All Forum Posts by: Patrick Connell

@Account Closed, the fact of the matter is that any landlord would have a hard time proving that they were unaware, unsure, or didn't understand what they were signing when they signed it. With the knowledge and financial means to purchase an investment property, they are not an incompetent person; based on how courts normally examine the situation in which you present.

The fact that the PM keeps the late fee also doesn't harm the LL, because the LL is still getting their same amount of rent as is guaranteed to them in the agreement. On the other hand, the PM can make a very good argument about the additional tasks and expense for posting proper notice and following up.

Again, the LL and PM negotiated a compensation package and both signed off on it. To say there is no incentive for them to collect rent on time is silly because, 1.) It's not their job to collect rent on time, it is the job of the tenant to pay on time, and 2.) once rent is late, it is their job to legally and competently post notice and pursue so you can enforce and eviction if need be.

Also, see my previous post about what the PM is actually making per hour on each door.

Welcome! First piece of advice, if you're planning to buy a property in the next 24 months with any type of traditional financing, do your best to make that happen within the next 6 months. Lenders get really uncomfortable about making loans within 6 mo. of your exit date, and once you're out, you'll have some difficulty getting a loan without "steady" job history. Chad Bowman out of Austin will be your very best resource if you plan on using a VA loan. He's a vet, a loan officer, and all his company does it VA loans.....

Ummmmm, seems like a business trip to me......

Yep, check your lease. If you don't spell it out in there then you might be screwed until renewed time.

Investors are even worse than consumers, when it comes to minimizing the value of a real estate agent. There are literally thousands of things that can prevent deals from closing, which usually don't occur on the buy side because you're using cash and don't really care about the condition. But, then you flip it and turn around to sell it to a consumer and that's where you have problems. Consumers who buy your flips are going to be using a lender more than likely. Since you're doing your first flip I'll assume the price point of your ARV is also going to include the high potential for FHA/USDA buyers. This is where the problems start..... Getting a contract means NOTHING, getting that contract closed means everything. So, from marketing, to negotiating, handling inspections, repair requests, lender issues, title issues, keeping you nice and legal, etc. etc. they will end up earning every bit of their 3%, both when you guy and when you sell. I wouldn't do a listing for 1%, and there are even some investor clients that pay MORE than the normal rate because they know they are pains in the *** to deal with, but that's ok because they know the job will get done. Real Estate Agent, Attorney, Loan Officer, Inspector, Contractors, etc. are ALL important for your team and you should pay them ALL what their worth. Don't screw them because your numbers aren't that great.

I can't speak for other places, but in Texas you must be a licensed Broker/Salesperson to do Property Management; so to say they are unregulated is a broad ignorant brush. Also, in Texas, the standard Texas Assoc. of Realtors PM agreement outlines the PM keeping late fees, keeping the interest from the account the SD is held in, and a few other items. There is nothing unethical about it. Everyone's wants to complain about how the PM shouldn't get the extra money but fail to realize that it's part of the total compensation package that they negotiated and signed off on. Sure, set it so the owner gets to keep the late fees, but then don't complain about them wanting 15% for a PM fee. On average, a PM probably spends a minimum of 3-4 hours a month handling each property (door). This should include receiving, documenting, and sending out rent, handling at least 1-2 conversations with tenants (phone, text, email), doing a drive-buy with walk around inspection, and a quarterly interior inspection. At 10% on $1,000 lease that's $25/hr BEFORE admin costs, taxes, etc. Now add in the experience to properly handle a late payment so an effective, legal, eviction can take place if need be and you're at $15 BEFORE admin costs, taxes, etc. Not worth it for ANYONE.

James Roux , you could very well be right. I'm not real good at sugar coating so hopefully this doesn't come off worse then it's meant to, but an "investor" without money to play with, little to no experience, working with an FHA loan isn't the most attractive investor client to work with. Someone mentioned finding the top 5 producers in an area, those people aren't gonna want to play either. Your best bet is to find a name-brand brokerage and hire one of their newer agents, someone who has the support in place and is hungry for business. Any decent loan officer should be able to turn out a new pre-approval letter within an hour any day of the weak; use a local lender if you can. As far as cash out of pocket, there are currently a lot of good conventional loan products out there that only require 5% down, which isn't a heck of a lot more than 3.5%. Some of them even come without PMI so your payment would actually be lower then with an FHA.

How long has he been in the property? Only a few different things can result in that situation. He overpaid, market is in decline, comps are wrong, or he just bought it within the last 12 months.

I think Ryan D. is actually the one who nailed it. Before everyone jumps on the agent for being stupid, lazy, etc. You need to think about the context in which this statement was made. You may very well be allowed to use an FHA loan for the purposes of an owner-occupied MF, but that doesn't mean you'll have the opportunity. From my perspective, the agent was trying to tell you you can't use an FHA loan to get into MF in that area because the market is to flushed with better buyers and/or cash investors. If I had a client come in and say they wanted buy in the sub-$150k range in South or East Austin using an FHA loan, I would tell them exactly what that agent told you. Either we have to figure out a way to get you into a different loan product or change areas. Their job is to get you closed on a property, not just show properties and write offers. Just my perspective, all about context.

@Christopher Hunter, my only reasons for asking is because it CAN be QUITE the learning curve to jump right into MF in the 20-100 range without any prior deal, PM, or other related investment experience.

Books are one thing, hands on another. My suggestion would be to try at least one or two 2-4 properties first, if for no other reason then to make mistakes with not as much money on the line.