Steve Jobs: Principles of Business
Steve Jobs
- Do what you love.
- Put a dent in the universe.
- Kick start your brain.
- Sell dreams not products.
- Say no to 1,000 things.
- Create insanely great experiences.
- Master the message.
Can Your Assets Survive a Lawsuit?
The way you hold title to your property is often the determining factor to whether you will lose everything in a lawsuit. You can be sued more and more today because of your “legal status,” not because of your “actions.” The trend is away from finding fault. This is due to the significant expansion of both “vicarious liability” which allows you to be sued for something someone else did, and “strict liability” which means you are automatically liable by statute and there is no defense.
Here are some distressing examples:
In environmental law, you do not have to be the person who made the mess. If you were ever in the chain of title, you can be sued after discovery of the environmental situation. For example, lead paint damage is a “strict liability” offense. And you will almost certainly find that your insurance excludes coverage for lead poisoning. This can destroy retired people.
If you have put all of your assets into a trust and one of the assets in the trust is sued (example: lead paint liability) then you could lose everything in the entire trust. (Remember, the purpose of a trust is to avoid probate. A trust cannot shield your assets from legal attack.)
If you are an employer you can be sued for the actions of your employees committed while acting within the scope of employment. “Negligent hiring” is the latest hot winning theory to confer liability onto an employer for actions taken by an employee outside the scope of employment. This occurs when an employee commits a wrong or violence against someone following an employer’s failure to research the background and character of the employee before hiring the person.
On June 26, 1985, the Supreme Court said that you could lose an asset due to joint ownership. As an example, if Mom and Dad put their home into a joint tenancy with their kids to avoid probate (often referred to as a “poor man’s will”), and any of the joint owners (the kids) is involved in a divorce, loses a lawsuit, or gets in trouble with the IRS – Mom and Dad could find themselves homeless. More…
Use Niche Marketing to Upgrade Your Tenant Clientele & Increase the Value of Your Rental Property
Is there a disconnect between the highest and best use of your rental property and your marketing niche?
That’s a really important question that has given my partner/son Josh and I the ability to create an increased cash flow, an improved tenant clientele, and increased property values on all of our units over the last few years. Of course, we didn’t ask the question exactly that way, because “niche marketing” has only become all the rage in the past several years. But the thought process is the same.
There’s some fun and profitable lessons here, so let’s explore the subject.
First of all, niche marketing is defined as the marketing of a product or service to a small and well-defined segment of the market place, typically a market whose needs are not being well served.
Some various residential rental property niches might be: high end, low end, ghetto, on the way down (deteriorating), on the way up, mid-level rentals, seasonal, senior housing, student housing, low income housing, subsidized/Section 8, etc. Then each one of those categories could be broken down into even smaller segments.
You need to always, always, always invest primarily for cash flow, so whichever niche you choose should lead you to an increased cash flow. To flesh out the idea, here’s some personal examples: More…
Pride of Ownership
This morning I rented a house to a cute trio of roommates in a popular area.
This evening, on my way to pick up my dog at doggie-day-care, I happened to drive by the house again. The new tenants were out in the front yard playing football.
I wanted to cry. It was the cutest darn thing I ever saw.
We took the house back a couple of weeks ago, when the last tenancy ended.
My great handyman prepped and painted the interior, power washed the exterior (hey it’s white!), painted the front deck, repaired the fence, pulled the basement carpet, repaired the swamp cooler, changed the locks, plus a few other odds and ends.
My great landscape contractors cleaned up the yard and upgraded the entry landscaping to give the house better curb appeal. When they finished, the landscape contractor texted me “now this house will sell itself.” He was right. More…
How Landlords Get a Bad Rap
You’re a good landlord. You’re out there working your tail off trying to provide a nice product to your great tenants.
Then wham! Along comes some tenants that have been trained how to be bad tenants by bad landlords. They’ve been taught that it’s okay to pay the rent late. It’s okay to party and disregard the quiet enjoyment of their neighbors, etc. Heck, that bad landlord might even have paid the bad tenants cash to get out of the last apartment instead of doing an eviction. The bad tenant has been rewarded for his bad behavior by bad landlords, and thinks bad behavior is the way to get ahead. [You always get what you reward!]
Here’s an example: I recently got some great new tenants that moved to one of my apartments because their last landlord would not take action to stop the all-night-long heavy traffic and partying going on in the apartment upstairs from them. Their last landlord just let my new tenants out of their lease instead. Now that former landlord has bad tenants upstairs from a vacant apartment he’s trying to rent! Where’s the logic in that?
I don’t have any of that kind of crap going on in my units. All of my tenants know that I have an evil twin…and none of them want to meet her. 😉 There’s a sort of “ethics presence” in knowing that I have the will to confront bad tenants if I have to, and that I intend to protect the quiet enjoyment of my good tenants. Consequently, I rarely have to bring out my evil twin. [Perish the thought!] More…
“For Landlords, This Could Be The Perfect Storm”
My son and investment partner, Josh Mettle, publishes an exceptional Mortgage Blog as well as a print newsletter. In the Spring issue of his print newsletter, he said something very important for landlords that I want to share here:
“…I should mention that rental properties are about as good a hedge against inflation as you can possibly get. I’m personally getting pretty nervous about the money printing and inflationary actions of the Federal Reserve. One of the first things that goes up in an inflationary environment is rent and, as a landlord, you have the benefit of making your fixed mortgage payment as you steadily keep raising rents to keep up with inflation.
We also have a very unique and pro-landlord situation brewing today as many people’s credit has been damaged and many others have just been convinced by the media that it might just be better to rent. I personally think that is a bad decision, but for landlords this could be the perfect storm. More…
Ordinary Income vs. Capital Gains
It often pays to “venture” outside of your area of expertise and inspect the thoughts of other professionals. Fred Wilson is an investor, venture capitalist and professional blogger living in NYC. On May 2, 2011, he posted a blog about the difference between ordinary income vs. capital gains which is really worth reading for income property investors:
“Today, I’d like to talk about ordinary income vs capital gains. This is not tax advice. I am not a tax lawyer or a tax accountant. I hope both tax lawyers and tax accountants show up in the comments as this is important and complicated stuff.
When you think about the various ways you can make money, two ways predominate. You can provide services to others and get paid for those services. That is ordinary income. And you can invest in something; shares of stock, a building, a domain, and then sell it later for more. That is a capital gain.
The distinction is important, at least in the US, because these two kinds of income are taxed differently. Ordinary income is taxed at the full federal, state, and local tax rates. We live in NYC and according to our accountants, we pay a marginal fully loaded tax rate of 47.62%. That means we keep about half of the ordinary income [my wife] and I generate. More…
Money Quote on Entrepreneurs
Fred Wilson [investor, venture capitalist, blogger]"Entrepreneurs don’t need degrees like lawyers and doctors do. They are credentialed by virtue of their track record."
Entrepreneurs are Different (and so are Great Landlords)
We all instinctively sense that entrepreneurs are different. But what is it that makes an entrepreneur tick? What makes an entrepreneur successful? What is the entrepreneurial mind-set? Let’s explore the elements of the entrepreneurial DNA.
You may have a day job, but if you are an income property owner you are also an entrepreneur. But be careful, if you use your employee brain to deal with your entrepreneurial endeavors, you could fall short as a landlord. Here’s why: More…
Ka-ching! That’s Your Curb Appeal Working for You
Gosh, it is so cool to own a little rental property!
It’s (normally) growing in value, it’s a forced savings so you’re not tempted to spend your down-payment and growing equity on doo-dads and bright shiny things, your great tenants are paying your mortgage down every month, you can keep more money in the family budget every year because of the savings on your taxes, you will have nice passive cash flow from now through retirement, plus you’ll have something of value to leave to your loved ones or favorite charity.
Sweet!
But it takes constant vigilance to keep the property in good repair. On the front end, it can be painful when you’re shelling out remodeling bucks. But upgraded properties = an improved tenant clientelle, an improved qualify of life as a landlord, an improved quality of life for your tenants, plus the value that will be added to the neighborhoods where your properties are located are all immeasurable benefits! Good landlords add a lot of value to the communities where they own property. It’s the ONLY way to do business as a landlord. More…