All Forum Posts by: Scott Lieberg

Since posting the discussion above, we at TIC Capital have had discussions with Crowd Street and Fundrise about Sponsoring large multi-unit, investor grade projects. Both are very credible sources of capital for sound, well vetted projects. The sunk costs and raise fees for these platforms need to be built into your analysis as you would for any debt or equity partner. Understand your value-add proposition and IRR computations, inside and out. If these models fit your needs, by all means do your own due diligence and start investigating this interesting sector for your growth.

Brendon,

Everyone in this thread is right. The Designated Broker who accepts the legal responsibility to supervise your licensed activity is fully accountable to the State regulators for your conduct and transactions.Your Errors and Omissions coverage, advertisting, contracts, MLS membership (if the office participates in MLS), the Realtor status, NAR, state and local boardmemberships are all tied into the Designated broker. I have been an Associate Broker in California and am currently a licensed Associate Broker in Idaho. Also in every state I am aware of, the Broker owns the agent listings.

Regarding flipping houses, as a Licensed RE agent you MUST disclose your status as a licensee in accordance with state regulations, usually to all the parties. You can act as principal but must inform your Broker and operate within your Agent agreement with the Broker.

As a principal, you may cross statelines. As an agent you are restricted by the law of the state in which the property is located for any transaction in which you are not a principal.

My answer is not comprehensive, as this is an exhaustive topic of study and education. Like those comments above, If you choose to earn your RE agent license, take that duty and your duty to your Broker seriously. 

Good luck in choosing your path.

Yes, SFR neighborhoods would be subject to units, rehab facilities, high density multifamily, constant pressure to up zone. It is coming. Check the general internet news for more specifics. Forget the politics, focus on the economics. The erosion in equities will offset any individual parcel gain.

As a former city Planning Commissioner and investor, I believe federal proposals eliminating residential zoning may be the biggest change yet in the name of equity and inclusion. Not getting a lot of daylight so far, but the concept is on the drawing boards, enforced by the flow of federal grant money.

What do you think?

Issac,

I also should add that the HO Policy will be for owner or Non-Owner. If you defraud the insurance carrier, good luck with you claim in the event of the loss. With no coverage, expect the lender to sue you for their loss. 

If you were to claim a family member occupying, check with the lender to see if they likely need to be on the loan application and on Title. If that is the case, their qualification will be underwritten also. Your ability to cover your primary housing and the new rental will also be documented.

Talk to your attorney and Realtor. If you agent is a party to this, change agents. Doesn't anyone else have advice for Issac on this one?

Issac,

On your taxes you either claim the property as your residence or as a rental. On your application with the lender you show your employment location. On your property taxes you take a homeowners exemption or not. On your water, gas, and electric you either take the utilities in your name or those are in your tenants names. Is this really a game of chicken that you want to challenge the Government to? When you take an owner occupied rate for financing, you sign occupancy certifications, you get a preferred rate.  

When I was on loan committee for a major lender, the FBI investigated these types of cases, as the loans were generally sold on the secondary market. At the lender level, we called the loans due. Perhaps, you should rethink your representations in this purchase. 

Having been to Small Claims Court both in Montgomery County, TX and Kern County, CA against tenants, be sure to serve everyone named on the lease, document your damages, and pay a process server to avoid any bonehead mistakes on your part that could be construed as harrassment. Consider paying a private investigator for a basic report (about 28 pages) and $500, to know who you are dealing with.

Record the judgement. Refile the judgement before it lapses. Every expense here is a tax write-off. 

Prepare for the fact the judge will expect you to mediate a settlement. If you do not reach settlement in mediation, by all means proceed to court. 

Future lenders will force the payment at some future date. 

Follow everyone's advice to know your renter.

If nothing else, Real Estate is cyclical.

In a quickly appreciating market, many investors gamble and panic to enter the market. Many investors have not seen the market flucuations, equity drops, foreclosures becoming the market. Many investors will lose.

1) Do you have funds to buy into the face of the next recession? 

2) Do you have the nerve and knowledge to buy into a recession? 

3) Is you leverage position recession positioned? Do you have a nibble exit plan, can you pivot?

I raise these issues not as a "Debbie Downer" (appologies to the Debbies out there) but as a basis for a frank discussion and self reflection before you jump headlong into investing. There is a lot of money to be made in Real Estate. Best wealth builder in history.

Educate yourself, grow thick skin, and then have skin in the game. Good luck on your path. Good planning. Good fortune.

Scott

Consult your attorney and Realtor or pass. 

Nathan,

Thank you for your topical discussion. 

This is the wrong path. Bringing government into the market, creating a flood of unqualified buyers, is not without precident . We never learn from our mistakes. Short sales, the sub-prime melt down of 2007, 95% LTV loans to unqualified borrowers by Country-Wide Mortgage (Not the current B of A subsidiary), before that it was the Charles Keating / Lincoln Savings debacle that gave rise to the Resolution Trust Corporation (RTC), interest rates in the late 70's of 16%, but no loans because no equity and on and on.

To the topic at hand. With programs like California 45% Partnership, hold some dry powder to buy in the next recession. Recessions are like trains, there will be another one along. Good luck investing.