All Forum Posts by: Joel Owens

Everyone ETHICS has nothing to do with license laws!!

I have to keep posting so people will understand.The state real estate commissions care about their license laws and if fraud is being committed etc.

Ethics is a subjective subject that some people feel is important and others don't.

If a broker/agent is a REALTOR belonging to the National Association of Realtors then they subscribe to the code of ethics.

Not all licensees are REALTORS. I am not one because there is no value in paying all of their fees each year.Doesn't mean I don't have Ethics.In fact there are many REALTORS who do not have ethics so a title doesn't mean squat.

Agency laws vary by state.In my state of Georgia I can check a box that I represent the seller and that the buyer is not represented as a CUSTOMER.I still get both sides of the commission and perform ministerial acts for the buyer (filling in the contract) but do not represent them as a client.

As far as commission MONEY talks.Some brokers/agents will scream ethics and I submit all offers etc.

Some do but over 90% of agents fail in the first year of entering the business. Almost all are trying to get REO listings as that is what is selling in most markets not regular resales which are expiring or withdrawn.

Until you close you don't get paid a commission so taking overpriced junk that won't sell is a waste of time.So you will find many new agents getting REO's as the government pushes small business and diversification to minorities etc.

The asset companies want to look good with the government and in compliance.

So if I am a new agent struggling to survive and I have a 100k REO most likely the commission total is 5%.The reo broker gets 2 to 2.5.The buyers broker co-op is at 2.5 to 3.0.

That new agents is likely on a 60/40 split with their broker.

So 90k offers at 2% is 1,800 commission and then agents gets 60% after cut with their broker 1,080.Actually it's way less than this when you count in other fees too long to mention here.

OR

A buyer where you get 5% of 90k = 4,500
60% of 4,500 = 2,700 to the new agent!!

Makes as huge difference. Now experienced brokers and agents in the game know that you only double end in reality a small percentage of their listings.A struggling new agent with just a few REO's doesn't know this so they will push to try an double end that one sale.

I just deal in the REAL WORLD where deals happen and not in fairy land where things are supposed a certain way and ETHICS stands above all.

It would be nice but is not practical.

Bottom line is they know it will take 1,000 later rather than sooner for many to close their first deal if at all.

So they have that 1,000 to leverage to their advantage while HOLDING it for you.

Commercial lenders do this as well and if you pay attention to the LOI's they say nothing about who will get the interest on a deposit for a deal while it is held in escrow.

Say a commercial lender asks for a 100,000 deposit and then 60 days later says SORRY the deal can't happen.If they get 6% a month they just banked 12,000 off of your 100,000 deposit.

I never said this guys system did or did not work.Haven't tried it. I am sure there is a small percentage of people who it has worked for.

I stand by my post.You sure seem defensive over a company you no longer use and you are not connected to.

I run across nice companies that will take your money and return it later all the time.They are very pleasant because you are giving them money even if to hold.

Wow what an infomercial for this guy.

Did nobody catch the FACT that this guy holds 1,000 of your money for the whole time until you cancel??

What is this guy doing with this money?? He is making interest off it for sure and leveraging himself into other deals.I am sure he is not letting the cash sit around and collect DUST.

He can also have a link on each website to further his SEO presence.

The one poster who extensively used his system paid 50 month and the 1,000 was locked up for a long time and a deal didn't happen.

Just like all the other systems where a few actually close deals but the money maker is using other people's money,seminars,boot camps,hosting fees,books,audios,tapes,etc.

Why do you think all these gurus sell a course for 500 or 1,000?? They know the average joe blow has that small amount of money.They want to extract as much as possible until they run you dry.

This is the same in the real estate broker/agent business.They know 90% fall out of business in the first year so they suck you dry selling you everything under the sun.

Stick to this forum.I don't give these types a dime.

I will tell you from the deepest depths of my soul that I can't stand property management.

You ought to here the horror stories I hear from my sellers when I list their properties.Managing is a very tough business.

I think where many investors go wrong is they try to be CHEAP in paying a manager.When they buy that 1st house they believe that collecting rent will be easy.

When they find out it is much more intensive than thought they now look for a manager.The problem is they didn't take this into consideration when buying and now will have a cash flow problem.

So they then try to find the cheapest person possible.YOU GET WHAT YOU PAY FOR.

What buyers should do is say I am going to manage myself but just in case that doesn't work out I have already priced a PM company into my offer to buy this property.

This is what happens to people who don't plan enough for a fix and flip and they get stuck with a rental and a nightmare to deal with.You have to plan upfront as much as possible so that you mitigate the risk as much as possible of problems happening.

For houses many brokers/agents look at it as good side income but it is not a huge paycheck for them.As soon as sales pick up they could care less.

Why does everyone let themselves get locked into a 1 year contract with no provisions??

I go to the YMCA. I pay monthly and can cancel at any time.Knowing that I can cancel at anytime makes them stay on their toes and keep the place clean and in good condition and keeps them smiling for the customers.

If you belong to a membership where they can keep you locked then they have little incentive to perform.Doesn't mean you don't reward goo service you just put controls in place so that they are always performing.

As far as management www.irem.org has better managers to choose from.

Also depending on number of units you can get property management for 5% with 50 units or more.You could also do a graduated payment system.If they keep 100% occupied they get 10%,90% they get 8% etc. Many ways you can set up.

Commercial real estate isn't as bad because you are dealing with professional tenants at normal business hours.Larger residential apartments aren't bad either as you can put many people in place to handle different problems.

You could rent out the rooms but then also so you get married or meet someone you then now need that space and the rental income will go away.

When do you see the market there start appreciating again.You would need to see local inventory levels and absorption rates to get an idea.

Why not get say a 10 unit apartment building?? With commercial financing you could put say 10% down.

Live in 1 then when you meet someone move out and buy a house and then now you have 10 rentals.Usually you can get a seller to carry some say 10 to 15% and you put 10% down.

You will have 9 other renters help paying your mortgage.

Many ways to go with this.

The congratulations! You are ready to move onto the next deal........

Over time you won't even think twice about passing on a property.

There are too many deals out there to settle for a marginal deal.

Every property has problems.You just have to find the one that pays the returns you want for issues you will be ok to accept.

National,regional,and local banks aren't the only game in town.

If we are talking only in that context and you have 20% to 25% to put down and can document everything to the umpteenth degree than you may get a loan.

Many of the investors I come across love commercial loans because they can find putting say 5% or 10% down for a slightly higher rate and then you get the seller to carry the other 10% to 15% at below market interest rates.

Also with vanilla type loans some will take a very long time to close.For some investors a slightly higher rate and a fast closing is what they are after. If you have to drop 25% into every deal soon you will not have very much cash.

At that point you have to start forming groups for buying different properties to get the money down which can be a headache to keep up with and cause a big mess with equity interests in the future.

So I have had investors tell me they would rather put less down and have the seller carry some and be able to leverage themselves into purchasing many more deals.

It just depends on the individual investor with what will work best for them and their A,B,and C exit strategy they will employ later down the road.

YES you will need more than one exit strategy in case plan A goes south.

I am by no means a loan expert but this is just the feedback I get on the investors that call.

There are up to 100% commercial loans out there and they are not hard money rates.

For this small of a deal with 2 tri-plexes a local bank might be the best bet to try first.

Most auctions are overrated. You would do much better associating with power REO brokers and making low offers on properties with clean titles already that you can close quick.

You also have to look at wholesaling differently for residential and commercial transactions.

Federal and state laws have conditions applied to residential that do not apply to commercial transactions.

So you have to know what you are targeting and what the rules are.

Matt,

What the sellers mean is the past buyer either found something on inspection,the bank took too long to reply to the short sale,or the buyers offer was too low and they didn't like the banks counter.

So short sale approved means the bank has ordered evaluations of the property and came to the conclusion this is what they would accept. Generally the sellers have no money in these situations.So the costs associated with the seller side the bank might balk at paying and you will have to come up with those funds.

The separate deed issue is a biggie as well.

Residential loans are single family properties,duplexes,tri's,and quad's.

Anything 5 units and above goes into commercial financing.Commercial financing the underwriting is much easier to qualify for as it's not regulated like the residential.

If the properties are separate legal description than most lenders will count them separately and not together.This will force you into a residential type lender. If it's one legal description you can count as 5 units or above.

They are some commercial lenders who will do if separate legal descriptions but the properties have to be together and the lenders are few and far between.

As gar as tenant inspections.Many times buyers just say insurance inspectors to take pictures so it doesn't spook them.If the seller has been a crappy landlord they won't mind new blood.

If the current landlord is awesome and their impression of you is not stellar they might high tail it out the door.

If the landlord has been self-managing it will make more of a difference.If property was managed by a company and you keep that company not much will change for the tenants.