In “A City Is Not a Tree,” architect Christopher Alexander argues that traditional city planning often results in cities that are rigid and lacking in vitality. He proposes an alternative approach based on the concept of “living structures,” which are characterized by flexibility and adaptability.
In many ways, Alexander’s approach is a reproach to suburban tract home and master-planned communities, as he writes;
Too many designers today seem to be yearning for the physical and plastic characteristics of the past, instead of searching for the abstract ordering principle which the towns of the past happened to have, and which our modern conceptions of the city have not yet found. These designers fail to put new life into the city, because they merely imitate the appearance of the old, its concrete substance: they fail to unearth its inner nature.
In contrast, Alexander’s ideas have been on display in the development of cities like New York and Los Angeles, which have grown in fragmented and organic ways. These city’s distinct neighborhoods, each with their own unique character, can be seen as examples of living structures. Rather than being organized according to a predetermined plan, these neighborhoods have evolved in response to the needs and desires of the people who live there, resulting in vibrant and dynamic urban environments.
In “A City Is Not a Tree,” Christopher Alexander uses the concepts of “tree” and “semilattice” to illustrate the differences between traditional city planning and his proposed approach.
A tree is a hierarchical structure in which each element is a part of one larger whole. In the context of city planning, this would mean that a city is organized according to a single, unified plan. Each neighborhood or district would be a part of the larger whole, with clear boundaries and a defined purpose.
The structural simplicity of trees is like the compulsive desire for neatness and order that insists that the candlesticks on a mantelpiece be perfectly straight and perfectly symmetrical about the centre. The semilattice, by comparison, is the structure of a complex fabric; it is the structure of living things - of great paintings and symphonies.
Alternatively, a semilattice is a “living” structure in which each element has multiple connections to other elements. This allows for more flexibility and adaptability, as each element can be connected to multiple others in different ways. In the context of city planning, this would mean that a city is organized in a more organic and fluid way, with neighborhoods and districts overlapping and intersecting with one another.
Alexander argues that a semilattice structure is more conducive to the development of a vibrant and dynamic city. Traditional tree-like structures often result in rigid and lifeless urban environments, whereas semilattice structures allow for more flexibility and adaptability, enabling a city to evolve and grow in response to the needs and desires of its inhabitants.
One real-world example of a semilattice structure is the internet. In the internet, each website is connected to multiple others through links. This allows users to navigate from one website to another in a flexible and adaptable way, rather than following a predetermined path.
Another example of a semilattice structure is a network of roads or highways. In a city with a well-developed network of roads, each street or highway is connected to multiple others in different ways. This allows for flexible and adaptable movement within the city, rather than requiring people to follow a predetermined route.
A third example of a semilattice structure is a group of friends. In a group of friends, each person is connected to multiple others through different relationships and connections. This allows for flexible and adaptable social interactions, rather than everyone in the group having to follow a predetermined social hierarchy.
Overall, semilattice structures are characterized by multiple connections and flexibility, which allows for adaptability and evolution. This is in contrast to tree-like structures, which are hierarchical and rigid.
Take the separation of pedestrians from moving vehicles, a tree concept proposed by Le Corbusier, Louis Kahn and many others. At a very crude level of thought this is obviously a good idea. It is dangerous to have 60 mph cars in contact with little children toddling. But it is not always a good idea.
There are times when the ecology of a situation actually demands the opposite. Imagine yourself coming out of a Fifth Avenue store: you have been shopping all afternoon; your arms are full of parcels; you need a drink; your wife is limping. Thank God for taxis!
Yet the urban taxi can function only because pedestrians and vehicles are not strictly separated. The cruising taxi needs a fast stream of traffic so that it can cover a large area to be sure of finding a passenger. The pedestrian needs to be able to hail the taxi from any point in the pedestrian world, and to be able to get out to any part of the pedestrian world to which he wants to go. The system which contains the taxicabs needs to overlap both the fast vehicular traffic system and the system of pedestrian circulation. In Manhattan pedestrians and vehicles do share
certain parts of the city, and the necessary overlap is guaranteed.
Real estate developers and city planners can make use of the principles in Christopher Alexander’s essay by incorporating flexibility and adaptability into their planning and development processes. This could involve designing neighborhoods and districts that overlap and intersect with one another, rather than being organized according to a predetermined plan.
Additionally, developers and planners can incorporate the idea of living structures, which are characterized by adaptability and the ability to evolve over time. This could involve designing buildings and other structures that can be easily modified or expanded in response to changing needs and desires.
Furthermore, developers and planners can focus on creating a sense of community and connection within neighborhoods and districts. This could involve incorporating public spaces and other amenities that encourage social interaction and a sense of belonging.
Overall, by adopting the principles in Christopher Alexander’s essay, real estate developers and city planners can create more vibrant and dynamic urban environments.
]]>It is a common belief that investing in vacation rentals is only for the wealthy. What if you could invest in a vacation home for as little as $100? The hospitality startup Here.co lets you do just that.
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So, why should you invest in vacation rentals? How does investing in Here.co work? Should you invest in Here.co? Let's find out.
When you are planning a vacation with your family, a hotel room may feel cramped and uncomfortable. You could book a second room or maybe more. Or, you could stay in a vacation rental instead.
Typically, a vacation rental is a large villa or multi-bedroom apartment. It offers ample space for families and large groups. Besides multiple bedrooms and bathrooms, a vacation rental may also offer separate living areas, a fully functional kitchen, and so much more.
Vacation rentals are becoming more and more popular because they offer more informality, more comfort, more privacy, and a more personalized experience compared to hotels.
A second home at a beautiful destination is a dream for many. Real estate investors don't just buy a vacation rental for enjoyment but also to generate income. They rent it out when not in use, and market appreciation also adds to the property's value.
Here are a few reasons why you should invest in vacation rentals:
According to a report by AirDNA, in 2021, the average annual revenue for short-term rentals reached the highest level ever, growing to $56,000. The average daily rate grew from $213 in 2019 to $260 in 2021. If you are looking to generate some extra income while having a place to go to during your vacations, a vacation rental is a worthwhile investment.
The market for vacation rentals is huge in the US. You can find them everywhere, from large metros to small towns and villages. As of 2021, there were 1.98 million professionally-managed vacation rentals in the US. The number is expected to grow even more in the coming years.
Historically, real estate has been known to appreciate faster than inflation. Therefore, investing in real estate is viewed as a hedge against inflation and profitable investment. According to the National Association of Realtors, the housing market performed better in 2021 compared to the previous years, despite the global pandemic.
When you buy a long-term rental, you rent it out to a tenant on a 12-month lease. There is no way that you can use the property in between. However, vacation rentals are only leased for a few days or weeks. Your tenants in a vacation rental would be families on a trip, couples on a weekend getaway, or business travelers who are in town only for a few days. If you want to spend your summer vacation at your holiday home, you can easily do so.
Besides appreciating in value, vacation rentals also have the potential to resist recession. Buying a vacation rental at a picturesque location near major metros can be a profitable investment. People living in the cities are always on the lookout for budget-friendly travel options. During a recession, people are more inclined to travel domestically instead of going on international trips.
Here.co is a platform that allows you to invest and own fractional ownership of vacation rental properties. Fractional ownership in real estate refers to a model where a group of investors pools their funds to buy a property. Instead of owning the entire property, they own a percentage of it and share usage rights.
Here lets you invest in vacation rentals with stakes as low as $100. The founder and CEO of this Florida-based startup is Corey Ashton Walters. Here has so far raised $7 million in funding, with investors such as Mucker Capital, Liquid 2 Ventures, Cooley, and Basecamp Ventures backing it.
However, since Here is not a timeshare, you do not get free time in the vacation rental that you invest in, unlike other fractional ownerships. You invest in a property, and in return, you earn dividends from other renters or property sales. Another difference is that you need to invest thousands of dollars in other fractional ownership companies. But with Here, you can invest for as little as $100. Since it is not cost-prohibitive, it is accessible to almost anyone. We say almost because there are some restrictions here that are not widely advertised that we will get into later.
Here works by acquiring property and turning it into a vacation rental using its own investments. Then it lists the rental in an IPO to investors for a price that includes all the expenses they put into the rental. All properties follow the rule of $1=1 stock of the property. When all the shares are sold out, Here lists the property on various vacation rental platforms like Booking.com, Homeaway, and Airbnb. Investors are paid quarterly dividends from the profits that the property earns during that period.
The company aims to keep a vacation rental on the market for about five to seven years, and then sell it off. Shareholders will receive payouts according to their stake in the property. Here deducts maintenance costs from the dividends and final appreciation before paying their investors.
According to the CEO Corey Walters, it collects 1% to 10% sourcing fees depending on the acquisition price of a property. You can think of it as real-estate agent's fees when you list a house for investment. Investors are also charged a 1% asset management fee yearly on the property. The company also holds a 1% stake in all the vacation rental properties it operates.
The startup has gone public this year and has listed three properties so far in Gatlinburg, Tennessee, Clearwater, Florida, and Bear, California. There are more than 30,000 registered users of the platform with over 1,000 active investors. Before putting up any property for investment on Here, it is acquired and submitted to SEC for approval. Each property is held under LLC. Doing so safeguards investors against personal liability in case there is a loan default or if the bank repossesses a property.
When acquiring vacation rental properties Here uses both debt financing and equity. It buys some properties outright, while others are bought on a mortgage.
Owning a piece of a vacation rental for just $100 seems like an amazing investment opportunity. However, is it a good idea to invest? The company is relatively new, which is why there aren't many Here.co reviews or Here investment reviews.
At Level on Demand, we reviewed the "subscription agreement" and the "offering circular" that investors must sign. Here's what we found. (This was for Here's "series 3" which now owns a property in Tennessee.)
The minimum investment is $100, which sounds great for beginners or those on a tight budget. But what if you are a serious real estate investor? How much can you invest? According to the subscription agreement, unless you're accredited, your investment cannot exceed 10% of your net worth or annual income. Investing any more than that is prohibited.
Will Here be responsible for the maintenance of the vacation rental that you invest in? According to the offering circular, the answer is No. "Here PM", which is a subsidiary company of Here, will be responsible for maintaining the property held by you. So, there is always a risk of transparency or accounting issues.
Here.co will be paying Here PM, its subsidiary, on average 25% of all gross revenues in exchange for property management services. This means that Here will essentially be paying itself 25% of all the revenue the vacation rental property earns. This is not an uncommon rate for management companies in the short-term rental space to charge. However, using a subsidiary to manage properties typically means employee and staff overlap and a lack of transparency on true costs and benefits. As a potential investor, it is very important that you set the right expectations for yourself, understanding that not all companies function this way.
According to the offering circular, Here.co also has complete discretion to hold onto all funds as "reserve" if they deem appropriate,.
The offering circular states that Here.co has the right to hold onto its properties indefinitely. Although they aim to sell off the properties in five to seven years and distribute the payouts, that may not be the case always. If Here.co decides to hold on to the property you have invested in, it also means that it is holding on to your investment as well. What if market conditions change? Would you be able to take advantage of it?
There is not much mention of a secondary market being made available through a network run by Here.co. This means we have to assume that liquidating your shares will not be a quick and painless process.
The first property launched by Here.co for its investors suffered losses for the first two quarters of operation. Although it is not an indication of poor management, it does raise questions around whether funds were properly allocated or not. Are the rest of the properties going to be profitable or would they too run into losses?
These are a few issues we caught. Our analysis revealed many other "red flag" clauses in their agreements.
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The language used in a commercial lease helps in determining what the procedures are for terminating that contract. As per the terms stated in a commercial lease, the tenant is typically allowed to occupy a certain commercial space for a limited time frame. This time frame is stated in the agreement. Until the date of lease expiration, a business can continue to enjoy their commercial lease. Both the tenant and the landlord are expected to adhere to the terms set by the agreements during the term of the lease.
However, a commercial lease could also contain a clause that permits the tenant to terminate the lease before the end of their term. The clause is known as a "break clause". A commercial lease review can help you determine whether your lease comes with such a clause or not. If your lease does not contain a "break clause" there may still be other options you have to terminate your lease.
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There are a few ways that a commercial lease could be terminated. These include:
1. Break Clause
This is one of the most common ways for a business to end their commercial lease. However, for it to be applicable, the break clause should be in the commercial lease agreement before it is signed. Should a break clause be present in your commercial lease, then this means that the lease can be terminated without you needing to pay the remaining balance as stated in the rent agreement.
Sometimes, the early termination clause is also known as a break clause. However, there are certain conditions that need to be met before a commercial tenant can exercise their right to end their contract. As the tenant, you will need to provide notice in a timely manner to your landlord. This formally lets the landlord know of your intention to terminate the contract.
Usually, break clauses end up stimulating that the tenant has the right to terminate their contract early, should it happen within a certain time frame. An example of this is a commercial lease agreement that comes with a break clause stating that early termination can only happen within the first year of the lease commencement.
2. Termination Agreement
There are various reasons behind why a business owner may choose to end their commercial lease. It could be due to sales losses, bankruptcy, property deterioration, as well as changes in the business structure. At any time, after the lease agreement has commenced, the landlord as well as the tenant will need to agree to terminate the lease contract. This should be before the expiration of the term in the lease.
The termination agreement should state that both the landlord and tenant have decided mutually that they would like to end the lease. As a result, the tenant would relinquish the property, and the landlord would also agree to release the tenant from further obligations pertaining to the contract. However, you should note that the landlord could preserve the right to sue the tenant for damages as a result of early termination. The landlord could also charge a fee for the same.
3. Landlord Termination
The landlord can choose to terminate a lease contract, but this is only under specific circumstances. An example of this would be the building being damaged beyond repair by fire, flood or other act of God. In such cases, the contract comes with a clause that indicates the landlord can terminate the lease unilaterally, without the approval of the tenant. Sometimes, they will provide the tenant with certain monetary compensation, but not always. Should the tenant end up defaulting on the terms of the lease, this also typically allows for the landlord to terminate the contract.
4. Lease Assignment
While technically not a termination, a lease assignment is an effective way to "get out from under" a lease you no longer wish to be in. It's not possible for a commercial tenant to avoid paying their lease obligations unless the lease agreement terms allows the assignment of leases. In these cases, the tenant can transfer their rights to a new tenant by assigning them the lease. However, even in this case, it will be the original tenant who will remain liable when it comes to the lease agreement. They will also be liable should the new tenant end up defaulting on their rent obligations.
Both tenant obligations and landlord obligations must be considered when it comes to ending commercial leases. Hiring a lawyer to help you end your lease could seek like a good idea. In which case you could be wondering how much do lawyers charge to review a commercial lease? Their rates can be expensive. Which is why you should consider working with us. We provide a flat fee commercial lease review, that helps you understand the terms of your commercial lease.
Even if you're a great tenant, there could be circumstances where you find the
landlord asking you to end your lease. In this case, are you eligible for a termination fee refund as a tenant? If your landlord doesn't provide you with a valid reason related to terminating your lease, then you may not have to pay a termination fee at all.
There are landlords who could also choose to evict their tenants for reasons that are illegal. In any of these cases, not only could a tenant expect to receive back any deposits, but may also be entitled to other compensation from the landlord. The easiest way to be sure if you qualify for money back as a tenant is to have an expert review your lease.
There are commercial leases that don't come with any right for the tenant to terminate early. Should the tenant decide to terminate the lease early, then the landlord can ask the tenant to pay all their rent obligations immediately. Occasionally, some landlords will negotiate to receive only rent amounts for a period of three to six months. Lease up costs that aren't amortized are also most likely required to be paid back.
Keep the following in mind! When you sign a long-term lease for more than a year, the landlord is expecting to recover their transactions costs. This includes broker fees and any up-front tenant improvements. Now, should you choose to end your lease early, you could need to pay the remainder of the costs you would otherwise have paid, when terminating your agreement.
There are, however, commercial lease agreements which have clauses that allow tenants to end their lease early without incurring penalties. These clauses are known as:
There are also certain conditions where you could end your commercial lease without incurring a penalty. These include:
Should you want to pursue the early termination of your commercial lease, it's typical to consider hiring the help of a lawyer. However, you could be wondering if there's a first step to take before engaging an attorney. A lawyer's service can usually be very expensive. A cheaper and faster solution to your problem may be to work with us.
We provide a flat fee commercial lease review. A Level On Demand expert will look at your commercial lease and let you know if and how you may be able to end your lease early.
]]>When it comes to real estate investment, there are many things to consider. What is the cost of the property? How much will you get back in returns? Will the property appreciate over time? The most important factor that most investors are concerned with is understanding the value of a property. Now, rental properties are not valued the same way as residential properties. The idea behind buying a rental property is to get monthly rental income. If you overpay for a property, the returns will not be to your liking. On the other hand, buying a property at a below-market rate may help you earn bigger profits.
So, what is the "right" price for a rental property? How do you calculate the purchase price?
The truth is, there is no "right" price for a property. What is right for one buyer could be the wrong price for another. Every piece of property is unique. Similarly, the reason for buying a property is different for different investors.
Say, you are more interested in appreciation. In that case, you may be comfortable buying a property with little or no cash flow. For instance, home values in Austin, Texas have appreciated by 22% in the last year. That means a home worth $400,000 bought a year ago would now be worth about $488,000. That's a profit of $88,000. Of course, there are areas where property prices have depreciated, and buyers have incurred losses. The risk with real estate markets is that it moves in cycles.
In the case of rental properties, investors would usually consider cash flow or a
combination of cash flow and appreciation to determine the right price. Some pertinent questions to ask when pricing a rental property are:
The answer to these questions will help you determine how much potential return you can earn based on the offer price.
If your priority is cash flow, you may want to invest in an area where the demand for rental properties is high. Of course, the purchase price may be higher, but you will also be earning higher returns.
A simple Google search for property price calculators would throw up various results, including vacation rental property calculators, single family and multifamily investment calculators, and more. However, there is no single way to determine the value of a rental property. Investors usually use more than one way to arrive at a potential range of values for a certain rental property.
The sales comparison method is perhaps the most common way real estate investors and appraisers determine the value of a property. This method compares the prices of homes that have been recently sold over a certain time frame. They may look at similar properties that have been sold in the last 30 days or so to determine the value of a rental property. However, it is also necessary to consider the activity levels of the local real estate market.
The sales comparison method considers features or attributes to assign a relative price value. For instance, it may consider the number of bedrooms in the house, pools, garages, and so on. Any attribute that makes the property noteworthy adds value to it.
The income approach considers the NOI (net operating income) generated by the property compared to its purchase price. NOI considers property operating expenses only and does not consider mortgage payments, repair costs, and so on.
The capitalization rate is calculated by dividing the first year of NOI by the property price.
Capitalization rate= NOI/ Property Value
Properties that have a high capitalization rate are considered better investments. However, it is possible to increase the capitalization rate by increasing rent over time and keeping operating expenses under control.
The cost approach is used when a rental property is not generating any income or when recent sales are difficult to come by. The idea behind this approach is that an investor would not pay anything more than what it would take to build the same home from scratch.
The formula for determining the value of a rental property using the cost approach is:
Property value= Cost-Depreciation+ Land value
Reproduction and replacement are the main valuation methods used in this approach.
The reproduction valuation method determines property value based on how much it would cost to build a house using the same materials, floorplan, and fixtures. The replacement method uses a new floorplan along with new materials and fixtures.
The concept of opportunity costs and risks are taken into consideration in the capital asset pricing model. That is why it is considered a more comprehensive approach to property valuation.
This model compares the potential ROI on a certain rental property with other risk-free investment options, such as US Treasury bonds or REITs (Real estate investment trusts). If the returns from risk-free investments are higher than the returns from the rental property, it is not a wise decision to invest in such a property.
When it comes to risks, the capital asset pricing model looks at all the inherent risks, such as the age of the property, location, and so on. For instance, the demand for rental properties in a gated community is higher than those in a high-crime area. If you do buy a property in a risky area, you will need to put safety measures in place, which will require more investment.
The gross rent multiplier approach considers the amount of rent an investor can earn in a year. It is a pretty simple way to determine if a property is worth buying. However, it may not be the most efficient method because it does not take into consideration factors like insurance, taxes, utilities, and other expenses on the property.
The ROI (Return on Investment) of a rental property measures the profitability of that property. For instance, if you have bought a property for $200,000 and the ROI is 5%, you should roughly be getting a profit of $10,000 per year.
Now, different people have different opinions about what is a good ROI for rental properties. Some are happy with a 7% to 10% return, while others are looking for a much higher rate of return.
Typically, 15% or more is considered to be a great return on your investment. However, some investors would not even consider a property if it does not give 20% or more ROI. So, it all boils down to your personal preferences and goals.
However, the turnover rate and vacancy rate also influence your ROI. If you are unable to retain your renters, and your turnover rate is high, your ROI may be lesser. That's because you would need to invest in marketing and other promotional activities to find new renters. The more the number of days your property remains vacant, the more money you lose.
The methods discussed above work well for determining the value of a rental property. However, if you are still unsure of the property value, you need professional help. Level on Demand are real estate experts, and we are all you need for all your real estate-related queries.
If you are unable to evaluate property value, check out our financial modeling packages below:
Single-family investment analysis
Do you want to invest in a single-family home? Let Level on Demand evaluate the property for you to determine the right property value. We track a variety of market metrics, such as interest rates, vacancy rates, and so on based on the location and attributes of the property. Get a complete evaluation of the property in less than a business day.
Residential development appraisal
Building a property takes a considerable amount of work, regardless of whether it is a single family home or a high-rise. Talk to our experts about any questions that you have. We will help you estimate everything, whether it is your construction budget, lease, or sale timing.
Residential real estate market evaluation
If you want to buy or sell a property, it is crucial that you know the right offer price. Some homes are ready to move in while others may need a lot of work before you can live in them. The offer price cannot be the same for both properties. Our real estate experts consider a lot of information before they determine the ideal offer price. The report is delivered in as little as 48 to 72 hours.
House flipping is a great way to earn a profit. But, how do you determine the right price? Leave that to us. We will deliver an editable excel workbook, filled in by a professional in less than a business day, complete with the local market knowledge and industry best practices baked in.
For more information, call us at +1 (310) 565-2889 or write to us at contact@levelondemand.com
]]>You could be a seasoned renter, or this could be the first time that you're renting. Irrespective of which you are, reading a rental lease agreement can feel confusing. Usually, they're full of legal jargon which could leave you confused. Around 37% of the population of the United States rents their homes. This means that when it comes to reading confusing rental agreements, you aren't alone. If you want to review your lease agreement, you could find that it gets difficult.
An apartment lease is a contract that essentially outlines what the terms are between the landlord and their tenant. Once both parties sign the lease agreement, then that agreement is legally binding. The lease agreement could be different depending on where you choose to rent. They could have different clauses, or they could end up looking completely different based on the terms of your lease.
You could be wondering how to review a residential lease agreement. Here are some common terms associated with leases that you should know:
These are the twelve-month leases and are the most common. The lease could also go up to fourteen months or last even longer. In this rental agreement, both the parties agree to comply with the lease rules. This is applicable for the time stated within the lease. You're usually asked to follow the community rules, to pay rent monthly as well as to pay fees for pets, should you have any.
It's also common for the landlord to not change anything that's already in the lease, before it reaches its expiry date. Usually, you're expected to follow through with the terms of the lease, but there are some landlords who could allow you to end your lease early.
Another lease available to you is a month-to-month lease. These are better suited for short-term and medium-term rentals lasting less than a year. It's also possible to change the terms of the lease. Both you and the landlord can do this. However, a proper notice will need to be submitted indicating what the change is. Usually, the proper notice period is around thirty days.
Leases can tend to differ, depending on the landlord or property management business. There could be hard legal terms present in the lease as well. You could hire a lawyer to check your rental agreement. However, the lawyer fee for rental apartment is usually quite high. In this case, you may want to review your lease agreement by yourself. A more affordable option would be to hire our services. We can help you review your lease agreement.
So what should you consider as important when it comes to looking at your lease? If you're wondering how to review a residential lease agreement, these are the things you should be paying attention to:
1. Premises And Parties
A lease needs to start with a section dedicated to premises as well as parties. This is the introductory part of your lease. Here, you'll usually find space where you can write your name. Should you have children or roommates, then you'll need to write their names as well.
Occupants need to be at least 18 years of age to sign the lease. This section also establishes the roles, which means you should read it carefully. Sometimes, this section also comes with your new home address. The landlord's address should also be present.
2. Terms
This section is responsible for stipulating what the lease terms are. It can also include what the cost of your rent is. When you're looking through the terms, pay careful attention. Ensure that the rent amount, fees, and start and end dates on the lease are all correct. Should you find any problems, your landlord will be able to fix it for you.
3. Rental Payments
You'll also find a section dedicated to rental payments. From here, you can understand when and where you're supposed to pay your rent. This is also where your grace period can be found if you have one. The grace period give you, the tenant, a few days past your due date before any late penalties come your way. Usually, rent is due on the first day of each month. It is important to note that the rent for the first month could be an amount that is prorated in situations where your lease begins in the middle of the month.
4. Security Deposit
Most apartments will require you to pay a security deposit before you're able to rent it. You'll need to pay utilities, rent as well as application fees. Sometimes your credit score will be a factor in the amount of security deposit a landlord requires, but most often it is a set amount equal to either one or two months' rent. Before you sign your lease, you should verify what the deposit rent amount will be.
5. Late Charges
In this section, you'll find out what your late charges are in case your rent is paid late. This section could either be separate, or it could come in the payment section itself. Note that not having insufficient funds in your account does can also incur additional fees beyond a late fee.
6. Utilities
The way utilities are billed to you could vary wildly across states and cities. This is partially due to environmental constraints. The age of buildings also plays a role. As an example, older buildings in New York City or Boston will have a very different way of billing than a new apartment in, say, Phoenix. There are some times when the utilities could be included in the rent. However, usually you'll be charged separately for at least some utilities.The most common is electricity, since that is usually the easiest to separate for each unit by the landlord.
7. Pets
In case the community you're living in doesn't allow pets, then this needs to be stated in the lease. This section can provide you with additional rules when it comes to your pets. You'll know what the pet rules are, as well as what the violation penalties are. You'll also learn about pet fees as well as if there is a pet deposit.
Should you be joining a community that is pet friendly, then you could also be asked to provide additional information about your pet. The monthly fee for pets should be clearly stated in this section. In many cases, especially with larger apartment complexes in dense cities, a weight limit will be placed on pets.
8. Occupants
This is known as the occupancy clause, and is important for you to understand regarding your lease. It can sometimes be difficult to decipher who is allowed on the premises outside the named occupants in the lease. For all issues with your rental agreement, we are here to help.
Your occupancy clause lets you know what the rules are that your guests need to abide by should they want to either stay in your rental property or visit it. Your occupancy clause could indicate how long a guest could stay in your home. This is usually no more than ten to fifteen days. Should anyone want to stay longer then you may need to get permission.
9. Common Sense Clauses
This section is about conduct as well as activities that could be considered criminal. Certain activities, such as drug use, could lead to eviction. This section will state what those rules are.
10. Repair and Maintenance Clause
In this section, you'll be informed of who has to pay for the repairs, if any are needed. If you stay in a community or in a mobile home, then you may not be allowed to get third parties to do repairs. You may need the approval of your landlord for this. You'll also be provided with rules on keeping your apartment clean.
11. Right Of Entry
There are certain conditions where the landlord can enter the property you're in. An example of this is a safety inspection. However, the landlord should give you a notice, which is usually of 24 hours, that they will enter.
12. Moving Out Early
There are also clauses provided regarding early termination. Usually, different landlords have their own rules for their section. You should know what these are, in case you want to suddenly move.
13. Resident Default
Finally, this is one of the most important sections of the lease. This part states that if you don't follow the rules, then you can get evicted. There are several ways you can default, such as by not following the community rules or by not paying rent.
Aside from what we have been covering here, every lease is different. Some may contain extremely complex language, the meaning of which you may not be aware of. A part of knowing how to review a residential lease agreement is knowing what terms like 'automatic renewal', 'lessee', 'lessor', 'abatement' and more mean. We can help you with this. All our experts have at least ten years of experience reviewing leases just like yours.
You always have the option to hire a lawyer to look at your apartment lease agreement. If a landlord ever tells you this is not the case, they would be incorrect. While it's true that a lawyer can help you review your lease agreement, they'll also charge you more for their services. It can be difficult to find a competent attorney willing to take on such a small job. It also oftentimes takes days or even weeks sometimes to get a lease reviewed by an attorney.
Level On Demand's lease review is not only more affordable, but give you a full review by a real expert in under a day! Signing a lease agreement should only come after the document has been carefully pored over. And this is where we can help you. We have the knowledge and expertise to understand what your rental agreement states. Our easy to read summary helps you quickly identify any potential issues or missing clauses that could be helpful to you as the tenant. With our help, you'll know the intricate details of your rental agreement. That way, you can go ahead and sign it without worries. Get in touch with us to get your apartment lease reviewed today.
]]>Most people lack in-depth knowledge about the local laws of the real estate market, legal terminologies, and other aspects of a legal agreement. So, it is better to seek out various resources while reviewing the contract.
]]>Simply put, a real estate contract is the legal agreement between two parties (usually a seller and a buyer) that states the particulars, clauses, and terms of a real estate deal. It also contains the responsibilities and liabilities of each party involved.
This article is written with the buyer in mind, but the same principles apply to everyone, no matter what the type of transaction.
Real estate contracts outline common terms like purchase price, existing appliances and fixtures, which party is responsible for certain things during the contract, the date of closing, certain contingencies, and other financial terms. To be legally enforceable, a real estate sales contract must be in written format and should be duly signed by both parties.
Now, you must be wondering: what is a real estate contract review?
Well, reviewing a contract is the process of critically analyzing each aspect of your real estate agreement before signing it. As a buyer, it is your right to receive all information about the real estate property you are purchasing. The information is presented to you in the form of the real estate contract by the seller.
To ensure that you are getting a fair deal and the seller is delivering what they have verbally promised you, you need to go through every line of the contract.
Most people lack in-depth knowledge about the local laws of the real estate market, legal terminologies, and other aspects of a legal agreement. So, it is better to seek out various resources while reviewing the contract.
While this greatly depends on the region you live in and the type of property being considered, most real estate contracts work similarly.
When you purchase a real estate property, you will have to sign a contract. This is common knowledge. However, what most people don’t realize or sometimes ignore is the importance of getting these reviewed by an expert prior to signing.
Since every deal is unique, every contract is unique too. And you don’t want to miss the important details of your sale or purchase because you didn’t get your contract reviewed.
Reviewing a contract is one of the most important parts of a real estate property deal. Whether you are a seller or a buyer, you must understand every single word and what it means before signing your contract. If you are not doing this, you are entering into an agreement with half knowledge - and half knowledge, as everyone says, is a dangerous thing.
Buying a house (or any other real estate property) is one of the biggest investments in anyone’s life. And so, it is natural to want everything to be perfect. And the way to that perfection starts by getting your real estate documents reviewed by an expert.
Here are some reasons why reviewing a real estate contract is essential:
Reviewing your real estate contact is one of the best ways to safeguard yourself from all kinds of unknown risks.
Examining a contract will hello you understand its nitty-gritty details and give you more clarity about your responsibilities and rights. It will also tell you about the responsibilities of the seller. Being aware of this is incredibly useful in case something goes wrong with your property after signing the documents.
One of the least discussed benefits of contract review is how incredibly useful it is in case of negotiations. If the seller is offering you a pre-formatted contract, examining it can help you negotiate for a better deal.
In addition, if you feel that you aren’t getting a fair price, you can find ways to approach the seller for re-negotiation.
Disputes are extremely common in real estate deals. For example, sometimes sellers don’t disclose some critical information about the property. Other times, they may fail to fulfill the promises made to you before closing.
The key to solving such disputes is your contact. A real estate contract contains several clauses that can help you figure out your rights as a buyer. They will also help you understand the responsibility of the seller and hold them liable in case they fail to meet them properly.
Whether you are purchasing, selling, or leasing a real estate property, you are always able to get your contact reviewed by an expert. We previously covered a few of the contract review services out there, but there are several more online resources that claim to offer contract review services.
Here are some of those options to get your real estate contract reviewed:
1. ContractsCounsel: ContactsCounsel is a platform that offers various contract-related services. You can hire vetted contract lawyers, and request experts to draft or review your contract. The platform assures that their lawyers charge 60% lesser fees than law firms (unverified if this is accurate)..
2. LegalSifter: LegalSifter is another contract review platform that you can use to get your real estate contracts reviewed. The goal of LegalSifter is to pair you with an attorney, similar to ContractsCounsel. LegalSifter claims to use a combination of Artificial and Human Intelligence to review contracts and give valuable advice to their clients.
LegalSifter claims their self-service AI-powered algorithms can review your contract, which comes with a $28/month subscription. You can also pay $227/month to gain access to full contract reviews similar to what you could expect from a Level On Demand expert. It is unclear how long each review takes but the required minimum term is 4 years! That cost comes out to over $10,000.00 dollars!
3. BizCounsel: Just like LegalShifter, BizCounsel also leverages the power of advanced technology to help their clients in legal matters. The platform isn't just limited to contract reviews but offers a large variety of legal services both for individuals as well as businesses. They have three membership options: Starter, Core, and General Counsel. At their $1,548.00 per year required annual subscription, the Starter option is the most economical, but it offers limited services.
So, these were some of the top resources that you'll find when you search online to get your real estate contract reviewed at an affordable price.
Perhaps one of the resources we just covered may be a good fit for you. Level On Demand offers a better contract review service. Our contract reviews are more affordable than using a software to get matched to a high-priced attorney. Most importantly, our reviews are typically completed and returned to you in under 24 hours. This is not what you get with those other services.
Whether you are a real estate agent, seller, or buyer, having the helpful second opinion of an expert is essential to making real estate decisions and understanding contracts before your sign them. If you don't want to hire an independent real estate attorney and want a more cost-effective option, going for a contract review platform like the ones mentioned above can be an excellent choice.
Sometimes you need an even faster review. One that is done by an expert at an even more affordable cost. If so, check out our services to see example reviews and learn how it works to place an order!
]]>The commercial real estate industry, and to a lesser degree, the residential real estate industry as well, leans heavily on that age-old contract; the lease.
Historically, a lease agreement has been a very effective way for an owner of real estate to “hand over” a set of rights to a tenant for a time, while still owning the property. In theory, a written lease agreement could be as simple as one page, naming the landlord and tenant, and spelling out the term of the lease, in time and money. Somewhere along the line, lease abstracting became a thing; taking a long lease and summarizing the key terms and details.
Lease agreements are long. Surveying the countless commercial and residential leases we’ve reviewed over the years, we found the average page length of commercial leases is 42 pages! That may not quite be a Dickens’ novel, but three key things make it easy to miss critical details:
Legal Language - The type of legalese (*sips tea) used in lease agreements can make it difficult to follow along and comprehend the full picture of what each clause means
Scattered Terms - Sometimes a simple term, like security deposit amounts, is not listed on page one with the rest of the financial terms, but instead is buried on page 38
Circular References - Usually a term used by excel junkies, some clauses will reference other clauses, that in turn reference the original clause; trying to make sense of all the potential outcomes can be overwhelming
Just like with doctors, sometimes with lease agreements it’s wise to get a second or third (or even fourth) opinion to ensure nothing gets missed. This is especially true for tenants prior to signing a lease, and equally valuable for landlords to keep track of the terms of their agreements with tenants.
For tenants, once a lease agreement has been fully negotiated, and all the parties are reasonably satisfied with the agreed upon terms, it’s time to have the lease abstracted prior to signing and executing the agreement. Getting a lease abstracted before any changes or negotiations can end up being useless, especially if there are a lot of material changes from the original lease document.
For landlords, either right before or right after a lease agreement is executed is the best time to have a lease abstracted. Just like tenants have to track how much rent they owe on an ongoing basis, landlords must be aware of the terms that they are responsible for, especially any terms that change in the future as the lease term progresses.
]]>Ready to get a lease abstracted? Head on over and check out our Commercial Lease Abstract package to see an example!
This is not a paid promotion. We took an objective look at the company and are sharing our opinions only.
Doorsey is a new online residential real estate marketplace. Their tagline of "Know exactly what you’re getting and how much to pay before making an offer" seems intriguing and refreshing in a world of real estate where everyone, buyers, sellers and agents alike, are not motivated to share information.
The platform itself is familiar, with some interesting twists. First of all, sellers and agents who list a home for sale on Doorsey get what you’d usually expect from Zillow; efficient systems for uploading listing data (we aren’t sure how nicely their platform integrates with various MLS systems), lead generation, and scheduling buyer showings.
When a new listing is published (for a fixed fee) by an agent or seller, Doorsey includes a fancy Matterport 3D virtual tour and gets a inspection done on the property by a local, independent inspector.
But Doorsey isn’t a listing platform. It’s an auction platform.
Once a listing “goes live” on Doorsey, the seller decides on what terms they would accept and an auction date is set by the seller. Prospective buyers not only have full access to the listing information but also see the inspection report, other documents provided by the seller (like HOA and tax information) without having to talk to an agent.
We checked one of Doorsey’s current listings in Texas, and were pleasantly surprised at the amount of information available
Buyers then have a window of time to review all the listing information and talk to others on the platform about the property before bidding at auction.
Doorsey says the purpose for all this is to do away with the whole blind offer business that causes so many problems in the real estate industry. We can relate to that frustration. In places like Los Angeles, where it’s not uncommon for sellers to go back and forth between prospective buyers individually, until they reach the “best bid” of sorts, it’s blatantly obvious that there is room for improvement in the offer process.
When auction time comes, buyers end up competing only on price, as most all of the other terms are the same for everyone. The winning bidder and the seller then move to contract. Currently Doorsey cannot facilitate the escrow and closing process on their platform.
From the Doorsey website, “Doorsey co-founders Jordan Allen, Nick McLain and Matt Melville are seasoned home buyers and sellers who experienced first-hand the frustrations of the traditional blind-offer process in the overheated housing market of Spokane, Washington. They conceived of Doorsey as an antidote to the heartache of a process where buyers lack visibility into whether their offers are competitive, and sellers lacked confidence that they are getting the best price for their homes.”
We had the opportunity to speak with Jordan and Nick recently about Doorsey. Jordan was CEO of StayAlfred, a short-term rental platform that closed up shop early in the pandemic.
Doorsey is different from listing platforms like Zillow and Redfin in a few critical ways.
Doorsey is an auction platform, not a listing site. This have a few positive consequences. Agents are disincentivized from listing “dead” deals as a means of generating leads. By doing auctions, Doorsey also does away with the blind-offer process.
Doorsey encourages requires more transparency from all parties. By requiring inspections and virtual tours, and allowing for sellers to share as much information as possible, buyers will be more willing to bid transparently (or at least that’s the hope).
While technically Doorsey is just another option when if comes to marketing houses for sale, we think they’ve done a pretty fair job of differentiating themselves and offering a “buyer-friendly” auction process.
Historically, we’ve always associated house auctions with bank foreclosures and court sales, where flippers and opportunists with deep pockets are scrambling to pick up a “good deal”. The idea that auctions could become a mainstream, accepted way of transacting is fresh, but largely untested as of yet.
In an odd twist, this is one area where the commercial real estate industry has lead the way ahead of the residential industry (usually it’s the other way around). TenX, the leading commercial real estate auction platform, which was started all the way back in 2010 (formerly auction.com) has surpassed a total transaction volume of $20bn and typically closes on it’s deals in under 60 days.
Will homebuyers find enough value in the ideas Doorsey is promoting to forever ditch the blind-offer process that relies so heavily on agents and other service providers? Probably
Will Doorsey be the platform that facilitates this monumental shift in the homebuying process? If they can eventually find a way to handle the escrow and closing process on their platform, then maybe so
]]>Welcome to 2022; it’s officially a post-pandemic world and the way commercial real estate leases work has changed for many. Retail and office tenants especially have gained some much needed bargaining power over landlords that didn’t exist two years ago.
Disclaimer: Nothing on this website is intended to be construed as legal, financial, investment or relationship advice.
As many small businesses and individuals look for lease space for their business, or consider renewing their existing lease, we are going to explain four negotiating tips tenants should know before they sign a commercial lease.
Landlords LOVE the lease guarantee; usually a simple 1-pager slipped in at the end of a lease contract, it specifies that the tenant or another “credit-worthy” person will be promising to pay the rent, in the event your business cannot. Sounds simple enough, right? In cases where a prospective tenant’s business has less than two years of operating history, a lease guarantee is often included by default, whether it’s actually a reasonable request or not.
Did you know that personal lease guarantees are negotiable?
That’s right. While a landlord is out to protect their interests, as they should, tenants have options when it comes to personal lease guarantees; it’s not a binary “yes/no” detail. In the event a landlord really wants a personal guarantee, here are some negotiating “counters” to bring to the table as a tenant:
Providing more proof of the businesses ability to secure the lease, which can be in the form of bank statements, secured future order receipts or other documentation
Increasing the security deposit: If a tenant has the funds available, sometimes a landlord will accept a security deposit of 3-6 months rent, in lieu of a personal guarantee
Early release of guarantee: In the event a landlord still requires a personal guarantee, as a tenant you can ask for it to be put down in writing that it will only be for the first year, or two years, and will then be removed, once you’ve shown a good track record of the ability to pay rent on time
We won’t go into the difference between different lease types here (modified gross, full service, etc), but every tenant should look very closely at any increases in rent they will pay over the life of their lease.
Many tenants AND landlords really took a haircut during the dark winter of covid, and are trying to make up for losses, each in their own way
For tenants, rent increase = bad. The standard old way of handling rent increases has always been to use a straight percentage increase each year of the lease, like 3%, or tie the percentage to the CPI (consumer price index).
But what about the fact that many commercial lease spaces, especially those retail and office ones, have sat vacant for the last year or two? What about inflation? How does all this affect what a tenant should ask for when it comes to rent increases?
The short, one-size-fits-all answer here is, tenants should look for reasonable increases that won’t put their business at risk. For many tenants, this looks like negotiating for stepped increases, instead of “straight-line” increases.
Take the following breakdown as an example. Same starting annual rent of $10,000, and the overall rent paid to the landlord is the same over five years, but the first three years are more attractive to a tenant in the stepped version.
Straight-line | Stepped |
---|---|
$10,000 (base) | $10,000 (base) |
$10,300 (3%) | $10,100(1%) |
$10,300(3%) | $10,100(1%) |
$10,300(3%) | $10,500(5%) |
$10,300(3%) | $10,500(5%) |
Most commercial leases include a clause, or even an entire section, related to what happens if the tenant doesn’t pay rent on time.
Usually, if the rent is not paid by the 3rd or sometimes 5th day of any given month, then the tenant is all of the sudden in (((default))). There is typically a window of a few days after that when the tenant can “remedy” their default, but the landlord has rights; when a tenant enters into default, in addition to large late payment fees, commercial lease evictions happen much more swiftly than residential house leases.
Obviously the best way to avoid all this as a tenant is to pay rent on time. But things happen. Seasonal sales dip below expectations, personal emergencies occur. Any number of things can affect on-time rent payments.
Ways to further protect yourself as a tenant in the original lease terms are:
Increase the “window to default” (if it’s 3 days, ask for 7, or better yet, 30)
Make late payments attractive to the landlord, but reasonable to the tenant (maybe 5% for the first one, then 10% for subsequent late payments)
Add a provision that allows the tenant to be late, up to a certain number of days, a few times a year, without penalty
If you’re wondering how to pronounce that, here you go.
We see “force majeure clauses” in about half of the leases we review. The language gives the parties certain flexibility when an “event or effect that cannot be reasonably anticipated or controlled” takes place.
The staples here have always included “acts of God” like hurricanes, earthquakes, war, etc. Some good attorneys have started to also include “pandemic” or biological events in this clause for their leases.
As a tenant, you should also look for, or ask to be added, something similar to the following:
“…any federal, state or local government law, ordinance or order, which would materially affect tenant’s ability to operate it’s business…”
We don’t know what the next big thing is going to be, and as a tenant, having broad flexibility to forego rent payments for a time, or even exit the lease entirely, due to some unforeseen circumstance is a great way to protect yourself.
Check out our Commercial Lease Review where we personally review leases for tenants starting at just $39. Our document review experts look for accuracy and red flags to help tenants understand the terms of their lease.
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For 2022, we've already added the first of many new "one-click" services, the Residential Real Estate Market Evaluation.
Go beyond the traditional Competitive Market Analysis that agents provide, and discover each properties true potential with our 3-way analysis. Some homes are "move-in ready" while others need some repairs or just need to be torn down. We provide quick and informed price guidance specific to each property for three scenarios, and let you decide how to act!
As the new year kicks off, Level On Demand continues on its mission to provide world-class, unbiased real estate services at reasonable prices. This includes financial underwriting and legal document review and much more.
Want to “run the numbers” on a current or potential real estate investment? Check out our Financial Packages. (more coming soon!)
Skeptical about a contract or lease? Our Document Review Packages will give you peace of mind.
Whether you're a buyer, seller or even an agent, it's always nice to have the peace of mind that comes from a professional helping you to read and interpret real estate contracts. It may be for the purchase of a home, assigning certain real estate rights, or just leasing real estate.
Since each state promulgates their own real estate forms, for brokers and agents to use, and with other companies like LegalZoom offering templated contracts for individual use, attorneys jobs are made easier than they used to be.
When considering if you really need to hire an attorney to review your real estate contracts, it comes down to personal preference, knowledge and cost. Anyone who has been party to at least one real estate transaction may feel like the expansive hourly fees they pay to attorneys just aren't quite cost effective. We believe at Level On Demand, that getting a second opinion on a contract for a small fee is a great first step, before making the jump to hiring an attorney. We know real estate deals move fast, and that's why we usually are able to fully review your contract and return it to you within 24 hours.
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