‘Tis more blessed to give than receive.  Especially when charitable remainder unitrusts are involved. Properly set up and administered, a charitable unitrust makes benefactors the beneficiaries – of reduced tax bills, periodic income, and perhaps even  improved cash flow – while still allowing them to leave a legacy of at least 10% to the charities of their choice.

Under the most common unitrust scenario, donors irrevocably transfer assets out of their estates and into a trust created by an attorney. In doing so, they stipulate that what’s left in the trust at a specified time in the future becomes the property of designated charitable organizations. Prior to that, however, the donors can arrange to have the trust make periodic payments (at least annually) to themselves or other named beneficiaries.

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After adopting a “wait and see” approach with the economy last year, many of my investors have changed course for the New Year.  Rather than waiting for things to recover, they have accepted that things may be slow for a while.  So – they are getting on with their lives and looking for a “bright spot.”  I am getting a lot of phone calls asking “Where are the deals?”  I chose that topic for my article this month.

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In today’s economic conditions, commercial property owners in great numbers are facing substantially high vacancy rates. The vacancy situation itself is more than enough to cause concern for property owners, but there could be an additional hidden trap in insurance policies that could spell financial catastrophe.

Typically, under a commercial property policy, coverage is significantly restricted for buildings that are vacant beyond a certain period of time. Usually, certain types of coverage are completely eliminated during the vacancy. Continued, full coverage often requires additional premium and the attachment of an endorsement indicating the insurer’s acceptance of the increased risk.

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Software Advice, a web site that advises software buyers about which property management software to buy, just released the results of their 2009 Property Management Technology survey.

The survey garnered responses from 70 property managers from around the country and came up with some very interesting conclusions.

Among them:

• What technology a growing property management company uses;
• How prevalent social media use is;
• How property management specific software allows companies to manage more units per employee; and
• How companies are struggling to track leads that come from the Internet

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In 2009, a couple can transfer up to $7 million without having to worry about their estate paying any estate taxes on the death the surviving spouse ($3.5 million per person.)  Remember, the estate tax is supposed to go away in 2010 and then sunsets to the old law of allowing a couple to be able to transfer assets of $2 million estate tax free ($1 million per person) in 2011.  In 2008, a couple could transfer up to $4 million.

No one really knows what Congress is going to do about the estate tax.  At an advanced tax seminar that I attended in October, most commentators discussed Congress extending the current law to 2010 as the most likely outcome.  This way Congress will not have to deal with any estate tax legislation this year given the current legislative priority for health care, clean energy and education.

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Willard Michlin

When politicians pass a law without thinking of the consequences, the American businessman is left holding the bag. The price of non-compliance or un-permitted compliance is even more costly. Newer technology saves the day.

At seven years old, Virginia Graeme Baker (VGB) got caught in a spa intake suction drain and drowned. Such incidents are very rare, but she was a relative of a politician who then decided he had to take responsibility for making sure that no other child suffered the same fate. With no research to substantiate the claims, he crafted a congressional bill saying that the cost of compliance would be less than fifty dollars per pool and sold the idea to Congress, No research was done to reveal the true cost of compliance or the frequency of such pool accidents. The true cost of compliance being between $1,000-$2,000 and the frequency being about one per year across the whole US.

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What is Real Estate Syndication? It is a partnership or group investing: where two or more persons pool their money, their effort, and expertise to invest in a property or properties. Depending on the partnership agreement, all the partners could be active or one or more will be active while others will be passive.

Get to know your investors and potential investors: Each property that you syndicate is not for everyone. You must meet with each investor or potential investor and find out what their financial objectives are. Where do they see themselves 5-7 years from now? Can they afford the investment? Are they able to wait 5-7 years? What if the property does not perform as planned? How much will that affect them? How much can they afford to lose? What is their tolerance for risk? What are their expectations? Please do not accept any investor in any project if it does not meet their investment criteria.

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“Triple Net Leased” is a term that is thrown around a lot in the real estate world.  This article will define this term, and discuss the benefits of owning such properties.

First, I will need to define some real estate lingo.
Many commercial leasing terms exist to describe who pays the property’s expenses.  Who pays which, and how much, of those expenses is all spelled out in a tenant’s lease agreement.  Three ways to describe commercial leases are:

1. Gross lease, 2. Modified Gross (or Net) Lease and 3. Triple Net (or NNN) Lease.
A gross lease is the easiest to understand.  Under this lease, a tenant pays rent only, and the landlord pays for all utility bills, insurance, and property taxes.  A modified gross, (sometimes called a “Net”) lease is one where a tenant will pay some expenses.  For example, an apartment building that has electricity separately metered to the units is charging modified gross rents.  Tenants pay their electricity bills, while the landlord pays everything else.  (Water, gas, sewage, garbage, maintenance, and insurance – to name a few.)  Triple Net describes leases where the tenant pays all of the expenses previously mentioned.  In fact, the name “triple net” is an abbreviation for the term “Net taxes, Net insurance, Net maintenance.”  Note that the term “double net” is sometimes used to describe leases.  This means that the landlord, not the tenant, is paying one of these bills.
I could write an entire article on the differences between commercial leases, but this article focuses on properties that are triple net leased to credit tenants, so I will focus on that topic.  The previous summary will have to do for now.
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Are all Your Eggs in One Basket?  Diversify Your Real Estate – Within Real Estate

By Chris Miller

Who is doing the best in this slow economy? Whose investments are performing the best in this environment?
The portfolios of real estate investors who have learned to diversify are.  Every several years, an economic downturn like our current situation hits – as it did at the beginning of this decade, as in the early 1990’s, etc.  Once we climb out of our current situation, another one will come along in several years.  Smart investors, like those that I advise, have learned by watching these cycles – and know the value of diversity.  This article will discuss diversifying within your real estate portfolio.

So – I don’t need to trade my real estate for stocks, bonds, or gold?
Heavens, no!  If you had sold half your real estate and put it into the stock market in 2005, where would you be now?  Many of my investors are comfortable with real estate because they understand it, it can yield excellent cash flow with tax advantages, and because property allows investors to use the power of leverage (through loans).

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If you’re just getting your feet wet in the world of investing, stocks may seem to be the best way to get started. While financial advisors will likely suggest that a certain portion of your portfolio contain stocks, it is important to realize that there are two primary styles of stock investing — value and growth.

At any given time, one style or the other may be the best bet for you.  Oddly enough, at times you may even be better off employing both styles. Even if you start off with one style, changes in your lifestyle or the market may lead you to make a switch to the other or use both styles at once.

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