All Forum Posts by: Jeff Copeland

Realtor (in the sense of a traditional buyer's agent / listing agent) would fall under brokerage. 

The most comprehensive guide I've found is at 
https://www.therealestatecpa.com/guide-to-qualifying-as-a-real-estate-professional (no affiliation)

We recently launched our first coliving/homeshare property (as a property management company) in St Petersburg FL. Here are a few lessons learned:

Zoning: You'll need to do some research with each local municipality. We found that in most Cities, 5 to 6 people in a home seems to be the line in the sand. Below that, it's no different from roommates. If you have 6+ people, some cities consider this a roominghouse or boarding house, which triggers different requirements. Parking is often another limiting factor.

Marketing & Fair Housing: While you can certainly target them with your marketing efforts, you can't limit your property to only nurses, or only college graduates, or only males/females, or impose age restrictions. You still have to comply with Fair Housing laws, and an applicant is either qualified for your rental unit, or they are not, based on your published (and legal) screening criteria. 

In terms of minimizing headaches, obviously you need crystal clear screening criteria as well as established, published, and posted household rules that everyone understands and agrees to up front (and via their lease). These need to be stressed early and often. 

In terms of challenges, the lease-up process is much more involved and takes a lot more legwork. For a traditional rental, you may show it 5 or 10 times, take a couple of applications, them move forward with a lease. In a coliving environment, you might show each room 10+ times, and then reject more applicants (because you don't have as much flexibility with regards to screening, pets, # of people, etc). You also have to educate a lot of people who don't understand the co-living model.

We provide wi-fi only. Most people stream their entertainment these days and cable TV is getting more and more antiquated. 

And yes, someone (such as a property manager) needs to be in charge, obviously. I do not think it would work well placing one of the tenants in charge. 

BTW - The coliving model seems to be more aligned with large single family homes. I could foresee some additional challenges trying to implement it in a multifamily setting. 

Also be sure to check out https://www.biggerpockets.com/...

A large percentage (90%+) of conventional, FHA, and VA loans get sold in the secondary market 6-12 months after origination. This is why Fannie Mae and Freddie Mac exist. It's typical and happens almost every time.

Like @Nathan Grabau said, your servicer simply collects your payments and manages your escrow account for taxes and insurance. It isn't rocket science. Other than updating your payment information and making sure your payments are going to the right place, it's usually not a major change. 

What are they getting wrong?

Sent you a PM with some info to check out.

There are a lot of factors that go into this:

1. Electrical: You need space and capacity in your electrical panel for one new 220V circuit for a dryer, and one new 110V circuit for a washer (some stackable units just require a single 220V outlet). You'll need an evaluation/estimate from an electrician for this. The cost could vary widely depending on the panel (could require a panel/service upgrade) and the distance from the panel to the washer and dryer (wire is expensive, long runs cost more).

2. You'll need hot and cold water on the supply side. This is often relatively easy, especially if the connections are going to be adjacent to the water heater (which is often the case in a utility room). 

3. You'll need drain plumbing for the washing machine. This can range from fairly easy (in wood frame construction with crawlspace access, for example) to very difficult (in slab on grade construction with drain plumbing under the slab, for example).

Obviously, you'll need a plumber to provide estimates for 2 & 3. 

4. You'll need a dryer vent. Again, this can range from easy (cutting a hole in an exterior wall with wood frame construction) to much more difficult (block construction, multi-story or basement applications, for example). 

For property managers, this is part of the Property Management Agreement. The PM acts as an agent of the owner. 

The second piece is what type of licensure is required by your state? Many states require a real estate license to practice property management, and almost all states require a contractor's license to be involved in any type of construction/renovation work. 

Yet another piece of the puzzle is liability, and liability insurance. If you hire the contractor, and the contractor burns down the house or electrocutes someone due to poor workmanship or negligence, what is your liability? And how do you insure against that liability? Most professionals in many fields carry both liability insurance (aka General Liability or GL) and errors and omissions insurance (aka Professional Liability or PL). 

 On what grounds would you keep the tenant's money? You are the one breaking the lease!

The downside risk here is what if someone breaks in to the house and steals their $25,000 heirloom dining set, or the house burns down and they lose everything they own before the lease even starts? Who is liable? (Hint: The landlord is the one getting sued.)

But on the other hand, this is a situation that people tend to overthink. 

A simple one page (or one line) lease addendum, or a pen and ink change initialed by all parties, adjusting the start date of the lease is all you need. Charge them prorated rent, or one dollar, if you want to. 

Everything else (utilities, renter's insurance, liability for their personal property, etc) should already be covered by the lease. Just change the start date. so the lease is in effect as soon as they take possession. 

Disclosure: I am not an attorney and this is not legal advice. You should get some from a licensed attorney in your state if you have any doubts whatsoever. 

Check out this video (I have no affiliation with the law firm, they just have a tone of great info for PMs and Landlords). 

You obviously want to meet with them, establish rapport, see the property, etc. 

But ultimately, the things that really matter are:

1. How much is it worth, minus how much do they owe? (How much equity do they have?)

2. How much will they sell it for (How much of that equity is leftover for you?)