DEAR BENNY: I was reading in one of your columns about paying off your mortgage faster by making an extra payment each year. You said to make sure your coupon clearly indicates you are making an extra payment. I did this at the end of 2008, but didn’t know whether it should go under an extra payment or payment on the principal. I paid it on the principal because otherwise it wouldn’t show up until January as a payment.

I called the mortgage company and could not get a straight answer from them. I was told I could do it either way, which was not helpful. Did I do the right thing by paying the extra payment on the principal? I was setting up our payments to come out of our checking bimonthly so the extra payment would be included each year. We also have money going into our escrow account to pay our taxes and homeowners insurance. I am confused. –Lynette

DEAR LYNETTE: I am also a little confused about your question, but let me try to answer it this way. I always recommend that if you can make at least one extra monthly payment each year, you can lower the amount of interest you will ultimately pay as well as shorten the term of the loan. For example, one additional monthly payment per year should reduce a 30-year loan down to approximately 22 years.

You can make this extra payment in several ways. In December of each year, you can make that extra payment. Or, better yet, divide the monthly payment by 12 and add that amount to your payment each and every month.

I recommend that you call it “extra payment” and include it in your coupon as an “extra payment.” To be on the safe side, I also would include the amount as a note on the bottom on your check, and again call it “extra payment.” If you are using an automatic payment account, instruct the organization paying the loan to make sure they label the extra payment as such.

And in January of each year, do your own calculations to make sure that these extra payments have, in fact, been included in your new mortgage loan balance.

DEAR BENNY: My wife and I (via our LLC) own a two-story brick building built in 1890. We are eight years into a 15-year fixed-rate mortgage with payments of $816 monthly, and a $42,000 balance. We have a successful business, which my wife operates, on the first floor.

For the last several years there has been a successful historic renovation of our downtown. Many of the second-story lofts have been or are being renovated into urban living spaces. Our second-story loft has 1,800 square feet and 11-foot ceilings with 8-foot windows, but has been bricked up since the 1950s. We are considering moving forward with a renovation, but we must borrow to complete this work. Our economy has experienced a downturn recently and our county currently has a 10 percent unemployment rate. I am uncertain if we should continue under these circumstances and if we do, is it wise to refinance the total building or extend our HELOC?

We are debt-free (except for our home and business mortgage), own four small businesses, have no children, own other free-and-clear rentals, and we have a six-month reserve on hand in the bank. I have proposed a budget of about $100,000 to complete this work, and other downtown rentals are running at about $1,100. What advice can you offer given the current economic situation and our borrowing needs? I do feel confident that given a 90 percent occupancy rate we can accomplish a slightly positive cash flow over our PITI. –Michael

DEAR MICHAEL: I always appreciate hearing positive things from my readers. You have asked the $100,000 question, but I can provide only general information. Only you can make the final decision. Since you wrote this question to me, (a few months ago) the economy has not gotten better, and indeed it has declined further. Perhaps the new Obama administration will create hope and optimism similar to Camelot when John Kennedy became president back in 1960.

You indicate that the unemployment rate in your county is quite high, but you will need a 90 percent occupancy rate to make a profit. What guarantee do you have that you will reach that goal? Keep in mind that being a landlord means you will have vacancies.

Have you lined up any potential tenants, and checked out their financial and credit ratings? That’s the first thing I would do before launching in the project.

Only you can make the final decision. However, if it were up to me, I would hold off at least until we see some signs of an economic recovery. You can always do this later, but if you fail now, you could lose the building.

DEAR BENNY: In June 2007, I purchased a house with a fixed-rate mortgage. A year later, the mortgage company requested an extra payment of $715. Six months later, they sent me another bill, claiming an extra payment was required.

I am being told that a mistake was made on the original amount needed for insurance and taxes, and they cannot be sure if or when additional extra payments will be required. And nobody seems sure whether I will be allowed to take over payment of my own insurance and taxes, which I’ve always done in the past.

Since I’m not a first-time homebuyer and have excellent credit and have managed house insurance and taxes in the past, this all seems highly weird. –Willi

DEAR WILLI: I personally dislike the concept of having to pay money monthly into an escrow fund managed by a lender to pay real estate taxes and insurance. However, it is legal and most lenders (especially FHA and VA) require this.

My objections are twofold. First, most lenders use this money as collateral and do not pay any interest on it. Second, lenders sell/assign loans all over the country, and often a lender in one state does not know where or how to pay the real estate tax in your particular county.

But whether you are a first-time homebuyer or have good credit, if you want the loan you have to comply with the lender’s requirements.

You should obtain and carefully review the lender’s financial records regarding your loan. Find out the costs of your tax and insurance, and compare those costs to what the lender has been charging — and paying. By law, lenders have the right to a two-month cushion, just in case you miss a mortgage payment.

Finally, I recommend that every borrower who escrows for taxes and insurance send a demand letter once a year (or twice a year if real estate taxes are paid every six months) requesting proof that your lender did, in fact, make the required payments. This is especially true in today’s market economy, when many mortgage lenders are no longer in business.

DEAR BENNY: My mother recently applied for a reverse mortgage. I have been trying to find a benchmark for reasonable costs associated with this loan to no avail. Could you please guide me in the right direction? –Peter

DEAR PETER: Congress recently enacted a law putting a maximum limit of $6,000 on closing costs for federally insured reverse mortgages. But different lenders will have different costs. I recommend that you do a search for “Reverse Mortgage” at your favorite Internet search engine. Specifically, AARP has a lot of helpful information, which can be found at www.aarp.org.

DEAR BENNY: I have an investment property I would like to use in a 1031 tax-deferred exchange. I have great credit scores (770), but my debt ratio will not allow me to qualify for a loan on the new property. I currently own the current investment property in my own name.

I now have a significant other in my life. Can he go on the new loan and title work, allowing me to take advantage of the 1031 tax exchange rules and qualify? We plan on the new property being our retirement home eventually. –Kathy

DEAR KATHY: It all depends on the price of the properties. Your current property is the relinquished property and the new one is called the replacement property.

Since you own the relinquished property by yourself, the replacement property must also be in your name only. However, let’s take this example. The relinquished property will be sold for $500,000, and the replacement property will cost $750,000. If you and your significant other take title to the replacement property as tenants in common, with your interest equaling two-thirds (i.e. $500,000), I believe this would fly through the Internal Revenue Service. But confirm this with your own tax and legal advisors.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column.

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Conoco CEO: Sees Oil Moving Up To $60 Or $70 A Barrel

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www.youtube.com/watch?v=3uvFaxHBTfk

Higher def. view click below.

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Around 6pm. I received a call to see if I was available for a conference call. I was in Marshall at this time. It was a ridiculously hot day in LA so I decided to go and cool off with my assistant Money Penny. I actually live with her she is my partner. So Money Penny and I went in to cool off. Tommy wanted to know if I would be available to receive a conference call in fifteen minutes. I told him I would be and quickly told Money Penny to grab the towels she was looking at. We headed straight for the cashier and out the door. We headed to my sisters house close by to pick up a check that had been left there for me and to wait for the call.

Tommy called me with his friend Harry on the conference line, after the perfunctory introductions I got straight to business. I wanted the particulars of the site, the financials and the relevant information. I was told that the property had a 35+ pages of an Offering Memorandum. I was also told that I would need to sign a Confidentiality and Non-Disclosure agreements. This property was being offered by the seller and not listed with anyone. I said I would agree to this.

I went back to my office and discussed the property with one of my collegues Randy that is his real neame. He immidiately pulled out a property profile from one of the title companies. We were able to very quickly ascertain the financing and the last purchase price and ownership. Randy had a potential buyer, we agreed that he would wait for me to get the rest of the information before he approached his buyer. I left the office and waited for the appropriate time to call my contact in Dubai his name is Charles. We discussed the potential of this property and we decide that he would wait for me to get the details before we contacted our international buyers. I advised him on the confidentiality and we agreed to wait for further information.

End of Pt. 1

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After our court appearance, I went to check the other stores in the Shopping Mall particularly the vacated premises of our Gym tenant. We had evicted him in April of this year. He had vacated the premises before the Sheriff’s eviction date. I gave my local real estate agent the authority to take possession of the store. She notified me that the Gym tenant had trashed the store and left it in a terrible condition. At my instructions, she immediately changed the locks on the store. This Gym was a 7200 SqFt. store and it was completely built out to be a gym. It had attending locker rooms for both sexes and all the walls were mirrored. So when I walked into the store I was stunned. The tenant had ripped out everything, I mean everything. The mirrors had been pulled off the wall and the underneath sheet rock was completely damaged and unusable. The urinals in the bathroom had been ripped out, the dividers were torn off, the ceiling tiles knocked out and the list continued. The glass on the doors were cracked what ever he could do to damage the place was done. There was debris everywhere and the internal neon lights had been broken. You can imagine what I was feeling.

When I had regained my composure, I immediately notified our insurance company. We had never put a claim for this building in 30 years of ownership. The insurance company requested we fulfill specific requirements in order to process our claim. We had to first file police reports to establish the facts and sequence of events. The process isn’t very complex as there is a list of specific information required by the insurance firm. We had to provide our Lease document, the courts eviction notice, the date the locks were changed with attending invoices. The insurance company gets a copy of the policy case number and a copy is sent directly from the police department. The police report, indicated that there had been vandalism inside the store. However, they couldn’t decide if it was criminal or civil. If it was criminal, they could go after the perpetrator. An interesting happenstance, as I was filing the report with the police standing outside the store, the evicted tenant was driving on the street adjacent to the parking lot. When he saw the police with me he immediately raced off.

The insurance company adjuster priced out the cost of repairs. Based on his estimation of repairs they will offer a settlement number which you agree to or contest. Several weeks later we received the settlement check which we accepted. This then is the second important item we often neglect as landlords. Adequate insurance coverage! This is very important. We all know how a document collects dust and is never really reviewed for all it’s details. We resent paying the bill and really don’t want anything to do with it. Not to mention we are always looking to get the least so that we can save the buck, even though in NNN leases the tenants pay their portion. We must maintain current and proper coverage. Do you know what it would cost to build your building in today’s dollars? Have you factored in your coverage the rising cost of new construction so that your insurance is up to date with the replacement costs of your building? What is your deductible? Our insurance payment covered only the repairs and not the cost of renovation. Since this store was built out years ago the codes have changed and we now have to comply with stiffer requirements which adds more $$$ to the bottom-line. The insurance company can decide to can go after the vandal. Yet despite the fact that we know who was responsible, it would be very difficult to prove this to be the case.

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http://resourcejoe.com/Gallery/main.php

*PS. Ignore the shopping cart in my gallery it comes with the software package can’t be removed.

If you need further detail about a specific city, building or location just send us a contact email with your requirements, or call there is are obligation or any requirements. Your email will stay private and we will not send you junk mail. If you wish to be updated on any new articles please indicate that in your email.

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Here’s another one. Believe me this one is a doosie. He has a very famous name, in fact infamous. The family had a reality (yuck!!) show on TV. Well the show is no longer running because there wasn’t enough drama for the network to air. Well, the execs should have filmed at my shopping center.

Several months ago I receive a call about this tenants air-conditioning unit. He had just recently moved in, still in the honeymoon phase. He tells me his unit isn’t working. Though the unit was older, it was working just fine with the earlier tenant. We have a NNN lease but like a good landlord that I am I call my regular air-conditioning guy in NY. He’s no longer there. So here I go again looking for someone to do the work. I get a recommendation from one of the maintenance company I contracted last year. His man quotes me $12,500.00. This store is all of one thousand sq. ft. I almost fall over. He begins to explain to me that he can’t even test the unit because, “the wires are cut and since it’s old we might as well change it”. Oh and let’s not forget “the duct work”. What duct work? We already have ducts. To add insult to injury he tells me that he, of course, is not responsible for the electric work. So now, I also need to call and electrician. Red flags are popping up in my head.

Now let’s look at the subplot. I go back to the office and ask one of my colleagues at Stevenson Real Estate Services about this. He owns many properties and he does a lot of building. The man knows his construction and what things cost. He says, “For every 400 sq. ft. you need about 200 BTU’s, which according to the rule of thumb is about $1,500.00, the store being 1000 sq. ft. needs a 500 BTU unit. This should be around $4500-$5000 give or take a few $”. This gets me to thinking. The tenant has a tanning salon. He has built little rooms and they get really hot. He needs a very powerful unit and each room has to have duct work done. The normal air-conditioning unit is too small for his needs yet it’s the one that comes with the store as per our lease agreement. I am sure you can put two and two together. Hmm… I wonder who cut the lines and busted the unit. The thing is he almost got away with it. Talk about Absentee Ownership.

What is an absentee owner to do? Above I have listed only a couple of events which happened to me. I will be writing a series of articles on absentee ownership in my future Newsletters, which may be of help to my readers.

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Americana on Brand

Seven years ago, Rick Caruso, a major developer in Southern California with a Midas’ touch, was engaged in a battle against a ballot referendum set by the General Growth Properties. The war waged was against his “return to glamour” project, a $400 million retail and residential development called, “The Americana”. The reason for the heated conflict was because the Americana would be built directly across the Glendale Galleria, the second largest mall in Los Angeles County, which is owned by General Growth Properties.

Last year though, a civil court jury awarded Caruso $89 million in damages and compensation because it found that General Growth Properties acted with, “malice, oppression or fraud” when they “illegally attempted” to block The Cheesecake Factory, who is associated with Caruso Affiliated Holdings from moving into the Americana. Coincidentally, as news of the scuffle broke out, the restaurant chain’s stock climbed.

Flash forward and May 2nd, 2008, the Americana debuts its opening ceremony complete with showgirls and male models transporting guests in golf carts. Some of those guest included Gov. Arnold Schwarzenegger and Jay Leno. The Four Tops, the Temptations, Natalie Cole and even Tony Bennett performed. Who would have thought that this once overlooked area, a few minutes away from Pasadena, would be visited by such a Hollywood crowd, let alone thousands from all of Los Angeles?

Central Square

Almost a week later, I found myself entering the massive complex situated in the middle of the once sleepy town Glendale. I couldn’t help but wonder if I was somehow transported to Main Street Disneyland or Lucerne, Switzerland, because of how perfect and detailed everything was. If you’ve been to “The Grove” in the Fairfax District of Los Angeles, (also owned by Caruso) you know what I’m talking about although, this is on a grander scale. It really created a feeling of comfort and splendor which was evident on all the visitors smiling faces. Once I was inside, I realized that Caruso and Affiliated intended this reaction from us. It was surreal and picturesque…everything from Mr. Roger’s trolley that circles the court center to the pristine cleanliness of the architectural design. The cafés and restaurants with their sidewalk seating only lend themselves to more of that Euro dream trip and all those high-end retail boutiques only make you wish you had a purse full of traveler’s checks. Lacoste, Guess by Marciano, Juicy Couture and Stuart Weitzman are just some of the 75 boutiques that inhabit the mall. The dreamlike scene even comes with a soundtrack to further the hypnotic process. (I’m not kidding; speakers are strategically laid throughout the 15.5 acres of retail heaven so everyone is walking in step to the same song.) You truly are bubbled in from the rest of the world here.

As I continue my tour, I see a large area of manicured grass called “the green” …and I mean GREEN! No variations of the color…just perfect green with a yoga instructor to go with it (they offer public yoga on Sundays). In the middle of this along with the dancing fountain stands an 18 foot, gold leafed statue, a replica of “The Spirit of American Youth”. At this point I’m waiting for Rod Serling to appear around the corner and the Twilight Zone’s theme to replace Frank Sinatra’s “I’ve got you under my skin”, which is playing on the speakers. Instead, as I’m taking pictures, low and behold, Mr. Caruso himself appears in a sharp suit and tie looking every bit the part. He greets me and carries on his rounds like one of the original Rat packers cruising Las Vegas.

The Americana also offers an 18-plex Pacific Theatre and 238 apartments and 100 condos ranging in price from $700,000 to 2.4 million. You might ask, “who wants to pay so much for a condo in a mall” and to that, Caruso’s team will entice you with 24 hour concierge service along with a lap pool, full service spa, private fitness club and on site oil change, auto care and car washing just to name a few.

As I exited the Americana, I realized that I was now entering the regular city humdrum. I’ll definitely be back soon. My hat’s off to Caruso and Affiliated and to all those who helped create this, in their words, “lifestyle center”.

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