FAQs For Real Estate Investors
We enjoy working with real estate investors because they are often able to remove their emotions from the transaction and focus on matters such as value, leverage, property condition and rate of return. Many of our clients are admittedly “addicted to real estate” which means that we see them repeatedly and are able to establish efficiencies and anticipate their needs. Our firm represents real estate investors in a variety of matters, including purchase and sale contracts, closings and title insurance, leases, evictions, financing, and foreclosure.
Below, please find frequently asked questions and answers designed for real estate investors:
Q. I own a few residential rental units and have had to purchase them in my individual name as my lender would not provide financing for a corporation or LLC. How else might I limit my liability?
A. To limit your liability, we recommend that you perform annual inspections of your properties to ensure they provide a safe environment for your tenants and their guests. By way of example, you should check regularly that all smoke detectors are in working order; that all windows and doors open, close and lock easily; that there are no tripping hazards such as tree roots breaking through walkways or driveways; that all handrails are secure; that the home has sufficient exterior lighting and/or motion detectors and that they are in good working order, and that nontempered glass doors have gel stickers at eye level. If your rentals are in an area that attracts retirees, you might consider installing grab bars in the bathtub or shower.
Q. How long does it typically take to evict a tenant for nonpayment of rent?
A. This depends on the tenant and whether defenses are raised, but typically takes 1-3 months.
Q. My tenant is in the hospital and behind on rent. I feel bad about sending a three-day notice. Do I have other options?
A. If the tenant is behind in paying rent and you want to evict him or her, then no, not really. A proper three-day notice is a condition for filing a suit for eviction.
Q. I have five rental properties. May I place all of their security deposits in my out-of-state credit union?
A. No. Per Section 83.49, F.S., a landlord is required to hold security deposits or advance rental payments in a Florida banking institution or post a surety bond by a state-licensed surety.
Q. Can I require that my tenants set up an ACH deposit into my account for their rent?
A. This is not prohibited by Chapter 83, Part II, F.S.
Q. Does the Florida Association of Realtors provide a form lease for commercial properties like it does for residential properties?
A. No, because commercial use varies greatly and includes, among other things, office, retail, food and beverage, and warehouse. Also, commercial leases can cover standalone buildings, mixed-use buildings, condominiums and shopping plazas. The terms therein are more widely negotiated and lease finalization often takes several weeks.
Q. I own a commercial property that is leased, and the tenant is in default and has refused to vacate the property. Can I enter the property and remove the tenant?
A. No, it is called self-help entry by a landlord and is prohibited per Florida Statute Section 83.05(2). This is the case even if the lease provides a provision allowing the landlord self-help entry.
Q. I just sold an investment property up north and would like to do a Section 1031 exchange with a Florida beach rental. What are the requirements?
A. To qualify for a Section 1031 exchange, the properties exchanged must be held for productive use in a trade or business, or for investment. Originally, 1031 cases needed to be simultaneous transfers of ownership. But after the rendering of the decision in Starker v. United States, a contract to exchange properties in the future is practically the same as a simultaneous transfer. To elect the 1031 recognition, a taxpayer must identify the property for exchange before closing, identify the replacement property within 45 days of closing, and acquire the replacement property within 180 days of closing. A Qualified Intermediary must also be hired to facilitate the transaction and hold the proceeds from the sale. The tax benefits derived from a Section 1031 Exchange may be lost if the requirements are not properly met. Please speak with one of our attorneys if you are interested in learning more about this option.