All Forum Posts by: Chinmay J.

My wife is currently working on getting her real estate license with the primary intention of aiding our own real estate investment activities.  Outside of our own purchases, we would only be potentially representing friends or family.  

We're looking for a brokerage that would be friendly to this and most cost effective.  In addition to any specific brokerages in the area (Stafford, Va and surrounding counties), any advice on terms of working with a brokerage?  I would imagine base case is a commission only arrangement, if possible.

Thanks for any input.

@Kellen Driscoll As an alternative to giving your partner access to the bank account, you can give him access to the application where you're keeping "the books" for this project. Any app would allow to set up a Read Only access where your partner would only be allowed to view the data without the capability to change anything.

Best!

 I've been the joint partner in some real estate deals, and the money partner in others. If I supply all the funds, some partner tells me I have no access to the bank account, then I would not go through with the deal.

One business I started was a accounting consulting business and one of my customers had me install an accounting system. The business itself was located in NYC, with local management, and the money partner was in Europe. The money partner in Europe grew suspicious when the local management refuse to give him bank account info or access to bank accounts. The local management said, I gave you monthly statements, P&L and balance sheets, that should be enough.

What happened was the money partner hired a private eye to check, and found that all the financial statements sent from the local management to him was false. When the money partner rushed over to see for himself if it was true, I was asked to compare the statements he received from the local management, and go back to the system I installed, and the prior system, that I was also familiar with, and generate the P&L and Balance sheets, from prior months and years, and indeed they were all different.

I didn't do the financial analysis, but I learned later that over $200,000 was embezzled by the local partner, hidden behind falsified financial data. 

I don't even trust local management sending me copies of bank statements, because in many embezzlement cases I seen on TV, I recall "American Greed", embezzlers falsify bank statements as well, so the only way to insure proper accounting is to get the information directly from the bank. In most of these cases, scammers offering business deals of all types to investors, especially retirees pulled off the scam by issuing falsified bank statements to their clients.

I am currently looking to partner on a small multifamily deal with a friend. Basically my friend will put up the money for the down payment and I will handle everything else. My question is how should I handle the bank account in which the rental income will go.

Should I keep an account in which I only have access to and pay him out of the cashflow. OR should I setup an account in which we both have access to so that he can be reassured that there is actually money in the account and not going to other places.

Thank you!

Kellen

Billing Your Tenants for Rent

RENTS DUE ON THE FIRST OF EVERY MONTH!

It took about a year for me to develop a plan. Tenants were paying their rent any time they wanted to during the rental month. Since I handled my own court cases and owned a lot of properties, I spent a lot of wasted time, typing up the Quits, the Summons and Complaints, to only have the tenants pay their rent just under the wire.

My husband would always say, well just think of it this way, we’re getting extra income. ($25.00 for late fees every month) and true we were, but I also worked on the houses, fixing them up, painting garages, handling court cases, solving tenant problems and more. And it just wasn’t worth it to me to go through all that work, worrying about whether or not a tenant would pay, whether I’d have to go to court, and if so, a lot of time preparing my case, (making copies of all their leases etc) to have them pay after I’ve typed everything up. Plus I didn’t want to be in court every single day of the month. Gosh, somewhere along the way, I needed a life!

So I made all rents due on the 1st of every month, and I would pro-rates rents in order to get all of them due on the 1st of every month. My lease agreement stated that if rent was not received in my office on or before the 1st of the month, then their rent was late and they would receive a Notice to Quit for non-payment of rent. And if rent was not received in my office on or before the 5th of the month, they would receive a late fee bill for $25.00.

So I set up QuickBooks® to automatically bill my tenants for rent that is due, 10 days before their rent was due. (I figured if my vendors send me a bill 10 days before the bill is due, then why can’t I treat rent as a bill and send it to my tenants 10 days before their rent was due). So I tried it. And, low and behold, the next month mostly all my tenant's rents were received in my office on or before the 1st.

You see I chose tenants who paid their bills on time when I qualified them for my rentals. And because most landlords haven’t done anything about rent coming in late, tenants just accepted that as being normal, not realizing that paying rent anytime during a rental month was not okay, therefore, they didn’t view the rental contract as a legal contract that actually had a due date! So when they received the bill in the mail for rent that is due, and it clearly said so on the Invoice that it was a bill, the tenants viewed it as a bill and rents came in and on time.

The few tenants who didn’t pay on or before the first and received the Notice to Quit the next day, (the 2nd of the month) would call my office and rant and rave about it. And, I would just tell them, to not worry about the Notice, it’s just to let them know that I haven’t received their rent yet. And, that it doesn’t become a legal document unless they don’t pay their rent which definitely had to be in my office on or before the 9th of the month or on the 10th I would have to file the Notice to Quit in a court of law.

I told them that in actuality it helps them to see that if they did pay their rent, that I haven’t received it yet and gives us time to find out what happened to their money. If they said they mailed it, I would ask for them to send me a copy of the check or money order.

Those tenants that got tired of receiving a Notice to Quit on the 2nd of the month, began paying their rent before the 1st because they didn’t want to receive that dastardly Notice to Quit. Therefore, it was a win-win situation. And I lived happily ever after.

Just a little tip.

Nancy Neville

It’s multi family but that makes sense, do you know if rates are typically a little higher on multi too?

Hey fellow pocketers, so I’m officially pre-approved by two lenders which I will most likely go with USAA since not only is the rate cheaper but it lowers my car insurance but that’s another story. I noticed both lenders want 25% and I’m confused as to why. Is it because I just bought a property 8 months ago? If so will I have a harder time for property 3? Will they expect more down?

Chinmay:

It's not a Canadian thing, it's a business thing.  Many landlords in your country and mine do ask for a tenant to provide banking information (bank and branch) as it provides another datapoint for validating the information provided in a credit history report.    Simply asking for your bank and branch does not provide the landlord with the ability to inquire about your accounts or their content - under Canadian privacy law that would require explicit written consent.

That said, in instances where applicants are self-employed or graduate students living on research grants, we often request bank statements as a means to verify ability to pay.

Here in Canada, a landlord may request a social insurance number (SIN)  - our equivalent to a Social Security Number in the U.S.A. - but they cannot require it and the applicant is under no obligation to furnish it (again, due to privacy law).