Property Ownership: Which Type Is Best for You?

Property Ownership: Which Type Is Best for You?
The way you set up your ownership interests in investment properties impacts your taxes, earning potential, and legal liabilities. It is important to consult with experienced taxation and liability lawyers before investing, to determine which ownership type works best. Following are the basic options available.

Sole ownership: One person has total control over the ownership interest in the property. Ownership may be transferred through legal documents with the sale of the property, or it can be transferred via a succession document. Without a succession document in place, the property will be considered an asset of the estate upon the death of the sole owner. In this case, estate taxes and fees may reduce the value of the asset.

Joint tenancy: Two or more individuals have an ownership stake in the undivided property. This process is not limited to your spouse; however, spousal joint tenancy arrangements do offer potential tax benefits.

One of the primary benefits of a joint tenancy ownership arrangement is that survivorship rights may be preassigned. If one member of the tenancy arrangement predeceases the other, the property can be legally transferred to the survivor without the need to involve the estate. The proportional property ownership may also be assigned through a will.

Tenancy in common: Two or more people own an undivided interest in the property or group of properties. Interests can be divided into various percentages, which do not need to be of equal value. The percentage is usually tied to the amount of capital investment each member provides. Usually, the investment stake can be passed through traditional transfer means, through either a bill of sale or a transfer of the shares in the property.

REITs (real estate investment trusts): Multiple investors purchase shares in a trust in the form of a company. There are six types of REITs, as described below.

Equity REIT: The trust owns and operates the income properties in order to generate income from rental revenue. The revenue is then redistributed after expenses and fees as a dividend to the individual shareholders, and allows the investors to have limited financial liabilities.

Mortgage REIT: The trust lends funds to real estate investors. The revenue generated is derived from the net interest margin (the difference between the interest earned on the mortgage loans and the cost of lending the funds) and is sensitive to interest rate fluctuations.

Hybrid REIT: This trust utilizes a portfolio with a combination of the above two types. The combination does not have to be fifty-fifty.

Publicly traded REIT: The trust lists shares on a national securities exchange, which are bought and sold by individual investors and are regulated by the U.S. Securities and Exchange Commission (SEC).

Public non-traded REIT: This is a trust also regulated by the SEC, but it does not trade on the national securities exchange, and although it is less liquid than a publicly traded REIT, it offers stability because it is not subject to market fluctuations.

Private REIT: This trust is not registered with the SEC and does not trade on the national securities exchange, but works by selling shares to select investors.

Which ownership type is best for you? Contact our office to review your options and determine what makes the most sense for your property investment goals.

Should You Join the Subscription Movement?

Have you considered a subscription model for your business? With a subscription, customers receive regular deliveries of products or services rather than placing individual orders.

Why would you want to offer a subscription? The subscription model offers benefits for both you and your customers.

Subscription Model Benefits

For starters, the subscription model provides a predictable income stream. Knowing that you can count on a certain amount of revenue each month enables you to better manage cash flow, inventory, and resource allocation.

Because subscription billings are automatically deducted from clients’ accounts, you also eliminate the cost and hassle of collections.

Another benefit is the opportunity to upsell. As you evolve your relationship with subscribers, you build brand loyalty and learn more about your customers.

This enables you to offer additional services targeted to their specific needs. These may be ancillary services, premium services, or discounts for longer-term subscriptions.

Finally, the subscription model provides data that you can use to keep track of recurring revenue, conversion rates, return on advertising investments, and much more.

Getting Started

The first step to adopting a subscription model is to design a version of your service with a standardized package of features that can be delivered each payment cycle. It’s a good idea to offer several options.

You may also want to consider offering free trials when you’re first starting out, to encourage early adopters.

Additionally, make sure the platform you are using supports automatic billing via credit card and the ability to collect customer data and preferences.

Transform Your Training from Monotonous to Memorable

Good trainers employ a blend of psychology, creativity, and thorough preparation to deliver truly effective and memorable learning experiences. They earn our engagement. Want to join their ranks? Here are some tips to make your presentations, trainings, and workshops soar.

Make the content relevant. Do some research or send out a preliminary survey to identify topics attendees want to hear about, issues they want to address, and information that will be useful to them. Create content and ask questions tailored to attendees’ roles and responsibilities and the challenges they face in their jobs.

Create a conducive learning environment. A bright, airy, inviting space is way more conducive to learning than a bland meeting room. Also, remember that people learn in different ways, so use a variety of audio and visual presentations, interactive exercises, handouts, and small-group discussions. Avoid death by PowerPoint. Kick off every session with a brief overview of what attendees will learn and how the information will help them achieve their objectives.

Use props, games, music, and mini-contests. These liven up sessions and help people focus on learning goals. You can also use music to energize attendees before the session and during breaks and to settle things down when it’s time to concentrate.

Tell stories. Make your content relatable to everyday life by using examples, case studies, and anecdotes. Stories, in fact, are central to how memory works.

Keep it short. Limit working sessions to two hours, and provide enough breaks so attendees don’t get antsy and can check email, grab coffee, or return phone calls.

Room Rentals: Are They Right for You?
The initial expense of buying a home has some homeowners looking for ways to lower their monthly costs. Renting out underutilized space in your home can help offset costs and generate revenue. Here are four tips to consider before you rent out a room.

Understand live-in vs. live-out: A live-in arrangement means the homeowner lives in the dwelling along with the tenant(s). Establish clear rules and boundaries before considering tenants. Clearly spell out your expectations for shared living spaces, privacy, cleanliness, and maintenance with a lease agreement. Always get it in writing.

Live-out arrangements are ideal for student housing and can be more profitable than renting the home to an individual. The main drawback is lack of tenant supervision. Clear boundaries and care with tenant selection will be necessary to ensure financial success.

Determine market rent: Seek professional advice from real estate agents who can also assist with the tenant selection process. They can provide clear examples of similar properties in your area and what is appropriate to charge for rent. Your diligence in this area can help maximize your rental income.

Understand your legal obligations: Tenancy regulations vary from region to region. It will be important to confirm how your options will be impacted by these rules. Typically, rules define the allowable rental increases, grounds for eviction, and dispute resolution processes.

Conduct thorough screening: Proper tenant screening will involve checking tenant references, reviewing credit history, and conducting an in-person interview to determine whether the applicant is a good fit for your situation.

SA Realty Watch Group
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This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter. This newsletter is not intended to solicit properties currently for sale.
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