All Forum Posts by: Jeff Copeland

Sometimes you can search the comments fields for the words "seller financing", and some MLS systems even have a drop down field for the types of financing being offered or entertained by the seller:

I just used this out of curiosity and in about 15 seconds found a listing that literally states in the public comments "Owner will hold financing with 20% down - terms to be negotiated."

Perhaps more importantly, it helps to understand when seller financing is appropriate. You can't offer someone who owes $200k on their mortgage $25k down with seller financing (check out https://www.biggerpockets.com/...), so another important piece of homework is to try and figure out how much the seller owes. This info is sometimes available via ancillary MLS systems (such as REALIST), or you can do an old fashioned public records search for mortgages. From there it's often simple enough to infer approximately how much they would owe today.

This is a good opportunity to brush up on your State laws concerning abandonment. 

Here in Florida, there are three ways a landlord can obtain possession of a rental unit:

1. Surrender - The tenant moves out willingly, with some kind of positive handoff (i.e. they turn in their keys and/or otherwise communicate their intentions to you)

2. Eviction - Each state has its own procedures for processing eviction suits. 

3. Abandonment - Likewise, each state has its own definition of abandonment, and what the landlord can do in such a case. (And there can be significant liability involved if you get it wrong - You don't want the tenant coming back and saying they were just on vacation and you disposed of $100k worth of their precious family heirlooms...it happens!) 

Disposal of their property without proper proof of abandonment or surrender is essentially civil theft and can come with the appropriate penalties, up to and including jail time. I know a handyman who was charged with burglary and grand theft because they were sent by the landlord to clean out a unit that wasn't legally abandoned and the tenant later pressed charges.

The following video (no affiliation) relates to Florida, but it's worth watching no matter where you are and it highlights what you need to learn and understand about abandonment the jurisdiction where your rental is located: http://www.evicttv.com/episode...

Hopefully you have a security deposit you can retain to offset some of the unpaid rent and turnover costs. Beyond that, pursuing collections is often a waste of time and resources. 

 In what way is the PM misleading him? See my post above. 

There's not really enough info here to answer your question specifically, but:

1. Don't rely on the Zestimate. They are useless and can be way off. A value 20% higher, or 20% lower, completely changes the outlook. Get a realtor to pull comps and give you a clearer picture of value. 

2. You should be able to renovate this entire house for $30k, give or take. $60k would cover a very high-end rehab (as in higher than you need to, or can afford to, go). I don't think I could make up $15k worth of work to do in a master bedroom if I tried: Paint (a couple hundred bucks if you do it yourself), floors ($3 to $6 per square foot), what else? So you also need to dial in the rehab costs. 

So there you have it: 1) Get a more accurate ARV, and 2) Get a more accurate rehab estimate.

 Odd that you referred to him as the seller. Where do you fit into to the relationship? If you are buying the property, why would you need to sublease it?

Everyone loves to jump on the PM in these forums, lol. 

I think a lot of the previous responses missed the fact that your PM is indeed collecting the rent each month, you are just upset that the tenant pays a few days late each month. @Jay Hinrichs nailed it: So what?

I agree it's mildly annoying, but this is not uncommon and there's very little more your PM can do about this. If a tenant is late, you post a pay or quit notice, and then if they pay, that notice is no longer valid (they complied with the notice when they paid). 

You can't move forward with an eviction because a tenant paid their rent a few days late. And it would be penny wise and pound foolish to spend $1000 or so on an eviction lawsuit and eat 1-3 months of vacancy over this even if you could evict (which, again, you can't).

I also find myself wondering what you your lease says about late fees? In some cases this could actually add to your rental income if the tenant pays late fees each month. It softens the annoyance when you get an extra $50 or $100 bucks in late fees.

Another option we've successfully implemented is to simply ask the tenant why they pay a week late every month. Often there is a valid reason, such as "My social security check arrives on the 7th of each month". In cases like this, we've offered tenants a "due date change fee" each month in lieu of late fees. For example, we had a tenant who paid around the 12th of each month and accumulated $100 in late fees every month. We offered them an alternative of paying an extra $50/mo convenience charge for changing their due date to the 12th. 

And finally, why are even involved in rent collection if you have a PM? Our rent is due on the 1st, late fees kick in on the 6th and max out at $100 on the 10th, and we spend the 6th through the 15th chasing down a few stragglers each month before transferring rents to owners around mid month. In the vast majority of cases, the landlord wouldn't even be aware of a late payment (or our considerable efforts to collect it). They'd just get their money on time each month. They pay us to deal with the minutia, so it's not even on their radar unless it goes beyond mid-month.

Here's one idea: You could structure this like a hard money line of credit. 

The money sits in a money market account collecting measly interest from the bank if it's not being used (so it doesn't cost you anything if its not being used). 

But you can withdraw up to the full amount at a predetermined interest rate if and when you need the funds for a specific investment property. 

I would actually try to structure it in such a way that you can refinance and pay off the line so that it resets and can be used again and again. Something like an origination fee or points every time you access it could sweeten the deal for your siblings, and the balance would grow considerably over time. 

For example:

You draw $100k from the line for up to one year with 3 points at 7% interest only. In this scenario:

$3000 in points get paid into the account. 

$583/mo in interest gets paid into the account. 

After 9 months, you refinance and payoff the principal. 

Now the available balance is $188,247, and you wash, rinse, repeat. This example is something like an 11% annualized rate of return, and you could secure the funds by giving them a first position mortgage, just like hard money. 

Did I just invent a new loan product?

Here is a useful graphic from a local title company (not my company, no affiliation, I just like their graphic):

This will be defined by your State's licensing laws. 

Here in Florida, it's at the "first significant point of negotiations" or something to that effect. 

The National Association of REALTORS Code of ethics also requires you to disclose your license when acting as principal. 

Most likely your tenant fought the eviction and requested a court date. Here in Florida (and I assume in some other states), the tenant has to pay their rent (or at least what they claim they owe) into the court registry in order to have their day in court. 

So the funds likely came from the tenant, and were being held in escrow by the court pending the outcome of the hearing. 

Sadly, there is no government agency that pays back lost rent to landlords following an eviction. 

In most states, the eviction suit wins you possession only, meaning the Landlord/PM gets the property back (with the sheriff's help, if necessary). 

Pursuing a collection judgment is a separate matter. And even if you win a judgment, collecting it is yet another matter, and often an utter waste of time.