All Forum Posts by: Alex Gronbach

Appreciate the caution, hard to explain the full context in a forum post like this, but I've no reason to distrust her. To your points, in order:

1) This is interesting, I know she has to pay dues into some sort of board / organization to maintain her Realtor's license, and with that comes a connection to a broker as well at least in terms of buying/selling properties. Not sure how Texas' laws work with respect to leasing and licensing, I'll have a look into this a bit more.

2) Yeah this was more of a thought that we could partner up instead, not through any formal business entity, but that I could hire her one-off to find and place tenants, doing exactly what she is now, except I'd be paying her instead of the Property Management company. I'll again have to check Texas laws on this one, didn't think that this could be illegal to hire someone to help me place a tenant and draw up a lease? Maybe I'm misunderstanding what could be illegal about ending my relationship with my current PM company and self-managing and hiring a "contractor" (my Realtor) to help find/place tenants and write up the leases.

3) How it works with this PM company is when they find a tenant and I approve, and we get them signed on a lease, they pocket 100% of my first month's rent as a "finders fee" for placing the tenant. As an employee of the PM company, my Realtor currently only gets 50% of this fee as her payment, with the PM company keeping the other 50% it sounds like. This isn't a real estate transaction, just placing a tenant. Not sure how the 3%/6% would apply?

4) In short, they are not going to let her act as both a Realtor and a Property Manager anymore and are changing her pay structure so that she is no longer salaried by them, and only paid for tenant placement commissions. And they are also talking about barring her from being able to practice as a Realtor as a term of her new employment contract. It really is a pretty bad change for her from what I've heard (granted I've only heard her side, but this PM company has never been the best company, just the best rate I've been able to find -- and yes you get what you pay for!)

Hopefully this helps to clarify things, I don't think anything is changing between her and her broker (not even sure who that is) just the terms of her employment as a PM with the PM company she is currently working for are changing and causing us to rethink things.

Thanks Corby, I do have some folks that I can trust on the ground but I've also had folks I thought I could trust screw up jobs when they were repeat hires from the management company. Just because they're company from the management company doesn't mean they will do good work, it is always a roll of the dice unfortunately. Thankfully everything I have is SFH with no basements and all single-story. To your point about how do I know that the work is being done right, it would be the same as it is now the contractor hired by the PM company fixes the tenant's complaint, and as long as the tenant stops complaining I consider the job "resolved". Especially in these COVID/remote times, my actual PM these days (not my Realtor, someone who works for the company we're both less than pleased with) never actually goes on-site. I only really get to fully deep-inspect what was done when they move out and I want to do some rehab or something.

I forgot to mention that I've been with the same property management company for a bit over two years now, and it is just alright. I had another one who was worse before them, but at the end of the day there were no major problems that arose during either company's tenure outside of an A/C unit or two going out in the middle of summer (100F+ weather) and that's how I ended up meeting my current trusted Plumber/HVAC guy. But at the end of the day contractors come and go and I've gotten pretty practiced finding new ones through things like Thumbtack that toss referrals very easily for whatever I need fixed.

Not trying to discount your guidance Corby, it is definitely higher risk than having a property manager, and for what, only $1000 per year per property saved? Doesn't sound like it is worth it, but I'm not sure I'd pay $1000 for the service I got from my management company in the last 12 months / I'd rather have pocketed the $1000 last year and have had to find all the contractors myself and vet the work remotely anyways if that makes any sense.

Hello Biggerpockets!

Looking for some wisdom/guidance as my Realtor today (who also works as my property manager through a company I use for management) came to me today with a proposition to "go rogue" so to speak and break away from her property management company. Allow me to preface this with the fact that I completely trust my Realtor and she has been my MVP of my local team and the only reason I've been able to be successful. I'd follow her anywhere, she's really amazing! Definitely not a scam, they're changing her comp structure and really screwing her unfortunately so she is now looking to quit the property management company they use.

Her suggestion was to use her (or some other management company) just to place tenants and write the leases, but do the day to day management myself. I currently pay one month's rent for a 12-month lease as the finder's fee (seems pretty standard), but learned today that she only gets 50% of that first month's rent as her cut. We started talking and it would make a lot of sense for me to give her 75% of that first month's rent payment to essentially do what she does for me now (take pictures, list & advertise, screen potential tenants, draw up the lease) but it would also be saving me 25% upfront and saving the $80/month per property I pay for management (fought hard to negotiate a flat rate on that).

Looking for guidance from those who have made this transition or are knowledgeable in self-managing multiple properties from at least a state away (or further than just an hour drive or so). Specifically, how do you collect rent? I use Stessa for all my accounting already, and that's pretty great with all of its reminders, but don't know if I should just open a new checking account and have them direct deposit / billpay into it? Or if there is a more eloquent tech solution out there? How do you handle emergency maintenance requests when you're away from your phone or sleeping? Any other pitfalls I should watch out for?

Thanks in advance!

Thanks @Bill Exeter I’ve kept plodding through TurboTax ans you’re right...this is getting really time consuming to figure out on my own. Definitely a CPA next year

Wanted to ask as well, I’ve talked to a CPA who’s rates start at $1800+ for filing and throughout the year guidance on strategy / ad-hoc Q&A (<20 mins each time, nothing long or formal). Does this seem expensive to you?

I had previously worked with another CPA I found here on BP and the cost just to file was ~$500, but it was very transactional. No ongoing guidance or tax strategy which I’m starting to realize I’d benefit from going forward.

Should I keep looking for CPAs who can remotely help file + provide guidance throughout the year at a <$1000/year price point? Or are those services typically >$2K/yr?

Hi folks - With the housing supply shortage across the nation these days, I'm struggling to find any deals in the Dallas area (where I invest). I've heard all the deals to be had are not on MLS / are off-market, but also that wholesalers aren't really giving out any deals these days. Driving the neighborhood isn't really an option for me as I'm out of state and unable to travel due to COVID until I finally get vaccinated and can safely travel again (a few months out yet).

How have your most recent deals?

Appreciate any and all advice, my Realtor and I are about to give up on putting in any more offers as the bidding wars are very quickly eating up all our cashflow on anything we can find these days. Thank you!

I’m on the back half of this process now and am confused as to how I “prove” this tax wise? I didn’t get a 1099-S from my lender, and didn’t see any section in TurboTax where I could enter in how many months I’ve lived vs rented the property, etc.

Not worried about the impact on the taxes I pay, but wanting to make sure everything on my return is filled out properly to reduce my risk of getting audited down the line. Any advice @Wayne Brooks @Natalie Kolodij @Bill Exeter ?

Agreed @Wayne Brooks in my case I bought and used as a primary residence for the first two years, then rented it for the last two ish years until today, hence my earlier phrasing. 

Thanks for the prompt replies @Natalie Kolodij and @Bill Exeter, this is very helpful! Thought this might be the case, but good to know I'm not going to set myself up for a 5-figure tax mistake by forgoing the 1031 exchange process this time around.

And we just went under contract today, so assuming the buyer doesn't back out we should be able to close before my five years are up in September

Hi BP!

I’m in the process of selling a property which I lived in for two years when I bought it in 09/15 and then have rented out since 01/18. I currently reside in CA, and the property is located in TX. I am selling the property for approximately 90K above what I purchased it at almost 5 years ago. 

That being said, it sounds like I am eligible for both a 1031 exchange as well as a section 121 exclusion. But as I understand it (and please correct me if I am wrong), the Section 121 Exclusion would only exempt federal gains taxes, and I would still owe CA taxes on the ~$90K of gains. Does anyone know what this approximate tax burden would be? Is this taxed at regular income tax rates? Higher/lower?

What I am thinking of instead is to claim the Section 121 exclusion AND go through a 1031 Exchange to split this property into two smaller single family rental properties in TX. This would I believe guarantee zero or almost zero tax burden on this transaction, but I don’t know if it is overkill or if CA still has some wonky way of making me pay taxes even after the 1031/121 processes. 

Any guidance and insight you can provide would be greatly appreciated!