All Forum Posts by: Jeff Copeland

 There's not enough information to make a call like this, and we don't know what the penalties are for backing out. There are a lot of things to consider that we simply don't know the answers to.

@Jillian Steelman - One recent trend for larger SFH in many markets is coliving - You can often collect significantly higher rent, and (perhaps more importantly) almost eliminate vacancy costs. 

For example, we are currently managing a 5-bedroom coliving property in St Petersburg, FL, and we are collecting twice as much rent ($5175/mo versus market rent of $2750) as we would with a traditional SFH long term rental. And even when we have a vacancy, the rent roll is still $4000/mo, compared to a SFH where you can expect about 6 weeks of vacancy (with zero income) every 1-3 years on average. 

This is something you might want to consider for a 4/2. 

Ideally, you want 5 or 6 bedrooms to really maximize the additional rent. But I have a 3/2 SFH under construction here in Florida and I'm seriously considering the coliving model, for the reduction in vacancy if nothing else.

 You've got one of the best right here in this thread! Highly recommend @Dave Foster.

Congratulations on your first property. 

As the landlord, the utilities will need to be in your name if you want/need them on during vacancies. Who else would you expect to pay for them?

Some utility providers even offer a type of landlord-friendly plan where the utilities automatically revert to the landlord when a tenant disconnects, to avoid interruptions in service (and the hassles of connecting, disconnecting, deposits, connection fees etc). Duke Energy, for example, calls this their Leave Service Active (LSA) program, and it comes with an online portal the landlord can log into to monitor their utility accounts. 

Any real estate attorney or title company can prepare and record a deed for you. You can discuss with your attorney whether a warranty deed or a quit claim deed is appropriate. But in most cases, there's no reason not to use a warranty deed. Do not do this yourself (that's a good way to create a cloud on title that causes problems later on, and it's not that expensive to do it right). 

You are correct that the replacement property in a 1031 exchange mush be titled the same (same taxpayer) as the relinquished property. However, that doesn't mean you can't complete the exchange now with the title as is, and then add her to the deed of the replacement property later on (probably best to wait at least one tax year after the exchange). This is something you can discuss with your qualified intermediary. 

Note also that Texas is a community property state, so depending on when you acquired the property and other details, your spouse may already have an equitable interest in the property, regardless of the deed. Again, something to discuss with your attorney. 

As noted above, the appraiser knows who to contact to get access to the property. Especially if it is in the MLS. Most appraisers have MLS access and would get the instructions directly from the MLS in such cases.

It also depends on what kind of appraisal product was ordered. It is possible to do a "desktop" or "drive by" valuation. Of course these will not be as accurate as a full blown appraisal, but it all depends on what the lender ordered. Most HMLs are in a fairly safe LTV position, so they may not need a specific value down to the penny, just a ball park figure to make sure they aren't putting themselves at risk.

Loopnet, Crexi, and other sites which feature predominantly commercial listings are a little different from MLS listings when it comes to realtor commissions.

When a property is in the MLS, the commissions for both sides are agreed upon in advance (between the seller and the listing agent, and between the listing agent and cooperating brokers via the MLS listing). A property cannot be listed in the MLS is there is no commission being offered to a buyer's agent.

But that is not true for commercial listings, and commercial brokerages who do not list their properties in the MLS operate differently. You'd need to tell them in advance that you have your own agent, and ask them if there is a co-broker commission being offered.

Sometimes they offer a cooperating broker (buyer's agent) 1 or 2%, but about 50% of the time, they offer nothing. And if you have already been talking to the listing agent about the property, they will likely consider you "their client" and will almost certainly not pay any commission to an agent you bring in after the fact. 

What this often means is you would end up paying your agent's commission on the buyer's side. 

But before you freak out and say "I thought the seller always paid the commission!" (they do, to the listing agent...the listing agent decides what to share with a buyer's agent), keep in mind it ultimately all gets factored into your offer and the ultimate purchase price, and it's really all semantics in the end.

For example:

Scenario A (listing agent offering 1% commission): You could offer $1M and the listing agent pays the buyer's agent 1% ($10k). 

Scenario B (if you know going in that you have to pay your agent 1%): You could offer $990k and pay your agent $10k in commission.

Either way, you pay $1M, and the seller gets $990k.

Of course, many agents can't afford to work for 1%. This is just an example. You could also combine the two (listing broker pays 1% and buyer pays 1%, or whatever is negotiated). 

The point is, on the commercial side, it's kind of like the wild west: There are less consumer protections and less standardization than what you normally see on the residential side, so you have to ask these question ahead of time and not just assume a commission is being offered. 

 DC Housing Market Stats (literally the first few search results on Google):

https://dcrealtors.org/resourc...

https://www.redfin.com/city/12...

https://fred.stlouisfed.org/se...

This chart from the last one going back to 1976 is particularly interesting. Of course, the glaring question is: What happens next? But I'd argue we're more likely to see a 1990's leveling off than a 2008 crash):

Fair enough. I don't have a clear answer on the HOA situation. But here is the most comprehensive REPS Guide I have come across (and these guys would be good people to ask - They run a Facebook group called Tax Smart Real Estate Investors).

In many markets, the 1% rule has become impossible to find for the past couple of years (some of us old timers even remember the 2% rule, lol), so I would argue it's somewhat obsolete as a hard and fast rule (which is was never meant to be anyway).

However: 1) This will change over time as the market cycles, and 2) It remains a useful metric that can be done quickly in your head to determine whether it's worth spending your time digging deeper into a property's financials.

If a property is listed for $400k, and has a monthly rent roll of $3,500 (.875%, still not 1%, but close), it's probably worth taking a closer look. There could be value add opportunities to increase the rent, and/or negotiation points to reduce the purchase price, that could get it closer to 1%. 

Conversely, if a property is listed for $400k, and rents for $1000/mo (without some serious value add or backstory such as excessive vacancy that can be corrected), I'm probably not wasting my time on this one.

There's obviously a full spectrum in-between these two examples. The 1% rule is just one quick guideline you can use to allocate your time and resources. 

With regards to your question about multifamily, yes it's the entire property. The two variables are purchase price (denominator), and total monthly rental income (numerator). If you aren't buying it "by the unit", the there's no calculation to be done on the rent "by the unit". You want to know what current rents and market rents are for each unit, so you can accurately calculate and/or predict the total rent. But the total rent number is the one you need for the 1% rule.

Check out The Real Estate CPA .com

(No affiliation, but they are a great resource, even if your current portfolio doesn't warrant the cost of their services right now)