All Forum Posts by: Mimi H.

@Max Smith one thing to keep in mind, Mountain View just passed Measure V, so if your units are not producing, you'll start being capped to 2-5% max annual increases - between that and the interest rates rising next year, it might be a good time to get out, if that's an option.

I swear, I'm not just saying that because I'm a realtor. :D

Another thing to consider is the designation of the townhouses. Many 'townhouse' configuration homes are actually legally condos. Why do you care? Mortgages on condos are .75 pts higher than on single family. If you can get your HOA to redesignate it to a proper townhouse (if it's not already) then that's more $ for you if you were to sell.

@Arlen Chou would love to hear about your solutions as well.

I've not found PMs to generally be great in the Bay Area, so if anyone has a referral, please do share.

Large parts of Long Island. It's not written in, it's just not done and the process drags until the Spring.

it all depends on how you finance, traditional banks tend to ask for 25% down - also depends on what you mean by investment properties - single family vs condo vs up to 4 plex vs multifamily vs commercial.

Relationships are key & can save you a lot of money (or kill you).

Before you make any decisions, negotiate what the PM can offer. If you have a great tenant, you may not need a PM, if you have horrible tenants and a horrible PM then it's just a bit of a nightmare situation all around.

Definitely become familiar with your local rental/eviction laws - they vary greatly. EG: there are certain parts of NY that don't do any evictions from roughly Oct - Feb and bad tenants have learned to work the system. 

May also be beneficial to use BP to find other investors in your area so you can be prepared for what's up.

@Jay Hinrichs EPA is still up and coming :) I sold my PDX house and it's more than tripled since (ouch)

@Jay Hinrichs oh boy, my stomach fell into the pits just reading that but yes, never look back. Markets can't really be predicted. Wish I'd bought when I first move to the Bay Area in 99 but ah well... 

If it makes you feel any better, Mtv View just passed Measure V - rent control maxed out at 5% increase annual.

I'd try to restructure things so that the $2.5M is coming from a solo 401k or solo IRA so you can take advantage of tax benefits. Then diversify. I would have put some of it in REITs but these days, they have already been run up so they're kind of pricy. What / where exactly you'd invest has a lot to do with many vectors. Generally, I don't deal with what if scenarios that aren't executable. There's so much opportunity to put real funds into play that at times, the 'what ifs' tend to be a distractor. But hey, it's Sunday so why not... :D

@Jay Hinrichs great to see you again on this post, it's been a little while :)

Great, thanks for the clarification. I was under the impression that that was the case but hadn't really looked into it for outside of CA. Also, Keller has a very different engagement model / rev share model than most. I interviewed a number of firms before I went with Keller - each brokerage is very different, for sure. And yes, you should be bringing in commission income (aka treating it like a job because, it is! :D ).

Jay, would be curious to hear about your path if you're willing to share? I've read your profile but curious to know what's driven the choices that you'd made (opportunity? or something else?).

@Evan R. you'd definitely want to check with your state to see where your state falls in the way of fees - it was a surprise for me since the info wasn't readily available.

One of the biggest disadvantages would be that it becomes more of a time sap then a cost savings, especially if your state has the requirement to hang your shingle with a brokerage. Don't get me wrong. I love the brokerage that I'm part of it, but I wanted to be in the business, it was the logical next step. Plus, I was seeing a lot of deals that were coming on the market that would be great for flippers, not so much for me.

Still, it surprises me that every single time this question comes up, no one ever provides actual numbers. Hopefully everyone doesn't run their investments in the same way.

I've been an investor first, and now I'm also a RE Agent. I joined because I was doing fairly well as an investor, am primarily interested in buy and hold deals, and was frustrated at the general poor quality of agents in my area for my price range. This is for both Retail and Investing. I won't go into the details in this response but it's safe to say that many of them did not seem to understand the areas, the schools, or basic finances. Or, more frequently than not, they would want to "upsell" me to things that were easily $500k above my cap, also known as total time wasters.

I knew that I could do it better, and really focus on servicing a select number of clients, and specifically, other investors.

There are a _LOT_ of 'hidden' costs associated with being an Agent and other not-so-obvious requirements.

I'll be more specific than everyone else here so you can really make that decision for yourself. 

In CA, there is a 2 year requirement to work with a Broker before you can get a Broker's license - there isn't really any way around it at this point. So if you're an investor, be prepared to join someone else's firm for 2 years. Question 1 for yourself: Do you want to do that?

Here are some costs associated with being an agent:

• E&O insurance (can run anywhere from $150+ monthly)
• desk fees (depending on the brokerage, some may charge "desk fees")
• rev split - when you join a brokerage, they get some % of what you sell - even if you don't sell, you may still pay desk / E&O / Office fees
• the test, materials - $600 all in
• fees to be part of the Real Estate Board - ~$1000/annual
• fees for MLS - ~$800/annual
• fees for key entry (can't remember how much this runs)

So all in, if you do zero business, and close zero deals, you'll be out roughly $4k for the first year, and roughly the same for every year following. Question 2 for yourself: Now that you have the numbers, will the numbers really work out?

Let's say that you decide to get the license, and you start ramping up on deals. You may find that you only have 24 hours in a day, and once you have 3 concurrent deals, you won't have the time to find the other deal. So here's Question 3: Realistically, if you want to scale, do you think you can do it without a team?

I realized that I wanted to get my license so I can augment a team. I've worked on a lot of massive projects and have been humbled time and time again with the sheer number of people that it takes to get big things off the ground with any sense of velocity. As a result, I'm bringing that mindset to RE as well, spending the time to meet the 'right' investors to work with as an agent, or the 'right' flippers to do hard money loans, or the 'right' partners for any other type of investing.

I see a lot of people going at it alone, or with their significant other (possible recipe for divorce if you're not both on the same page btw). People make it happen for sure, but I've personally have found that working with a solid team delivers much better results and there is a lot to be said for the ability to divide and conquer.

Now, of course, if you find that you don't enjoy working on a team, then that really trumps everything I've noted above. Because if you don't like working on a team, then it's highly likely that others will also not enjoy working with you. So here's the final question: Are you easy to work with? You can define that in any way you wish, but the sooner you can be honest about that answer, the quicker you'll come to a decision. If you're not easy to work with, then you'll do yourself, and any potential agents, contractors, etc. a huge service by getting your license so it's not a waste of everyone's time.

Most agents hate working with investors because there are a lot of "investors" out there who just talk about investing, but have no track record of investing, or burn through their potential partners. Then they complain about how everyone else sucks.

People love to say how terrible their agents are (re-read my first comment for proof) but may not be aware of what's really involved. Let's just say that I have a much better appreciation of the good agents now that I am one.

Hope this helps.