All Forum Posts by: Jeff Copeland

Just sent you a PM.

We're not in Ocala, but a couple hours away in St Petersburg. 

Welcome, you'll find this community a great resource! Be sure to check out the Bigger Pockets bookstore and podcast. 

I won't post external links here in the forums, but we also have tons of free educational info specific to Florida real estate investors on our own website, podcast, and youtube channel (and we aren't hard to find). Let me know if you have any questions!

This information (at least a name and current mailing address) is usually available for free via the County property appraiser or property assessor website. 

For example: https://propertyinquiryportal....

A very important consideration right now is the term. 

How long do you lock/fix 7.7 on the non-QM product? That sounds high, but even conventional QM loans right now are in the mid to high 6's in some cases. 

Unfortunately, 7.7% may sound great a couple of years from now!

The bridge is presumably only for a year or two. My concern there would be having to refi out of that balloon in a year or two at 8 or 9% +.

If you can afford it, you may want to lock in the longest fixed term you can. 

We don't know enough about the situation to say whether your PM has any blame here. Was there an eviction? Did your PM start that process at the appropriate time? Did it linger in the court system for 9 months? Or did your PM just let it ride for 10 months and leave you hanging? Not enough info. 

But it really doesn't matter. You could spend another $10k suing the tenant and win a $1M judgement against them, but you are still unlikely to ever collect a dime from them. Here is a great video on this topic: Episode 48: Collections and The Property Manager - Evict TV

Let it go and chalk this up to an expensive lesson learned. 

The "my PM won't give me their social security number {or credit report)" issue is very common. 

Under federal law, they can't (or at least shouldn't) without exposing themselves to significant liability). 

(And it's often true that they actually don't have it anymore. Many software systems XXXX out the SSN or delete it after a certain amount of time as a safeguard against FCRA violations and identity theft).

This legal article is a must read on the subject: https://evict.com/releasing-cr...).

Some key points:

- At issue here is a federal law called the Fair Credit Reporting Act (so this applies in any US state or territory and does not vary from market to market).

- Under the FCRA, your PM is a "Credit Reporting Agency" and as such they cannot (or at least should not) share credit reports, SSN, or other PII with you or anyone else without exposing themselves to significant liability. 

Per the article above "A debtor (resident or applicant) can sue for a violation of the FCRA, as can the Justice Department. Damages are awarded, even if there’s been no harm done to the debtor! Add attorney fees and court costs to that, and one has a very unhappy property manager."

- A tenant cannot waive their rights under the FCRA and "sign a release" to share their report with you or anyone else.

- Again quoting the article: "...the fact that the owner hired you as his agent and you obtained the report in that capacity of agent does not change any of the advice above."

In addition to the FCRA, the other major risk is identity theft.

In order to even be permitted to run credit reports, my PM company had to go through a physical site visit from a representative of the credit bureau to ensure we have physical (locking filing cabinets, etc), electronic (password protected computer lock screens, etc), and procedural (written policies) safeguards in place specifically to prevent the release of SSNs and other personally identifiable information (PII).

So legally the PM cannot and should not share a tenant's SSN with you.

Note: I have no affiliation with the Law Office referenced in the above links. Just sharing pertinent info.

A skip tracer and/or private investigator handles these types of requests. 

Though I'm curious what you intend to do with the address if you're not referring them to collections. 

A word of warning about trying to collect your own debts: You become a debt collector yourself and you are subject to consumer debt collection practices laws in most states (and I believe there is a corresponding federal law). 

I was sued once because a tenant invited me (in writing, via text) to her workplace (citing transportation issues) to pick up a rent check. She didn't even have the rent check, and she then sued me for unfair debt collection practices for coming to her workplace! 

The case was completely frivolous and went nowhere (in fact, my E&O insurance carrier countersued the tenant for the legal fees and she ended up with a new collection on her record).

But it still cost me $10,000 (my E&O deductible) in legal fees, and probably a hundred hours of wasted time. 

It's 80% of the appraised value ($465k x 80% = $372k). 

Minus the payoff of your existing mortgage of $337k = $35k available to cash out.

Minus closing costs on the loan. 

I've seen this pop up in other threads before. Based on past discussions, you're likely to get some conflicting advice here, and some will want to argue with my position on this. 

As a property manager, I have been through this a few times with owners, and even sought clarification from a well-respected attorney. 

This article is a must read on the subject: https://evict.com/releasing-cr...).

Some key points:

- At issue here is a federal law called the Fair Credit Reporting Act (so this applies in any US state or territory and does not vary from market to market).

- Under the FCRA, your PM is a "Credit Reporting Agency" and as such they cannot (or at least should not) share credit reports with you or anyone else without exposing themselves to significant liability. 

Per the article above "A debtor (resident or applicant) can sue for a violation of the FCRA, as can the Justice Department. Damages are awarded, even if there’s been no harm done to the debtor! Add attorney fees and court costs to that, and one has a very unhappy property manager."

- A tenant cannot waive their rights under the FCRA and "sign a release" to share their report with you or anyone else.

- Again quoting the article: "...the fact that the owner hired you as his agent and you obtained the report in that capacity of agent does not change any of the advice above."

In addition to the FCRA, the other major risk is identity theft.

In order to even be permitted to run credit reports, my PM company had to go through a physical site visit from a representative of the credit bureau to ensure we have physical (locking filing cabinets, etc), electronic (password protected computer lock screens, etc), and procedural (written policies) safeguards in place to prevent the release of SSNs and other personally identifiable information (PII).

So the correct answer to your question is a hearty No, the PM cannot and should not share applicants' credit reports with you.

Note: I have since followed up with the law firm that published the article linked above, and they acknowledged that some of this is still the subject of legal debate. But they were very clear about NOT sharing the credit report in particular:

"Cathy concluded that the management company was hired by the owner to screen applicants and make decisions about what applicants were approved, and saw no clear authority to share privileged information in the application with the owner, such as SSN information. The point is still a matter of legal debate, but NOT with regard to consumer reports. Definitely cannot share consumer reports."

Yes, just not with conventional financing. Conventional financing usually comes with the best rates/terms (i.e. 30-year fixed rate), but is typically only available to individual persons, not corporate entities. 

As noted by other posters, this limits you to commercial financing, DSCR loans, and other "Non QM" loan products.

So, for residential properties (4 units and below), the choice usually comes down to:

1. Put it in your own name, get the best possible financing terms, and protect your self from liability with good insurance, to include an umbrella policy, or

2. Put it in an LLC, pay more for financing, but have the added layer of liability protection (and/or tax savings) provided by the LLC.

Many people stick with #1 until they max out the availability of conventional loans (usually a max of ten loans in your name, or whenever your DTI ratio prohibits more conventional loans), then move on to more advanced financing strategies.

And it's important to note than good insurance coverage is an excellent protection against liability risk, and you''ll still need good insurance insurance even if you have the property in an LLC.

The underlying theme of the LLC is the fact that if someone has a death or permanent injury on your property and they sue (which they will), your risk would be limited to the assets and cash held by the LLC, not your personal assets and cash.

But in either case, your insurance carriers have a duty to defend and will fight to minimize your loss.  

What are your questions?

The main issue with VA loans for investors is the loans are for owner occupants only, meaning the veteran has to live in the house he/she is buying. 

You could possibly buy a 2-4 unit multifamily and have your Dad live in one of the units. But otherwise your options are limited as far as financing investment properties with VA.