As seen in Erica's monthly real estate column, "Real Property Realism"
in Connecting Rochester Magazine.
America is built on entrepreneurship, small businesses sprouting out of someone’s basement or garage-low overhead, lower risk. When it comes time to consider moving your growing business to a storefront, you must consider the difference between leasing versus owning a space. There are pros and cons to both alternatives.
If you have an established business, making the move to rent or purchase office space may be a little less stressful. You should be able to put together a budget and figure in the cost of the lease or mortgage payment. The following are some thoughts on purchasing a property. When you own your business space, you are free to make any changes, including making room for another office or rental apartment to help share the overhead. You are in control of your property when it comes to parking, maintenance, and improvements. Also, you have obtained an investment. Most people in small business build personal wealth by buying a piece of property because often times the value of real estate goes up more than the business itself.
However, in order to purchase a property for business purposes you are tying up a significant amount of cash. You will be taking on a debt service that includes insurance and cost of maintenance like plowing, garbage pick-up, etc. Owning a commercial property or purchasing a building/house to use for business may be good for some but not worth the commitment for others. It does depend on what type of business you operate.
Kevin Mulcahy, owner and operator of Mulcahy Landscape and Design currently leases a building to house his trucks and equipment. Ultimately he would prefer to purchase a property but location is what made him decide to lease. “Most of my business is in the Irondequoit area, and there are few options for purchasing property,” he states. “The lease works for me because it keeps me close to my customers.”
One thing to take into consideration for a lease contract is length of the term, usually 2-5 years. The landlord wants to secure space for a certain amount of time. If you need to change the office area and make improvements to suit your business, make sure you consult with the landlord before signing the lease. The owner will often do the work for you and divide the cost by the terms of the lease over the duration of your agreement; this is on top of your lease payment. In other words, an extra cost per month. Small landlords may make you do the improvements on your own dime. When you leave the space, you do not receive back any of the money you invested in someone else’s property.
However, leasing allows you to come up with less cash, and you are not tied to the space for the long term. Usually there is an option to leave after 2 years. There should be a payment schedule set for the length of the lease in advance. An important consideration is whether there is expandable space for your business. Is there a chance you will you outgrow the space? It can be hard to predict how quickly your business will grow if this is a concern. This is why a 2 year lease that has the option to be renewed may be your best bet.
Steve Walther, broker/owner of Walther Realtors moved his real estate business from his home to a converted house in 1986. The house was a former doctor’s office, with the other half used as a rented residence to balance out the costs of owning the property. “I purchased the property due to its highly visible location and the ability to convert the existing dwelling into what suited my needs. “ In 2000, Mr. Walther expanded his real estate office, created another office to rent out and made a smaller apartment on the second floor.
There is a lot to consider when you need to have a storefront for your business. The option you choose, lease or purchase, and where you choose to lease or purchase can play a huge role in your business’ success. Consider all of your options and do not settle on a location. There are many things out of a business owners control such as the economy, but this decision is all yours and may just be the reason why your business flourishes.
Monday, December 28, 2009
Friday, November 20, 2009
Facts About Radon Testing
Usually radon tests are performed on an "as requested" basis by a buyer. Over the years there has been an increased concern of radon levels in the home. Radon testing has become commonplace in the home buying process. However there are often many questions surrounding radon screening tests. The following information is intended to help answer some of the common questions and to address confusion that is frequently expressed.
What is Radon gas?
Radon is a radioactive gas. It is the result of a natural breakdown of uranium in the ground, including soil, rock and even water. This gas seeps into a house because most homes periodically have negative air pressure. In other words, they are sucking in air.
Testing for radon is not a test to determine whether there is or is not radon in the house, but instead it is a test to determine how much radon exists. It is also important to understand that any home is susceptible to a radon problem. This includes homes with or without basements, old homes, new homes, etc. The EPA (Environmental Protection Agency) has indicated that when a person breathes air containing higher concentrations of radon, they have an increased risk of acquiring lung cancer.
At the present time the EPA has recommended efforts to reduce radon levels in a home if testing indicates that the levels are currently at or above 4.0 pico Curies per liter. Some questions have been raised recently about whether the EPA intends to lower the "accepted level", but at the present time 4.0 pico Curies per liter remains the threshold level.
The EPA has also indicated that radon testing should be performed under "closed house" conditions. Specifically, all windows and exterior doors must be closed at least twelve hours prior to the start of the test, and also for the duration of the test. Testing lasts a minimum of forty-eight hours. Normal "in and out" traffic is allowed during that time, but the doors and windows must not be left open. Once again, it is important to understand that EPA establishes these rules in order to ensure accurate testing. All windows must be kept closed during the test, not just those windows in the immediate vicinity of the testing device. This is basically done to simulate how the house normally is (on average) throughout the year.
In regards to the use of air conditioners we would offer that central air conditioning systems can be used during radon testing since they do not allow for the free exchange of air between the exterior and the interior. Some window and wall mounted air conditioning units do not assure conformance with closed house conditions and, as a result, in many cases window-mounted air conditioners should not be used during radon testing.
Where is the test done?
According to the EPA, radon testing should be performed in the lowest livable level of the home. In most cases this means that the basement becomes the test site, assuming that it is a full depth basement. Whether the basement is currently finished living space or not, it is considered a livable level even if the basement does not have an abundance of headroom. Crawl spaces would not meet these criteria. In many old farm houses basements are of minimal depth and, as a result, could not be used as workshop space or "livable space". In these instances the first floor would then be tested.
The radon testing device should be placed in a somewhat central location of the lowest livable level. It should be placed an appreciable distance above the floor (typically at least 20 inches). It should not be placed directly adjacent to an exterior wall, near windows, near venting appliances (furnaces, water heaters, clothes dryers, etc.), in a closet, or next to a drainage crock or sump.
There are various testing devices that can be utilized for radon screening. Charcoal canisters are the simplest type of testing device. They are accurate, but they have their limitations and can be prone to false-positive readings in some situations. They are clearly not tamper-resistant. Most reputable radon testing firms utilize electronic monitors. These monitors take air samples continuously throughout the duration of the test period, measuring the levels of radon in the air during the test. The levels of radon will vary throughout the test, and the final result is the average level during the test. The highly accurate monitors that are utilized by our office also monitor temperature, relative humidity and barometric pressure. In addition, the monitors have a tilt-detecting mechanism. This provides some tamper-resistance.
It is important to understand that the radon levels in a home vary over time. In fact, the levels vary from hour to hour, let alone day to day, week to week or month to month. As a result, the screening tests that are performed are essentially a forty-eight hour "snapshot". A similar test performed at a different time in the same house will usually render a slightly different result, although it would probably be a result in the same range as the first result. There have been times when we have performed tests that have resulted in radon levels just above the 4.0 piCu/l threshold. Sometimes, buyers or sellers will opt for a second test. The second test result might be higher or lower than the first result. This is not because one test is more accurate than the other, but instead because the tests were performed at a different time. One logical approach would be to average the two test results to determine the average level of exposure in the house over the two 48 hour snapshots.
What do you do if your radon level is over 4.0-
Active radon mitigation systems are routinely installed when testing shows radon levels above 4.0 pico Curies per liter. These systems are relatively easy to install, and the cost of operation is minimal. Essentially, most radon mitigation systems provide a means to suck air from beneath the basement or slab floor and exhaust it to the exterior through the use of a simple PVC pipe and an in-line fan.
Radon levels are quite unpredictable, and it is not possible to predict with any appreciable accuracy what the levels of radon might be in one home versus another. One house on a street may have a level of radon higher than 4.0 and the house across the street or next door may have a reading below 4.0.
For more information visit this website:
http://www.health.state.ny.us/environmental/radiological/radon/maps_statistics.htm
Any individual or firm performing radon tests must do so in concert with an approved and licensed laboratory and all testing devices must be calibrated and approved for use. You should specifically ask anyone under consideration for radon testing whether their testing equipment and protocol meets these criteria.
This is an example of what a testing device looks like. You can also buy home kits.
What is Radon gas?
Radon is a radioactive gas. It is the result of a natural breakdown of uranium in the ground, including soil, rock and even water. This gas seeps into a house because most homes periodically have negative air pressure. In other words, they are sucking in air.
Testing for radon is not a test to determine whether there is or is not radon in the house, but instead it is a test to determine how much radon exists. It is also important to understand that any home is susceptible to a radon problem. This includes homes with or without basements, old homes, new homes, etc. The EPA (Environmental Protection Agency) has indicated that when a person breathes air containing higher concentrations of radon, they have an increased risk of acquiring lung cancer.
At the present time the EPA has recommended efforts to reduce radon levels in a home if testing indicates that the levels are currently at or above 4.0 pico Curies per liter. Some questions have been raised recently about whether the EPA intends to lower the "accepted level", but at the present time 4.0 pico Curies per liter remains the threshold level.
The EPA has also indicated that radon testing should be performed under "closed house" conditions. Specifically, all windows and exterior doors must be closed at least twelve hours prior to the start of the test, and also for the duration of the test. Testing lasts a minimum of forty-eight hours. Normal "in and out" traffic is allowed during that time, but the doors and windows must not be left open. Once again, it is important to understand that EPA establishes these rules in order to ensure accurate testing. All windows must be kept closed during the test, not just those windows in the immediate vicinity of the testing device. This is basically done to simulate how the house normally is (on average) throughout the year.
In regards to the use of air conditioners we would offer that central air conditioning systems can be used during radon testing since they do not allow for the free exchange of air between the exterior and the interior. Some window and wall mounted air conditioning units do not assure conformance with closed house conditions and, as a result, in many cases window-mounted air conditioners should not be used during radon testing.
Where is the test done?
According to the EPA, radon testing should be performed in the lowest livable level of the home. In most cases this means that the basement becomes the test site, assuming that it is a full depth basement. Whether the basement is currently finished living space or not, it is considered a livable level even if the basement does not have an abundance of headroom. Crawl spaces would not meet these criteria. In many old farm houses basements are of minimal depth and, as a result, could not be used as workshop space or "livable space". In these instances the first floor would then be tested.
The radon testing device should be placed in a somewhat central location of the lowest livable level. It should be placed an appreciable distance above the floor (typically at least 20 inches). It should not be placed directly adjacent to an exterior wall, near windows, near venting appliances (furnaces, water heaters, clothes dryers, etc.), in a closet, or next to a drainage crock or sump.
There are various testing devices that can be utilized for radon screening. Charcoal canisters are the simplest type of testing device. They are accurate, but they have their limitations and can be prone to false-positive readings in some situations. They are clearly not tamper-resistant. Most reputable radon testing firms utilize electronic monitors. These monitors take air samples continuously throughout the duration of the test period, measuring the levels of radon in the air during the test. The levels of radon will vary throughout the test, and the final result is the average level during the test. The highly accurate monitors that are utilized by our office also monitor temperature, relative humidity and barometric pressure. In addition, the monitors have a tilt-detecting mechanism. This provides some tamper-resistance.
It is important to understand that the radon levels in a home vary over time. In fact, the levels vary from hour to hour, let alone day to day, week to week or month to month. As a result, the screening tests that are performed are essentially a forty-eight hour "snapshot". A similar test performed at a different time in the same house will usually render a slightly different result, although it would probably be a result in the same range as the first result. There have been times when we have performed tests that have resulted in radon levels just above the 4.0 piCu/l threshold. Sometimes, buyers or sellers will opt for a second test. The second test result might be higher or lower than the first result. This is not because one test is more accurate than the other, but instead because the tests were performed at a different time. One logical approach would be to average the two test results to determine the average level of exposure in the house over the two 48 hour snapshots.
What do you do if your radon level is over 4.0-
Active radon mitigation systems are routinely installed when testing shows radon levels above 4.0 pico Curies per liter. These systems are relatively easy to install, and the cost of operation is minimal. Essentially, most radon mitigation systems provide a means to suck air from beneath the basement or slab floor and exhaust it to the exterior through the use of a simple PVC pipe and an in-line fan.
Radon levels are quite unpredictable, and it is not possible to predict with any appreciable accuracy what the levels of radon might be in one home versus another. One house on a street may have a level of radon higher than 4.0 and the house across the street or next door may have a reading below 4.0.
For more information visit this website:
http://www.health.state.ny.us/environmental/radiological/radon/maps_statistics.htm
Any individual or firm performing radon tests must do so in concert with an approved and licensed laboratory and all testing devices must be calibrated and approved for use. You should specifically ask anyone under consideration for radon testing whether their testing equipment and protocol meets these criteria.
This is an example of what a testing device looks like. You can also buy home kits.
Wednesday, November 11, 2009
Homebuyer Tax Credit Extension
With the extension of the homebuyer tax credit we hope to see the real estate market continue to have steady activity. The new credit was lowered from $8000 to $6500 but homeowners who have lived in their residence for five years are also eligible to the tax credit.
*There must be a written, binding contract to purchase a property in effect on April 30, 2010. The purchaser will have until July 1, 2010 to close.
Frequently Asked Questions:
Q: I am an existing homeowner. On October 25, 2009 I signed a contract to purchase a property. I have lived in my current home for more than five consecutive years and am within the new income limits. I will close on November 25. Will I qualify for the new credit?
A: YES. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of the contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
Q: I am an eligible first time buyer. I entered into a contract to purchase on November 1, 2009. Do I have to close before December 1? How does the extension affect me?
A: You do not have to close before December 1. Due to the extension it is as if the November 30 deadline never existed.
*There must be a written, binding contract to purchase a property in effect on April 30, 2010. The purchaser will have until July 1, 2010 to close.
Frequently Asked Questions:
Q: I am an existing homeowner. On October 25, 2009 I signed a contract to purchase a property. I have lived in my current home for more than five consecutive years and am within the new income limits. I will close on November 25. Will I qualify for the new credit?
A: YES. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of the contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
Q: I am an eligible first time buyer. I entered into a contract to purchase on November 1, 2009. Do I have to close before December 1? How does the extension affect me?
A: You do not have to close before December 1. Due to the extension it is as if the November 30 deadline never existed.
Thursday, November 5, 2009
The Flood of Foreclosures
It is no secret that the number of foreclosures on homes has reached an all time high. However, why have they not reached the Multiple Listing System?
In a normal market a bank will repossess a property a usually process it through a listing agent within 30 days. Today with roughly 400-500,000 properties repossessed over the past year, they are not yet on the market.
Lenders and servicers office explanations as to why it is taking longer to process foreclosed properties that it has in the past:
In a normal market a bank will repossess a property a usually process it through a listing agent within 30 days. Today with roughly 400-500,000 properties repossessed over the past year, they are not yet on the market.
Lenders and servicers office explanations as to why it is taking longer to process foreclosed properties that it has in the past:
- Many of the properties have title issues that need to be resolved
- Many of the properties are in states of extreme disrepair
- A number of states have strict redemption-rights periods which prevent the lender from reselling the property.
- A few states have extended the length of eviction proceedings
- The volume of REO's (foreclosed properties going into the MLS) has slowed down the process; there will be roughly 10 times the number of REO's this year as in the last "normal" year, 2005
There are many agents and buyers waiting for these potential "bargain" properties to come on the market. The banks often price them according to market condition but are also willing to take less than a homeowner to increase their chance of unloading the property and saving as much money as possible.
Monday, October 19, 2009
The New Credit Card Act
I am sure many of you have seen one if not all of the following things occur regarding your credits cards:
1. interest rate
2. unfair fee
3. decrease in credit line
These changes were probably made without any notification and have negatively affected your credit scores. Credit card companies have been in control making the consumer feel ineffective at managing their credit.
To make matters worse it was reported that credit card providers collect around $15 billion in penalty fees each year!
There could be some good news.
The Credit Card Accountability, Responsibility and Disclosure Act of 2009
( aka The Credit Card Act)
Signed into law on May 22, 2009. Provides some of the most proactive credit card consumer legislation in 60 years. "The Act" is important and anyone who has a credit card should understand it's basic principles.
There are 2 key provisions:
1. Until August 19, 2009 consumers were only given 15 days notice of their interest rate change. Now, they must alert you 45 days prior to any change. This gives you the chance to call your credit card company and offer an explanation for the whatever situation may have arose. Try and renegotiate your interest rate. If they won't budge, take your business elsewhere.
2. Card holders will now have 21 days instead of 14 to make their payments. This is a huge plus for consumers who are fighting to keep on top of their bills and those who travel a lot.
The most significant portions of the law go into effect on February 22, 2010. Here are some details:
No unfair changes-
Credit card issuers will not be able to change your credit status at anytime, for any reason. If you miss a payment with one creditor, another cannot automatically increase your interest rate or drop your credit limit, which can often affect your credit scores.
Restrictions under 21 years of age-
Consumers under the age of 21 will need a co-signer or a job in order to get a credit card. This will help limit the number of young, college age card holders.
Over-limit Fee Control-
Card holders will no longer be able to exceed their limit without having the card holder's permission to do so. If you have not agreed to allow over-limit exceptions, your card will be declined thus saving your credit score.
Late fees-
If your credit card provider charges late fees, they must clearly disclose them on your monthly statement.
Credit Card Agreements-
Creditors will now be required to have a copy of your credit agreement for you on a website.
As we have seen it is crucial to actively mange and monitor your credit profile to ensure you are fully aware of any changes.
1. interest rate
2. unfair fee
3. decrease in credit line
These changes were probably made without any notification and have negatively affected your credit scores. Credit card companies have been in control making the consumer feel ineffective at managing their credit.
To make matters worse it was reported that credit card providers collect around $15 billion in penalty fees each year!
There could be some good news.
The Credit Card Accountability, Responsibility and Disclosure Act of 2009
( aka The Credit Card Act)
Signed into law on May 22, 2009. Provides some of the most proactive credit card consumer legislation in 60 years. "The Act" is important and anyone who has a credit card should understand it's basic principles.
There are 2 key provisions:
1. Until August 19, 2009 consumers were only given 15 days notice of their interest rate change. Now, they must alert you 45 days prior to any change. This gives you the chance to call your credit card company and offer an explanation for the whatever situation may have arose. Try and renegotiate your interest rate. If they won't budge, take your business elsewhere.
2. Card holders will now have 21 days instead of 14 to make their payments. This is a huge plus for consumers who are fighting to keep on top of their bills and those who travel a lot.
The most significant portions of the law go into effect on February 22, 2010. Here are some details:
No unfair changes-
Credit card issuers will not be able to change your credit status at anytime, for any reason. If you miss a payment with one creditor, another cannot automatically increase your interest rate or drop your credit limit, which can often affect your credit scores.
Restrictions under 21 years of age-
Consumers under the age of 21 will need a co-signer or a job in order to get a credit card. This will help limit the number of young, college age card holders.
Over-limit Fee Control-
Card holders will no longer be able to exceed their limit without having the card holder's permission to do so. If you have not agreed to allow over-limit exceptions, your card will be declined thus saving your credit score.
Late fees-
If your credit card provider charges late fees, they must clearly disclose them on your monthly statement.
Credit Card Agreements-
Creditors will now be required to have a copy of your credit agreement for you on a website.
As we have seen it is crucial to actively mange and monitor your credit profile to ensure you are fully aware of any changes.
Wednesday, September 30, 2009
Historic Rehabilitation Tax Credit
The New York State Historic Rehabilitation Tax Credit program was enhanced from 2008. This is thanks to the Preservation League of NY. They led a diverse coalition of business and municiple leaders, preservation organizations and environmental groups to help enhance this program. The goal is to stimulate downtown and neighborhood revitalization in municipalities that need meaningful economic development tools.
The following are the changes made:
Rehabilitation of Historic Properties -Commercial:
The following are the changes made:
Rehabilitation of Historic Properties -Commercial:
- credit percentage increases from 6% to 10% of qualified rehabilitation costs (NYS credit is now 50% of the federal credit rate)
- Credit cap increases from 100K to $5 million
- Establishes transferability among business partnerships
Historic Home ownership Rehabilitation:
- credit cap increases from $25K to $50K per residence
- Qualifies historic housing census tracts at or below 90% State Median Family Income (SMFI)
- Establishes credit rebate provision for homeowners earning less than $60,000
Monday, September 28, 2009
More Help for First Time Buyers
In the state of New York first time buyers will receive more financial help. Governor Paterson announced on September 1 that New York will offer a federal income tax credit. The NYS Mortgage Credit Certificate (MCC) will enable first time buyers to claim a tax credit equal to 20% of their annual mortgage interest costs, potentially saving the average home buyer about $1,500. each year.
MCC can be used to reduce a home buyer's tax burden for every year the mortgage loan remains outstanding. With an MCC, 20% of the amount paid in mortgage interest becomes a tax credit than can be deducted, dollar for dollar, from a homeowner's federal income tax liability.
Sample savings:
$150,000 purchase at 5.25%- principal and interest= $829.50
$829.50 x 360 months = $298,620.00
$298.620 - 150,000 purchase price = $148,620 interest
Tax credit over life of loan equals 20% of interest
20% of $148,620 = $29,724 income tax credit
For more information consult with your mortgage lender or REALTOR.
MCC can be used to reduce a home buyer's tax burden for every year the mortgage loan remains outstanding. With an MCC, 20% of the amount paid in mortgage interest becomes a tax credit than can be deducted, dollar for dollar, from a homeowner's federal income tax liability.
Sample savings:
$150,000 purchase at 5.25%- principal and interest= $829.50
$829.50 x 360 months = $298,620.00
$298.620 - 150,000 purchase price = $148,620 interest
Tax credit over life of loan equals 20% of interest
20% of $148,620 = $29,724 income tax credit
For more information consult with your mortgage lender or REALTOR.
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