All Forum Posts by: Carol Frome

Thanks all, for your responses. Some of you were very helpful, if only for moral support. To those who implied that I know what to do, you are right! I posted here hoping for some insight I may have overlooked. I already have the wheels in motion to take care of everything ASAP.

By the way, as Matt P. points out, the breaker wires and switches can be moved if the set up is as he describes (it is), but if you're skeptical, check out Youtube. Also, we can see the evidence with our own eyes.

Unfortunately in Vermont, property managers do not have to be licensed. (Neither, unbelievably, do contractors.) 

We have successfully worked with property managers in the past, but that was in another state. We bought this property a year before we moved in preparation for the move, so a PM was a must have during that time and for our first months in our home, which needed a serious renovation. For a PM, we happened to get a nice shiny Apple that looked good--and was good, at first--but who went sour. It happens.

Happily, we are, indeed, conscientious landlords, and we are righting this ship.

Hello, Im trying to sort out how best to handle this. My former property manager was overbilling me like crazy and never gave me receipts for materials. He is retired now. 

Last spring I instructed him to rent a vacant one bedroom apartment, which he did almost immediately. Months later, I found out he had rented it to his neice. 

After she moved in, my quarterly water bill shot up from $300 to $900. He claimed he couldn't find the cause.

Now, in winter, my electric bill for the common area has also shot up. It was $45 a month. It went up to $200 and something, then to $300 something, and now $600+. We finally figured out after shutting the common area breakers off that "someone" moved the breakers for her apartment onto the common area. 

I still owe him money $2600. I already paid him $2000, even though I'm sure he was overbilling me.

I'm thinking of paying the electric bill and just not paying the former manager-uncle. The tenant is 19, pregnant, appears to party a lot, and she claims she has no lease (she does) and seems to be clueless about utility bills (her lease says she is responsible for heat and electricity). I suspect that uncle manager had been paying her bills other than the water, which I pay for everyone. But now he seems to have stopped. She got her first propane bill. Electric then skyrockets.

The former manger and I share the same lawyer. In fact, the lawyer recommended him.

I wouldn't count on the insurance being lower if it's very old, even if it is only 4 units. We have a similar situation. The insurance is very high!

Good advice from James. We just bought a rental house that was listed as having 5 units. All 5 units were occupied. As it turns out, the folks in the third floor attic apartment were moving out. The seller agreed to convert that space to storage. He had to remove the appliances and cap off the plumbing. 

We were upfront with the bank about converting the fifth apartment. They were fine with it. You can be sure, by the way, that the appraiser will look at the space and will take photographs.

If the building is located where temperatures fall below zero, don't forget to turn the heat on in your new storage area. Otherwise, your pipes will freeze and you'll have a real mess on your hands. Even though the pipes are capped off, they're still in the wall.

I've been licensed in two states--New York and South Carolina--and the fiduciary duties expected of a real estate agent are the same in both states and probably elsewhere, as well. An agent cannot self-deal. That is, she must give her clients (the seller, if she has the listing, or the buyer, if she brings the buyer and represents the buyer rather than the seller) preferential treatment. She can't bid against a client because she has a duty of loyalty to her clients. Also, this could result in an agent bidding up the price on a property with no intention of buying it. I would also be very careful about not showing a property to a buyer or buyer-client that she knows is qualified and who she knows is looking for the same type of property. If she represents the seller, she must present all offers in order to help her client get the best deal--which is whatever the client decides it is. Making an offer yourself without marketing the property and bringing all offers is a no-no. 

Are these asset-based non recourse loans?

In addition to what Doreen and David say, according to my research, the IRS regards flipping houses as a business, not an investment. Buy and hold rentals are an investment. I have read that you can flip one house a year within the SDIRA, but not more. I would love to do that, as it would build our nest egg. However, I'm skeptical and will not do so unless a CPA says "yes--go ahead." 

Also, about the UBIT, elsewhere on Bigger Pockets, you can find well-reasoned advice stating that you don't have to fear it as much as it appears at first glance. Yes--it's colossally high; however, after all the deductions that one takes on a rental property and considering that it is only on profits from the leveraged portion, it may not, in the end, amount to as many dollars as you think it will. The only way to find out for sure is to run the prospective purchase by a CPA or tax attorney. Note: not a done deal--a prospective purchase.

Ask what their average annual vacancy rate is and what it is considering the neighborhood you plan to buy in. 

I agree with Christian, also, about cheapest not always being the best. We pay a a percentage to our PM. It's a bit high--but she never charges another fee. She pays for all marketing, and if the house is vacant, no charge that month. I believe this arrangement is a great incentive for her to bring in good tenants and keep the place occupied, which she has done consistently.  We are very happy with her. She has saved us time, money and headaches and got a higher rent than we were getting on our own, thus covering her own paycheck.

Hello Ira! My husband and I are also in the Greenville area.

Experienced agents are also cool and calm during negotiations and know when to tell a client to walk instead of buy. Also, Once a property is listed, the listing Realtor and brokerage are going to get paid when it sells, whether or not the buyer has an agent. If the buyer has an agent, the listing brokerage must split the commission with that agent and his or her brokerage. Either way, the commission is the same. The listing agent will love it if you want to deal directly with him or her, because then the entire commission goes to the listing side rather than splitting it. 

But here's a key difference: the listing agent, no matter how nice, must legally represent the seller's best interests, not yours. In this case, the seller is his client and you are a customer. His job is to get the most money out of you that he can. Nicely, but the most. The buyer's agent is legally required to represent the buyer's best interests. The buyer, in that case is the buyer-agent's client, not a customer. So get a buyer's agent. You don't have to pay anything that isn't already being charged in the commission. That person will work hard for you, harder than you can imagine. A good agent stays abreast of the market and knows all kinds of ins and outs and things to watch out for. They do a ton of legwork. Wondering if a property is in a flood zone? Guess who will find out for you?