All Forum Posts by: Diego Alvarado
Diego Alvarado has started 3 posts and replied 203 times.
Post: What to ask a property manager
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
I am seeing good answers here, even though you have to do your due diligence, the approach that I would take is:
To select the property manager to contact:
1. Verify reviews in google or other platforms
2. Ask Real Estate Facebook group for recommendations.
3. You could find new property management companies, in that case they will miss the reviews or recommendation so check if they are open about who are the people in the management team.
When talking to the company:
1. Ask for process and procedure guidelines (in here you have to look at the inspections frequency, and how their proceeds are with them, eviction and tenant screening)
2. Fee breakdown (sometimes there are hidden fees)
3. Reporting (how do they report the status of the property to you)
4. Contact (how you are managening your account)
5. Communication when you have a question.
All these will give you an idea of who fits your needs. There is no always a company that fits all. It always depends on your priorities.
Post: non LLC , use personal checking account to pay mortgage and bills or open a separate
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
My story is similar, I started with a rental, it was a lot of hassle to open LLC as the mortgage at the beginning won't allow it, but it is always convenient to separate the accounts for book keeping.
You will see this as soon as you have to do your own taxes first time, it will be a nightmare to collect everything is you incur into maintenance cost or any other expenses even if small.
Post: Renting out former primary residence
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
Congratulation on the first step investment.
I would recommend you to evaluate the cash on cash that you have in that house, looking at your GRM is really large.
I don't your market and the size of your residence, those are things to consider in future. As you bought it brand new, that is an important factor, but after 10 years, maintenance cost increases so that it is always good reduce the risk.
Post: Flat Fee MLS / HAR Rental Listing in Houston
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
I can't recommend you one company but if you search in google you will have a popup of some. I heard about Houzeo it might be a good option, but you have to evaluate what you pay and what you get. All depends on the needs from you. Another option, that I say good results is listing in zillow, at the time it was free to do it there.
In my case, I have negotiated with my realtor a lower one month commission to a 75% of the first rent, and he manages all the calls, tenant verification, and showing. (In rental, this is a lot of work).
Post: need advice on lawn maintenance
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
These are all good options that were suggested. I have done most of them in my rentals.
One thing to add is that eviction for lawn maintenance is complicated and I wouldn't go that route, because they are still paying you the rent.
If you still want to pursue that please consult with an attorney.
Post: Syndication vs Partnership
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
Quote from @Crystal Smith:
Quote from @Diego A.:
Hello Experts,
I am looking for some advice on what route to take. I have a group of friends that they are looking to invest in Real Estate in some deals together, but we are not clear on how to make sure we structure the partnership correctly.
I am in real estate investing since 2018 where I invested in Single Family on my own and holding rentals as well, but I have never done a deal with partners. I am also transitioning full-time to real estate so this partnership will see my friends as LPs and me as GP running everything such as finding the deals, rehab, operations, etc.
Syndications seems to be complex in terms of the legal process, and partnerships are complex in differenciating who is passive and who is active.
What are the pros and cons? What would be your advise being in this position?
I talked with a lawyer but I am running into the problem that his recommendation seems to be what is better for him, so also in search for other real estate lawyers in the area.
In my opinion, If these are your friends then you should create a partnership, not a syndication. You can define the roles of each person inside of the partnership agreement without necessarily using the terms General & Limited Partner. Now I say this assuming the size of your partnership is not in the millions.
If your goal is to eventually solicit from people who are not your friends and are looking for passive income, then you need to consider establishing a syndicate. There are lots of rules & regulations on who you can solicit from and how to solicit that you will have to become familiar with. I have seen the cost to file for a syndication range from $ 25K to $100K.
Thanks for confirming, that was exactly the assumption that I did with the other replies, the prices is also big for the investment size.
Post: Indemnification Clause in PM Agreement
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
Quote from @James Wise:
Quote from @Chris Seveney:
Quote from @James Wise:
Quote from @Chris Seveney:
Quote from @John Weiss:
Looking to hire a PM was going over the agreement. Saw this and it kind of concerns me that basically im on the hook for any stupid thing they do. As a General Contractor when i manage a site im used to being the one on the hook for everything. Not passing the buck to the homeowner that hired me. Is this standard fare for PM's. To me it defeats the primary reason for hiring a Property manager.
9. INDEMNIFICATION AND HOLD HARMLESS
Except for the willful misconduct of Agent, Owner shall indemnify, defend, and hold Agent harmless from all loss, damage, cost,
expense (including attorneys' fees), liability, claims, investigations and lawsuits by third parties for personal injury, death or
property damage incurred or occurring in, on, or about the Premises that are connected with the management of the property,
during the term of this Agreement or after its termination, including any liability for error of judgment, a mistake of fact of law, or
for anything which Agent may do or refrain from doing hereinafter. Owner shall pay, except as provided elsewhere in this
Agreement, all expenses incurred by the Agent, including, but not limited to, reasonable attorney’s fees and Agent’s costs and
time in connection with any claim, proceeding, or suit involving an alleged violation by the Agent or Owner, or both, of any law
pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but
not limited to, any law prohibiting, or making illegal, discrimination on the basis of race, sex, creed, color, religion, national origin,
age, marital status, or mental or physical handicap, provided, however, that the Owner shall not be responsible to the Agent for
any expenses in the event that Agent is finally adjudicated to have personally, and not in a representative capacity, violated any
such law, unless such acts and or omissions are outside the course and scope of Agent’s duties hereunder. Nothing contained
herein shall obligate the Agent to employ counsel to represent the Owner in any such proceeding or suit. The Owner also
agrees to pay reasonable expenses (or an apportioned amount of such expenses where other employers of Agent also benefit)
incurred by the Agent in obtaining legal advice regarding compliance with any law affecting the Premises or activities related
thereto. If Agent or Owner are called upon to respond to any such claims, each party will promptly notifify the other. Upon receipt
of such notice, Owner will promptly notifiy Agent whether Owner will undertake the defense. If Owner does not respond
promptly and assume the defense of such claims, then Agent may take such steps as Agent deems necessary in connection
with the claims.
Agent assumes no responsibility or management of personal property left by Owner at Premises. Owner shall not hold the Agent
liable for any willful neglect, abuse or damage to the Premises by tenants or vandals or others nor for loss of or damage to any
personal property of the Owner or any tenant including loss due to exchange or theft by tenants or any third party. Further, the
Owner shall not hold the Agent liable for any error of judgment or mistake of law except in cases of willful misconduct or gross
negligence.
we always have our attorney bloody the heck out of this. Indemnification is important but it has to be even -kind of like - if I screw up on me if you screw up on you. Most PM agreements are like this and very lopsided. Some they literally could kill a tenant and you have to pay to defend them. Things my attorney typically mark up are we get rid of willful misconduct, the last sentence that we cannot hold them liable for mistake of law - umm sorry if they do not follow the law - that is on them - why are you paying them
If you need a good attorney to review this I got one. Also make sure it goes both ways - make sure the PM indemnifies and defends you for things they do that are illegal.
Ya'll need to focus on the real world here... Can an attorney review it and ask for changes sure, but why spend the money? A legitimate PM company ain't changing their contract for any customer. Can you have your attorney review your contract with Verizon, sure, but why? They ain't doing anything about it.
Have all the love for you james,but this clause is a very important clause in a contract and has significant legal ramifications and I will spend $250 all day long to have this reviewed and will not use that PM if it is grossly one-sided.
If a PM is not going to hold themselves liable for breaking the law which is what this agreement says since willful misconduct is almost impossible to prove as it has to be premeditated - then that is not a risk I will take.
Re: Verizon of course they will not amend their agreement (actually I have gotten them to amend a lease as a tenant...) , but the service they provide to you is very different than what a PM does. Now on the flip side I am 100% for a PM indemnifying themselves for whatever the tenant does - there are some owners who think if the PM brings in a bad tenant that is on them - I am 100% on PM side there, but this is a you screw up on you I screw up on me.
Let me ask this question - if one of your employees during work hours walks into a store and decides to rob it or someone picks a fight with them and kills them, will you legally defend them? I do not know who would, I would not, but this contract above is saying the owner of the property would be required to defend an employee of the PM for this instance - someone goes on property collects rent, gets in a fight and kills the tenant....
I suppose we could go back and fourth on the validity of your example of the rent / fight / murder, but for now the purpose of what I am saying here is if a customer isn't comfortable with the contract, their time is better spent moving on to a different PM than spending time and money trying to change their contract, cuz it ain't happening.
I am not sure how other will take this, however in my experience a property management company has an specific job for a very little portion of the pie, which means that they need to assure that they are not liable (of course, I wouldn't sign a contract when they are no liable even for their own error, that seems to be a red flag).
You have to understand what is the service that a PM jobs, in here we were comparing with Verizon, but I agree that this is different, however you can compare it with an assitant or a fractional operation manager, as that is their main job to do, and that is the work that they are taking from your shoulders.
Another thing to review is what happen when the property goes vacant, are they providing another listing contract or are this also included into the PM agreement? That is another item to review, not to say that is good or bad either of them though.
Post: Syndication vs Partnership
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
Quote from @Chris K.:
When people say "syndication" in context of real estate, they really mean filing the necessary paperwork with the SEC to sell securities. Most of the time, they are seeking to rely on exemptions Section 506(b) or Section 506(c) to avoid having to register their offering with the SEC. You will need to work with lawyers that specialize in handling those registrations. It's a different skill set from handling the legal work for the underlying real estate transaction. Some lawyers can do both --- some cannot.
Not sure if @Ronald Rohde still posts here but he is probably a good starting point for any TX transactions.
Disclaimer: While I’m a licensed attorney, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.
Thanks Chris this clear a bit the path, and I get now why when I consulted with an attorney, he didn't know about this. I have to find an attorney that is experienced on this type of deals.
Post: Syndication vs Partnership
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
Quote from @Charles Carillo:
If any investors are passive, you need to setup a syndication since it is a security.
If all of the investors are active, you can setup a joint venture partnership.
Thanks for the response.
What would it be the steps to setup a syndication? Or better yet any recommendation for a Real Estate Attoney in the DFW area?
Post: Syndication vs Partnership
- Real Estate Agent
- Flower Mound, TX
- Posts 206
- Votes 94
Hello Experts,
I am looking for some advice on what route to take. I have a group of friends that they are looking to invest in Real Estate in some deals together, but we are not clear on how to make sure we structure the partnership correctly.
I am in real estate investing since 2018 where I invested in Single Family on my own and holding rentals as well, but I have never done a deal with partners. I am also transitioning full-time to real estate so this partnership will see my friends as LPs and me as GP running everything such as finding the deals, rehab, operations, etc.
Syndications seems to be complex in terms of the legal process, and partnerships are complex in differenciating who is passive and who is active.
What are the pros and cons? What would be your advise being in this position?
I talked with a lawyer but I am running into the problem that his recommendation seems to be what is better for him, so also in search for other real estate lawyers in the area.