commercial tenants bear most of the burden for maintenance and making repairs. Residential leases are for places where people live. They usually span a year and contain numerous legal protections for the tenant. Residential tenants usually are not responsible for any repairs or maintenance.

Whether your interest lies in commercial property or residential real estate, take advantage of the insights and information about both types of property throughout the United States available in the ProspectNow databases.

How to Get LLC Information

How to Get LLC Information

As a commercial real estate professional, finding new and motivated leads is at the center of what you do. Connecting with owners and decision-makers allows you to build your network and find opportunities for CRE investments. What happens, however, when properties are owned by an LLC? In many cases, this method of ownership not only protects the owner and his or her personal assets, but it keeps their ownership anonymous. Getting past LLC anonymity is key to closing more CRE deals. And it’s possible. With the right tools in hand, here’s how to get LLC information you need to generate quality commercial real estate leads. 

What is an LLC?

An LLC, or Limited Liability Company, combines the elements of partnerships and corporations. It affords business owners similar tax benefits and exemptions as a partnership, while also providing a way to keep assets and business accounts separate from personal assets. 

In other words, under the LLC structure, an owner is not held liable for business debts or liabilities. If a business fails or falls into legal issues, the owner’s personal property is protected. 

An LLC is also one of the simpler methods to establish a business. It is easy to start an LLC and structure, taxes, and management are much less complicated than that of a corporation. 

LLC’s and Real Estate

Many small business owners or independent contractors will opt to use an LLC to benefit from tax exemptions they wouldn’t otherwise receive. When it comes to real estate, LLCs are a popular choice in order to hold an asset (commercial property) separate from both the owner’s personal assets and the business as a whole. 

These shell companies are a popular choice for purchasing commercial properties. The first LLC laws were established in Wyoming in 1977, but it wasn’t until the 1990s that businesses started to note the benefit as it relates to real estate. 

In New York City alone, 65% of all real estate sales are connected to an LLC. This is up from 30% in 2003. What is causing this increase? Owners investing in high-scale properties are using LLCs to stay anonymous. 

While anonymity isn’t always the goal of using an LLC to purchase real estate, it certainly is the byproduct. The public ownership details are recorded using the LLC data, not a personal name, and so finding direct decision-makers from public records can be challenging. 

In order to create off-market opportunities and connect with motivated leads, finding LLC information is key. 

How to Obtain Public LLC information

Obtaining public LLC information is not at all difficult. Business records are maintained through the Secretary of State’s office for each individual state. Searching for an LLC requires knowing at least a portion of the business name. Depending on what state you are in, results could reveal some helpful data:

  • When the LLC was established
  • Registered Agent
  • Contact information (in some states)

Where finding LLC information gets challenging, is when LLCs choose to have commercial registered agents. In these cases, the agent name and contact information (if provided) will not help guide you to an owner or decision-maker who can discuss the LLC’s commercial real estate

Discover LLC Owner Details with ProspectNow

Finding exciting off-market leads and networking directly with CRE owners is possible through ProspectNow’s suite of real estate tools. 

Instead of chasing individual leads through hours of public searches, you can easily locate even hidden LLC data for over 15 million LLCs. Our database allows you to find the real data you need to pursue new leads:

  • Property portfolio information 
  • Contact details
  • Owner names

Combine that information with the ability to search over 40 million commercial properties, and you can prospect for leads within a single database and without digging through the frustratingly limited public information. 

Our predictive analytics help you identify properties that are likely to sell, or you can search for pre-foreclosures, newly purchased properties, or longstanding business properties to establish a list of potential opportunities. Most properties will include LLC ownership information that you can then put through our LLC database. 

Discover when properties were purchased, how much an owner has invested, and whether or not they might be in the market for a new opportunity. You can also easily identify decision-makers to make direct contact for roofing projects, insurance, and investment proposals. 

When it comes to finding the LLC information you need to grow your CRE business, ProspectNow provides the most thorough database of key owner information. 

Contact our team today to learn more or start your free trial and start discovering new CRE opportunities.

The 10 Most Unaffordable Areas in the U.S.

Anyone who has lived in (or visited) some of the United States’ largest metro areas can attest to a certain common experience: they are expensive. Cities like New York, Los Angeles, and San Francisco continually top the lists as some of the most expensive places to live or play. In fact, the most recent release of 1-bedroom median rent prices from Zumper puts San Fran, NYC, and Boston in the lead. But when it comes to housing affordability, the results look a little different. While many of the country’s biggest cities are the most expensive, they don’t all necessarily qualify as the most unaffordable. Instead, for those looking to buy a home or investment property, here’s a look at the 10 most unaffordable areas in the country right now. 

A Look at Nationwide Medians

Calculating affordability can be challenging given the massive differences in the cost of living, housing, income, transportation, healthcare, and food across cities, states, and counties. New Jersey and Rhode Island, for example, tied for first as the most expensive states to live in in 2019. Yet, neither state makes the list when we look at housing affordability. 

Instead, when it comes to buying a home, what makes a housing market out of reach isn’t always the average costs for the region, but rather the percentage of a buyer’s annual income that is needed to purchase a median-priced home. 

Right now, the median home price in the United States sits at an estimated $274,000. The median household income for the nation reached $63,179 according to the latest numbers from the Federal Reserve Bank of St. Louis.

Across the country, however, those numbers vary dramatically. In Hawaii, for instance, the median home price is sitting around $673,000. In San Francisco, it is $927,400. Many of the cities with the highest median home values, however, also experience some of the highest median household incomes. 

What Makes an Area Unaffordable?

We’ve already determined that affordability and expensiveness can differ, but how do we determine what is considered unaffordable? At the end of 2019, ATTOM Data Solutions tracked and ranked housing affordability in 100 metro areas based on data from 855 counties. The results were shocking. 

The data revealed that in 71% of counties, the median home price is still unaffordable for the average working adult. In fact, two-thirds of the housing markets would require at least 30% of wages in order to buy a home. When referring to renters, spending 30% of income (or more) on rent would qualify the household as rent-burdened. In this case, these are the most unaffordable, or mortgage-burdened areas in the U.S. 

Stockton, CA 

With a median home value of $355,000, Stockton, CA has seen some huge growth in recent years. In fact, the home value has increased by 155% since the housing market was at its lowest in recent years. What puts Stockton into the category of unaffordable housing, however, is the median household income of $45,347, well below the national average. With an unemployment rate of 6.8% (compared to the national 3.9%) it is easy to see how buying a home in Stockton could be out of reach for many people. 

Honolulu, HI 

When discussing the cost of living and affordability, Hawaii often makes the list, along with other hard-to-reach locations such as Alaska. The cost to ship and fly in food, materials, and almost every living necessity adds to the cost of a living burden that many Hawaiian residents experience. In Honolulu, this is no different. The median housing price is $580,000, lower than the state median. But compared to other parts of the islands, the percentage of a household income needed to buy a home in Honolulu means purchasing is unaffordable for many residents. 

San Jose, CA 

It should come as no surprise that the majority of the most unaffordable metro areas in the U.S. today are in California. In fact, looking beyond metro areas and examining the most unaffordable counties in the country, California still makes up half the list. In many California locales, this has to do with the fact that home appreciation increased faster than wages. This is evident in San Jose where the median home price is $1,086,000, while the median household income is only $83,400. Not only that but San Jose has the largest share of million-dollar homes than anywhere else in the country. 

San Francisco, CA 

Median home prices are constantly changing, but current data indicates that median-priced homes in San Francisco cost somewhere between $875,000 and $927,000. Either way, this puts San Fran into the category of one of the most unaffordable metro areas. According to HSH mortgage data, this means the average working household would need to make nearly $188,000 in annual income in order to afford a home in San Francisco. 

San Diego, CA 

There are many reasons people love living in San Diego, including the nearness of beach, mountains, cultural activities, and dining. As attractive as the city is, purchasing a home is still unaffordable for many. The median household income of $79,646 is well above the national income, but with housing prices around $568,000, buying a home requires much more than the average income. 

Riverside-San Bernardino, CA 

Located east of the Los Angeles metro area, Riverside-San Bernardino is yet another California area deemed unaffordable when it comes to buying a home. This reason this LA suburb makes the list? The discrepancy between the median house value of $355,000 and the median household income that, at just below $39,000, comes in well under the national median income. 

Provo, Utah 

According to the study by ATTOM, the median home price in Provo is around $340,000, up 105% from the lowest point in the market. This rapid growth in home prices, as well as an increase in population, means there aren’t enough affordable homes available for the number of people in Utah’s third-largest city. 

Oxnard, CA 

Oxnard is another area that is impacted by the unreachable housing prices of Southern California. With median home prices resting at $598,000, and median income near $62,000, homes are unaffordable for many, making renting a popular choice in Oxnard. 

New York, NY 

Whether we’re discussing the most expensive cities in the world or the most unaffordable housing market, New York City is bound to make the list. While median home prices have declined over the last year, a New Yorker still needs a household income of well over $100,000 annually in order to safely afford a home. 

Los Angeles, CA 

Los Angeles has enjoyed a 4.4% increase in median home prices over the past year and a huge leap of 99% from the bottom of the market. The city, however, hasn’t enjoyed the same increase in the average salary or household income. With median prices currently around $650,000, buying a home is still unaffordable for the average wage earner in LA. 

Use the Power of Data to Drive Real Estate Investments

Want to learn more about the housing market across the country? ProspectNow provides the most complete property owner database with over 100 million homes. Find your next lead, explore owner information, or access predictive analytics to learn which properties are most likely to sell—even in the most unaffordable areas in the country. Get started today.

Everything You Need to Know About Seattle Property Tax

Purchasing a home in the beautiful Pacific Northwest comes with a long list of benefits. Nearness to the water, the mountains, rainforest, and city—all within driving distance—are just a few of the bonuses of Seattle living. When it comes to property tax, however, Washington State has one of the most complex systems, evaluating tax based on a levy—or budget—program. Not sure what to expect when it comes to owning a home in the Emerald City? Here’s everything you need to know about Seattle property tax.

The Basics of Seattle Property Tax

Property tax is a reality nationwide for anyone who owns commercial or residential real estate. In fact, some states even evaluate taxes on personal property as part of their annual property tax revenue. 

These taxes are used to pay for state and local public services, such as schools, road maintenance, snow and ice removal, fire departments, and libraries. Every state, county, and district has their own way of determining property tax rates for homes in that area. This makes understanding property taxes challenging as they can vary dramatically from state to state and even from county to county. 

One of the only things that all 50 states have in common when it comes to property tax, besides the reason for collecting the taxes in the first place, is the underlying principle of using the assessed value of your property, multiplied by the local tax rate, to determine your taxes owed that year. 

Seattle property tax, however, is significantly more complicated. While most property owners across the country will see a correlation between a decrease in home value and a decrease in property taxes, the same cannot be said about Seattle property tax. For example, housing prices in King County (where Seattle resides) dropped 28% between 2008 and 2012, but the average property tax increased 9% during that same period. 

Why is Seattle property tax so complex? It comes down to the fact that Washington State uses a budget-based property tax system.

What is a Budget-Based Tax System?

While your Seattle property value does play a role in your property tax bill, it’s role is minor in comparison to other factors.

The driving force behind your Seattle property tax rate is the budget established by the state, county, and local districts. Essentially, every year the assessor establishes how property tax revenue is needed to fund the budget. This is known as the levy. The levy amount is then divided by the total taxable property value for that district in order to calculate a levy rate per $1,000 of assessed property value. 

This is where the value of your home comes into play. The fair market value of your home determines what share of the levy you will pay. So even if the levy amount didn’t change from one year to the next, and your home value also stayed the same, your property taxes will likely change. This is because as new homes are built, and as other homes increase or decrease in value, your share of the tax burden is adjusted accordingly. 

The amount of the levy on your district depends on several different factors: the state tax allotment, local districts, and special taxes. While districts can only increase property tax revenue by 1% each year—a statewide law—additional taxes can be added through special voter-approved levies. 

How Taxes are Allocated

In Washington State, property taxes make up 9.4% of the state’s General Fund. Besides statewide services, counties and local districts (such as library and fire districts) also receive funding from property taxes. 

For homeowners in King County, the largest share of their property taxes go toward funding education. This is due to a Washington State bill that increased state funding for schools, as well as the fact that county voters passed a special school levy that will impact the 2020 tax year. An increase in Seattle property tax (above the expected 1%) in 2017 was due to a voter-approved public transportation tax. 

Aside from the state and county general funds, other ways in which Seattle property tax is used is for city public services such as water, waste, and recycling; emergency medical services; port funding (since Seattle is a port city); and local hospitals. Your property tax will also include a certain amount for the local school district where your house is located. 

Seattle Property Tax Ranking

Washington State currently ranks 29th for median property tax rates by state. The median rate 1.01% of property value, compared to New Jersey, which has the highest rate median of 2.47%.

Seattle property tax, on the other hand, is one of the highest median property taxes in the United States. The median property tax in King County is currently $3,572 per year for a home worth $407,700 (the median home value). 

Despite the complicated—and sometimes steep—Seattle property tax, the booming city is still a highly sought destination for homebuyers. Seattle was one of the fastest-growing cities in the US this decade, and continues to see growth in the form of new jobs, visitors, and people moving to the region. And while growth continues, home prices recently dropped, making the Seattle market appealing to new buyers. Perhaps the Seattle property tax can be overlooked, if not for the stunning beauty that surrounds it, then perhaps because Seattle also enjoys the state’s highest median household income, as well as no state income tax, and no vehicle property tax. 

Find a Local Seattle Agent

Are you ready to make the move to Seattle? Find an agent through LemonBrew for guaranteed expertise, local knowledge, and experience with the Seattle housing market. We make the home buying simple, smooth, and more affordable. Find out more.

Watch Out for These 13 Environmental Hazards

When it comes to staying safe and remaining healthy, there are the obvious things we do every day to protect ourselves, such as looking both ways before crossing the street, paying attention as we descend the stairs, and watching out for ice in the wintertime. But other hazards that affect us as well, most of them invisible to the eye. Below are 13 environmental hazards to watch out for and what you can do if you detect them.

In or Around the Building

1. Mold

Oftentimes the mold in our homes or building is not readily visible and often goes undetected until it starts to affect our health. However, since some symptoms are the same as a cold, stuffy nose, wheezing, and watery eyes, most people believe they may just have a cold. However, since some mold can make a person seriously ill, even kill them, it is important to regularly test for mold.

2. Lead Paint

Lead paint for consumer use was banned in 1978, but homes and buildings built before then will likely have lead paint under layers of newer paint. Lead poisoning symptoms include learning difficulties, hearing loss, irritability, seizures, and more. There are several options for removing lead, but it is best for professionals to take care of it.

3. Formaldehyde

Formaldehyde is found in plywood, pressed wood, tobacco smoke, and is found in other commercial products as well and has been linked to cancer, skin rashes, and other issues. There are air test kits to detect formaldehyde in the air and the best ways to remove formaldehyde from the air in homes and businesses is with an air purifier that has a deep-bed activated carbon filter.

4. Asbestos

Surprisingly, the EPA has no ban on the use of asbestos, but it is a regulated air pollutant that is still used in fireproof clothing, motorcycle brakes, and some construction materials. Difficulty swallowing, shortness of breath, and facial swelling are associated with asbestosis from asbestos. It is possible to safely remove asbestos yourself, but many people prefer professional help.

5. Radon

Radon is an invisible, odorless, tasteless radioactive gas that causes lung cancer and radon is caused by the natural breakdown of uranium. Symptoms of radon exposure include hoarseness, tightness in the chest, and shortness of breath. There are radon testing kits you can buy. There are ways of taking care of radon, such as sealing sump covers.

6. Carbon Monoxide

This one is another common and silent killer. This is caused by appliances such as gas fires, central heating systems, water heaters, and other sources. It is recommended to use carbon monoxide detectors in the home and business. One way to prevent carbon monoxide is to have your appliances regularly serviced.

On Your Property

7. Underwater Tanks

An underwater and underground tank can cause a whole number of issues. Whatever the tank is storing can leech into the ground and then carried off by the rain into the sewer and contaminate drinking water, lakes, streams, or even catch fire.

8. Damaged Sewer Lines

Damaged sewer pipes can cause flooding, water contamination, and damage to roads and properties. If the sewer line is causing flooding, it can damage the properties in the area. It can also damage roads and properties by causing a sinkhole.

9. Groundwater

Groundwater can become contaminated from road salts, feces, chemicals, and all sorts of man-made and natural materials. This not only makes it unfit to drink, but can cause animals to become sick and contaminates streams, rivers, and plant life as well.

In the Nearby Area

10. Superfund Sites and Brownfields

A brownfield is a land that has been previously developed and may be potentially contaminated. Superfund sites are abandoned waste sites such as mines, oil refineries, and other industrial-type areas. These places contaminate the land and water with oil, radioactive material, or other waste matter.

11. Flooding

Flooding is a common environmental hazard that damages homes, businesses and can cause other environmental hazards from that damage.

12. Natural Gas

Natural gas is used to heat the home, but it is also used to make antifreeze, fertilizer, and other materials. Natural gas produces nitrogen oxides, which then produces smog, but produces much more methane than CO2.

13. Air Pollution

Air pollution can not only reduce the visibility of the skyline, but can have a profound impact on people, plants, water, and animals. It increases the risk of asthma, heart attacks, strokes in people, causes acid rain, and alters cell structures of plants

There are many ways to protect yourself from many of the environmental hazards, or at least mitigate their impact. On days with low air quality, minimize the time you spend outside. Be sure to regularly test for mold, radon, and other hazards and have a plan in place for when and if other hazards do occur or are detected.

How to Invest In Opportunity Zones

The real estate industry provides investors with numerous opportunities to draw huge benefits. If you are ready to implement your investment strategies appropriately, then there is no doubt of succeeding in the sector. For instance, opportunity zones are a significant investment that commercial and residential real estate agents should focus on. 

They come in handy with various tax benefits. Most importantly, the investment gains and lenient tax policies have given most investors the full picture of the continued venture in opportunity zones. However, the main question here is exactly how to venture into opportunity zones. Here are simple tips for investing in opportunity zones.

Be Familiar with Opportunity Zones, the Way they Work and Their Benefits

Although understanding opportunity zones and their benefits are not challenging, familiarizing yourself with these zones is paramount. Most venture capitalists fail for ignoring the effect of learning the fundamental policies of these investments. For instance, if you are keen to check the policies, you may end up fetching huge capital gains as well as tax reductions. 

However, you can best draw most of these benefits in ten years of opportunity zones venture. Some benefits consist of a 10% reduction of tax of the initial differed investment gain whenever an investor holds the investment for five decades. Once you reach seven years, the deal gets more exciting, and you may receive a deduction of 15% tax of your deferred gains. More interestingly, ten years in opportunity zones venture grants you a chance to pocket 100% tax reduction of your gains.

Find the Exact Opportunity Zones to Endow 

You don’t just wake up and pick any opportunity zone investment available around. It’s crucial to note that not every zone offers similar benefits. While certain zones are established in potential growth regions, some are slowly developing areas. Nevertheless, this should not worry you so much. Why don’t you pick the main housing market zones? They are a major boost to a reaping business as they have fast economic growth, thus, increasing your safety.

Get the Owner Details and Contact Information for That Property

The choice of a property to invest is not enough without thinking about the owner’s details including their names and contact details. It does not matter whether this is an individual or else a company. In all cases, you have to find their true names and contact information. It’s among the critical steps that will lead to an exceptional deal. For example, reaching them might offer you a chance to negotiate for price and unlock new opportunities for decision-making.

Consider Investing Your Gains in a Recognized Qualified Opportunity Fund

Once you have decided on a particular location, you should consider capitalizing in a qualified opportunity fund. However, before you get to this point, are you aware of how this plan works? Simply, this will be your main target to pool the capital benefits that you obtain in every property deal. 

Of course, this attracts an amazing benefit where 90% of the investment will be part of another residential real property venture. Whichever selection, ensure that you pick a fund deal with extensive histories of gainful opportunity zones deals.

Self-Certify or Trace an Opportunity Zone Fund

At one point, you will have to decide on a more sustainable plan making you select between self-certification and qualified opportunity funds. Even though many investors go for qualified opportunity zones, it is imperative to remember that this plan involves some fees besides their recognized benefits. 

However, if you have to self-certify yourself, then you must be ready to fill in the IRS 8996 form and submitting taxes. On the other hand, it will save you quite some good investment fees. Moreover, you will have control over your investments.

Think Through Executing a Buying and Holding Real Estate Approach

If you are considering drawing huge returns of investment from opportunity zones, taking a lasting deal is recommendable. It’s not all about the tax gains you reap. How much money will you procure for a short-term deal compared to a long-standing deal? The fact here is that if you select the best opportunity zone, you do not have to doubt its rapid and continued development. Therefore, this implies that holding the investment will be worth the wait.

Wait and Realize the Tax Gains

Patience is of the essence when you think of venturing into opportunity zones. You don’t have to undergo the overwhelming procedure of opportunity zone property search and give up in the course of the journey. It will only take you five to ten years to realize your tax benefits. So, sit back and watch your investment in the opportunity zone of your choice grow. However, given the existing short period of reaping maximum benefit from the sector, it is recommendable to start your investment soon.

Final Word

Investing in opportunity zones is nothing to question about. By following the above steps, you must have understood the basics of opportunity zones investment. Together with the vast tax benefits and its potential investment returns, opportunity zones should be your next investment plan to consider.

 

What to do When Selling a Home With Negative Equity

When your home value falls below the amount you still owe on your mortgage, this is considered negative equity—or an underwater mortgage. There are many reasons a home can fall into negative equity, including damages to the property, a declining real estate market, or a high loan-to-value ratio. In many cases, negative equity is simply a byproduct of uncontrollable circumstances. But what happens when you need to sell your home? Here are several options to consider when selling a home with negative equity.

Understanding Home Equity

Home equity is the portion of your home’s value that you own outright. At the time of purchase, your amount of positive equity in your house is the amount of your down payment—typically around 20%. Your equity fluctuates, however, as you make mortgage payments and as the value of your home increases or decreases. The moment your home value drops below the amount you owe on your mortgage, you are in negative equity. 

One of the most common causes of negative equity is a shift in the housing market and a sudden decrease in home values. This is what happened in the market crash of the past decade, resulting in more than 11 million homeowners—nearly 25% of mortgaged homes—with negative equity at its peak. 

According to the latest statistics from CoreLogic, approximately 2 million homeowners—or 3.7% of all mortgaged properties—were experiencing negative equity at the end of 2019. While this is a positive trend from previous years, it still means that many homeowners are underwater on their loans and looking for the best ways to sell their negative equity homes. 

Options for Selling Negative Equity Homes

The U.S. Department of Housing and Urban Development describes negative equity as having multiple consequences for both homeowners and the surrounding community. Foreclosures are a significant byproduct of homes falling into negative equity. As homeowners find themselves trapped in homes they can no longer afford, they choose to walk away and let the home fall into foreclosure. 

This has a negative impact on a homeowner’s credit—and stays on your credit report for 7 years—but it also impacts the community. Other home values begin to drop as neighboring houses fall into foreclosure. 

But there are options other than foreclosure when you find yourself with negative equity. These are some of the most common ways to sell your home when you owe more than your home’s value. 

Pay the Remaining Mortgage

By far the simplest option for selling a home with negative equity is to get as much as possible from your home sale and pay the remaining mortgage yourself. If you owe $200,000 on your home loan and sell your house for $175,000, you can pay the remaining $25,000 at the time of closing. While this is the most expeditious way to sell a home with negative equity, it is not always a practical solution for homeowners. If you are experiencing the burden of negative home equity, it may also be an unreasonable financial burden to pay off your existing home loan. If that is the case, there are other options for selling your home. 

Short Sale

If your home value has dropped below the amount you owe, and you are far enough behind on mortgage payments that you are unable to catch up, some lenders will agree to a short sale. With a short sale, the lender is willing to accept less for the home than your remaining mortgage balance. Lenders opt for short sales when they wish to avoid the process of foreclosure and feel that they can possibly recover more of the loan than they would through other methods. 

The first step to a short sale is to speak with your lender and work out a short sale agreement. The process can often take longer than a traditional sale, and ultimately it is the lender—not the seller—who approves or denies offers on the home. For many homeowners trying to sell a home with negative equity, short sales are a desirable alternative to foreclosure. It is important to note, however, that once completed, a short sale can remain on your credit report for up to four years. 

Deed in Lieu of Foreclosure

Another option for selling a home with negative equity is to not sell it all, but rather sign the deed over to the lender. Much like a short sale, this option requires the express involvement of the lender and is often only considered if there are no other liens on your property. 

This course of action will negatively impact your credit score in the same manner as a short sale but is also often considered a better alternative to foreclosure. If the bank does agree to accept your deed in lieu of foreclosure, it is important to understand your rights as well as the rights of your lender. Some states have protections in place that prevent lenders from pursuing the loan deficiency—the difference between the home value and the amount you owe—after a deed in lieu of foreclosure, but not all. As you work with your lender to find the best solution for your situation, be prepared to work out an agreement in which you are forgiven the loan deficiency regardless of how much the home is worth. 

Navigating Negative Equity

Negative equity is not always something a homeowner can control, particularly when the real estate market fluctuates unexpectedly. Managing the sale of a negative equity home can be challenging, but accessing support from a real estate agent can help you navigate your options.

If selling your home is a necessary step, understanding the current real estate market can also help you decide which solution is right for you. ProspectNow offers a comprehensive view of the housing market and predictive analytics to help sellers make better real estate decisions regardless of negative equity.

Property Owner Search: How to Go Beyond What’s Public

Property ownership is a matter of public record. Visit your local county assessor’s office—or in some cases, their records are now online—and you should be able to track down a property owner’s name using a parcel number or street address. When it comes to pursuing real estate leads, however, especially commercial real estate opportunities, the limited details of public records aren’t always enough. In these cases, professionals depend on other resources to conduct a property owner search that goes beyond what’s public. 

Performing a Public Property Owner Search

Why are public property ownership records less than helpful? With regard to commercial real estate, especially, public records are often lacking the pertinent ownership contact details. 

Knowing how to search for public records, however, is still important. 

If you are pursuing real estate opportunities that are local to you, the best place to start searching for public records is through the county assessor’s office. In the case of property deeds, the information is often located with the county recorder. For real estate opportunities beyond your local county or city, resources such as NETRonline.com provide a nationwide directory for county offices that keep public records.

Whether your county offers an online database or you have to go into the assessor’s office, you will need either the address, parcel number, or owner’s name for the property you wish to search for. 

Let’s say you search by street address, you should be able to discover some, if not all, of the following information:

  • Taxpayer/Owner’s name or business name
  • Mailing address
  • Assessed value and taxable of the property
  • Parcel Number
  • Property type (commercial or residential)
  • Date property was last assessed

While some of these details are useful for real estate professionals—owner name and mailing address, for instance—the public records are lacking some details essential to moving your business forward. 

In the case of CRE opportunities, most commercial properties will be in the name of the corporation or LLC, and not the owner or key decision-maker. Without knowing who makes decisions for repairs, investments, or sales opportunities, it can be difficult to turn that information into a productive lead. 

Taking Your Property Owner Search Beyond Public Records

Generating new CRE and residential leads begins with having the right resources to go beyond public ownership records. 

ProspectNow allows you to dive deeper into property owner details in order to maximize your time and find more qualified leads—whether you are a broker, lender, investor, or you provide building maintenance services. 

The ProspectNow database includes information on nearly 40 million commercial real estate properties, both on and off the market. This means you can search millions of properties to find details that include:

  • Name of owner or key decision-maker
  • Owner’s email, phone number, and mailing address. 
  • Contact details for LLC managing members
  • Purchase and tax history of the property
  • Ownership portfolio for LLCs

What makes this resource stand out is the use of predictive analytics to discover off-market properties that are likely to sell. CRE professionals can pursue leads that are still off-market but trending toward the need to sell, whether due to market predictions, financial purposes, or both. 

Instead of searching through public records one name or address at a time, ProspectNow makes it easy to access the information you need to pursue CRE opportunities both near and far. The database is searchable by property type, size, owner, location, and even whether or not it is in preforeclosure. 

Speed Up Your Search

Prospecting new leads is a critical part of your role in commercial real estate. While networking and word of mouth play a significant part in finding new clients, conducting a property owner search allows you to discover unique off-market real estate opportunities. 

The traditional public records search is a great way to find the details of one or two properties that you are pursuing. The tax assessor or county recorder, however, will lack the necessary information you need to contact key decision-makers and owners.

By utilizing the tools available through ProspectNow, you can speed up your property owner search and find information that goes well beyond the details available in public records. 

Discover new, motivated leads through our database of properties, LLCs, and businesses. Utilize predictive analytics for CRE and residential real estate and explore a world of off-market real estate potential. Ready to see how it works? Sign up for a free 3-day trial and get started with your detailed property owner search today.

10 States With the Lowest Property Taxes

If you are in the market for a new home, then you might want to consider the amount of property taxes you will need to pay. When calculating how much you can afford to buy, you’ll need to factor in property taxes along with the mortgage, utilities, insurance, and other costs of homeownership. Where you settle down impacts the amount of property taxes you will owe.

What Are Property Taxes?

Property taxes are annual taxes levied by local governments on your land and buildings. Municipalities calculate taxes by multiplying the applicable local tax rate by the assessed value of your property. The appraised property value typically is less than the market value and depends on the neighborhood, structures on the property, and other factors.

For most cities and counties, property taxes are the primary source of revenue for local government, funding schools, city employee salaries, emergency services, infrastructure projects, and more. States typically provide parameters for setting tax rates, but localities can set their own rates within those parameters. Each locality differs in size and in the services provided, each jurisdiction has different needs and different property types, so tax rates vary greatly across the country, within states, and even within counties or cities.

States With the Lowest Property Taxes

Below is a list of the 10 states (plus the District of Columbia) with the lowest effective tax rates. The effective tax rate used here is an average calculation of the total actual property taxes paid for calendar year 2018 as a percentage of the estimated total value of all owner-occupied homes in the state. Property taxes due depending in large part on the value of the real estate, so even when a state has a low tax rate, like Hawaii, homeowners still might have a high tax bill if their home value is also high. Additionally, some areas of the state might have significantly higher or lower property taxes.

Property tax rates fluctuate from year to year, so the top 10 shifts annually. However, for the past several years, the states of Hawaii, Alabama, and Louisiana have remained the states with the three lowest effective property tax rates.

(Note that the median home values are from the Zillow Home Value Index for December 2019.)

  1. Hawaii (0.30 percent effective property tax rate; $638,007 median home value)
  2. Alabama (0.40 percent; $140,030)
  3. Louisiana (0.52 percent; $167,376)
  4. Wyoming (0.55 percent; $252,310)
  5. West Virginia (0.55 percent; $107,789)
  6. South Carolina (0.56 percent; $187,337)
  7. Colorado (0.56 percent; $398,753)
  8. Delaware(0.58 percent; $254,717)
  9. District of Columbia (0.59 percent; $628,914)
  10. Utah (0.62 percent; $350,841)
  11. Arkansas (0.64 percent; $128,777)

Property Tax Exemptions

Some locations allow for certain property tax exemptions based on either the homeowner’s status or certain characteristics of the property. For example, partial exemptions exist in some locations for properties with certain renewable energy systems, such as solar panels, installed. More than a dozen states offer exemptions for elderly homeowners and most offer tax relief for disabled military veterans. Exemptions typically only apply for homestead properties, which means the real estate is owner-occupied as a primary residence.

4 Tips For Targeting Just Listed Prospects

It’s not easy to land a sale, especially when it comes to property. As a professional, it is important that you not only know the real estate market, but also know the services that you are pitching to potential property sellers so that you can convince them to do business with you.

How To Build Your List Of Prospects Fast

The selling process has greatly accelerated thanks to today’s technology, with new innovations and concepts making finding prospects easier than ever before. Here are four sound tips for how to target prospects quickly.

1. Get A Good Database Provider

There are a number of database providers for you to choose from at the comfort of your mouse and keyboard, many of which offer contact information for various property owners for homes, businesses, and plots of land. These providers can also give you company financial data and statistics, in addition to companies they have worked with in the past and present. These factors can give you an indication of what sort of tenant these property owners work with, what they specialize in, and more. It is important to choose an owner that gives you the best chance of getting a deal done, not just the biggest and brightest in the database.

2. Get Focused On A Few Niches

Specialists who are tasked to pull prospect data will typically start by choosing a target niche owner, such as a landowner or commercial building owner. When companies narrow down their focus this way, the outbound collateral will be the same across all companies that fit this niche. In turn, this leads to more success in your outreach project. These property owners are likely waiting for the right people to do business with, so you will need to help them understand that you are contacting them to help them.

3. Identify The Most “Fit” Companies

As niches are chosen, you can narrow down your list of property owners by aspects such as earnings, budget, and location. When you only go after companies that meet your buyer persona, you can easily find the best company among the candidates you are considering. The company, in particular, you would like from here is one with challenges that can be overcome thanks to your business, as these observations are to be discussed by the company’s personnel when you take the step of contacting them. If a company doesn’t have difficulties that yours can resolve, do not bother with them if you are no use to them.

4. Discover More Contacts.

One way to discover more contacts is through browsing a website like LinkedIn. By looking at the individual’s profile on LinkedIn, you can verify that they still assume the role that the data has previously suggested. You can also expand your network on LinkedIn by forming new relationships with other people you might want to do business with in the future, who may happen to own property that they are looking to sell. You can easily find new prospects this way that might not appear in a database.

Conclusion

Your database is the most important part of reaching out to the right property owner. Looking for the right owners, who may also be looking for the right buyers or clients, is important so that you can close the best deal you want in the least amount of time possible.

ProspectNow is the ultimate real estate prospecting tool that can allow you to find owners looking to sell or refinance, find property owners, and much more. Give us a call today for more details on ProspectNow and its price tiers.