Burt M. Polson | Napa Valley and Vallejo's Commercial Real Estate Broker

Guiding you through the real estate part of your life™

Commercial Sales, Leasing, and Consulting

Private Equity Real Estate Funds

Napa Valley and Vallejo, California

Understanding the lease - part 3

A lease can be an often skimmed-over document with most not concerned about its contents until a problem arises or the lease expires and you are wondering what to do next.

A lease agreement is a long-term contract bringing together two parties that details the relationship and what to do when it goes awry.

In part one, you learned how a lease is a contract that creates a relationship which gives the tenant a right to use a property owned by the landlord.

In part two we discussed the commencement date and the responsibility of paying the rent promptly.

We will continue our discussion on the ten page CAR (California Association of Realtors) “Residential Lease or Month-to-Month Rental Agreement.” We are referencing terms of tenant law in the State of California, but keep in mind I am not an attorney so be sure to consult with one if you have specific questions.

Here is what to know regarding security deposits, the condition of the premises, maintenance, and damage.

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Understanding the lease - part 2

Unfortunately, some leases can last longer than some marriages. Do not be caught in a lease you do not understand, a property that does not fit your needs, a landlord that does not seem to take care of their property, or a tenant who does not pass your qualifications.

I am currently working with a property owner of an industrial property and a winery tenant who wants to lease it for 15 years. Both parties are concerned with the terms in the lease and are investigating it and the property thoroughly.

In part one of this series of articles

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Understanding the lease - part 1

Getting stuck in a lease with less than favorable terms you do not fully understand can give you years of regret. Both landlords and tenants need to be sure they ask questions and know the specifics before signing.

Unlike purchasing real estate, the relationship created between a buyer and seller is relatively short-term lasting only a few months. A lease can be from one-year up to several decades so knowing what you are signing is important.

A lease is a contract between a landlord and tenant (often termed a lessor and lessee) that allows the tenant rights to the use of a property owned by the landlord for a period.

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House hacking - part 2

In part one we discussed my clients, Steve and Cheryl, who doubled their money using the house hacking technique in purchasing, managing, and living in one unit of their fourplex multi-family property.

House hacking is purchasing a two to four unit multi-family residential property, living in one of the units and renting out the others.

You too can be a house hacker if you have the passion for becoming a real estate investor and the fortitude of being a landlord.

The financial side of house hacking in Napa

If you find the right deal in the right location, you could have the tenants’ rent cover your monthly loan payments or more. However, in Napa, this could be difficult as we shall see why.

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House hacking - part 1

Have you ever considered an owner-occupied multi-family property? My clients Steve and Cheryl did, and it worked out well for them.

It seems that everyone is “hacking” something--house hacking has been around for decades, it is buying a one to four unit multi-family property, living in one of the units and renting the others.

Steve and Cheryl bought a four-plex ten years ago for 500 thousand dollars. It was a fixer-upper in need of upgrading and cosmetic improvements.  Today the property is valued at double what they paid, and now the rent income had doubled as well from what it was when they started.

You may not see such a massive return as Steve and Cheryl, but with a bit of work in finding the right property at the right price, and securing the right loan, you may be able to come close.

What is house hacking?

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Real estate disrupters then and now

The year was 1992, the world-wide-web is one year old, Windows 3.1 is introduced, and the first text message is sent on a mobile phone. AOL is the way many accessed and used the Internet.

I started my real estate career at an office in Napa where we had one desktop computer for 12 agents. The computer was mostly used to access the new MLS (Multiple Listing Service) to search properties. Only a few of us used the MLS as most agents still used listing books that came out every month.

I was on the computer not only using the MLS but also researching information on any website I could find and using desktop publishing for creating marketing material to print. I was always the first agent to adopt technology. My first email address was cyberagent@compuserve.com, and my first website had a similar address. My first mobile phone was the Motorola “brick” phone with phone calls costing ninety cents per minute.

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Qualifying tenants - part 2

You are familiar with qualifying tenants and administering leases if you own investment real estate.  Whether your rental property is a house or a big box STNL (single-tenant net leased) property occupied by an Office Depot or Whole Foods you have qualified a tenant and executed a lease.

In part 1 of our focus of discussion was for a residential tenant, which is usually an individual or several individuals. Qualifying a tenant of this type is a simple process where you have the applicant complete an application, and as the landlord, you obtain credit, eviction, and criminal reports as well as contact their employer, past landlords and references.

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Qualifying tenants - part 1

Investment property owners must evaluate prospective tenants’ creditworthiness as an essential part of creating a solid return on their investment while mitigating any future potential issues.

It is essential to be thorough in evaluating and qualifying a prospective tenant for single-family rental homes. Many issues can develop from a tenant who may lack integrity in paying rent on time or even worse damage the property.

In commercial real estate investments, the value of the real estate is directly tied to the income derived, and therefore the tenant’s creditworthiness is essential. However, as in residential real estate much can go awry with the tenant’s use of the property.

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"On the hook" with a listing agreement - part 2

In part one we discussed the three basic types of listing agreements.

I left you with the following question regarding the broker getting paid a commission for their efforts: “What if a potential buyer and seller talk and agree that when the broker’s listing agreement period expires they come together, execute a purchase agreement and consummate a transaction effectively cutting the broker out of the transaction and a commission.”

The listing agreement protects the broker for a set period of time against this provided a broker registers all the potential buyers who toured the property or made an offer that failed. If the seller and buyer consummate a sale during the period of time after the expiration of the listing the broker will still receive a commission.

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"On the hook" with a listing agreement - part 1

If you sold or leased real estate with an agent or broker, you probably signed a listing agreement, or what is formally called an “exclusive authorization and right to sell,” or “exclusive right to represent owner for sale or lease of real property,” depending on the form used.

Just as the title implies, the property owner is giving the real estate broker the exclusive right to represent them and their property in marketing and eventual transaction. There are also less exclusive representations called an “agency authorization” and an “open listing.”

A broker representing a seller has a fiduciary duty of care, integrity, honesty, and loyalty to their client. Did you know the seller has specific responsibilities as well in their representation to the broker?

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Understanding the ADA - part 3

Part one of Understanding the ADA (Americans with Disabilities Act of 1990) highlighted the difficulty many commercial property and business owners have in understanding and implementing the ADA.

Part two highlighted how to determine if your property complies, the benefit of hiring a Certified Access Specialist (CASp), and checking your lease to determine ADA responsibility of the tenant premises.

In this article, we will answer some specific questions.

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Understanding the ADA - part 2

Part one of Understanding the ADA (Americans with Disabilities Act of 1990) highlighted the difficulty many commercial property and business owners have in understanding and implementing the ADA.

One may ask: “How do I determine if my property is in compliance and how do I get my property into compliance before delivery of a notice from an attorney informing me to do so?” Continue reading for more information and also look for part three where we answer your specific questions.

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Understanding the ADA - part 1

The Americans with Disabilities Act (ADA) law from 1990 in part works to ensure access to offices, stores, restaurants and other businesses by all people including those with disabilities and makes it unlawful to discriminate against people with disabilities.

California’s Title 24 of the Building Standards Code outlines regulations more stringent than the federal ADA guidelines and were actually in place before the federal ADA guidelines.

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How to predict the real estate cycle and profit - part 2

I have not lost my mind. I am not offering a “get rich scheme” or a secret way of “timing the market.” The truth is these teachings usually found at high-energy seminars are full of hot air.

Profiting in investment real estate takes time. There may be a few outliers who tell you how they doubled their money in three months flipping a property, but these are not all that common.

Knowing the real estate cycle can give you a strategy of when to buy, hold and sell as well as what to look for in a potential investment property.

In part one, I provided you an overview of the first two phases of the real estate cycle, recovery, and expansion. Phase 1, recovery, is when the market starts looking better after a recession. You may find vacancy rates decreasing, the Federal Reserve potentially lowering interest rates, and people begin to find jobs.

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How to predict the real estate cycle and profit - part 1

Is it possible to know what the real estate market is going to do in the future? Sorry, to get your hopes up, but there is not a way to foretell what the market will do tomorrow.

However, there are methods to predict what may happen based on trends that occurred in the past. Analyzing the trends in the financial and real estate markets over many years gives economists the ability to recognize a cycle.

Want to know how to profit during each phase? Review “your strategy” in each section below to find what you can do as a savvy investor.

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How to spot a scam in ten steps or less

No one wants to be taken advantage of, but there are plenty of unscrupulous people who want your money and are devising ways to get it.

Scam artists, unfortunately, have always been around us. In the past, they may have been easier to spot, but they are getting craftier and to me in more abundance.

Here is my list of how to spot a scam in ten steps or less:

Step 1 - the unconventional transaction

An unconventional method of executing the transaction could be the first sign of a scam. If the first question you ask yourself is, “That’s a strange way of doing that?” you should probably stop there.

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A snapshot into my private resources

Several of the resources real estate brokers use can cost upwards of $1,000 dollars or more per month. Brokers use several resources with many more thankfully in the range of less than $100 per month, with many being free.

Many of these are not all that private.

Here are a few of my private and free resources you might find helpful. The first website you should go to is burtpolson.com for my current articles and archive of every article I have written.

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Do your due-diligence diligently

If you are purchasing real estate, you probably want to know what you are getting yourself into and perform due-diligence.

I purchased a used truck and was able to negotiate what I thought was a good deal--only if I knew then what I know now I would have passed.

I soon discovered after closing the deal that my truck was driven hard during the first few years of its life in the Canadian wilderness by a contractor for the oil business. You can imagine the hidden wear and tear about every inch of the truck experienced. Well, I do not have to imagine--I have become good friends with my mechanic.

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Retail trends and predictions

The news media tells us Amazon is disrupting the retail industry causing stores to close. Retail is evolving, and it is not all negative.

Below are five trends and predictions in the retail industry.

Who wants to shop at the mall?

Our regional mall that opened over thirty years ago at the time consisted of 150 stores including Emporium-Capwells, JCPenney, Sears, and Mervyns. A cinema and video arcade were the entertainment.

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