What Business Owners Need to Know About Commercial Real Estate Mortgages

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"You just can't beat the person who won't give up." - Babe Ruth

For many people, the American dream includes a cozy home with a manicured lawn, and our home loan system is merrily set up to make this dream a reality for quite a few people.

But for entrepreneurs dreaming of owning their own store, shop, or office location, the dream is a lot murkier. There are quite a few differences between residential mortgages and commercial real estate mortgages, and you need to be sure you fully understand what you're getting into before taking the plunge into commercial property financing.

Commercial Differences from Residential Loans
The United States has some of the best home loan options in the world. The most common loan type, which you're probably familiar with, is a 30-year, fixed-rate loan. These residential loans are readily available, have low interest rates, fairly low fees, and carry no prepayment penalties.

Commercial real estate mortgages tend to be the polar opposite.

Commercial mortgages tend to be much shorter time periods. Five to ten years is a typical loan term. The monthly
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Home Construction Changes and Mold

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I have concluded that mold and “mold load” in homes is getting worse, not better. Over the past 40 years, we have made some significant changes, that have negatively affected our home's indoor air quality. Here are a few reasons for the increase in mold exposure to all of us. 

1. Homes can't breathe: In a cold climate during the heating season, moisture vapor inside a building is driven outward into exterior walls. When it reaches a surface that’s below the dew point, the vapor condenses into a liquid. That surface is typically the backside of the exterior sheathing. Rigid foam board, particularly the foil-faced kind, creates a vapor impermeable barrier, so the wall cannot quickly or fully dry out. 

2. Changed the way we build homes: We are using less and less real lumber: We have exchanged real lumber for manufactured particleboard, and pressed wood. Particleboard is a widely used material in the building industry. It is created by placing wood chips, fibers, or even small scraps of wood under intense pressure with adhesives and chemicals. Cost is the overriding factor and the main reason builders choose particleboard over any other building material. It is a fraction of the cost of lumber. When building large projects that require hundreds of sheets of material, or even when you use it for small pro
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Planning For a 30-Year Retirement

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“The greater damage for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it.” - Michelangelo


Your retirement savings – combined with any pensions you’ll receive plus Social Security – will ultimately dictate the lifestyle you’re able to live in retirement.


Looked at another way, knowing how much you’ll need to withdraw from your retirement portfolio every year can help you determine how much you need to save.


From either perspective, these are good numbers to know. As the old saying goes, failing to plan is planning to fail. So, how do we go about making these determinations?


Safe Withdrawal Rates
Back in 1998, three finance professors at Trinity University in San Antonio, TX published what has become one of the most influential research papers in the history of investing. The purpose of the study was to
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5 Cybersecurity Steps all Business Owners Should Take

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“You may have to fight a battle more than once to win it.” - Margaret Thatcher

Whether your business is in full-on work-from-home mode, or your business is such that this is a totally foreign concept, the reality is that cybersecurity steps are something you absolutely need to address.

Your office computers, employee laptops and tablets, cloud services (which can be accessed remotely), and even company cell phones all have an insane amount of information on them that hackers would love to get their digital hands on. Along with customer credit card numbers and employee SSN’s and DOB’s, your digital records contain a wealth of valuable information. Even something as seemingly innocuous as customer estimates and invoices can look like hidden treasure to the world’s digital pirates.

Taking basic cybersecurity steps is cheap protection against potentially embarrassing and expensive data breaches.

If you do have employees working remotely, it’s your responsibility to protect customer and employee data. Just like the IRS sets minimum requirements for us to protect YOUR private information, you should als
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Partnering v. Syndications Part 2

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In our last blog, we covered the considerations that determine when you might be engaged in a partnership or a syndication. And, if you fall in the syndication category, then you’ll need to comply with SEC regulations. Or, if it’s an actual partnership, then you do not. That is an important question to answer and not always as clear cut as you might think. There are a lot of variables and uniqueness to your specific deal that can make a big difference in the answer.

In today’s blog, we are going to cover the legal structures of these two types of investing techniques. Let’s start with a syndication.

A syndication is almost always an LLC structure. But, before that, you will also need a Private Placement Memorandum (PPM). This is a business plan with the terms of what you’re offering that will be giving to potential investors. You may also need a Subscription Agreement. This is an investor’s pledge to contribute to the deal at the stated terms before the syndicators actually need the investment. Then at some point the Subscription Agreement is “called,” and the investor will wire funds at that time, completing the exchange. Then, of course, there is paperwork to be submitted to the SEC and to states in which you are raising funds.

Now let’s talk about the operating agreement for the LLC.
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Rize Property Management Offers Realtor® Referral Program

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Do you love selling properties, but not the hassle of leasing and management?

When you partner with Rize Property Management by referring property management clients to them, they’ll send the love right back!

  1. YOU RETAIN YOUR CLIENT RELATIONSHIP - They have a guaranteed non-compete agreement. If your client ever expresses interest in buying or selling any property, they send them right back to you.
  2. THEY TAKE GREAT CARE OF YOUR CLIENTS - Old school property management of reacting to issues is out the window. They’re proactive and investor-focused to ensure the property management experience is smooth and profitable.
  3. THEY PAY YOU FOR EVERY REFERRAL - When you send them a property management client who hires them, they pay you a $750!

To learn more, visit:  rizepropertymanagement.com/realtors

To contact Rize Property Management:  Call (801) 471-2473, e-mail info@rizepm.com, or visit rizepropertymanagement.com.


Businesses Win That Are Controlling Costs

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“You may be disappointed if you fail, but you are doomed if you don’t try.”  - Beverly Sill

Depending on the type of business you run, you have a myriad of things you need to pay for to stay in business from rent to office supplies to payroll to inventory (not to mention all those pesky taxes).

When a business is brand new, most business owners go over the top controlling costs. But over time, they tend to loosen their grip on such things and inevitably experience “cost creep.” Sound familiar?

Every dollar you spend on a business expense means one less dollar in profit for your business (think renovations). So, it’s a good idea to periodically check in on your expenses to make sure you’re controlling costs where needed.

But where do you start?
Looking at your income statement may just give you a headache. Plus, that P&L is a summary of categorized expenses and doesn’t tell the full story about individual costs racked up throughout the year.

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Do You Owe The IRS For Past Years?

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Do You Owe The IRS For Past Years?

Utah REIA  members who owe back taxes will help the IRS meet  their payroll…when they catch you.

Every year, the IRS charges tax debtors a boat load of penalties.

Just how much? Take a look…

To put this in perspective, the IRS budget for 2021 is about $12 billion. That means the entirety of IRS operations could be funded this year with just the money they charge individuals or small businesses in penalties.

When you’re on the receiving end of these penalties, it can feel like the IRS is just pouring salt into the wound. When you can’t pay your taxes, the last thing you want to see is…more taxes. Fortunately, the IRS does provide several options for penalty relief.

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Partnering v. Syndications Part 1

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This 2-part blog is going to cover the differences between partnering with others to engage in real estate investing versus putting together a syndication. These two techniques may be similar—and often confused—but they are very different! And you need to understand each as a separate investing strategy.

NOTE: There can be some subtle legal nuances to the discussion below. It’s meant as information and educational. content only. If you even think the SEC rules may apply to your deal, you should seek legal counsel to make a determination before proceeding.

Not only is it important to understand the difference from a structural standpoint, but also from an SEC compliance standpoint. True “partnerships” do not need to be registered with the Securities and Exchange Commission or other state securities office. While a syndication (almost certainly) will need to jump through SEC filing hoops. Because failing to register a project with the SEC can create very serious financial and criminal consequences, we’ll cover the SEC portion in this blog and the structural differences in the next blog.

All offerings of securities must be registered with the SEC. Private offerings, like the ones you’ll see in real estate investing, have exemptions from the complicated and expensive filings that companies going “public” face. But even with private offerings
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What You Need To Know About Healthcare Changes

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“To succeed in life, you need three things: a wishbone, a backbone, and a funny bone.” - Reba McEntire

Let's start with Premium Tax Credits (PTC).

These are the magic beans that help to reduce the cost of health insurance under the Affordable Care Act (ACA). When you buy health insurance through either a state exchange or the federal HealthCare.gov site, you may be eligible for help in paying your monthly insurance premiums. This assistance is actually an advance against the tax credit that you can claim when you file your 2021 income tax return in 2022.

While this arrangement does provide health insurance to millions of Americans that previously couldn't afford it, there is one significant hiccup to the whole setup. As your income goes up, the credit goes down. Once your modified adjusted gross income (MAGI) exceeds 400% of the federal poverty level, the tax credit vanishes entirely. This is generally referred to as the "ACA cliff."

The ACA cliff thresholds are based on family size. For 2021, the MAGI thresholds were:

  • One person: $51,250
  • Two people: $68,680
  • Three people: $86,880
  • Four people:
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