All Forum Posts by: Steve Osowicz

@David Zachery If you want to try and go through a bank, try River City Bank they do work with investors and have two products, one for flips and one for hold.

Like @Andrew S. said, those are your alternative:

1. Hard Money - Needs a down payment - decent credit - higher interest rates, downtown Louisville is Action Loans who is a hard money lender.

2. Private Money - see Andrew's comment above

3. Seller Financing - Make sure if you go this route, you get some help. You will want to have the deed recorded, if the seller has a mortgage, this can be more complicated since they may have to agree to the loan. I have seen instances where someone was doing "seller financing" but the deed was not recorded, the buyer was making payments, but the seller had stopped making their payments, lost the property in foreclosure and the buyer lost out since the deed was not recorded. 

@Pavel Reyes Valdes Real estate health of Louisville and surrounding areas is strong, not as confident about Bullitt County, but Shelby and Oldham, are doing good too. 

Over the last couple of years Louisville has definitely improved. Ford invested 1.2 billion and G.E. 800 million in facilities, plus companies like, UPS National Air Hub, YUM! Brands, Humana, UofL Nucleus, Amazon, and Forbes rated Louisville high for housing stability. 

Multi-Family A, B, and C vacancies are down, CAP rates are generally higher than on the coasts.

Retail shopping centers have done better, many of the older ones have been improved, for example, if you go by Shelbyville Road Plaza, it is an old center that a company bought and revitalized for example. Paddock Shoppes (was called The Summit), Shoppes of the Bluegrass (brand new just outside of Louisville) the Mall St Matthews and Oxmoor, still maintain large anchor tenants. Older centers not taken care of have suffered. 

Industrial absorption is up, over 2,000,000 sq ft net was absorbed in 2013. 

Office for 2013 - 9.3% in suburbs, 14.7% downtown vacancy, 14.6% overall. 

@Brent Coombs No, I mean have a maximum charge of a late fee percentage of the total rent. In Kentucky, our attorney advised we not go over 10% of the total rent amount in late fees otherwise a judge may look unfavorable on trying to collect that much (they would possibly see it as excessive). I see what you are saying that it appears that the owner is being penalized for the tenants late payments. 

@Paul Zofsak Well, as I read this and understand it, the issue is with them collecting the balance due. Applying payment towards fees first then towards rent is likely how the management agreement/lease is written. The problem is that the amount due should still be incurring a late fee, since full rent was never collected (due to late fees). They have collected approximately 5% of total rent, check if that is their policy not to exceed that amount. That would also indicate that each month the tenant would be running a deficit, and less and less of the rent would be collected each month. 

I don't see anything in what you described as something illegal, but they should definitely be making a harder attempt at collecting past due balance and getting the tenant back on track. Likely when the PM asked if you wanted to proceed with eviction, they are asking because there is no other way to compel a tenant to pay other than through a court. If you want to try other means first, get the PM to send the tenant a letter advising them that they are late and are incurring late fees, if this continues you will have no choice but to send notice and proceed from there. 

If you stay with this company, when it comes time to renew, I would at the very least request half the late fees. 

So, just to recap, in my opinion, the issue is not them taking late fees, or deducting fees first, but them not making a real effort to collect the past due balance. 

@Anthony Martin I have never seen a lease option with a tenant and the tenant actually end up purchasing the property. Typically this was because they could not qualify at the time of rental and were not able to qualify later when the option was to be executed or expire. I think you are talking about 2 separate contracts, one is for the lease and one is for the option. So, what happens if part of the way through the lease you have to evict the tenant or they move out? They still have until the option expires that they can execute (though that is unlikely) it is something to consider. You would likely need to talk to an attorney and ask about how that would work since you might be in a bind waiting for the tenants option to expire and be prevented from doing anything until that time. 

1. How difficult is it to "break into"? The barrier to entry to be an agent is very low, (too low in my opinion), the tests are pretty easy, continuing education is easy, however there are a number of costs involved up front. Getting your license, being on the MLS, joining your local Board, when you put your license under a broker, they will charge either a "desk fee" or part of your transaction.

2. College? Even though I do not personally believe you need college to be successful, I would recommend  getting a degree, even if it is an associate's degree. Depending on your area, if you pursue a degree in real estate, the classes should count towards your license requirement, kill two birds one stone. Employers love seeing that a person has a college degree, just in case being an agent doesn't work out. I know this runs contrary to the "burn the boats" idea, but I am just more conservative by nature. 

3. How much money can you make? With any pure sales/commission role, that is completely up to you. There will always be a need for sales people in some form, so that is why they tend to make a lot of money if they are successful. If you are good with pushing your comfort zone and doing the things others are scared to do you can be very successful. 

Hey @Chris Elliott that is a rough break, if it were me (and has been) I would let it go. It helps to have a short memory and thick skin in real estate sales. What is the upside, you would have to go through a lot of grief to get that money and the client would hate you, maybe enough to go after your reputation. If you do contact her, I would just ask her if you did anything wrong or why she used a different agent after you had been helping her. Sounds like she probably has her hands full with her family and maybe it is a blessing in disguise that you are out of the transaction. 

@Pavel Reyes Valdes not sure which bank you went to, River City Bank offers 2 loan products, one for flips and one for buy and hold, they do work with investors. If you haven't reached out to them yet you should check them out. 

What @Jason James said, there are areas of the city that can appreciate better, and if you want to sell a portfolio eventually, that area will not generate interest that other areas of the city will. That area is very tempting for investors since you can get properties for $5k, $10K and up good for cash flow, but the difficulties in maintenance, repairs and rent collection would not be enough for me to invest there. You can spend a little more and go closer to UofL or for that matter there are pockets in the city all over that if you spend a little more, you can get a higher rent and possible appreciation.  

@Jason Krawitz If it were me, I would use your friends lease. You said you would be fine omitting or changing items, but you are not an attorney, nor do you have extensive experience as your friend does. There will be more tenants. Likely your friend got burned several times and each time made the lease longer to cover what happened to him. What you don't want to do is let the tenants make you conduct your business their way, you want to remain in a position where you have process, procedures and paperwork and follow that system with each tenant that you created. Just my two cents, good luck!