All Forum Posts by: Joe Norman

The contract shouldn't affect your basis, that will be based on what you pay for the property (unless there's some money changing hands outside of closing, which probably wouldn't be documented in the first place). The legitimacy of the contract probably only really matters if you have to go to court/arbitration to enforce it.

That said, your title company would be a good place to start in terms of getting a legal review, I'm sure they have a real estate lawyer(s) on staff or retainer depending on the state.

As mentioned above, the liability and tax benefits of an LLC are really minimal. IMO the main benefit is anonymity if they are set up properly.

If you register your LLC in a state outside of Maryland, then be sure to register it to do business in Maryland. Otherwise there could be signficant taxes and fees if you sell as an out of state owner.

Utility management can be a pain for sure. One suggestion is to call the utilities and see if they have any solutions for Property Managers. For example our local gas and electric company (Baltimore Gas and Electric) has a program called the Automatic Change Name program that PMCs can enroll in. If a tenant stops service then BGE will automatically change the account over to our name so that service doesn't lapse. 

For water we always keep that in the owner's name (since, in our area at least, water bills run with the house and not the customer). We log in weekly to pay any bills and then invoice the tenant.

Most other utilities (cable, internet, etc) we don't get involved with since they are not requirements under our lease agreement.

Good luck!

This goes against the general concensus, but I'm not a big fan of borrowing money to borrow money. My advice is to buckle down and save enough for down payment, closing costs, and emergency/rehab fund before you make another investment. It sucks to go slower than you want to, but in the long run I think you'll sleep much better at night. In addition to adjusting your personal budget to save more, a side hustle can be a great way to quickly pad the bank account. Good luck!

Market research will be your first step. Find a few that you are interested in and then interview a few Realtors who have a track record of success working with Realtors. If you have $50k to invest then you will probably be looking at properties in the mid-to-high $100s (assuming you're putting 20% down + closing costs and a little cushion). I can only speak from experience on the Baltimore market where you can definitely find quality rental property in this range. Other rust belt cities such as Cleveland and Detroit are likely also good options, but I can't speak from experience on them.

All that said, why buy a rental property instead of a primary residence? The lending terms (specifically the down payment requirement) are generally much more favorable for an owner occupant and you can always convert it to a rental property down the road.

Good luck!

My guess is that your acquaintance was suggesting paying the equivalent of half your mortgage payment every two weeks. Since there are 26 bi-weekly periods in the year, that would result in two months where you pay 1.5x your mortgage or one extra payment a year. 

I don't have experience with STESSA, but have managed my own small portfolio with QuickBooks Online pretty effectively. It is NOT specific to property management, only invoicing and bookkeeping but it does that well. For actual property management software I now use RentVine and have been very happy, although it doesn't do the business bookkeeping as well (still need QBO, and separate bank accounts, for that). However if you're only managing for yourself, not others, it would probably be sufficient. Good luck!

Sorry to hear you are dealing with this. Maryland doesn't regulate PMs (which is a whole other story), however if the PM does have a real estate sales license (i.e., they're a Realtor) then they can be subject to discipline by the Maryland Real Estate Commission, and you can be compensated from the MREC Guarantee Fund. I don't think we're allowed to post links but if you Google "maryland real estate commission guarantee fund" then one of your first links should be to "File a Complaint". I suggest you do this regardless of whether the PM is licensed or not.

Pro Tip: Even in states where licenses are not required for a PM, it's always a good idea to hire one who has voluntarily obtained one. This gives the owner client peace of mind as well as some protection.

Non-humble self promotion: I own and operate Blue Door Residential Property Management (and am fully licensed) and would be happy to talk about your needs if you want to shoot me a PM.

There is a reason that most states (including Connecticut) require property managers to be licensed, one of which is that they are required to have basic education on the rules and laws governing the practice. Please do not act as an unlicensed manager, it will only result in issues for both you and your friend.

Another option for getting into properties quicker is to have your own representation (vs. contacting the listing agent). A Realtor who works for YOU will likely be quicker to get a showing scheduled, return your calls, etc.

Good luck!