The Liz Moore Market Watch Blog

Should I Hire a Property Manager?

Posted by Lynnette Tully on Tue, Jun 17, 2014 @ 02:21 PM

Like everyone else these days, I’m all about saving money.  But, one lesson that I’ve learned in business time and time again is when I should pinch pennies, and when I shouldn’t.

I believe that a professional property manager is worth their weight in gold, for a number of reasons: hiring a property manager

  • It is important to be totally objective when screening tenants; it is all too easy to get sucked in to an emotional tale of why their credit score is low or why they weren’t able to pay on time in their last rental.   Property managers, on the other hand, assess the likelihood to pay based on a tried and true formula, and sometimes even employ a computer screening process.
  • Finding a new tenant when you only have one (or a few) properties to advertise is far more difficult than casting a wide net advertising for tenants for multiple properties.  You haven’t really saved much if your rental is vacant for an extra month or two!
  • Professional property managers play by the rules.  Because it is their vocation, they are up to speed on all the intricacies of landlord-tenant law…how many days notice to pay or quit, how the eviction process works, etc.
  • Property managers have special accounts set up for holding escrow, and accounting for interest which under certain circumstances must be paid to the tenant.
  • Paperwork!  Because they’ve “seen it all,” property managers have comprehensive application forms and lease documents, walk through forms, etc. that address every situation imaginable.  That offers you far more protection as a landlord than using pre-printed forms online.
  • Perhaps the most valuable asset of all is that professional property managers have a reliable network of affiliates – everyone from handyman to plumbers and electricians that they can count on in an emergency.  They also work with attorneys who specialize in rental properties as well as tax professionals to give you sound advice when applicable.
  • Thorough inspections, both before move in and upon move out, are essential to a smooth transition.  Having an experienced, objective 3rd party to conduct these inspections and insure that the appropriate follow up paperwork is completed is a must.

Typically, hiring a professional property manager costs between 10 and 15% of the monthly rental income.  In my view, well worth it!  Email us at for more infomation on how to go about hiring a property manager.  

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Tags: Investors

Nearly 1 in 5 Sales in January Were Short Sales, REOs & Foreclosures

Posted by Lynnette Tully on Thu, Feb 27, 2014 @ 10:46 AM

Inman News recently reported that nationally, short sales, REOs and foreclosure auctions accounted for nearly 1 in 5 existing-home sales in January, a new report from data aggregator RealtyTrac suggests.

Short sales and distressed homes accounted for 17.6 percent of existing-home sales — theinvesting in real estate highest proportion since March 2013 — according to RealtyTrac’s January Residential and Foreclosure Sales Report.

Real estate owned, or “REO,” homes accounted for 10.2 percent of sales, short sales captured 5.9 percent market share, and foreclosure auctions took a 1.5 percent slice of the sales pie.

Another sign of the lingering effects of the housing boom and bust: All-cash deals accounted for 44 percent of sales in January, the seventh consecutive month that sales to buyers without mortgages have been greater than 35 percent.

Institutional investors (entities purchasing at least 10 properties in a calendar year) accounted for 5.2 percent of residential sales, down from 8.2 percent a year ago to the lowest monthly level since March 2012.

While institutional investors seemed to be losing their appetite for markets in Florida and Arizona that were hit hard early in the downturn, investors appear to be shifting their focus to markets where there are still deals to be had.

The share of sales to institutional investors was up in 23 out of 101 metros analyzed by RealtyTrac, including Atlanta (up 9 percent), Austin, Texas, (up 162 percent), Denver (up 21 percent), Cincinnati (up 83 percent), Dallas (up 30 percent), and Raleigh, N.C. (up 15 percent).

“Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,” said RealtyTrac’s Daren Blomquist in a statement.

(source: Inman News)

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Tags: Investors

Securing Financing as an Investor

Posted by Lynnette Tully on Tue, Jun 25, 2013 @ 02:53 PM

One of the greatest lessons I’ve learned in real estate is the value of a great lender. Like everybody, I appreciate the value in shopping around for the best deal… but, with mortgages that often means getting a lower rate and then being surprised by hidden fees, delays and undisclosed terms that end up costing far more money over the long haul.

 I’ve also learned that there is a huge difference in lenders. And, knowledge and experiencefinancing for investors are worth their weight in gold.

You should also understand the difference between a mortgage company that does its own funding, and a mortgage broker. Brokers sell their loans to investors, and have less control over the underwriting process than mortgage companies that underwrite their own loans. A mortgage banker is responsible for finding a source of money, approving the loan for a particular borrower and finalizing the transaction, which is also referred to as closing the loan. One of the primary advantages of using a mortgage banker over a mortgage broker is that certain fees such as the broker’s fee can be avoided by dealing directly with the source of funding. In this way, a mortgage banker also usually helps speed up the process by eliminating the middleman. On the other hand, when dealing with a mortgage banker, the ability to comparison shop is diminished because mortgage bankers generally only represent a few investors.

In my experience, the best of all worlds is a mortgage banker who represents multiple investors. That way, your loan officer not only has direct control over the process (local processing and underwriting), but also has the ability to assess different products which may suit your particular needs.

Qualifying to purchase investment property is slightly different than qualifying to purchase a home that you plan to occupy. Generally speaking, if you are getting commercial (as opposed to private) financing, you can expect to make a 20 – 25% down payment. The best of all worlds is a mortgage banker who has access to a wider variety of loan products and sources. Expect a 20-25% down payment for an investment transaction.

Whether or not you will be able to count the proposed rent you will receive toward the purchase for qualification purposes will depend on the type of loan product, and whether or not you can demonstrate a history of property management. This is one of the primary reasons that it makes sense to establish a relationship with a good lender early on, so that they can help you set your budget and parameters before you begin looking.

Need help finding lender that is a good fit for your situation?  Email us at  We'd love to help!

This piece of content is an excerpt from our ebook, "The Field Guide to Real Estate Investing". Click below to read the entire ebook.

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Tags: Investors

5 Ways to Identify a Good Real Estate Investment

Posted by Lynnette Tully on Tue, Jun 18, 2013 @ 03:51 PM

This piece of content is an excerpt from our ebook, "The Field Guide to Real Estate Investing". Click below to read the entire ebook.

Download The Field Guide to Real Estate Investing


A good real estate investment appeals to the broadest market, and there are many things to
think about.  The best approach is to consider what things are important to the average family. good real estate investment

  • Generally, the newer the better because of lower maintenance. But consider what the costs are for that maintenance. If you’re in a condo or a townhouse, association fees need to be figured into the cash flow equation. 
  • Garages are huge! 
  • A three bedroom, two bathroom home accommodates a larger population of prospective tenants than a one or two bedroom. 
  • Proximity to major employers is also important. 
  • In the Hampton Roads, Virginia area, closeness to the military bases is a major factor. 
  • And the same is true for popular school districts.

A good real estate investment property weighs in well on all these considerations. And an experienced, knowledgeable Realtor® already knows where they are. The time you save working in partnership with a Realtor® - as opposed to researching and locating properties on your own – cannot be over emphasized.  Email us at, and we'd be happy to put you in touch with an agent who is an expert in real estate investments! 


Tags: Investors

Got Rentals...Should You Form an LLC?

Posted by Lynnette Tully on Mon, Jun 10, 2013 @ 03:43 PM

By Brian D. Lytle, Esq. 

What is the best entity for holding real estate investments, especially rentals?rental property

Typically, two considerations drive rental real estate business entity decisions: liability and tax; and of these, liability is the single most oft-cited reason why one would hold rental real estate as a business.

If a rental property is owned individually and personally (with or without others) then the owners are personally liable for any tenant and guest personal injuries, etc.  While one should always have first-rate and extensive insurance coverage in order to cover any such risks, there is always the chance that coverage might be denied, lapse, or simply not be enough to cover a jury award.

Should You Form an LLC?

At Lytle Law we generally recommend rental properties be held in a limited liability company (LLC).  An LLC is similar to a corporation in that it exists as a separate, legally recognized, entity, which will provide protection to its owners and managers from injuries to others (in other words, the assets of the LLC are the basis for collection, not your personal fortune).  Tax-wise, an LLC does not pay income taxes.  Rather, any income (or loss) is passed through to the members, who are treated as partners.  Obviously, this is a simplification of tax treatment and options so always discuss the implications with your accountant or us.

If you are not presently holding your rental real estate in an LLC, or you are looking to acquire rental property, then let us know, and we will be happy to assist you in making an entity decision and implement it.  It does not cost very much to do so, but it could cost you quite a bit if you do not.

Feel free to contact us, or Brian D. Lytle at Lytle Law (757-595-5655), for questions specific to your situation. We'd love to help!

Download our FREE eBook, Field Guide to Real Estate Investingand find out what every investor should know!


Download The Field Guide to Real Estate Investing






Tags: Investors

What is a 1031 Exchange?

Posted by Lynnette Tully on Fri, May 24, 2013 @ 02:40 PM

Putting Your Money to Work

By Brian D. Lytle, Esq. 1031 exchange

Typically when a property owner sells his or her property, he is taxed on any gain realized from the sale. However, when a Section 1031 exchange is utilized, the tax on the gain is deferred until some future date.

1031 Tax Deferred Exchanges

Section 1031 provides that no gain or loss shall be recognized on the exchange of property held for productive use in the trade or business, or for investment. A tax deferred exchange is a method in which a property owner trades one or more relinquished properties for one or more replacement properties of “like-kind”, while deferring the payment of federal income taxes and some state taxes on the transaction.

If you own investment property and are contemplating a sale then you should consider a Section 1031 exchange. Lytle Law, my law firm, can help you plan your strategy for the exchange, and then locate what is known as an intermediary to hold the money until such time as the exchange is completed with the purchase of the replacement property. Sometimes, particularly in a volatile real estate market, it can be hard to find a replacement within the 45-day designation time period, so you can also consider a reverse exchange whereby you actually purchase the replacement property first and then sell the relinquished property afterwards.

For the savvy investor, this tax deferment strategy should be a part of your arsenal.

If you are interested in finding out if a 1031 Exchange is the right fit for you, email us and we'd be happy to help! 

Download our FREE eBook, Field Guide to Real Estate Investingand find out what every investor should know!


Download The Field Guide to Real Estate Investing



Tags: Investors

Alternative Financing For Investors

Posted by Lynnette Tully on Tue, May 21, 2013 @ 04:32 PM

By Brian D. Lytle, Esq.

If you are looking to buy investment property and are unable, or unwilling, to obtain newalternative financing for investors financing, or if you are looking for ways to sell property you now hold and want to open the market to non-traditional buyers in order to get it sold, then the savvy investor should consider alternative financing options, these are as follows:

Land Sale Contract

A land sale contract is an agreement, or contract, between the buyer and the seller whereby the buyer agrees to pay the purchase price for the property over a period of time. The buyer does not receive title to the property until such time as the purchase price is paid in full, but the land sale contract gives the buyer exclusive use and possession of the property (i.e. it can be rented, renovated, etc.) and the right to sell it while the buyer makes the payments. When Lytle Law handles these transactions for investors we have the seller execute a deed to be held in escrow in order to minimize the buyer’s exposure, and of course, one can record the land sale contract to protect against future liens and encumbrances (and having it sold out from under the buyer).

WRAP Deed of Trust.

A wrap-around mortgage, or deed of trust, is a seller-held second deed of trust that subsumes the first mortgage. In other words, you as the purchaser receive title to the property and your agreement to pay is secured by a deed of trust (a second mortgage if you will) in favor of the seller. The well-drafted WRAP deed of trust will require payments to be made on the first, etc.


While we have not seen many assumptions over the last several years because of low interest rates, an investor does have the ability to assume many loans. Moreover, even those loans that are not thought of as being assumable may well in fact obtain the consent of the mortgage company if the buyer is at risk of defaulting or foreclosure is imminent. In other words, under those circumstances where there is no other option than it simply does not hurt to make this effort.

Seller Financing.

There is always the opportunity for traditional seller financing. That is, you as the purchaser execute a note in favor of the seller that is secured by a deed of trust against the property, and you receive title in exchange. Of course, this option may not always be available because in most cases the seller will need to pay off a loan secured by the property, but there may be ways to help a seller accomplish that goal.

Each of these options can trigger a potential due-on-sale clause in an existing deed of trust. Both the purchaser and the seller of the property need to understand the risk of the due-on-sale clause, and that is something we would need to discuss in person.

If you are interested in finding out if any of these alternative financing options are the right fit for you, email us and we'd be happy to help! 

Download our FREE eBook, Field Guide to Real Estate Investingand find out what every investor should know!


Download The Field Guide to Real Estate Investing

Tags: Investors

What Is A Short Sale?

Posted by Lynnette Tully on Thu, May 02, 2013 @ 11:08 AM

1. What is a short sale?

Lenders that loan money secured by a lien against real estate have a right to require theshort sale underlying loan to be paid in full before they release the lien. A short sale, then, is a sale where the lender agrees to accept less than the full amount necessary to pay the loan in order to get the lien released. Lenders will agree to do this when the seller needs to sell the house and its current value does not support a sales price high enough to pay the loan in full. 

2. Why buy a short sale?

Simply put, a short sale can be a good deal. Almost by definition a purchaser is paying substantially less than the house sold for only a few years prior and less than the amount necessary to pay the loan.

3. Are there any disadvantages for a buyer on a short sale purchase?

Since lenders are not obligated to agree to accept less than the full amount necessary to pay their loan there is always a chance the deal will fall through at the last moment. So the only real downside is the risk associated with losing the house you want to purchase through no fault of yours.

4. What can I do to protect myself?

First, you should manage your expectations and realize the deal might not happen. Do not make firm plans based on the transaction occurring, e.g. hiring movers, switching schools, etc. Second, hire knowledgeable professionals to help you through the process. Lytle Title and Lytle Law are very familiar with short sales and will be happy to assist you in your closing. Third, if you choose to use Lytle Title and Lytle Law then I will be happy to assist your agent with drafting a clause for your contract that protects you and gives you some options. For example, I would recommend such a provision has a “kick-out” clause so that you can continue to look for suitable housing while the short sale is pending approval. Additionally, you should discuss commissions with your agent now. It is not uncommon for a short sale lender to demand that the real estate agents cut or give up their commission in order to make the short sale happen. Since your agent will have more than earned that commission in a short sale it is manifestly unfair for the lender to ask, or require, that they not get paid for what they do for a living and by having the conversation now neither you nor your agent will feel like you are in a position where the agent is the one causing the deal to fall apart as opposed to the real culprit, the short sale lender.

5. How long will it take?

The process can take anywhere from two weeks to two months. It depends on the lender and the particular requirements associated with your transaction. For example, some lenders have a more substantial loss mitigation department than others, and some lenders want a full independent appraisal to assess value, while some will require a broker’s price opinion, and some will accept and agent’s comparative market analysis. I would recommend a closing date approximately four weeks away with an appropriate provision regarding extension if necessary.

6. How do I know the short sale will be approved?

You don’t. As the information above explains, this is a lender’s call entirely. Congress has taken some action, and promises further action, that will help provide some funds and incentive for lenders to accept these short sales so the current climate for approval is much better than in the past.

Want to learn more?  Download our free white paper, Frequently Asked Short Sale Questions.  If you would like to arrange a complimentary consultation with an agent who specializes in short sales, email us at


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Tags: Investors

Converting Your Home To Rental Property

Posted by Lynnette Tully on Mon, Apr 22, 2013 @ 03:39 PM

The Benefits and Pitfalls

By Susan Liniger, Goodman & Company

You have moved to another residence, but find it difficult to sell your present home.  One wayrental home to weather a soft residential selling market is to rent out your present home until the market improves.  You should be aware, however, that renting out your personal residence carries potential tax pitfalls.

You are generally treated like a regular real estate landlord once you begin renting your home to others.  That means that you must report rental income on your return, but also are entitled to offsetting landlord-type deductions for the money you spend on utilities, operating expenses, and incidental repairs and maintenance (e.g., fixing a roof leak).  Additionally, you can claim depreciation deductions for your home.  You can fully offset your rental income with otherwise allowable landlord deductions.  However, under the tax law passive activity loss (PAL) rules, you may not be able to currently deduct the rent-related deductions that exceed your rental income unless an exception applies.  Under the most widely applicable exception, the PAL rules won't affect your converted property for a tax year in which your adjusted gross income doesn't exceed $100,000, you actively participate in running the home-rental business, and your losses from all real estate activities in which you actively participate don't exceed $25,000.

Potential tax pitfalls may arise from the rental of your residence.  Unless your rentals are strictly temporary and are made necessary by adverse market conditions, you could forfeit an important tax break for home sellers if you finally sell the home at a profit.  In general, you can escape taxation on up to $250,000 ($500,000 for certain married couples filing join returns) of gain on the sale of your home.  However, this tax-free treatment is conditioned on your having used the residence as your personal residence for at least 2 of the 5 years preceding the sale.  So, renting your home out for an extended time could jeopardize a big tax break. 

Even if you don't rent out your home so long as to jeopardize your principal residence exclusion, the tax break you would have gotten on the sale will not apply to the extent of any depreciation allowable with respect to the rental or business use of the home for periods after May 6, 1997.  A maximum tax rate of 25% applies to this gain (attributable to depreciation deductions).  Some homeowners who bought at the height of the market may ultimately sell at a loss.  In such cases, the loss is available for tax purposes only if the owner can establish that the home was in fact converted permanently into income producing property, and isn't merely renting it temporarily until the home can be sold.  In this situation a longer lease period helps the owner.  However, if you are in this situation, you should be aware that you probably won't wind up with much of a loss for tax purposes.  That's because basis (cost for tax purposes) is equal to the lesser of actual cost or the property's fair market value when it's converted to rental property.  So if a home was bought for $300,000, converted to rental property when it's worth $250,000, and ultimately sold for $225,000, the loss would only be $25,000.

The question whether to turn a principal residence into rental property isn't easy to resolve.  It's important to fully understand the ramifications of your decision, and so you should consult your tax advisor to help guide you to the right answer for your situation.

Email us at and we can get you in touch with a great tax advisor.

Download our FREE eBook, Field Guide to Real Estate Investingand find out what every investor should know!


Download The Field Guide to Real Estate Investing




Tags: Investors

The Benefits of Being a Distressed Property Investor

Posted by Lynnette Tully on Fri, Apr 05, 2013 @ 03:56 PM

Yes, you’re reading it correctly. No, it’s not what you think.  This is the term classifying investors that are making a dent in the housing market by purchasing a short sale, a pre –foreclosure, and sometimes bidding against the banks at auctions. If you’re a first timer, savvydistressed property investor
investor, experienced investor, or simply a collective group of  individuals , you should consider these properties.

The one downside is dealing with the banks, or as we call them REO or Real Estate Owned Corporate, which can turn in to a rather complicated situation.

However, since 2009 real estate investors have grown  from the large wholesale conglomerates to individuals starting out to take advantage of the bargains. Not content with investing in stocks and bonds, the new savvy investor gets a greater satisfaction from a “hands on” approach .

The investor has several  options with his properties. Once owned , it can be rehabbed and sold for a profit. Depending on its condition, it can be flipped with minimal improvements and sold for a profit. Another option is to hold on to the property if it is in fair condition and rent it for a monthly cash flow.

Whatever avenue you choose to be a savvy investor in Hampton Roads, it does not take an expert to make good return on investment from real estate.

Interested in learning more about real estate investment strategies?  Email us at or Download our free eBook!


Download The Field Guide to Real Estate Investing

Tags: Investors