All Forum Posts by: Matthew Mucker

This is the first thread in which I've heard the first suggestion that there's any kind of licensing, anywhere, for property managers.

This comes as a total surprise to me.

How can I determine if my locality requires a license of any kind to be a property manager?

EDIT: The Texas Real Estate Commission's website (the agency that licenses RE agents and brokers) says nothing about property managers... so I assume there's no statewide requirement for PM licensing.

This is an "it depends" answer if there ever was one!

What state are you in? Under what conditions would you be buying the property?

For example, in some states, if property is purchased at a tax foreclosure auction, the prior owner does have some rights to reclaim the property under some conditions.

What would be your motivation to keep a money-losing property?

Don't get me wrong... there are valid reasons... but if you don't know why you'd hang on to a money-losing property, then your best bet is probably to get rid of it.

Anyone else having this problem? I know that my machine is saving cookies; other sites I visit do auto login for me...

Put yourself in their shoes. If you were the real estate agent, what would you think about your sales pitch?

You form an LLC to protect your personal assets.

Right now you own four properties. Let's say, for ease of calculations, that each is worth $250K.

You also own your personal residence, which we can assume is worth $250K.

Now, all of these are owned in your name.

Let's say that one of your tenants trips and breaks her leg on your property. She sues you for all kinds of silly things that the US court system allows, and a jury awards her three million dollars.

Your liability insurance kicks in (you do have liability insurance, right?) and if you've got $1M of liability insurance, that pays out. But you still owe $2M.

You can be forced by the courts to sell those four properties and the profits can be taken to pay off that judgment. So assuming you owned them all with no mortgage, there's $1M of your money that went to her.

If you're still shy of the $3M total, various state laws kick in and could force you to sell your personal assets (such as your home) to pay off that judgement as well.

Now, let's say that each property is owned by a separate LLC. The tenant sues and wins a judgement against the owner of the property: the LLC. The LLC can be forced to sell its assets, but (assuming you set up and operate your LLC's correctly), they can't come after your other properties or your personal property, because they are owned by an entity other than the one that had the judgement against it.

That, in a nutshell, is the primary reason for forming an LLC.

Now, an LLC has to be operated properly to maintain the personal liability protection and you can research how to do that elsewhere, but that's the general idea.

A local mortgage broker just quoted me:

* 25% down 6.75% with 1% origination and 1% discount
* 10% down at 10.25% with 1% origination and 1% discount

TEN AND A QUARTER PERCENT ON A FIRST MORTGAGE!!??!?!?

I'll assume that I just need to find myself a different broker. This can't be the going rate, can it?

Interest on a morgage is tax deductible.

Every dollar that you don't invest into THIS property is a dollar available for you to invest in the NEXT property.

Thanks to both of you!

Not really. High risk, high potential for reward.

If you were guaranteed the reward, it wouldn't be risky!