All Forum Posts by: Steve Osowicz

@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!

@Brandon Gamblin yes to what @Curt Davis said. If it is an independent or small regional bank they might deal directly with agents. However a lot of large regional or national banks will have a third party basically go through the "vetting" process for them. Some of the information they will require is; company revenue, length of time in real estate, experience with REO's, copies of E & O insurance, copies of licenses, etc etc etc. The application is very extensive, even after completing it, there are likely agents who are already in the third party system that the banks have used previously and would continue to use. If you want to get an idea of the depth of the application process you can go to homepath.com (Fannie Mae) or homesteps.com (Freddie Mac), there is a section for agents. As a side note, you can also view Fannie and Freddie inventory from those sites as well.

@Max Balesteri there are many, many questions, I'll try to name a few I would want to know. 

1. Ask if they do in-house maintenance or do they contract out all repairs. 

2. At what level do they need your approval to conduct repairs (i.e. if something is going to cost over $200.00 do they call you first).

3. What is their process for past due rent - collections - and lease violations. 

4. On top of what @Curt Davis said, get a list of all fees they charge - lease up fee - marketing fee - anything you might be charged for, though all this should be in the management agreement. 

5. If they have an indemnity clause and how it is written (do you the investor shoulder all of the burden in a legal dispute). 

6. When is rent due, when is your distribution sent if the tenant pays on time/and when if the tenant is late? What is the late fee policy and who receives the money from late fees? Is is check or direct deposit?

7. Do they provide online statements or do they mail out a monthly statement? 

Some other tips - before deciding get a proposal from 3 different companies make sure they include their fees - along with a copy of their management agreement and lease so you can review and compare them. I am not saying paying higher fees is necessarily bad if it give you peace of mind and the company does a good job, just make sure you don't get any surprises - tenants can be surprising enough. 

@Account Closed These are the sources I use - Godaddy.com for registering the domain (i.e. yourdomain.com), you can normally google deals or coupons and get the first year heavily discounted. Then you need a host, though Godaddy offers hosting I use bluehost.com, if you use this method you will need to point your nameservers from godaddy to bluehost (it sounds complicated but is not). Bluehost has a link for you to use wordpress to find a theme download info and start editing your site. If you are feeling more adventurous, just get a text editor (i.e. notepad++ or sublime text) and write your own html and css (there are many youtube videos that can guide you through this process).  

Now that the easy part is over (yes, that was the easy part) you will need to research SEO or Search Engine Optimization. This involves a number of methods, such as making sure you link your site to other sites you might have such as a facebook page, twitter, google plus and pintrest. This involves making sure that your site has what search engines consider valuable information. Other influencing factors are the number of unique visitors you have to your site. Yes, all of this can be done for less than $30 for the year, is it easy, no. If you decide to use a free site, unless you pay them your site will either include their advertisements or have their name in the domain i.e. yourdomain.freesite.com. 

Good Luck - use the internet you can find everything you need for creating your site.