All Forum Posts by: William Morgan

Disclaimer: not legal advice.

If you are transferring ownership to your LLC it will trigger the "Due on Sale" provision of your mortgage which gives the lender the right and option to call the loan immediately due and payable in it's entirety. This is also sometime referred to as an acceleration clause. The bank will not automatically call the loan "Due" ( i.e. accelerate the loan) but it has the right to do so and probably will if it notices the transfer.

I assume you want the liability protection of your LLC? Increasing your insurance and buying an umbrella policy is probably a better, cheaper, more effective way to go if you just own one property.

Evictions are a pretty big risk.  I'd venture a guess that the only reason they do not have a lower credit score to go along with their eviction is because the previous landlord didn't recorded the judgement.

If there was a legitimate habitability issue why did a judge evict them?  Many times, if not most, mold issues are caused by the occupants either not using the bathroom fan, not reporting leaks or not cleaning well.

I bet the mold issue was some sort of half baked attempt to not pay and/or fend off the eviction - which the judge apparently saw right through.

Evictions trump all in my book.

@Ron Smith Not trying to rub salt in the wound here Ron but, there's lot's of lessons to be learned here.

• Screen your tenants well.  If you have a PM do it, make sure they forward you the background and credit info of the new tenant.
• Put them on electronic payments with automatic late fees, no partial payments accepted.
• Make it a policy to start eviction proceedings automatically after day 10 late.
• Pass eviction related costs that they incur by being 10+ days late onto the tenant before resuming the lease. ($150 filing fees, $50 handling fee, etc)
• Put these details into your leases.

As for advice, you could tell the guy that you will record the eviction and that will appear on his credit report.  You can also pay collection companies a flat fee ($20) to send a nasty letter for non payment, mentioning his credit will be affected.  Remind him many employers are looking at credit these days. That's about all I can think of.

And as you're marching up the court house steps and that little voice tells you "this was your fault Ron" make sure you reply "and it will never happen again" :)

@Jay Hinrichs Sounds like a great model Jay.  

I caught some flack  in another thread for suggesting the average homeowner doesn't always feel they get a commensurate value for a 3% listing fee .  But for an investor, I think you have it wrong.  While your numbers work for a one time transaction, they might not be as pretty as they could be across many transactions.

What if your listing agent also did much of the legwork on your rehabs?  Issues like meeting the well/septic/propane company at the property, finding and scheduling a landscaper, the flooring choice, make keys, develop the reno plan, finishes, what to do about this issue or that? Many agents will gladly fill that role for a steady source of listings meaning one less person to hire and/or more time freed to concentrate on acquisitions. If you're able to leverage that into greater deal flow then your one time Cash on Cash example is not nearly as impressive. Just a thought.

I'm in escrow on a REO that initially requested (and received) Cash Offers only

• Deal directly with the Listing Agent
• Put a fat deposit down
• Beat the Cash Offer by a meaningful amount
• Be willing to release Financing/Inspection contingencies on a short time-frame
• Be ready with proof of funds, credit, pre-approvals etc
• Work with a lender who you know can perform
• Say on top of third party timelines (ordering an appraisal, Prelim, getting loan approval, etc)

$30/sqft + the roof/sheathing repair.  Do I get a prize if I'm right? 

You could demo just the rock that's on the wall area, limiting the rock to strictly the fireplace.  Make the wall area sheet-rock again.

If you limit the area of the rock it may just serve as an attractive feature.  If you still don't like the look of the curtailed rock then you can just tile over the fireplace only . You may find that tiling the entire wall area makes for every bit an obtrusive feature as the rock did.  

My online Rent Payment service enforces late fees and (optionally) will not accept partial payments.  It also sends a reminder automatically if rent is not received by the last acceptable day.  My reminder goes out on the 5th (if rent hasn't been paid) and says:

A friendly reminder of our Late policy:

Late Rent: Rent is late on the 5th day past the due date. A late $50 fee applies to late rent (see your lease).

Very Late Rent: If the rent and all late fees are not received by 10 days after the date it is due the Automatic Eviction Process begins. To restore tenancy, reimbursement of any court fees or legal costs are required to restore tenancy - this can be expensive! Once the Automatic Eviction Process begins it cannot be stopped until all checks clear and all additional fees have been paid.

Seems to do the trick.

@Chris Soignier :  "As already mentioned, licensing is administered by the states, NOT NAR. You might want to do some research to clear up your many misperceptions about NAR."

@Jay Hinrichs "yep the OP who made the statements about NAR has no clue as to reality.."

From the Federal Trade Commission: (link)

States require real estate brokers and agents to be licensed. These licensing statutes form the framework for state regulation and oversight of the profession by establishing requirements for licensure (such as minimum age, education, and experience) and various requirements and prohibitions regarding business practices and conduct. State commissions, frequently composed of real estate brokers, oversee drafting of and compliance with these laws and regulations. 

And this:

 Consumer Federation of America (cited by the FTC in their brief- link)

Absence of Independent Regulation

All 50 states and the District of Columbia require real estate brokers and salespersons to be licensed. All state licensure laws include requirements and proscriptions concerning the business practices of licensees. Requirements in most states include disclosure of important information about price, services, and representation.

The licensure laws of every state establish a regulatory agency, usually called a real estate commission or board. These agencies, with few exceptions, are granted broad and exclusive rulemaking and enforcement powers by the licensure statutes. 

A large majority of states have part-time real estate commissions with extensive participation by practicing real estate brokers. California, Illinois, and Minnesota, however, have professional regulators who work full-time to oversee the real estate brokerage marketplace.

In Illinois, for example, real estate regulation is overseen by the Commissioner of Banks and Real Estate, who hires a Director and Deputy Director of Real Estate. These public officials are advised by a Real Estate Administration Disciplinary Board. But none of these officials or Board members are permitted to be licensed as real estate agents. To serve as an official or Board member, practicing brokers must surrender their license for the duration of their public service.

This separation of real estate regulation and brokerage services, however, is unusual. Across all states, more than two-thirds (68%) of real estate commissioners are required by statute to be active real estate salespeople, brokers, or licensees. In most states, agent commission members are required to have current licenses.