All Forum Posts by: Angela Harding

I'm a licensed broker in Michigan and Ohio. Am pursing my license in Florida. Different states have different licensing requirements. I went straight for my Broker's license because I had a lot of experience in real estate and didn't need a broker to help me or take educational classes through them. Most states require a certain amount of transactions or years of experience as a salesperson before they can qualify for a broker's license. In Michigan, I qualified with experience as a loan originator for 10 years so I did not need to get my sales license first. In Ohio, my Michigan Broker's license qualified me for a Broker's license without a sales license. 

In my opinion you can never go wrong with a sales license if you are going to invest in real estate. It will only become a problem if you don't actually do any transactions and you end up paying fees and taking continuing education courses. If your going to get the license, use it to your advantage. 

The first advantage is your represent yourself on your deals. You get commission on houses you buy. Second is, you are now self-employed and there are great tax advantages that you can write off under your license. Talk to a CPA on those benefits in your state. Picking your broker to put your license under is very important if you are doing this mainly for investment purposes. There are always broker's like myself that only hang other investor licenses and don't charge desk fees, and only charge small fees when investors purchase a house for themselves. They have to get paid something because they carry the insurance and handle the paperwork for compliance. If you can't find a broker like me then look for a company that only takes so much a year but doesn't charge you if you don't sell anything and/or that has a good educational program. Keller Williams is my favorite for new people. 

The other benefits are that you can provide services for other investors if you are just doing a few deals a year and get paid for it. Just don't get into managing other peoples properties unless your broker is ok with it and/or you have good experience. It's not a very rosy business and has a lot of liability with it. Helping to lease other investors home is a great way to make some steady money with your license as you get started. 

A couple other benefits I like is for example, when I bought the home I'm living in I had to put down $5,000 and my commissions were $2,500. The purchase of my property with a license paid half my down payment. The other one is when I sell houses in my program that I own, I still charge myself a realtor fee so it reduces the capital gains I have to pay after expenses. The funds still come to me but I pay 15% self employment tax instead of 35% capital gains. (After my itemized expenses.) 

So get your license but make sure you are ready to have it pay for itself. 

Angela

Great demand for section 8 housing here in Toledo. It really is about the area and service provider. They are great to work with here. My section 8 tenants do not trash my houses. They are screened the same way as self paying tenants and that is how we keep the bad apples out. If section 8 tenants trash houses here and you report them and work through the system then they lose their vouchers. They tend to stay a few years also because it is so much work to transfer. The main reason why I do like section 8 is because if a tenant loses a job or income section 8 picks up and pays their entire rent until they get back on their feet. 

Christopher,

We are coming out to California in April. Fresno to be exact. But meeting with several of our clients out there that can't make it here. If you are interested in Michigan or Toledo I would love to meet up with you when I'm there. 

Angela

Welcome! I completely understand how hard it is to find the right property management when you buy in Toledo. I've seen so many investors from Australia, Spain, California and others be completely burned here by managers. Some of the situations on the houses so poor the houses ended boarded up and on the online auction sites just passing a bad deal on to the next unsuspecting investor. There is a lot of hype to bring in investors from out of the area here with low property costs and high returns but once you are sold a house then it doesn't perform for several reasons. The biggest is because the property management here is so poor.  The second is because if you aren't working with someone who really knows what to look for in 100 year old houses you end up with a house that needs more work than you originally thought or you end up with a house that is high maintenance eating away your profits. The third, success here is about location, the areas that have high performing tenants. 

I manage in the State of Michigan and in Toledo (do not do Detroit at all but have in the past). When I tell people how to look for a good property management company I tell them bigger is not always better unless they have the staffing and experience to handle it. Use a company that completely focuses on property management and not sales. A good company will help you build your portfolio with houses that are lower maintenance in good performing areas. High maintenance and high turn over properties do nothing but cost a manager time and money. 

Everyone of us managers can hand over good references, no one is going to give you a name and number of a client that is unhappy. So here is how you find good management in Toledo. First, we have a system for tenants to put their rent in escrow if the manager is not properly taking care of the homes. You can contact the landlord department at the courthouse and ask them how many cases of escrow (name of property management company) has active and over the last year. Second, we have a public records for evictions. You can search the company to see how often they are in court evicting tenants from poor screening. If they have evictions every month you know screening is poor. 

We have a tight nit contractor community also. Plumbing is one of our biggest issues here. The main source of 24 hour emergencies here is Rooter Pro. There are others also that if you google and just start calling you can ask them if they do work with or have worked with in the past (name of property management company) if they don't work with them then chances are it's because they don't pay their bills leaving the owners of properties at risk. I was shocked when I found out owners paid property managers for service here but the managers did not pay the actual contractors that did the work. 

Another good indicator of a good company is how long the staff has been with them and how long they have been working with a contractor team. For us, we started in 2011 here and we have the same contractors and service providers that we began with. 

The most important thing you can do when investing away from home is to come to the area and spend a couple days meeting the people you are going to be working with. Ask to see homes that are currently being worked on. Most of my owners come in before they buy properties and visit once a year. When they come we set up to do inspections on every house. Owners get a chance to see the finished product and meet tenants to hear any of their concerns. If they really do provide good service then they will be completely transparent with every aspect of what they do. 

Finally to sum up my long winded reply, remember it is buyer beware when buying houses here. Don't think that there is no way to lose when spending 20 to 60 grand here. I have an investor that I took his properties on after a company from Spain sold him turn key houses and never checked the homes. Took the word of another owner selling a property that he said was completely rehabbed after a fire. He closed on it and two weeks later when they came into town found the unit still burnt up and needing over 100,000 in work and a city inspection for structure. He is now putting money into a legal battle while maintaining a burnt up home so the health department and code compliance won't press charges against him for not maintaining the home. It is a misdemeaner offense in Toledo if you do not take care of your vacant properties. The city will take you to court and get an order to tear the building down at your expense. If people are selling you property and recommending a property management company make sure you check them out and talk to as many managers as you can. Wholesalers, flippers, turn key providers just want to sell you a home. Invest slowly to begin with. Let one or two houses do well for you and be confident with your team here before you buy a portfolio of 20 houses. 

Angela

David... what a great post. I have seen how investor's here have gotten stuck at the bottom of the market prices. Yes, when we fell we took advantage of the market and did well but I can't expect to pay those prices anymore. We are still low here but I can't buy the same deals here I did two years ago and I'm not worried about it. I can still buy under market value and do the work to create both equity and cash flow however, I will not pass on a property where the money I put in just brings it up to market value and pass on a good cash flowing deal and a house that when we hit our higher cycle, I will be sitting where I can sell and take the cash or still sit and enjoy the cash flow. I never buy for appreciation, I call it a bonus. I've always bought when we hit bottom or while we were on on our way up. Your post was just amazing and well said. 

Hey Chris, I'm a big fan of the Sushi here around Toledo. 

My son started in real estate at 18 by working for me in my office. He got paid to learn. There are good ways to do that. He's 21 now and we have him all set up to start buying whenever he is ready. Worked to get his credit set up so when he is ready his first house can be a duplex where he rents one side and lives in one side. He took the knowledge he has down to Tampa Florida and does leasing and marketing for a 400 unit apartment complex making twice what he could make here doing the same thing. It's wise that you are thinking a couple years ahead of time. Make your list of goals and what you are going to do to accomplish them. There are a lot of good people here to learn with. There are also a lot of people who claim to be the gurus around here and they are not. They just take advantage of the out of state investors. So be careful who you learn from here. It's the quiet ones that are the gurus here. 

If you can make it tonight look me up. If the same people are doing sign in you can tell them I invited you and ask them who I am and they will point me out.

Sarah, that is good advice. That is the first thing I think of when I look at a property near a school! When I ran the sex offender list in Toledo I was extremely shocked. In the long run, they only notify the neighbors once and you never know who will be moving in when you are in a high rental area. I had a neighbor by me on one of my own houses and that neighbor was so bad she caused me to move out. The entire block had a party when they foreclosed on her house. With neighbors and owning rentals sometimes you just never know what is going to happen. You just try to reduce your risk with everything you do before you buy it. Buying near a school can have benefits!

I am an absolute believer in taking an application fee. One, I make money from people who have wasted my time telling me a lie that they have never been evicted. Two, people have a stake in the game. Three, if you don't have $25 to pay for me to check you out I don't want you in my property. But don't think just because you don't charge a fee that you don't have to send an AAL letter. If you apply for a car loan and it doesn't go through, they still have to send you the reasons why you were denied. Anytime you pull a credit report and background check you have to send a letter if they don't qualify. 

I'm so glad I joined biggerpockets. I love the experience I see on here. I'm going to add and take a little bit from everyone and say there is a happy medium to buying at retail. One thing I agree that I read over and over was all about due diligence. Have those inspections done, know what you are looking at. Make sure those financial reports have some proof to back them up also. How often do the units turn over or are they long term tenants? What is the maintenance history and actual maintenance costs? I have many people that buy close to retail because they have full time jobs and want to put their money into something that generates a return quickly or cash flow quickly. But they know what they are buying. Inspections are done, a history of work is presented and a certain warranty is given on the property. And they absolutely do not want to go looking through 20 properties, do estimates, lease units, over see contractors and wait it out for a month. Some of them can also acquire more properties because they finance and not have to come out of pocket so much. A lot of good advise here and like every deal, it all comes down to the deal and the property. 

Angela