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Real Estate Investor Blog
Boise area real estate and rental management blog
2/20/2024 - Overreaching Governance or Necessary Burden?

On January 1, 2024 the Fed requires LLC’s and corporations to file with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) identifying individuals who have “substantial control” over the entity, or individuals who own or control at least 25% of the entity’s ownership interest.  This would require every existing LLC that holds rental property to file this form by 1/1/2025.

 

I am told that this law was enacted to identify illicit financial activities, such as money laundering.  Is it an essential step towards accountability and transparency or an additional burden for business owners?

 

I found this process to be challenging, when I attempted to file one of my simplest of LLCs, where Stacy McBain and I are 50/50 members. The website https://www.fincen.gov/boi offered 2 ways to submit our information.  Unfortunately, I received page load errors on the first option and proceeded to the 2nd option, which was a web interface that does not save your work, so once you start, you either complete, or you back out and have to start over again.

 

I either missed something or the website failed to ask for multiple owners. Therefore I will have to return and correct my filing. The requirement to upload personal information, including driver's licenses, via an online raises concerns about data security and privacy. It did not ask for my SSN and if it did, I was prepared to abandon my reporting.

 

CPAs are prohibited from assisting with filings, which I believe adds another layer of complexity. While legal firms are exploring avenues to provide this service, the intricacies of LLC structures, especially those with tiered memberships, amplify the challenges. The penalty for not filing is $500 per day up to $10,000.

 

In essence, I believe that the Feds see this as a way to fortify financial oversight and integrity, but its implementation seems lacking to me.  Is this a necessary step towards transparency, or does it represent an overreach by the feds? 

 

Tony A Drost

Swope Investment Properties

Your Boise Investment Properties Team

1/30/2024 - Ada County Fourplexes

There was only one sale in December

There were no sales in November, and only one fourplex was sold in December. The fourplex that was sold in December was not a typical fourplex; it was more like two townhomes with their own Accessory Dwelling Unit (ADU). However it was nicely finished and located in downtown Eagle.

Trailing 6 Month Averages:

Days on Market:          46.1

Gross Rent Multiplier:  180

Cap Rate:  4.64%

Data analyzed by Tony Drost, referencing the Intermountain Multiple Listing and Ada County Fourplex activity.

A Year to Reivew: Single Family Market Update for 2023

Last year ended with a dip in Ada County median home sales prices, bringing the total change in median home values to less than 1%! It was .9% in resale homes and -.7 (down) in brand new homes. The number of homes sold was down 13% from the previous year, but pending deals went up 13%, possibly paving the way for a strong start to  2024.

 Ada County has provided a couple extra graphs showing values over time…enjoy!

In Canyon County, the median home sales prices were up 8.2% in resale homes, but down 2.9% in brand new homes, bringing the total change in median home values to less than 5.1%. It was .9% in resale homes and -.7 (down) in brand new homes.  Both the number of homes sold and inventory were down in the 30% range, creating a demand for resale homes. December’s slight bog in days on market, particularly in brand new homes relieved some pressure. Pending deals went up in resale homes for the first time in four months which will boost the upcoming closed sales in the 2C.

Idaho’s Economic Forecast

According to a recent economic forum hosted by TitleOne that I attended, the forecast for Idaho is looking good. Idaho has experienced a significant increase in its median income rankings, jumping from 45th place in 2012 to 26th in 2021. This is due, in part, to the growing number of affluent individuals migrating to the state who hold higher paid jobs. As a result, these individuals are able to stimulate business and income to the communities in which they move to.

 

Idaho has also emerged as the fastest-growing state this decade and the 2nd fastest in the last decade. Idaho continues to lead the nation in employment growth, with the Boise MSA seeing an annual employment growth rate of 3.4% compared to just 0.5% nationally. Of those migrating to Idaho, 67% are from CA, and 74% of these individual are under the age of 50.

 

However, there is one concern that was highlighted by the economist who spoke at the forum. Over 50% of the counties in Idaho have a higher death rate than births, which means that the state may continue to experience a shortage of workers. Despite this, the economic forecast for Idaho is looking very positive.

 

Tony A Drost, Associate Broker

Swope Investment Properties

Your Boise Investment Properties Team

Property Tax Assessments: Impact on Homeowners and the Boise Area Real Estate Market

Understanding the assessment process and its implications is important for homeowners as it affects their Idaho property values and the real estate market. Ada County, which includes the cities of Boise, Meridian, Kuna, Eagle, and Star, property tax assessments are based on factors like location, size, condition and comparable sales for residential while also taking into account rents and operating expenses on the commercial and residential income side.

 

Assessors, located in Boise, take data and apply a time adjustment to the property in order to get the assessed value as accurate as possible to a Jan 1 date with an error margin of +/- 10%. Based on their data, it was seen that values went up the first quarter and into the second quarter of 2022. As May came along, those values started to soften and then decreased throughout the last half of the year with the increase of interest rates. On the commercial side (anything over 4 units), rates are increasing, vacancies seem to be holding around 4% and cap rates are staying on the low side at 4.7% for 2022 and 4.5% for the first part of this year. On the residential side (4 units or below including single family homes), we can expect to see anywhere from a -12% to a +20% change in the assessed value based on where the home was previously valued.

 

Idaho has a few programs to help homeowners with their property taxes. The homeowners exemption program applies to any owner occupied properties and reduces the value you're taxed on by $125,000. It is applied for once at the time of ownership. The circuit breaker and tax deferral program are a few others that you have to qualify.

 

If you feel your assessed value isn't accurate and is off by more than +/- 10%, you have a right to appeal. Your assessors name and phone number are on the bottom of the statement and you can contact them directly, or ask one of us and we can assist you. The last date to appeal is June 26th but it's advised to do so sooner than later. Reach out to your trusted Swope agent for help with this as we have relationships with the assessors and understand the appeal process. We are always here as a resource and to help!

 

Paige Brown, Associate Broker

Swope Investment Properties

 

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