The Laws of your Money with Ann-Margaret Episode 25

Episode Transcript

Speaker 1 (00:00):
The following is a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed. The following program is sponsored by New
York Priority Medical Care. Now it's time for the Laws
of Your Money, a weekly call in show with legal

(00:20):
tips to help you protect your money. Here's your host
and Margaret Caroza.

Speaker 2 (00:25):
Hello and welcome to the Laws of your Money. This
is a show dedicated to protecting you from legal and
financial mayhem when it comes to personal finance. I believe
the single most important factor is protecting yourself legally, because

(00:47):
what does it matter how diligently and brilliantly I save
and invest if there's a greater than forty percent chance
of losing assets to a long term illness, expensive breakup taxes.
This can be capital gains taxes, a state taxes, not

(01:08):
to mention ordinary lawsuits. We know that we are living
in a very litigious society, but do you know that
you are more likely to be embroiled in a legal
drama with a former loved one than with a stranger.

(01:29):
I believe we all have possible legal land minds in
our lives. Are you in a second marriage, concerned about
blended family warfare. Later, do you have an elderly relative
and we're concerned about losing the home to a nursing home.

(01:49):
We're going to dive into these and many other legal
tips to prevent you from being steamrolled. I am as
set protection attorney and Margaret Carosa joined today by my
guest co host, William M. Duke, MD. Welcome back to

(02:11):
the program. Bill. It's nice to be here, and you're
going to be giving us some tips for healthy living
later in the show. Looking forward to that.

Speaker 3 (02:21):
Well, I'd just like to say, if Paul is streaming
in from China, I have no interest in replacing you.

Speaker 2 (02:28):
Okay, So today is June first. June is National homeowners Month.
For most Americans. The home is our single biggest asset,
and we're going to be talking today about tips for

(02:50):
acquiring the home, protecting the home, and enjoying the home
for as long as possible. Our first first guest expert
is my go to real estate expert. His name is
Bill Mason. He's been practicing for over twenty five years.

(03:13):
There's never been a question that I pose to Bill
that he doesn't have an amazing answer for He's been
my go to for many years, and I'm thrilled to
welcome to the program. Real estate attorney Bill Mason. Welcome
to the program.

Speaker 4 (03:31):
Bill, Hi Ann, how are you?

Speaker 2 (03:33):
How are you?

Speaker 4 (03:34):
Thank you?

Speaker 2 (03:34):
Thanks for joining us on a Sunday morning. Sure, Now,
what is your best advice for a first time home buyer?

Speaker 4 (03:47):
I think for a first time home buyer, they should
do a couple things so that they could start to
prepare themselves in advance of making an offer. Right, So,
one of the things I would do is I would
tell them to try to evaluate their budget for a
house they're gonna buy.

Speaker 2 (04:04):
That is huge, Bill, I mean, how much can they afford?
I remember, is it still the rule of thumb that
you take your gross annual salary and two and a
half times that is the maximum that you should even
be thinking about.

Speaker 4 (04:24):
Sure, I think you also have to consider what are
the debts that you have though that may curb it
a little bit more if you have student loans or
any other types of debts. But you know, you don't
want to buy a house and then be cash poor
and not have money if you know there's an unforeseen
you know, expense, So got the big, you looshy job,
you don't have reserves, so you know, that's that's a

(04:45):
big thing to think about before you even go out.

Speaker 2 (04:48):
Definitely, now for folks who need a mortgage, and I
think that's most people, do, you find that the underwriting
is much stricter today. You know, I remember prior to
eight there was a time you really only needed to
have a pulse and the bank would throw money at you,

(05:13):
often giving you a bigger mortgage than you could possibly afford,
and a lot of people got into a lot of
trouble that way.

Speaker 4 (05:23):
Yeah, so the underwriting now it's a lot different than
it was back then. So the banks are now more
driven by credit score and your documentable income then they
used to be driven by the size of your down
payment in the past. So they're going to really focus
on your income and your and your credit score as

(05:45):
opposed to the down payment. And probably now that you
brought that up, that would have been the second thing
I would have said to do with when you get
ready to buy a home is to meet with the
loan officer to find out what you need to do
to qualify for a loan and to get an idea
of the terms and you know what the payment would be.
With the rates as high as they are right now,

(06:05):
can people get sticker shock which when they see what
the actual payment is exactly?

Speaker 2 (06:10):
And you know, home prices I think are at an
all time high and mortgage interest rates are up. Do
you have any advice for folks to identify an up
and coming area, like what is the next Dumbo? What
is the next Long Island city?

Speaker 4 (06:31):
You know, I'm not a real estate broker, so you know,
I don't hope that I would give advice to somebody
on the best areas to buy. But I can tell
you in general that New York real estate it does
pretty well. Right.

Speaker 5 (06:43):
It's intrinsic value in the real estate, and I think that,
you know, buying a house is probably one of the
best things people can do, even if it's a struggle
at the beginning.

Speaker 4 (06:56):
You know, you have a lot of benefits, like a
tax reduction for it, but for the real estate taxes
and for the interest. And not only do you pay
the half stand you get appreciation, especially the invest in
New York.

Speaker 2 (07:09):
Absolutely, And I remember hearing Barbara Corkran giving advice to
identify like gritty areas where artists are living such as
a Williamsburg that the artists tend to gravitate toward an

(07:31):
area before it really pops. I think we also want
to look at, you know, investments, government investments in the
community or private investments such as you know, putting in
a live theater. Look at downtown Riverhead twenty years ago,

(07:51):
every other building was for sale, and I think with
the addition of the aquarium and with the life theater,
we're starting to see a lot of revitalization in that area.

Speaker 4 (08:04):
Do you agree, Yes, I agree with that. I think,
you know, there's different criteria for commercial and residential properties,
but I think one of the things that I would
consider first for a residential purchase is the school district,
because you know, there's always going to be demand in
an area where the school district is good, right, and

(08:25):
you know, and then I would consider the location the
property before the condition of the house, because you could
always fix the house up and get the house to
be a better house, but you can't change the locations.

Speaker 2 (08:36):
A really good point.

Speaker 4 (08:38):
Definitely, Yeah.

Speaker 2 (08:39):
And you know, another thing that I like for young
people to look at, even if it means that they
have to take a beat and wait for a year
or so to save money before jumping in. Is the
advisability of the first purchase being a two families home.

(09:00):
They live in one unit, they rent out the other unit.
As they start to acquire more money, they can then
buy another property and rent out the two units. I
think that would be a great way for young people
to be on the road to being a successful real

(09:22):
estate investor. Do you agree?

Speaker 4 (09:24):
Yes, that's an amazing chance to buy a two, three
or four family house. And I think they just changed
the guideline with the faky that you can do it
as little as five percent down when a typical investor
would need twenty percent down to get the same rate.
So it really gives you a leg up. And you
also see veterans using their VA loan where they could

(09:47):
do one hundred percent financing to do that as well.

Speaker 2 (09:49):
That's great advice. And if you are going to purchase
property that you intend to rent out, it is very
important to consider having the ownership rather than individually in
a limited liability entity. This can be an LLC, an LLP,

(10:12):
an S corp. Or my go to structure for one's
primary residence, which is a trust because with a properly
drawn trust you do not lose your star property tax exemption,
So that's an important consideration. Now, Bill, how do you

(10:35):
know when you find a property that you love whether
it's priced too high.

Speaker 4 (10:41):
One of the things that if you so just to
backtrack a little. If it was me and I was
starting to look, I would try to before I looked,
make a relationship with a realtor, I trust, an attorney,
a lender, so you have these professionals you could go
back to. And when I found the property and I
wanted to make an offer, I would try to take
a look at closed cops as opposed to you know,

(11:04):
what's the asking price, so you can get an idea
of what similar houses in the neighborhood of you know,
close that and what they worth. And that's probably the
best way to do it. It's you know, and you
should also then just I think, before making the offer
in your head, have it like a stop number that

(11:25):
you're not going to go past, because it's easy to
get caught up emotionally and wanting a house, especially when
it's not an investment property and it's a primary residence
and overpay.

Speaker 2 (11:35):
No that that's really super advice. My last question for
you doesn't come up that often, fortunately, but when it does,
it's a huge problem. And I've seen real estate investors
buy properties sight unseen. Let's say it's a foreclosure situation

(11:58):
and they can't get in it before buying it, and
they discover lo and behold, there are tenants in the building.
Maybe they're squatters, maybe they haven't paid rent in a
year or two. What's your advice for the owner of
that property to get these tenants out.

Speaker 4 (12:20):
A lot of people when they look to buy real estate,
they come in and they're like, oh, I'm going to
buy an RAO and there's a lot of pitfalls with that,
and you have to be super cautious. They're basically selling
the house subject to a lot of things. Usually they
don't represent it their certificates of occupancy violations. There's very
minimal representations. And one of the exclusions quite frequently is

(12:44):
that they don't represent it it's occupied or not. So
you know, one of the considerations is what county is
the property in, So you're be in better shape if
you're buying a house in Suffer County, then you will
be if you're buying a house in the Bronx, or
you're buying a house in Brooklyn, where it could take
you a year to evict someone buying a property with
a tenant in there is extremely extremely risky, and when

(13:08):
you go to court, you don't know what they're going
to say exactly, So you really have to think that
through before you did that.

Speaker 2 (13:14):
Now, Bill, I had a lovely, lovely client, a young couple,
and they were real estate investors, and they bought a
property at foreclosure, got into the property and there had
been tenants or squatters there and they had vacated. They

(13:34):
left a ton of garbage. So the new owners cleaned
out the garbage. They had a dumpster come and they
cleaned it all out. Lo and behold, these folks returned
and claimed that there were like antique ming dynasty vases
in the debris that got cleared out. Long story short,

(13:57):
in Queen's landlord tenant, the quote unquote tenants sued the
new owners and got a several hundred thousand dollars judgment.
So I think Bill and I our number one piece
of advice to folks in this situation is, do not

(14:17):
engage in self help, don't change the locks on your own.
Definitely reach out to a landlord tenant attorney or reach
out to Bill and he can give you a little
bit of guidance. Bill, how can people contact you?

Speaker 4 (14:36):
My name is Bill Mason, our firm is Mason and Mason.
We're in Garden City, New York, which is NASA County,
and our office phone number is five one six seven
nine thirty ninety.

Speaker 2 (14:48):
Bill. Thank you so much for being on the show,
and I hope you'll come back.

Speaker 4 (14:53):
Absolutely. I appreciate the opportunity and take care.

Speaker 2 (14:58):
Great tips. Bill, do you agree for first time home buyers?

Speaker 3 (15:03):
It sounded like very sound advice, especially the part about
tenants in the building.

Speaker 2 (15:08):
Goodness. Yeah, these poor people who had to deal with that,
they ended up having to sell the property to pay
these people off. Okay, so we've found the perfect property,
We've made an offer. Now it's time to ensure the
property now. By way of background, I am no stranger,

(15:33):
and Bill, you are no stranger to investment real estate.
We do a fair amount of it in our own lives.
And in terms of insurance, I really thought I knew everything.
And by way of background, as a New York State legislator,
I sat on the Assembly Insurance Committee for fourteen years,

(15:56):
so I fancy myself to be an armchair insurance expert.
But this past week, our next guest expert I just
met this past week and I called Bill Mason for
a recommendation for an insurance broker, and he said, the

(16:16):
only person you should be talking to is our next guest.
His name is Mike Cellis, and I'm pleased to welcome
to the program Mike sellus. Thank you for being with us.

Speaker 6 (16:31):
Mike, good morning. How are you? Thank you for having
me my pleasure.

Speaker 2 (16:36):
So this was a last minute invitation when I called
you this week to discuss my personal insurance situation. Maybe
five minutes into the call, I'm saying to myself, why
do I not know this? Why has no one broken
this down and explained it to me like this? So

(17:01):
you know, your level of expertise was just out of
the box. And I said to you on the spot,
you know, forget about my situation for the moment. You
need to be on the program and help educate listeners
on what to look out for when buying home insurance.

(17:21):
So I am all about saving money, but would you agree,
Mike that fibbing on an insurance application is not the
place to try and save some money.

Speaker 6 (17:34):
Absolutely. I mean, if the only person who's going to
pay for that at the end is be insured, you
want to be the insurance company is your partner. You
have to view them that way. You have to be
transparent and you have to be honest with them if
you want them to do right by you. So you
know there are certain areas where you can be more

(17:55):
strategic or maybe you know self insured in certain areas.
But you never want to misrepresent or not give the
right information to your insurance company because on the worst
day of your life, you want them to be your
best friend.

Speaker 2 (18:08):
Absolutely, So I'm going to ask you you know a
few common misrepresentations, and you tell me just how bad
it is from the insurance company's perspective. Okay, Sure, what
happens when let's say you have a parent who died

(18:31):
and they did not have their home and a trust,
so it has to go through probate and it's going
to take them seven to eight months at a minimum
to be able to list it and sell it because
they don't have the authority yet. Just because the will
says Mary gets the house doesn't mean that Mary is

(18:54):
able to sell it before that will goes through probate.
So we have a situation where the home is going
to be vacant for an extended period of time, should
Mary call her insurance representative to let them know that
the home is vacant.

Speaker 6 (19:14):
Absolutely, yeah, you definitely, you definitely want to let the
insurance companies know whenever your property becomes vacant. There are
certain Most insurance policies do have a safeguard that allows
for a short period of time in which property can
be vacant as long as it's occupied before that deadline,
and each carrier will have a different rule for that.

(19:36):
So like common common situations are there's a tenant occupied property,
the tenant leaves houses vacant, let's say, for you know,
thirty days or so, and then you get another tenant
to occupy the home. That traditionally is okay, but you
should still notify your insurance company in the event of
the situation like a trust where let's say you know

(19:57):
it's going to be technically that's a change of named
short So that's something that's very important and needs to
be brought to the attention of the insurance company. So
you will want to make sure that you modified the
policy to include the trust if it's not already on there,
and then notify them of who the executor of the
estate will be and let them know that you know

(20:19):
it will be vacant. Oftentimes, if it's let's say, a
homeowner's insurance policy. Unfortunately, in that situation, if it's going
to be vacant for you know, let's say three months
or so, they most likely will ask you to rewrite
it to another policy where it will account for the
vacancy exposure.

Speaker 2 (20:38):
Now, got it, And naturally the premiums are going to
go up. But failure to do so, I think you
might as well not have insurance, or don't pretend you
have insurance because you're out of compliance. What about I
think as a general rule, would you agree Mike, that
there's no coverage for an injury arising from an illegal activity?

Speaker 6 (21:06):
Yes, illegal activities are, so it's important to know because
a lot of people try to do this. Insurance is
in no way, shape or form above the law. The
law is the law, and if you're not doing something
in line with that, then there's nothing your insurance carrier
can do to protect you.

Speaker 2 (21:23):
But are there you know, areas of gray, like for example,
if I'm hosting a weekly fight club in my basement. Obviously,
there's not going to be coverage for an injury, right,
But what if I am, you know, doing a more
common violation of the law, and I have an off

(21:47):
the books housekeeper or an off the books caregiver for
an elderly parent, and that person who is technically an
illegal employee because I am not paying workers comp and
disability and unemployment, on and on and on, and they
have an injury, will I have coverage?

Speaker 6 (22:11):
So there is It's it's very grey. It's a very
gray area. These kinds of questions are very great. They
are case by case, and it does depend on which
insurance company you have. Usually, like, for example, with the
domestic employees, there is a domestic a workers compensation policy
specifically for domestic employees that's offered through the New York

(22:31):
State Insurance Fund. That's very reasonably priced and they I
recommend that for anybody that has a home health aid
or anybody that works at the house. What's most important
is that you know, at least from the insurance standpoint,
is that they rate their premiums based off of payroll,
so you need to give them some sort of payroll
in order for the coverage to apply when it comes

(22:53):
to you know, the homeowners' policies do technically have some
of them have workers compensation coverage built into them. But
in a situation where you're not showing the InCom and
it's never been disclosed, you run the risk of you know,
that claim can go either way. So the best thing
that you can do is to just be upfront about
it and get it over to an insurance company and

(23:13):
let them make you know a decision on whether or
not they're willing to ensure you or not. That's the
That's what I would recommend if you want some reassurance.

Speaker 2 (23:22):
That's great advice. My last question for you, Mike is
what about you're renting a property out and you were
honest with the insurer that this is a property you
sometimes use as a second residence, but you also rent
it out occasionally. What if the rental violates local zoning

(23:44):
laws like we see out East a lot of the
towns and municipalities have four week minimum rental requirements. And
what if I'm doing in Airbnb for one week and
that tenant has an injury.

Speaker 6 (24:02):
That's a great question. And on Long Island, particularly the
short term rental exposures is something that it's growing like weeds.
A lot of people are doing it. There are certain
homeowners carriers that allow for rentals on a on a
traditional homeowners policy with a minimum of one month up
to four weeks per year. So some some of these

(24:23):
carriers that have been writing business, you know in the hampdens,
are out and out in those areas. They know that
you know you're going to rent this house, so they
have their policy forms adjusted to account for that. Airbnb
specifically short term rentals, weekend rentals, things like that you
must notify your insurance company and for the most part,

(24:44):
no admitted carriers are going to cover Airbnb exposures. So
as far as like the local ordinances and things like that,
you know you obviously, like I said before, the law
is the law. You want to follow the law now.

Speaker 2 (24:56):
Really my great advice and I we would really encourage
everyone to reach out to you for a second opinion
on your current coverage. I think you can cut right
through the weeds and tell people if they're adequately insured
and if they are overpaying. You told me that I

(25:17):
was overpaying, and those were some of the best words
I've ever heard. So, Mike, thank you for being on
the program. And how can folks reach you?

Speaker 6 (25:28):
Thank you. So, my name is Mike Sellas. You can
reach me on the telephone number six six. Brokerage is
called Sella's Brokerage LLS, and we're in Bohemia, New York.

Speaker 2 (25:42):
Thanks so much for being with us. Mike, have a
great day.

Speaker 6 (25:45):
Thank you you too.

Speaker 2 (25:47):
So now we have found the house, we've purchased the house,
we've insured the house. Now we need to protect it
from ordinary liabilities as well as long term care expenses.
We know that the President's big beautiful bill that narrowly

(26:11):
passed the House of Representatives last week two fifteen to
two fourteen, which is now being reviewed in the Senate,
contains massive cuts to the federal Medicaid program, and we
can expect to see a harder time qualifying for Medicaid,

(26:32):
which is super important for folks facing long term care
expenses because, as you know, Medicare and the supplement only
cover the first hundred days when we enter a rehab.
So we want to think about having a trust own
the property to get this five year clock ticking. On

(26:55):
the other side of the five years, the home is
totally invisible, and it is exempt for purposes of Medicaid eligibility.
And if you say you're never going to qualify for Medicaid,
that could very well be the case a couple of
years from now. So I encourage everyone to check out

(27:18):
some long term care insurance quotes. But in the here
and now, in New York State, the Medicaid program is
the best in the United States. And I'll pivot to
my guest co host to confirm that in New York State,

(27:39):
when you're in a rehab or nursing home situation, that
Medicaid coverage and private pay coverage, that patient will receive
the same exact level of care. Is that correct?

Speaker 3 (27:56):
Yes, care has to be equal for all people, all
pay in such a setting.

Speaker 2 (28:01):
Yeah, And that is unique to New York State. In
neighboring states, they're able to say, and we don't have
any Medicaid beds, will put you on a waiting list
for when something comes up. New York, the coverage is even, Stephen,
but we definitely want to think about protecting the home.

(28:24):
We are just about out of time. Unfortunately, we had
so many more things to cover. We'll have to have
you back, doctor Bill it will be my pleasure. In
the meantime, I encourage you to go onto my website
for more tips on protecting your home and what kind

(28:46):
of trust is right for you. The website is my
Asset Protection Attorney dot com. That's all for today. I
hope you all have a wonderful rest of yourself day.

Speaker 1 (29:20):
The preceding program was sponsored by New York Priority Medical Care.
The preceding was a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed.