All Forum Posts by: Patti Robertson

 Because our General Assembly just passed a bill defining wholesaling real estate contracts as an activity that requires a broker's oversite, which means having a license.

A agree with everything @Greg Scott mentioned.  You are making this way too complicated.  If you "gift" the property your daughter she will be subject to gift tax for the fair market value minus the $18,000 exclusion.  I suggest you meet with a CPA first to figure out the best way to accomplish your strategy.  

I don't get the hesitation that wholesalers have about having a license. I've always seen having a license as a benefit. 1) It gives you multiple strategies when meeting with a seller. 2) I always tell the seller when I disclose that I am licenses that this gives them the ability to not only use the court of law if they feel I do something wrong, but they an also submit a complaint to the licensing board. This builds trust. 3) At least in our area, our MLS allows a contract to be listed for sale. Listing generally nets the highest price.

The way I read this law, it is only assigning a contract that the new law is saying will require a license.  Essentially they are going to consider the wholesale fee a commission, which will have to flow through a brokerage.  Remember that DPOR will still have to adopt this, and that may not happen by July 1.  

Wholesalers can still double close without having a license.  No one can ever tell a property owner that they have to have a real estate license to sell what they own.  If you close with the seller and then in a second transaction close with the buyer, no license will be required.  This will require the deal to be funded by the wholesaler, and will create a big opportunity for transactional lenders.  

Most traditional brokerages aren't going to want to have wholesalers on their team. This creates an opportunity for a broker to create an investor friendly brokerage.  

The people who will be hurt by this are the people who are wholesaling from other states and the people who don't have the ability to fund a double close.  The majority of the people who are wholesaling the right way are going to do business as usual.

I do ALOT of SEC 8. The issue with someone porting into your area from someplace else is that they almost never have income when they move.  IF they have all retirement or disability income that may be OK, but if they are quitting a job to move and have to find another job after they move to your area, this means their income when they apply for your rental and SEC 8 determines if they will approve your rent with be zero. I don't accept any tenant with zero income, even SEC 8.  

As a Property Manager I will tell you that the worst properties I take over are military house hacks when the owner leaves before the roommates.  In 100% of the cases I have experienced (including one we are working on as we speak) the roomates leave their crap behind and leave the house in a total mess.  If you decide to go this route, I strongly suggest you have the same expiration date for all the leases.  I had one situation where the owner had one lease 4 months longer than the other and she was stuck with ony $700 in rent because we needed to wait out the lease because the tenant would not accept any other option.  Everyone always thinks their roommates wouldn't do that to them, but I promise you they will.  It is best if the roommates all leave when you do or if you leave last.

On another note, I know this is not a popular opinion, but I wrote a BP blog about why I feel sub-to should be illegal.  Here is a link if you want to check it out.  https://www.biggerpockets.com/member-blogs/9232/65349-why-i-...

IMO you would be way better off with a commercial loan than buying these sub-to with his inferior mortgage. The MTM leases don't bother me.  Once you figure out what tenants are work keeping you can put them in long term leases.  In every single case I have even seen, my lease is far superior to the one the seller was using.  I prefer tenants to come with no leases for this reason.  

Be careful looking at the published HUD rents. They are quoting rent PLUS utilities. You can only get that rent if you include all utilities, which you would never ever want to do. Typically the actual max rent is $200-300 less than what is published there.

I looked this portfolio up in our court records and this seller has only taken two tenants to court - ever.  It's pretty much impossible that there would only be two situations where a tenant didn't pay in a low end unit - and all of these are located in very low end neighborhoods.  It is likely he has tenants with big delinquencies.  I suggest asking for a rent roll that includes current tenant balance just to see how healthy the rent roll is.  That said, I never don't buy because of a tenant.  In Virginia a bad tenant is pretty easy to replace.  You just want to make sure you will have the ability to replace the bad ones one at a time, preferable, to keep cashflow coming in and spread out your expenses.

This topic comes up so much that I put my reply in a BP blog to save my fingers from so much typing.  https://www.biggerpockets.com/member-blogs/9232/55313-intro-...

We hold ours in LLCs and do file a 1065s. No biggie.  The more equity and wealth you have, the more important it is to separate the liability.  If you have more debt that assets, it's not nearly as important.  Insurance only covers the entity ensured.  It's not foolproof.  If you have equity, why not protect it with every tool you have available?

FYI that you can advertise rooms for rent on the official military website - homes.mil.