The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to educate investors about securities-based crowdfunding.
Crowdfunding generally refers to a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people. Companies can use Regulation Crowdfunding to offer and sell securities to the investing public giving the public the opportunity to participate in the early capital raising activities of start-up and early-stage companies and businesses.
Can I make a Regulation Crowdfunding investment?
Anyone can invest in a Regulation Crowdfunding offering. Because of the risks involved with this type of investing, however, you may be limited in how much you can invest during any 12-month period in these transactions. If you are an accredited investor, then there are no limits on how much you can invest.
Accredited investor. An individual will be considered an accredited investor if he or she:
·earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year,
·has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence and any loans secured by the residence (up to the value of the residence)), OR
·holds certain professional certifications, designations or credentials in good standing, including a Series 7, 65 or 82 license.
A spousal equivalent means a cohabitant occupying a relationship equivalent to that of a spouse
If you are a non-accredited investor, then the limitation on how much you can invest depends on your net worth and annual income.
If either your annual income or your net worth is less than $124,000, then during any 12-month period, you can invest up to the greater of either $2,500 or 5% of the greater of your annual income or net worth.
If both your annual income and your net worth are equal to or more than $124,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is greater, but not to exceed $124,000.
The following table provides a few examples:
Annual Income
Net Worth
Calculation
12-month Limit
$30,000
$40,000
greater of $2,500 or 5% of $40,000 ($2,000)
$2,500
$150,000
$80,000
greater of $2,500 or 5% of $150,000 ($7,500)
$7,500
$150,000
$124,000
10% of $150,000 ($15,000)
$15,000
$124,000
$900,000
10% of $900,000 ($90,000)
$90,000
Joint calculation. You can calculate your annual income or net worth by jointly including your spouse’s income or assets. It is not necessary that property be held jointly. However, if you do calculate your income or assets jointly with your spouse, each of your crowdfunding investments together cannot exceed the limit that would apply to an individual investor at that annual income or net worth level.
How do I calculate my net worth?
Calculating net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth.
For purposes of Regulation Crowdfunding, the value of your primary residence is not included in your net worth calculation. In addition, any mortgage or other loan on your primary residence does not count as a liability up to the fair market value of the residence. If the loan is for more than the fair market value of your primary residence (i.e., if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test.
Further, any increase in the loan amount (other than for the purchase of the primary residence) in the 60 days prior to your purchase of the securities (even if the loan amount does not exceed the value of the primary residence) will count as a liability as well. The reason for this is to prevent net worth from being artificially inflated through converting home equity into cash or other assets.
While your individual circumstances will vary, the following table sets forth examples of calculations under the net worth test in order to determine crowdfunding investment limits:
Jane Doe
John Smith
James Lee
Primary residence
(not included except for related liabilities below):
Home value……………………
$ 300,000
$ 300,000
$ 300,000
Mortgage………………………
200,000
200,000
330,000
Home equity line:
more than 60 days old….
–
20,000
–
less than 60 days old…….
–
10,000
–
Included assets:
Bank accounts………………..
$ 20,000
$ 20,000
$ 20,000
401(k)/IRA accounts…………
100,000
100,000
100,000
Other investments…………..
50,000
50,000
50,000
Car……………………………….
20,000
20,000
20,000
Total included assets………
$ 190,000
$190,000
$190,000
Included liabilities:
Student and car loans……….
$ 100,000
$ 100,000
$ 100,000
Other liabilities……………….
20,000
20,000
20,000
Portion of mortgage
underwater…………………..
–
–
30,000
Home equity line
(less than 60 days old)……
–
10,000
–
Total included liabilities….
$ 120,000
$ 130,000
$ 150,000
Net worth……………………….
$ 70,000
$ 60,000
$ 40,000
How do I make a Regulation Crowdfunding investment?
You can only invest in a Regulation Crowdfunding offering through the online platform, such as a website or a mobile app, of a broker-dealer or a funding portal. Companies may not offer Regulation Crowdfunding investments to you directly—they must use a broker-dealer or funding portal.
The broker-dealer or funding port —a crowdfunding intermediary—must be registered with the SEC and be a member of the Financial Industry Regulatory Authority(FINRA). You can obtain information about a broker by visiting FINRA’s BrokerCheck or calling FINRA’s toll-free BrokerCheck hotline at (800) 289-9999. You can obtain information about a funding portal by visiting the SEC’s EDGAR website.
Keep in mind that you will have to open an account with the crowdfunding intermediary—the broker-dealer or funding portal—in order to make an investment and all written communications relating to your crowdfunding investment will be electronic.
What should I keep in mind?
Regulation Crowdfunding offers investors an opportunity to participate in an early-stage venture. However, you should be aware that early-stage investments may involve very high risks and you should research thoroughly any offering before making an investment decision. You should read and fully understand the information about the company and the risks that are disclosed to you before making any investment.
The following are some risks to consider before making a Regulation Crowdfunding investment:
Speculative. Investments in startups and early-stage ventures are speculative and these enterprises often fail. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. You should be able to afford and be prepared to lose your entire investment.
Illiquidity. You will be limited in your ability to resell your investment for the first year and may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange where you can quickly and easily trade securities on a market, you may have to locate an interested buyer when you do seek to resell your investment.
Cancellation restrictions. Once you make an investment commitment for a Regulation Crowdfunding offering, you will be committed to make that investment (unless you cancel your commitment within a specified period of time). As detailed in the box below for Changing your mind, the ability to cancel your commitment is limited.
Valuation and capitalization. Your Regulation Crowdfunding investment may purchase an equity stake in a startup. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult and you may risk overpaying for the equity stake you receive. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold through Regulation Crowdfunding offering.
Limited disclosure. The company must disclose information about the company, its business plan, the offering, and its anticipated use of proceeds, among other things. An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide more disclosure. The company is also only obligated to file information annually regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events continuing disclosure that you can use to evaluate the status of your investment. In contrast, you may have only limited continuing disclosure about your Regulation Crowdfunding investment.
Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds.
Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds through crowdfunding, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that Regulation Crowdfunding investments will be immune from fraud.
Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through Regulation Crowdfunding may not have the benefit of such professional investors.
How do I get informed?
Broker-dealers and funding portals that operate Regulation Crowdfunding platforms are required to offer educational materials to help investors understand this type of investing. These materials further detail the risks involved when making a Regulation Crowdfunding investment. You should take advantage of this resource to educate yourself and understand the risks of making Regulation Crowdfunding investments. Remember, this is your money that you are putting at risk, and you should only invest after careful consideration of the risks.
Review and acknowledgement. Before you can make a Regulation Crowdfunding investment, the broker-dealer or funding portal operating the Regulation Crowdfunding platform you are using must ensure that you review educational materials about this type of investing. In addition, you will have to positively affirm that you understand that you can lose all of your investment and that you can bear such a loss. You will also have to demonstrate that you understand the risks of investing in a Regulation Crowdfunding offering.
As mentioned, the companies that you invest in are required to disclose a limited amount of Information to you. This information includes general information about the company, its officers and directors, a description of the business, the planned use for the money raised from the offering, often called the use of proceeds, the target offering amount, the deadline for the offering, related-party transactions, risks specific to the company or its business, and financial information about the company. You should use this information to determine whether a particular investment is appropriate for you.
Tiered financial disclosure. The minimum level of financial disclosure required by the company depends on the amount of money being raised or raised by the company in the prior 12 months:
·$124,000 or less – financial statements and specific line items from income tax returns, both of which are certified by the principal executive officer of the company unless financial Statements reviewed or audited by an independent public accountant and the accountant’s review or audit report, as the case may be, are otherwise available.
·$124,000.01 to $618,000 – financial statements reviewed by an independent public accountant and the accountant’s review report unless financial statements audited by an independent public accountant and the accountant’s audit report are otherwise available.
·$618,000.01 to $1.235 million – if first time crowdfunding and audited financial statements are not available, then financial statements reviewed by an independent public accountant and the accountant’s review report, otherwise financial statements audited by an independent public accountant and the accountant’s audit report.
·More than $1.235 million (up to the maximum aggregate of $5 million) – financial statements audited by an independent public accountant and the accountant’s audit report.
An audit provides a level of scrutiny by the accountant that is higher than a review.
The sharing of views by members of the crowd is considered by some to be an integral part of Regulation Crowdfunding. Broker-dealers and funding portals, through their Regulation Crowdfunding platforms, are required to have communication channels transparent to the public—for example, on an online forum—relating to each particular investment opportunity. In these channels, the crowd of investors can weigh in on the pros and cons of an opportunity and be able to ask the company questions. All persons representing the company must identify themselves. It may be worthwhile to monitor these communication channels before and after you make your commitment to invest.
Changing your mind. You have up to 48 hours prior to the end of the offer period to change your mind and cancel your investment commitment for any reason. Once the offering period is within 48 hours of ending, you will not be able to cancel for any reason even if you make your commitment during this period. However, if the company makes a material change to the offering terms or other information disclosed to you, you will be given five business days to reconfirm your investment commitment.
What’s different about being a Regulation Crowdfunding investor?
Being a Regulation Crowdfunding investor is different than being a shareholder in a publicly listed company. For one thing, you cannot sell your shares at any time as you would be able to do if you held shares in a publicly listed company. In fact, you are restricted from reselling your shares for the first year, unless the shares are transferred:
in connection with your death or divorce or other similar circumstance;
to a trust controlled by you or a trust created for the benefit of a family member; or
as part of an offering registered with the SEC.
Family member. For purposes of the above, a family member is defined as a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.
Another difference from being a shareholder of a publicly listed company is the amount of information you’ll receive about your investment. Publicly listed companies generally are required to disclose information about their performances at least on a quarterly and annual basis and on a regular basis about material events that affect the company. In contrast, Regulation Crowdfunding companies are only required to disclose annually their results of operations and financial statements.
Additional Information
To learn about SAFEs, a type of security being used in Regulation Crowdfunding, see our Investor Bulletin.
For a list of funding portals registered with FINRA to act as Regulation Crowdfunding intermediaries, visit here.
For a list of broker-dealer firms registered with FINRA, visit here.
For more information about accredited investors, see our Investor Bulletin.
To learn more about Regulation Crowdfunding, see this website.
For additional investor educational information, see the SEC’s website for individual investors, Investor.gov.
This bulletin represents the views of the staff of the Office of Investor Education and Advocacy. It is not a rule, regulation, or statement of the Securities and Exchange Commission (the “Commission”). The Commission has neither approved nor disapproved its content. This bulletin, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.
The information presented here is not an offer to sell or solicit any securities which are for regulated companies. Should Reagan & Reid, Inc or any Affiliates attempt to Crowdfund, Syndicate, or start a fund, No solicitation will be made without our operating with competent Legal Guidance and SEC registration. Reg D disclosure
A Financial Win-Win for Companies and Commercial Real Estate Owners
Owner financing is a financial arrangement in which the seller of a commercial property finances the purchase for the buyer. This can be a beneficial option for both parties, as it can provide the seller with a recurring stream of income, improve their cash flow, and reduce their risk. For buyers, owner financing can make it possible to purchase a commercial property without having to qualify for a traditional mortgage. This can be especially beneficial for buyers who may have a lower credit score or a higher debt-to-income ratio.
Benefits for Companies
There are a number of financial benefits for companies that choose to offer owner financing to buyers. These benefits include:
Generate recurring income: Owner financing allows companies to generate a recurring stream of income from the interest payments made by the buyer. This income can be used to fund other business initiatives, such as growth or expansion.
Improve cash flow: By owner financing a commercial property sale, companies can receive a down payment from the buyer and then spread the remaining balance of the sale price over a period of time. This can help to improve the company’s cash flow and reduce its reliance on external financing.
Reduce risk: Owner financing can help to reduce the risk associated with selling a commercial property. If the buyer defaults on their payments, the company can foreclose on the property and retain ownership. This can help to protect the company’s investment and minimize any financial losses.
Benefits for Commercial Real Estate Owners
Commercial real estate owners can also benefit financially from offering owner financing to buyers. These benefits include:
Sell to a wider range of buyers: Owner financing can make it possible to sell a commercial property to a wider range of buyers, including those who may not be able to qualify for a traditional mortgage. This can help to expand the pool of potential buyers and increase the likelihood of selling the property quickly.
Get a higher selling price: In some cases, commercial real estate owners may be able to get a higher selling price for their property by offering owner financing. This is because buyers may be willing to pay a premium for the convenience and flexibility of owner financing.
Defer capital gains taxes: Owner financing can allow commercial real estate owners to defer paying capital gains taxes on the sale of their property. This is because the seller is not receiving the full sale price upfront, but rather over a period of time. This can help to reduce the seller’s tax liability in the year of the sale.
How to Get Started with Owner Financing
If you are a company or commercial real estate owner considering offering owner financing, there are a few steps you can take to get started:
Consult with a financial advisor: It is important to speak with a qualified financial advisor to discuss the specific benefits and risks of owner financing before making a decision.
Develop a financing agreement: Once you have decided to offer owner financing, you will need to develop a financing agreement with the buyer. This agreement should outline the terms of the loan, including the interest rate, repayment schedule, and consequences of default.
Secure collateral: In most cases, you will require the buyer to provide collateral for the loan. This collateral can be the commercial property itself or other assets that the buyer owns.
Conclusion
Owner financing can be a mutually beneficial arrangement for both companies and commercial real estate owners. By offering owner financing, companies can generate recurring income, improve their cash flow, and reduce their risk. Commercial real estate owners can sell to a wider range of buyers, get a higher selling price, and defer capital gains taxes.
If you are considering owner financing, it is important to consult with a financial advisor and develop a financing agreement that protects your interests.
As seasoned investors know, analyzing income-producing properties is not just a one-time activity; it’s an ongoing necessity for achieving long-term success. Whether you’re a seasoned real estate mogul or a novice investor, regular analysis is essential for understanding the health and potential of your portfolio. In this article, we will explore the key reasons why investors must consistently evaluate their income-producing properties to make informed decisions, especially when considering selling, in order to maximize returns.
1. Optimize Cash Flow and ROI:
Analyzing income-generating properties enables investors to optimize their cash flow and return on investment (ROI). By scrutinizing rental income, expenses, and potential tax implications, investors can identify areas for improvement and ensure their properties are generating the maximum possible income.
2. Monitor Market Trends:
The real estate market is ever-changing, with fluctuations in demand, rental rates, and property values. Regular analysis of your income-producing properties helps you stay informed about current market trends. This knowledge empowers you to adjust rents, renegotiate leases, or make strategic decisions about holding or selling properties.
3. Identify Underperforming Assets:
By conducting regular property analyses, investors can quickly identify underperforming assets. Whether it’s a property with consistently high vacancy rates or declining rental income, recognizing such issues early on allows you to take corrective actions promptly. This could include property upgrades, implementing new marketing strategies, or even selling the underperforming property to reinvest in more lucrative opportunities.
4. Mitigate Risks and Make Informed Decisions:
Thorough analysis equips investors with valuable data that aids in risk mitigation. By evaluating factors like property condition, tenant stability, and local economic indicators, investors can make informed decisions to safeguard their investments against potential downturns or unforeseen circumstances.
5. Capitalize on Tax Benefits:
Real estate investments often come with significant tax advantages. Regular analysis helps investors optimize these benefits by identifying deductible expenses, tax credits, and other incentives, ultimately reducing their tax liabilities and increasing their overall returns.
6. Portfolio Diversification:
Investors who maintain diverse portfolios can better weather market fluctuations and reduce overall risk. Analyzing income-producing properties regularly allows investors to balance their portfolios strategically and align them with their financial goals.
7. Spot Opportunities for Property Upgrades:
Analyzing properties regularly provides insights into potential upgrades that can enhance their value. Whether it’s renovating kitchens, adding amenities, or improving energy efficiency, these upgrades can attract higher-paying tenants and justify rent increases, thereby boosting overall income.
Conclusion:
In conclusion, analyzing income-producing properties consistently is vital for investors seeking long-term success in the real estate market. By optimizing cash flow, staying ahead of market trends, identifying underperforming assets, making informed decisions, maximizing tax benefits, diversifying portfolios, and spotting opportunities for upgrades, investors can unlock the full potential of their investments. Remember, an astute analysis is especially crucial when considering selling, as it allows you to negotiate from a position of strength and achieve maximum profitability. So, make analyzing your income-producing properties a top priority and watch your real estate ventures thrive!
Reagan & Reid is a commercial Real Estate Agency that can help with a full analysis of your income-producing property and produce a full report with images, charts, graphs, demographics, other comparable properties, and much more. Contact us today to see what Reagan & Reid can do to help you make the most money possible from your investments. Use our FREE calculator to evaluate your property value. <CLICK HERE>
What is the difference between a revocable living trust and a will? And which should you make?
What Is a Will?
A will is a relatively simple document in which you state what should happen to your property after you die. You can also use your will to name guardians for your young children, name an executor, forgive debts, and designate how to pay your taxes. After your death, your executor pays any debts or taxes and sorts out who gets what based on the terms of your will. This court-supervised and highly-structured process is called “probate” and has a reputation for being drawn-out and expensive.
What Is a Living Trust?
Like a will, a living trust is a document you can use to name beneficiaries for your property. Beyond that, however, the two documents are distinct. The main feature of a living trust is that it appoints a trustee to manage and distribute trust property after your death, and this takes the place of the executor working with the probate court.
So, property that passes through a living trust does not go through probate, which can save your loved one’s time and money. Many people make living trusts specifically to avoid probate. On the downside, living trusts are generally more complicated and expensive to set up and maintain. You cannot use your living trust to name an executor or name guardians for young children, so even if you have a living trust, you still need a will to do those things. In fact, most people who make a living trust have a will as well.
Difference Between a Living Trust and a Will
Here is a quick comparison of what wills and living trusts can do. Read below for details about each characteristic.
Revocable Living Trusts
Wills
Name beneficiaries for property
Yes
Yes
Leave property to young children
Yes
Maybe (see below)
Revise your document
Yes
Yes
Avoid probate
Yes
No
Keep privacy after death
Yes
No
Requires a notary public
Yes
No
Requires transfer of property
Yes
No
Protection from court challenges
Yes
No
Avoid a conservatorship
Yes
No
Name guardians for children
No
Yes
Name property managers for children’s property
No
Yes
Name an executor
No
Yes
Instruct how taxes and debts should be paid
No
Yes
Simple to make
No
Yes
Requires witnesses
No
Yes
Are You Paying Attention?
Name beneficiaries for a property. The main function of both wills and trusts is to name beneficiaries for your property. In a will, you simply describe the property and list who should get it. Using a trust, you must do that and also “transfer” the property into the trust. (See “Transfer of property into the trust,” below.)
Leave property to young children. Except for items of little value, children under 18 cannot legally own property. When you leave property to a minor, that property must be managed by an adult – at least until the child turns 18.
When leaving property to a minor using a living trust, the trustee manages the property until the child reaches an age determined by you.
Avoid probate. Property left through a living trust does not pass through probate. Property left through a will does go through probate.
Probate is the court system designed to wrap up a person’s affairs after their debts. Probate takes a long time, can be very expensive, and for most estates, isn’t necessary. Read more about avoiding probate in Why Avoid Probate? on Nolo.com.
Because all property passing through a living trust does not have to go through probate, it can be distributed to beneficiaries after the death of the grantor, without any fees or interference (or guidance) from the court For this reason, many people chose to create a living trust. Read more about
But not everyone needs to avoid probate. If you don’t own much property, or if you have many debts, creating a trust may not be necessary. See, “Do I Need a Will or a Living Trust,” below.
Privacy after death. After death, a will becomes a public document. A living trust does not, so many people choose to use a living trust to keep their affairs private. Read more about this in Is a Living Trust Public? on Nolo.com.
Transfer of property into the trust. To leave property through a living trust, you must transfer the property into the trust. For many items, this is as easy as making a list of the property and attaching it to the trust document. However, items with title documents, such as real estate, must be retitled so that the owner of the property is the trust. This is not usually complicated or particularly difficult, but it is an extra step that you must take. No transfer of property is required when using a will.
Protection from court challenges. Court challenges to wills and living trusts are rare. But if there is a lawsuit, it’s generally considered more difficult to successfully attack a living trust than a will.
Avoiding a conservatorship. In a living trust, you can name your spouse, partner, child, or other trusted person to have authority over trust property if you become incapacitated and unable to manage your own affairs. You cannot do this with a will, however, you can also make a durable power of attorney to appoint someone to manage your finances.
Guardians for children. In a will, you can name guardians to care for minor children. You cannot do this in a living trust.
Property managers for children’s property. In a will, you can name someone to manage any property left to or earned by your children. You cannot do this in a living trust.
Naming an executor. You can use your will to name an executor who will be in charge of wrapping up your estate after you die. That person will be responsible for communicating with the court, paying your bills, and, eventually, distributing any property that goes through probate. You can’t name an executor in a living trust. In your living trust, you name a successor trustee who will manage just the property left through the trust. Because most estates will need an executor to some extent, it makes sense to make a will and name an executor, even when you leave most of your property through a trust. In most cases, it also makes sense to name the same person for both jobs.
Instructions for taxes and debts. In your will, you can leave instructions about how you want debts and taxes to be paid. For example, you can say that you want to pay the loan from your brother to be paid from your savings account. You can also use your will to forgive debts owed to you. You should not do these things with a living trust.
Ease of creating and revising the document. Wills are simple documents that require no particular language. Wills created by attorneys may be complex and nuanced, but the law does not require them to be. In some states, even handwritten wills are acceptable. To execute your will, you and two witnesses must sign it. Witnesses should be two people who will not receive anything under the will.
As with wills, there are no laws that require living trusts to be complicated. However, because living trust documents must cover the trustee’s duties, they tend to be more complex (and more expensive to make) than wills. Instead of witnesses, you must sign a living trust in front of a notary public. After you create the trust, you must take the additional step of transferring your property into it. See “Transfer of property into the trust,” above.
Both revocable living trusts and wills allow you to revise your document when your circumstances or wishes change. The decisions you make in these documents are not set in stone until you die.
(On the other hand, you cannot change an irrevocable trust after you finalize it. Wealthy people and institutions typically use irrevocable trusts to shelter money from taxes or creditors, and irrevocable trusts are much more complicated than the revocable type. See a lawyer if you want to make an irrevocable living trust.)
What Living Trusts and Wills Cannot Do
Reduce estate taxes. Neither wills nor can living trusts help you reduce estate tax, but most estates will not owe estate tax. Learn more about whether your estate might be liable for Estate Tax on Nolo.com.
Leave money to pets. Pets cannot own property, so you cannot leave money to your pets. You can use your will to leave your pets to a trusted caretaker, or you can create a pet trust. But if you try to leave your pet property, that property will end up in your residuary estate.
Leave final wishes. Although it is permissible to leave funeral instructions and other final wishes in your will (never in a living trust), it’s better to leave them in a separate document.
Leave passwords for online accounts. After you die, your executor will appreciate being able to access your online accounts, computers, and other devices. However, do not leave this information in your will or living trust. Instead, create a separate document and keep it in a secure place with your other estate planning documents.
Do I Need a Will or a Living Trust?
Most people need a will, but not everyone needs a living trust. Whether or not you need a living trust depends on your age, how wealthy you are, and whether you’re married.
Even if you decide that you need a living trust, you should also make a will to name an executor, name guardians for minor children, and take care of any property that doesn’t end up in your trust.
What If I Don’t Have a Will or Living Trust?
If you don’t make a will or a living trust, your property will be distributed according to the laws of your state.
As summer comes to a close, is it time to think about selling your vacation home? Based on recent data and expert opinions, it’s something you may want to consider. According to research from the National Association of Realtors (NAR), vacation home sales are up 57.2% year-over-year for January-April 2021.
If you’ve taken your last vacation this summer, here are reasons you should consider selling your vacation home this year.
1. Remote work continues to drive demand for vacation homes.
As the report from NAR says, based on continuously evolving work needs, there could be more interest in your second home than you think:
“In 2020, across all nine divisions, the fraction of the workforce that work from home is typically higher in the vacation home counties than in the non-vacation home counties… The opportunity to work from home could further raise the demand for vacation homes in future years.
Recent data shows we’ll likely see a sustained increase in the rate of remote work over the next five years. That means your vacation home could be highly sought after by certain buyers. Lawrence Yun, Chief Economist at NAR, puts it best, saying:
“Vacation homes are a hot commodity at the moment . . . . With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers.”
2. Selling could allow you to upgrade your vacation spot – or even your day-to-day scenery.
When demand is high, so is buyer competition. When competition is strong, buyers will do everything they can to make their offer on your vacation home as appealing as possible. This can include things like all-cash offers and more. If you sell now, you’ll be able to benefit from high buyer competition and pick the offer with the best possible terms for you. That offer could give you the opportunity to purchase the primary residence of your dreams.
Or, if you find that you’ll continue working from home, you could consider taking up more permanent residence in your vacation home and selling your primary residence instead. While this isn’t a choice everyone can consider, it could be a great option.
No matter what the situation, you don’t have to make the decision on your own. Your trusted real estate advisor can help you determine your best option when you’re ready to sell.
Bottom Line
Buyers remain interested in vacation homes this year for a number of reasons. Now that summer is winding down, it’s time to think about taking advantage of today’s demand for vacation homes. Let’s connect today if you’re ready to give your second home its day in the sun.
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