All Forum Posts by: Michael M.

@Account Closed

Misinterpreted your first response. Gotcha. Thanks.

-Michael

@Account Closed

So that would NOT be choice number 1.

Do you issue them invoices, and if so, what do they look like? Do you let them know how much their usage has been on there or do you just charge them X amount of dollars potentially leaving them curious as to "why the bill is this or that". And if such a case arose, would you/do you actually show them your bill to "validate" the charge.

-Michael

BP,

With the tenant being responsible for paying utilities, how is this to be executed?

1) Have the tenant activate the electricity in their name so they're responsible for receiving & paying the bill during their lease?

2) Receive the electricity bill in your own name and create an invoice reflecting the price and metered usage? If so, what does your invoice look like?

3) Other?

Thanks,

Michael

So what is the consensus on this topic, so we wrap this up...

A standard (interest bearing) savings account (what I'm presuming @Ned Carey is referring to). If so, whose name belongs on the account, etc.

Or an escrow company (which I'm thinking is synonymous with title company? As I don't see any brick & mortar businesses providing solo escrow services- they all seem to be title companies in conjunction with escrow services).

-Michael

@Ned Carey

Yeah, I suppose it's loosely thrown around because it's always escrow this and escrow that. And like you, I'm very specific when it comes to ingesting material, I always want to read every bit of the details, even for all the small things.

You said: "I just use one separate account for all security deposits".

See, to me, that's a bit vague and generalizing. You say this, and my brain automatically goes:

Okay, what kind of account, exactly?

Who's name (tenant or mine or both) goes on the account?

Are there any concerns I should be aware of that I'm not addressing?

Is the term escrow being used in this context slang for simply a neutral third party?

Is there a neutral third party service provider that isn't called "escrow"?

Being over-analytical is an understatement.

-Michael

BP,

I'm nearing the date of when I'll be leasing out my property, and brushing up and finalizing my To-Do-List. In the state of NJ, the tenant's security deposit must be deposited in either:

1) Shares of an insured Money Market Fund.

2) Sate or Federally chartered bank, savings bank or savings and loan association.

Asides from this (from the NJ State Laws referred to above), I've consistently read suggestions to put security deposits into an escrow account, despite the word "escrow" not being in the NJ Law for tenant security deposits.

Now, Bank of America being the location of my current accounts, I had asked if they offered escrow services for security deposits and how to it should be executed, and requested all the information there is that a customer should know about their escrow accounts. I was told that there's no documentation but was suggested I needed to be a legal entity to do so, or be a title company, or via lawyer representation- all irrelevant to a simple tenant security deposit.

With that said, can't I just deposit their security deposit into a Savings Account like it says in the NJ law? If so, who's name goes on the account, the tenant's or mine?

Please explain this to me like I'm five years old because I know squat about this.

-Michael

@Michael Krassos

I think it would be beneficial for the (NJ) community here on BP if you update this thread and share what you've learned and outline how you intend to operate.

That way, others may compare & contrast, as well as offer or seek suggestions.

-Michael

@Shuai Zeng

What do you mean by pay more? Pay off your mortgage more quickly? If so, that's up to you and what your plans are.

How much positive cash-flow do you get from this particular property?

You should understand the benefits of the terms the mortgage gave you: time.

You pay them a fixed amount, and they give you TIME in return to make whatever financial decisions you want to make with any extra money you have left over.

If you want something right now that's $100,000, you have the freedom to get that deal down NOW. If you pay the mortgage off faster, you're doing THEM a favor making them whole, and depriving yourself from investing NOW. What happens if you pay off your mortgage faster, and then you're suddenly interested in that home that was once $100,000, only now a few years have lapsed, and that $100,000 home you wanted is no longer $100,000, and instead $200,000.

The choice is up to you. The terms you agreed to for that mortgage gave you time, it's up to you if you want to use that time in your favor.

-Michael

@John Schnyderite

Well as you've mentioned, the value went down, so right off the bat if you choose to sell, you'll be losing. That would make it as a whole, a bad investment.

However, if you hold, even if you're receiving negative cash-flow, you'll be building up your equity, and be given the opportunity to ride the market until that condo is valued more than you paid for it, especially if the appreciation outweights the amount of money you bled out. If and when that time comes, selling it would be theoretically be a good investment.

-Michael

@Matt Rothwell

Yeah thanks for that, I didn't express myself too clearly. I meant that the more units one has, the more you have to juggle, per se, making management more of a task and burdensome. On the other hand, that can all be lifted given he and his wife are equipped with a good PM to do the job.

But yeah, I wasn't trying to say that each vacancy would be more costly as the "slices" of the pie are much thinner the more units you have.

-Michael