Summer break has come to an end, and children have started school again. In South Florida this means that “season” is right around the corner. Season is the time of year when many snowbirds come down to avoid the cold winter, as well as many international folks who are involved in the equestrian community. It is the perfect time when investors, and others who vacate their homes for a few months, provide housing for those coming down for season as they can usually obtain a good rental premium.
While seasonal renting can be lucrative for landlords, it is important that they are protected while doing so. A well-written lease agreement that protects a landlord is a must. A useful tip for landlords with seasonal rentals, as well as yearly rentals, is to try to obtain the entire rental amount up front or as much as possible. Besides the obvious benefit of collecting the money at the beginning and not wondering if the tenant will make the next payment or not, there is another benefit as well. Should the lease need to be terminated, say because the tenants throw an unruly party, if the lease is properly terminated by the landlord, the landlord could be entitled to keep the remaining amount of money that was paid for advanced rent. Continue reading →
If you are thinking about purchasing a rental property make sure you are not making your decisions based on common, incorrect assumptions. With rising prices and historically low interest rates the real estate investor is back in full swing. However, buying a rental property and counting on it to pay for your retirement or provide you easy monthly passive income may not be a smart move.
Home vs. Investment
Arguably the most pervasive myth when it comes to investing in real estate is the belief that buying a home is a great investment. To be clear, buying multiple rental properties and relying on rental income from those properties can actually be a good investment. However, purchasing your primary home and relying on it to fuel your retirement is rarely ever a good idea. Your house isn’t an investment, ATM or piggy bank. It is a place to live in. Do not forget that. Continue reading →
Modern commercial leases can be dozens of pages long and contain a vast number of provisions spread over many paragraphs. Some of these provisions, such as those relating to the amount of rent and operations of the premises, are looked at and negotiated quite thoroughly by the parties. Most of the other provisions however are routinely ignored as dense legalese and the parties, especially the tenant, pay little attention to what they say.
One often overlooked provision relates to the acceleration of rent upon default in payment by the tenant. While language can vary according to the specifics of a lease, the general function of an acceleration provision is to allow the landlord to make a claim for the entire rent due under the remaining life of a lease if the tenant defaults during the middle of lease term rather than having to wait for rent as it comes due before making a claim for it. For example, if a tenant defaults after one year of a five-year lease where the rent was $1,000 a month, the landlord can demand $48,000 (the amount to be paid under the remaining term of the lease) immediately without having to demand an additional $1,000 every month for the remainder of the lease term. While the accelerated rent is usually reduced to its present value, it can still be a hefty sum. Continue reading →