All Forum Posts by: Account Closed

There's a good group of investors in the Kalamazoo area.  I think their name is the Kalamazoo Real Estate Investors Association.

I'd contact the Grand Rapids Association of REALTORS to get the best answer.

Local associations that have forms that have been tried and tested in courts for years and that are updated and valid under Michigan law.  (Be very wary of any other form you get online--most are not correct for use in Michigan.)

You'll need to check with a lawyer.  I believe Federal Dodd-Frank regulations will not allow you to have a balloon payment less than 5 years.  There are other restrictions as well.

Hi Tony:

Security deposits in Michigan are handled differently than earnest deposits for buying real estate. You have two choices on how you can handle them:

1).  Place the deposits in a bank account that you use solely for security deposits and nothing else, i.e. deposits go in and go out as needed.

2).  Place the deposits in a bank account that you use for many things, i.e. maintenance, buying other property, etc.  If you do this, you must "bond" (purchase an insurance policy) the deposits.

Here's the language in the law:

Section 554.604

(1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond.

(2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond.

Also, you do not have to pay the tenant the interest earned on the deposits.

Clay

There are a lot of existing REI clubs in the Grand Rapids area attended by new and experienced investors!

In Michigan, you cannot enter a premises without the permission of the tenant other than in an emergency. If you have a clause in your lease that is supposed to allow you enter for repairs, showings, etc. and the tenant does not allow you in, you have to start the eviction process to get possession due to a lease violation.  You can never force your way in...even in an emergency.  In those cases, you'd want back up with local police or fire department.

Hi Robert:

Don't feel too bad--many landlords have made this same error in the past.

You could treat the situation just like any other month-to-month lease, i.e. if the rent isn't paid in full, you could use a demand for non-payment of rent to start the eviction (9 day notice) OR you could ask for possession of the property using a notice to quit (32 day notice).  The downside to the non-payment of rent notice is that, if she pays, she stays.  Some courts will allow no notice if the person hasn't moved by the end of a lease (and there is no extension clause) and allow you could go straight to filing the complaint--but I'd use a attorney for that one.  (This last alternative would be the only way to legally get them out without working out a deal with them.)

I like one of the comment's above, i.e. offering to move them some where else in the mean time but that could get expensive.

Trying to keep both parties happy might be tough without a lot of costs to you.

Good luck,

Clay

Get the LLC first and purchase it from there. Avoid the issues of Quit Claiming the property. And, most of the point of having an LLC is to separate your personal assets from your investment properties. If you don't use an LLC and you get sued due to something that happens at one of your rentals, etc., all your personal assets are on the line (home, cars, boats, etc.). Liability insurance will not prevent someone from taking your personal assets to satisfy a judgment. Better to be safe than sorry.

Also, you'll need a real estate salesperson or broker license to do wholesaling in Michigan.  (Folks will tell you you don't need one--but, technically, you do. You don't want to receive one of those cease and desist letters!)