All Forum Posts by: Jay Hinrichs

@Jacob Taylor 

  Utah is ground zero for many of the fulfillment companies that are the back end of all the gurus you see on TV.  If you have an actual link to the site maybe we could take a look and formulate an opinon

@Account Closed 

  what you describe is a prohibited transaction in Oregon.. When I give referrals to brokers in the Napa valley and Palm springs from Oregonians looking for 2nd homes. I get a referral fee however they ask for my brokers license number and verify that is current.. That's my CA Brokers license. At least the bigger shops will.  I think every state has a different twist on this one.. One things is certain though its not the title companies job to decide who is licensed and who is not and who should get paid.

PS on another thread folks were talking about EM deposits.  When you do your transactions do you use an attorney to close them or a title and escrow company? And or have you ever used an attorney to do the functions of a title company on a closing ?

@Chris Martin 

I have never seen a  title company  get involved with licensure issues. and the broker in most states that I am aware of is the one who gets paid. Not the agent.. And its the Seller 98% of the time paying the commish... So if a seller says last minute hey my guy has no license and instructs title not to pay the agent the escrow company can disregard the broker demand but I will bet 50 cents that if that was the case the title co. would hold the funds until the parties reached a resolution or if no resolution was made would interplead the funds. The broker in this illustration cannot just unilaterally make a demand for the whole commish at lest I have never heard of it or seen it.

@Account Closed 

Really Joe,,, ... rare is it that an attorney closes a SFR or small investment deal on the west coast.

Big mulit and commercial deals multi millions etc  yes... but even then they work with the title company and the escrow officer handles most of the duties Attorney may draft the note or Deed  and review.

Maybe some of the CA investors can weight in and advise who they use for escrow closings.  completely different closing norms than an attorney driven closing state.

@Nazz Wang 

  if your buying in the SF Bay Area this strategy could get costly.. A lot of the inventory that is bought out of the West coast is very low dollar... So even though they are talking 100% of purchase price I suspect many of the purchase prices are 5k to 50k... Not 600k to 1 mil that you would be spending in SF or the peninsula for a wholesale deal.

I have many times accompanied my offer with a copy of a cashiers check for the full amount. But I don't put that into escrow and there is a simple reason I don't.

On the west coast once money hits an escrow account of a major title co.. It takes both buyer and seller signing cancellation docs to release your EM... If one party won't sign the title company files and interpleader with the courts and it can take over a year to get EM back.. and the offending party is not punished in any way... Lots of EM on the West coast gets argued over in this manner.  So if your going to be doing this on the west coast be sure to ask the title co. before hand how the cancellation policy is handled. and or have it stipulated in the contract that the EM is to be released back to you within 30 days of mutual acceptance and make sure that will fly.

Its one the reasons our closing are different here.  For instance a bank making a loan will not send their funds in until 1. buyers funds are in and buyers docs are signed. 2. they get recording numbers from the county.. then they fund.. As they don't want hundreds of thousands tied up in escrows if the buyer will not release the funds back.

Out east and mid west its kind of the opposite I were sellers expect a check right that minute at closing, this never happens on the west coast as funds don't get distributed until there is an actual recording and recording numbers.. I was blown away the first few times I did deals in the MId west years ago when everyone got their money and the Attorney told me that he only went to the court house to record once a week.... Or like in Detroit were its so screwed up docs can take 20 to 60 days to get recorded.. Title co. then need to issue gap insurance as who knows what kind of crook could slip an instrument in between the time you buy and you actually record.

@Eugene Hoffman 

  Never even thought to check licensure of another agent I worked with.. I like it.. I guess since I would never in a hundred years operate and get paid as a licensed agent when I knew I was expired status ,  so I would think no one else would either.

But in our state its not the agent who is owed the commission its his Broker..and his broker would not let him work if his licensed expired. But I guess if its an independent broker IE sole practitioner I can see them taking the risk... I guess up here in Oregon we just don't think that way. 

@Ian Fisher 

in my experience with hypothecations was I was the one Hypothecating a seller carry back note ( and to my bank)  I would think in your case you would just buy the note.. Or maybe your thinking your just going to buy a set amount of cash flow not the entire note.

To structure a JV now that you already own the assets is probably going to be pretty tough especially if you bought them turn key as there is probably not much true equity if any to offer a JV partner.. I could be wrong but in my experience that is usually a correct statement.

And for a JV partner there has to be mass and scale.. Not really going to get someone to come in and do all the grunt work for a few hundred bucks a month..

I think your like many investors on the buy hold mid west model.. once your in your in..

And now that you have rental roll history the values will to a large extent be based on how well your properties perform.

What class of property would you consider these to be ,  that's another important issue as to how hard it is to actually manage them no matter who is managing.

@Derek W. 

that's an interesting contract twist.. and it makes sense... gives you the ability to act like a cash purchaser and use HML to actually buy.

so in essence you can leverage your cash up without having to really have the cash. past the initial amount of one property.. I like it.

@Ian Fisher 

  Property management to be profitable for the PM needs the revenue from maintenance.

If the PM is only generating their income from the PM activities IE no brokerage actives or flipping IE TK.. The PM company won't stay in bizz by just charging a monthly fee or lease up fee.. they must charge all the other fee's to make any kind of real money.

I think your heading down the right path though... in your thought process... diversify and Notes can be a great way to do that as long as you choose your notes Very carefully. A very good First Trust deed will cash on cash out perform most of the Assets in the so called Cash flow markets.. Because of consistencies of income .. Same income every month no expenses at all. No vacancies No maintenance etc. But there is no leverage either. So if your investing for cash flow and paying cash in a market that you know the values will never really go anywhere.. Then a Note that makes 8 to 12% interest could be a great vehicle for you.. There are some tax implications for Foreign investors buying notes. But there is a tax exemption form that can be utilized as well.

The other point you made about JV with local partner works.. In my mind if your going to live 12km from the property and you have SFR's not Multi then this works well. We were west coast based I bought 350 SFR's from 09 to 2012 and that's exactly how I did it.. My PM and maintenance were my partners. No leasing fees no management fee's no mark up on maintenance etc etc. And even at that cash flow was never what we all thought it would be going into it... The reality of cash flow in SFR's in many markets is just does not match pro forma or marketing materials.. Your experience's are very typical and normal.

It also depends on the Asset class. I have GO Zone rentals in MS  that I can self manage no problem.. I pay a realtor a one time lease fee then handle everything else myself. But these are white collar rentals No sec 8  all tenants with professional type jobs.. I could not do this in the Blue collar areas at all there you need someone on the ground or you will have it far worse.

@Eugene Hoffman 

 I have never seen a closing Attorney or Title co.. verify anyone's license status.

I am a RE broker in 3 states and NMLS licensed mortgage banker I have never once been asked about licensure in almost 40 years of doing this..

In reality the issue is only going to come up if a deal went hinky and complaints are made to the DRE from the parties involved.

As a licensed broker we are precluded both in RE and in Mortgage from paying any kind of referral fee's... That is true is all the states I work in.

As stated just never seen a Title Co or Closing attorney verify these facts or even know the laws pertaining to licensure issues.