With a new president in the White House who campaigned on tax cuts, and Republican majorities in the House and Senate who have long been waiting, 2017 may be the year tax reform finally moves forward. But major storm clouds loom on the horizon for 1031 like-kind exchanges. 1031 like-kind exchanges, a very useful tax provision for the real estate sector, could be reformed or eliminated during the next phase of tax reform activity in Congress. Take Action.
As I was browsing the internet today, I came upon a humorous article entitled Santa Delivered the Drone. But not the safety and skill to fly it. The article contained a number of “drone laments”, speaking of the excitement of getting a new drone for Christmas followed by the agony of crashing it on the first day or even the first flight. One Tweet read: “A holiday story: Give nephew drone. Nephew flies drone for like five seconds. Drone falls, breaks. Christmas ruined. Drones are stupid. The end.” This one gave me a good laugh.
It’s true that drones have become a very hot item in recent years. And as the technology has become more widespread and less expensive, drone sales have gone through the roof. The majority of the drones sold cost less than $200 and are best classified as toys. And most people who fly them lack a good understanding of flight principles, wind, and spatial awareness. Thus, the yuletide drone woes come as no surprise.
“The use of drones across all sectors has exploded in the past three years. The FAA estimates that over 600,000 drones will be flying commercially in the US in 2017.”
In real estate and many other businesses, drones for commercial use are definitely not toys. They are valuable and, I might add, critical tools for marketing and selling property. I have personally been using drones for over two years – thanks to my FAA Section 333 exemption. I can personally attest to their value in my business, BUT here’s the latest: my exemption doesn’t exist anymore. In fact, ZERO Section 333 exemptions exist. That’s because in August of 2016, the FAA enacted a new rule enabling people to become licensed specifically as drone operators. Previously, the only way to legally fly a drone for commercial purposes was to hold a pilots license and go through a lengthy approval process to get an exemption. Now, after taking online education and passing a written exam, individuals become licensed as drone operators and can fly completely legally, subject to certain regulations.
Due to this new rule, I have been encouraging every land broker I know to become licensed and start flying. You can buy a drone for less than $1,000 that has all the capabilities needed, and you don’t have to be a Navy fighter pilot to safely and efficiently fly your drone for maximum effectiveness. A little practice goes a long way and the more you fly, the more comfortable you will become. I often tell people that I could teach a ten year old to fly my drone in under thirty minutes – and I mean it. With the right equipment, the drone basically flies itself. This small investment of money and time has the potential to have huge impacts on your business.
An overhead view provided by a drone shows how a property fits together, how it is accessed, and the surrounding land and uses. On a large property, you can showcase more about a property in a sixty-second video than an entire morning of driving. Additionally, in the same way that digital photography and online mapping are considered standard today, drone video and photography are becoming just as commonplace. As land professionals, it is important to keep in step with emerging trends to bring the best service and value to our clients.
At the 2017 National Land Conference, I will be leading a breakout session on the use of drones in land real estate. We will briefly discuss how to become licensed as a drone operator but will focus primarily on how to best use this tool to increase value for your clients and increase business for yourself. If you have no experience or interest in drones, I invite you to attend and see if I can change your mind. If you have been flying drones for years as I have, I invite you to come and share your stories, as well as what works for you and what doesn’t. The format will be very interactive and I think everyone will come away having learned something new – including myself!
I hope to see you at the 2017 National Land Conference in Charlotte, NC, from March 31-April 2. In the meantime, if you have any questions about drones that I can answer, please give me a call or drop me an email.
About the author: Caleb McDow is a land specialist for Crosby and Associates in Winter Haven, FL, with a Master of Science in Real Estate (MSRE) and is a FAA Certified Drone Pilot. McDow joined the institute in 2014 as a Military Transition Program (MTP) member. He serves on the Institute’s Future Leaders Committee and regularly blogs on real estate issues. Caleb McDow can be reached at 352-665-6648 or email@example.com
NAR hosted a REALTOR® Party Post-Election Live Webcast today featuring NAR Senior Vice President Jerry Giovaniello and NAR Political Consultant Doug Sosnik discussing the impacts of the election results on the real estate industry. During the webcast, the two fielded questions about impacts on land real estate and Tax Deferred 1031 Like-Kind Exchanges.
While they believe “it remains to be seen what impacts the election results will have on land real estate,” Sosnik explained that “1031s are still in trouble.” He believes this is “because for the last three years, Congress has been trying to limit or eliminate these deferrals. There is a belief that if we get rid of these tax deferrals, people will buy and sell at the same rate. That’s just not the case.” The REALTORS® Land Institute has been a strong opponent to 1031 Like-Kind Exchange Tax Reform and plans to continue to advocate to save it in the future alongside NAR.
For more information about the REALTOR® Party, click here.
Learn what you need to know about wildfire risk to homes and real property from Michele Steinberg of the National Fire Protection Association (NFPA). She will share information and knowledge on how homes ignite and simple steps that homeowners can take to prevent wildfires in their communities.
Find out about the voluntary Firewise Communities program and learn how neighborhoods and subdivisions are working to improve safety for all residents.
Click here to view additional information.
Time: Thursday, October 27, 2016 2:00 pm, Central Daylight Time (Chicago, GMT-05:00)
Host: Russell Riggs
Event number: 928 567 555
Event password: wildfires
Republicans on the Senate Environment and Public Works Committee today released a 38-page report accusing U.S. EPA and the Army Corps of Engineers of advancing “very broad claims of jurisdiction” in Clean Water Act disputes. The report also warned that a recent Supreme Court win for landowners in a case about who can challenge certain decisions about water permits in court could become “moot” if Congress does not act to withdraw the Clean Water Rule.
The Obama administration’s rule, also known as Waters of the United States, defines which waterways and wetlands receive automatic protections under the Clean Water Act. In October, the 6th U.S. Circuit Court of Appeals put the rule on hold nationwide while litigation plays out . Republican members on the EPW Committee and foes of the rule have previously accused EPA and the corps of flouting the court’s order by asserting broad jurisdiction over the nation’s waterways.
The report argues that the agencies are taking a narrow view of exemptions for farming, highlighting several case studies of jurisdictional battles taking place across the country.
“The reach of federal authority claimed by EPA and the Corps is, in the words of Justice Kennedy, ‘ominous,'” the majority’s report says. “That ominous authority would be codified in the WOTUS rule. As a result, if that rule goes into effect, the hard-won right to challenge Corps jurisdictional determinations will become meaningless.”
This article originally appeared in the REALTORS® Land Institute’s Summer 2017 Terra Firma magazine.
Drone. It’s a word that elicits different feelings for different people. Some people love them, others hate them. Some people see their incredible potential while others wish they didn’t exist. Headlines range from “Drones are saving puppies” to “Drones are ruining my life”. The issue can be polarizing.
As a land professional, a drone can be a powerful and effective tool for your business. The current and potential uses are varied and creative. The opportunity is huge and it’s important to be well-informed regarding the proper use of drones.
As with any “hot-topic” issue, there is a lot of bad information that gets into public view; and having bad information can result in poor decisions, lost business, and even legal penalties. I am writing this article because I want you to be an informed, intelligent, and passionate ambassador for drones and their incredible potential in real estate. As such, I want to provide specific, reliable, and accurate information on how to legally operate a drone in your business. I also want to provide you with resources for further research and up-to-date information.
To achieve that goal, I am going to focus on the nuts and bolts of completely legal commercial drone flying. I’m not going to tell you which drone to buy, how to get the best shots, or what time of day offers that epic cinematic effect. I am going to tell you exactly how to operate within the Federal Aviation Administration’s (FAA) rules and guidelines for commercial drone use.
Below are three basic overarching maxims that are central to all legal, commercial drone operations. These are presented as fact, insofar as they are published in FAA guidance, law, or other official means. So, regardless of what you’ve heard on the news, read on the Internet, or been told by your brother-in-law, here is the scoop:
THE ONLY LEGAL WAY TO OPERATE A DRONE COMMERCIALLY IS THROUGH A SECTION 333 EXEMPTION ISSUED BY THE FAA
The FAA is currently using an EXEMPTION process to allow legal commercial drone use. This process is filling the gap until full-fledged regulations can be finalized and published. Until recent years, “model aircraft” have been used almost exclusively for recreational purposes. In the past decade, inexpensive drones with the ability to capture high-quality video and photographs have flooded the market. This has given the FAA a lot of heartache, because they did not yet have rules in place to regulate “commercial model aircraft”. The exemption process is the only avenue currently available to operate legally for hire.
This is how it’s done: read through a few petitions, copy someone else’s petition, personalize it to yourself or your company, include the necessary documentation, and submit. It’s not college English class so plagiarism is not only allowed, it is actually encouraged. You want to make it as easy as possible for the FAA to say yes by submitting an application very similar to one that is already approved. When I applied for my exemption, the FAA’s stated processing time was ninety to one-hundred and twenty days. I received my approval in eighty-seven days. It was the first time in my life a government entity had done something faster than advertised. Some people have hired lawyers, others have hired so-called “Section 333 Exemption Companies” to write and submit the application for them. That is unnecessary. The process is simple and the instructions are clear.
THE OPERATOR OF THE DRONE MUST BE AN FAA LICENSED PILOT
After reading number two, you may be thinking, “I’m not a pilot. I’m never going to become a pilot. Why should I apply for this exemption?” The person applying for the exemption DOES NOT HAVE TO BE A PILOT. The person OPERATING the drone DOES have to be a pilot. Of the over five-thousand exemptions granted to date, many of them have been companies or individuals who are not licensed pilots. You can have a pilot working for your company, or contract with one who can legally fly the drone. This will allow more flexible and on-demand scheduling to keep your costs lower. The exemption will require a certain level of drone training and logged flying hours. But any level of FAA license will do – from Airline Transport Pilot all the way down to Sport Pilot.
THE DRONE MUST BE REGISTERED, COMMERCIALLY, AS AN AIRCRAFT
Because the FAA, with the input of the courts, has determined that a drone is an aircraft (Google: Raphael Pirker Drone), it must be registered. For commercial drones, this once meant filling out a paper form (carbon paper included) and sending it, along with other documents, to the FAA. Luckily for all of us living in 2016, in April of this year that process was moved online. In order to register your drone, you must visit https://registermyuas.faa.gov, pay a five-dollar registration fee, label your drone with the registration number provided, and you’re good to go. This is the FAA’s way of finding you when you crash your drone on the White House lawn. Flyers beware!
(As a side note, recreational drones also require registration if they weigh over 0.55 pounds).
When you receive your exemption, it will be accompanied by a long list of dos and don’ts that you must abide by. These requirements range from pre-flighting your drone to maximum altitudes you can fly. Here are some of the basics:
- No flights above four-hundred feet Above Ground Level (AGL)
- Drone must remain within Line-Of-Sight (LOS)
- If operator is using First Person View (FPV), looking at the video feed instead of the drone, he must have a Visual Observer (VO) to maintain LOS
- No flights within five miles of an airport with a control tower or within three miles of an airport without a control tower, UNLESS a Certificate Of Authorization (COA) has been issued and the Operator has coordinated with the airport control tower
- Must stay five-hundred feet away from non-participating persons at all times
Below is a list of resources where you can stay updated on everything contained here. This an ever-evolving issue. Be sure to check back often for updates and changes.
- A one-stop-shop for general info on rules, safety, registration, etc.
- Here is where you file your Section 333 Exemption
- Here are the instructions for filing
- Here is a link to my exemption
- Here is where you register your drone
- Here is the FAA’s UAS homepage (Unmanned Aerial Systems)
Now, I’m certainly not naive enough to believe that none of you have ever flown a drone commercially without the required exemption, licensing, and registration. It’s true that thousands of people have taken aerial video and photography this way; and the vast majority of them never face any issues from the FAA. However, I would submit that as land professionals and REALTORS®, we should all strive to operate within the rules. We need to be doing things the right way, every time, all the time.
To their credit, the FAA is taking steps to make things easier for everyone who wants to operate a drone. I have seen at least two examples of LESSENING of restrictions for Section 333 exemption holders in the past few months. These include an increase in the allowable altitude from two- to four-hundred feet and the publishing of a blanket list of drones you can fly once you receive your exemption (previously each petitioner had to list all drones intended for use and provide all documentation for each drone).
So, what does the future hold? Good news! The proposed rules going forward provide for approving drone operators WITHOUT a pilot’s license and WITHOUT a Section 333 Exemption. Applicants for a Drone Operators License (for commercial operations) will be required to complete online education, pass a Transportation Security Administration (TSA) background screening, and pass an FAA knowledge test. These proposed rules are still being vetted, discussed, and debated to determine the final rules. However, the rules are a great framework to lessen the burden of legal operation while still maintaining appropriate training and safety measures. Plans are also moving forward to allow flight over non-participants – as long as the specific drone being flown meets certain industry standards. The timeline on the final rules is uncertain. Yet, industry stakeholders and individuals alike are putting a lot of pressure on the FAA and Congress to get it done.
For now, we have to operate within some tight restrictions, but drone technology, uses, and regulation are all evolving very quickly. If you haven’t already, get ready to join the world of drones – an exciting industry with virtually unlimited potential!
About the author: Caleb McDow is a land specialist for Crosby and Associates in Winter Haven, FL, with a Master of Science in Real Estate (MSRE) and is a FAA Certified Drone Pilot. McDow joined the institute in 2014 as a Military Transition Program (MTP) member. He serves on the Institute’s Future Leaders Committee and regularly blogs on real estate issues.
Two new and fifty revised Nationwide Permits have been submitted by the US Army Corps of Engineers under Section 404 of the Clean Water Act or Section 10 of the Rivers and Harbors Act. The National Association of REALTORS® stated that “The two new permits authorize impacts related to the removal of low-head dams and construction and maintenance of living shorelines for shore erosion control. The permit revisions affect a variety of activities, including residential, commercial, and industrial development; flood control; storm water management; mining; and agriculture and aquaculture”. Read more.
On June 21, the Federal Aviation Administration (FAA) released operational rules that now make it easier than ever to use drones commercially. The approved rules are set to take effect on August 1, 2016. The REALTORS® Land Institute continues to support the progress made by the FAA to facilitate the use of drones in the industry. RLI and NAR will continue to work towards increasing the possibilities of use for industry operators, including “beyond visual line of sight” flights commonly used by land professionals when filming/photographing large tracts of land. Read more.
Top 3 Takeaways for the FAA’s New Drone Rule
Top Takeaway: This Final Rule will lead to more predictability in the market for drone-based services. The rule will create a broader base of trained operators and service providers and make it easier for real estate professionals to utilize this new technology in their business.
- Education provision: The new rule clarifies that if the drone is for commercial purposes, the operator must be certified, but does not have to be a licensed pilot. A less burdensome new certification for ‘remote pilot in command’ authority will replace the need for a previously required pilot’s license. The certification test is administered at FAA testing centers and is knowledge-based only. The cost is about $150, and will takes around 20 hours of study time to prepare; the test itself is 3 hours long. Operators will still need to pass a background check performed by the TSA.
- Flight operations permitted: flights may be conducted during daylight hours, within visual line of sight, not directly over non-participants, altitude limit 400’, and 100 MPH max speed.
- Provisions for flight over non-participants will be addressed in a future rule-making.
- Daylight-only operations, or civil twilight (30 minutes before official sunrise to 30 minutes after official sunset, local time) with appropriate anti-collision lighting.
- Almost all of the operational requirements can be waived, which leaves room for innovation and experimentation with the technology.
See a summary from the FAA.
The REALTORS® Land Institute has signed on to a letter in conjunction with the National Association of REALTORS® in an effort to support small business owners by preventing increased regulations and the compliance costs that come with them. Read the full letter.