All Forum Posts by: Patricia Steiner

As in any profession, there are those who know the business, love it, and are trusted advisers to their clients - and then there's a whole lot of something else.  The reason I become a realtor/broker after a long banking investment career is because of the bad experiences I also had in dealing with realtors.  

For investors, here's my recommendation:  find a broker with investment experience - but who is  NOT currently transacting business for him/herself.  First, real estate investing is a completely different skill set than general real estate.  Secondly, your broker needs to have your back and not be a current investor. Get that commitment in writing.  It's a tough enough gig in markets like mine where inventory is at historical lows to land deals without worrying that you're being sabotaged.  

How to find this professional? I find the harder they sell themselves, the faster I need to run.  Focus on the business and you'll find out who's for real and who's the stuff of reality tv.  

John, a family member formed a partnership with several prominent individuals - and that partnership has successfully and profitably lasted for 40 years. Forming the right legal entity is important, having a managing partner (you?) while the others serve as investors, and agreeing on when to sell, hold, and distribute profits/expenses. What happens if one partner wants to cash out? What happens if one partner refuses to contribute to an unexpected expense? What happens if a partner in one deal passes on the next that the group does together? What happens when a partner decides to be more than an investor and wants to be "more active?"  And, what happens with a spouse wants to be involved - or a divorce, lawsuit hits?   A strong agreement between the partners can surely avoid all the things that go south whenever dealing with money and personalities.  Good luck as you move forward in what will surely be a "challenging and rewarding" experience.  

The majority of my investor clients purchase with cash. It saves on closing costs, we close in three days (or as soon as clear title is obtained), and the ROI is increased. When paying with cash, assess a 2% cost of funds on that money when calculating ROI - as that what your hard earned cash would earn in a top paying money market these days. And, one more thing: congratulations on saving this money and giving yourself options for investing. I'm proud of you.

It takes about $2500 to get started (course work, exams, finger printing, Association Dues, etc.).  Then a Big Box Broker will charge a 6% franchise fee on every transaction plus a split on the commission AFTER that assessment (65% to the realtor).  Then there's the $70 desk charge (whether you use one or not) to the broker each month in addition to their charges for classes, business cards, signage, etc.  I started my own firm after realizing very early on that the fees kept adding up yet offered very limited value.  If flipping/rehabbing is your niche, stay in that lane and leave skid marks everywhere.  

We're proud to be the home of MacDill AFB here in Tampa which is part of Central Command.  Tampa is on the high end of the rent reimbursement scale and it takes every bit of it to secure housing here.  Since commissioned officers have three year guaranteed deployment terms, a rental agreement for that term can convince my investor clients to graduate the rent annually.  With SFHs, lawn service is a must include in the rent here in Tampa where summer (and lawn cutting) is ever lasting.  With all the challenges, you won't find better tenants...and that's worth a whole lot.  

I have several investor clients who invested in "military markets" and here are the lessons learned:   

1. SFH suitable for families were challenging in maintenance/upkeep expense and in getting market rent. Many families retain their "permanent" home so they were looking to stay well below the housing allowance on their "assignment home."

2.  Townhouses with garages were popular with both families and single service personnel - as well as to civilians working at the base. 

3.  The appreciation wasn't there...and wasn't on the horizon.  Buying low and in good/great condition will never be more important in getting a return.

4.  The tenants could not have been better.

Hope this helps...

My investor clients are looking for a credit score of at LEAST 700 plus a clean background check on evictions/criminal. Also gaps in history indicate a whole host of not good.  When multiple tenants have credit scores that are at/above and below the desired credit score, watch out.  Most tenants can only afford the rent if all occupants are paying so someone with a history of not meeting their obligations could be a problem. 

Having an active realtor's license isn't a cheap date; the fees to the local and national associations as well to a broker firm with splits won't get you the value and performance you're hoping to achieve with your flips.  There are a lot of strategies that investors use in making offers on flips that are worth exploring.  My recommendation would be to work with a broker/realtor who has experienced professionally and personally in real estate investing. It will make a huge difference in your results and provide you with a trusted adviser.  

That's some landlord's strategy for retaining good tenants...be sure you give your notice in writing. If you already have, please - again in writing - advise him that you are not on the lease executed by other tenants and that your departure will commence on the termination date of YOUR lease.  That should do it....

Please pursue this with the Property Manager.  I would ask them to meet me at the house with their documentation from the tenant's termination walk.  It should be "entertaining" to see how they explain the missing damage and how they intend to repair it.  Holding your PM accountable will ensure greater attention to your property in the future.