All Forum Posts by: James Park

I am thinking about starting my own brokerage but i am not sure what the costs are every year or if it makes sense. I am looking to use my license for investment purposes and also to help others buy and sell their homes. For those you who have a broker's license, what are the advantages or disadvantages of starting your own broekrage compared to hanging your license with a low fee broker?

The detailed paper work required my low fee broker is very extreme and many agents who hang their license with this particular broker are not happy about this. The other option for me is to hang my license with Keller Williams.

I am 100% certain that i want to be a real estate investor, but sort of exploring the path of working as an RE agent so see if i like it or not.

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I would put $300,000 into my own business (non real estate related), $300,000 in SFR rental properties yielding 15-20% return, $100,000 in USD cash (money market collecting 1.24% a year) and $300,000 in long commodities: Oil, Agriculture, Silver, and Gold. I would allocate a larger percentage to Oil and Agriculture as they are more undervalued than Gold and Silver.

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J Scott,
I like the idea of becoming my own brokerage myself. Though you would have more control, wouldn't the costs be a lot higher : FMLS membership, e&o insurance.

What do you think are pro and cons are hanging your license with a low fee brokerage to having your own brokerage. I guess one pro is that the checks will be written directly to your own brokerage. Sometimes i wonder what happens to commission if your broker decides to file bankruptcy. When REMAX Greater Atlanta went belly up, I remember one of the agents I knew had $25,000 of commissions he couldn't collect.

Originally posted by J Scot:

There are both state laws and then rules that your broker will have.

State laws are pretty simple: you must disclose that you're licensed at the earliest reasonable time (generally, agents take that to mean upon first phone or face-to-face meeting or upon making/receiving an offer), you must disclose in writing in the ad if you're advertising a specific property for sale and you can't offer to buy a property in return for a listing without first putting your offer in writing (this comes into play when you offer to list a short sale that you plan to buy yourself). There may be a few others, but these are the ones we've run into.

In addition, our brokerage has some rules, and they tend to be more strict. They require that any written advertising contain their logo (which has to be as prominent as your own logo if using both), must disclose licensure and they also want to review every piece of written marketing to ensure that it doesn't open them (or you) up to unnecessary liability.

Personally, that last piece is what makes it difficult for us -- our brokers are pretty rigid in what they don't want us to say, and it is detracting from our marketing success. For this reason, my wife is working on getting her broker's license, which should free us up to do whatever we want, so long as we follow the state rules (and are okay with any liability our marketing brings).

The other option was to find a smaller brokerage that didn't really care what we did (and that was an option), but we like the flexibility of being our own broker, so we're going to go that route instead.

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Nate,
I got my broker license in California and had it transferred to Georgia. This allowed me to bypass the 3 year license requirement in GA to get a GA broker license. I initally had my license with Solid Source, but i had some similar complaints as J Scott regarding some of their strict procedures and policy: marketing, logo etc. I had a little tense moment with my broker that I refuse to put that ugly Solid Source Realty Logo on my website :)

I am currently with Park Mason Brokers and there fee is $195 a year plus $195 per transactions which is lowest fees I have seen in Georgia.

Originally posted by Nate Gelinas:

Since you are in GA as well, can you expand on the disclosure requirements a bit? Are you required to disclose when you market, or simply once you begin discussions with a potential seller?

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Happy birthday j Scott!
Your two year old can already talk? our two year old twins can't talk yet. I think it is because I speak to them in English and my Wife speaks to them in Korean and they get confused.

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Here is the way i see it. If you have $2 million in cash and have a debt service of $2M, this is the same as owning all your properties free and clear and you can pay off $2M any day.

If you can take out a 80% loan from your primary at a fixed rate of 3.75% for 30 years and invest that money and get a return of 15-20% why wouldn't you do it? The smart thing to do is lock in $2M of mortgages at 4% for 30 years and arbritrage that money to beat the bank. Any return you can get greater than 4% is your profit.

If i see my track record for the past 5 years it looks like this.

1) Investing in my own business (eCommerce) - 35 - 50% Annual return
report card : A

2) My personal hedge fund - 25 - 30% annual return: Report card : B+

3) Real estate - 5 % - this is the sector that i am the weakest at, but read bigger pockets every day to improve my returns and improve my grade. Report card : D

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Let's also assume you've seen enough episodes of American Greed on CNBC and you will not trust turning over your money to a hedge fund manager or become loan shark. You want to control this money with conventional investing.

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You have inherited $1,000,000 USD from uncle Joe and you are seeking 10% return of $100,000 a year how would you invest this money in an environment where money market is paying you less than 1%? In terms of rental properties you prefer not to lock up more than 30% in real estate.

If investing in the stock market, how would position yourself in 2012? If investing in a business, what type of business who you invest it in?

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Jon Holdman,

I you bought a $170,000 SFR rental in the tier one zip code in Austin last year... I will argue that this home will trade at $340,000 + by 2021.

I also wouldn't mind making a friendly wager with you... however I am not sure if you or I will be still around on Bigger Pockets in 2021.

John W. Schaub's 10 year SFR investment plan will work in the best zip codes in Austin.

Originally posted by Jon Holdman:

James Park, yes, I actually have read that Lindhal book. No, I don't believe its possible to find areas that will double in value in the next 10 years. I think those areas will be few and far between, if any exist at all. If we were having this conversation in 2002, would people have said properties would double in 10 years? You bet. Many people would have said that. Did they? Anywhere? I daresay most properties are, at best, worth little more now than they were in 2002. Planning on 7% annual appreciation over the next 10 years is speculation pure and simple.

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Bienes,

How did your situation end up? I recall you said that you were in a similar situation as me?

James

Originally posted by Bienes Raices:

Originally posted by James Park:

My tenant situation is getting worse. The mother (tenant1) called me yesterday with another sob story that the grandmother had sent all of your money to Asia for hospital bills. She asked if she can deposit $1000 to my account on Nov 1st and the grandmother will deposit the $800 on Nov 21st. I almost bought the sob story until i called the grandmother. She told me that she will give here daughter the first month payment on the 1st. The grandmother is not even on the lease. Her son who is tenant 2 has the 700 credit score and the mother tells me now that they don't care if i go through the eviction process or not.

I reduced the rent from $2175 to $1800 in sympathy that her son (tenant2) had lost her job. Now it seems like they are truly trying to take advantage of my generousity. It also appears that they are hindering any new prospective tenants to coming in voluntarily telling then the flood I had in July.

Tenant1 (the mother) is flying to Asia on Nov 2 - Dec 3. I asked her when the earliest date she can vacate my property and she told me Dec 3. If I don't get paid by the Nov 5th, I plan to serve the 5 day notice. I asked if she could move out in Nov and I will return her prorated security deposit and did not like this option as she will be Asia. She insisted that i take the $800 from the security deposit until her mother deposits this amount to my account the 21st of November which i refused to do since that is not what the her $2250 security deposit is for.

I would appreciate any advice from the experienced landlord. I got really pissed when the mother (tenant1) called me at 8pm on Friday while having dinner with my wife. Now it seems clear that everytime she calls me it another sob after another and I am buying it anymore. Emotionally this is becoming too much for me. What are my options here?

As a human being.. I would hate to see the police men throw their belonging out on the street. Is eviction the only option I have a this momoment. I rather pay two mortgages then face the stress these tenants have been giving me in the past 4 months. I could atleast fly to Chicago and clean out the unit so that it is presentable to the prospective tenants. I've had many people viewing the property but only one application so far.

Sorry to hear of your predicament James. I am heading towards a similar situation (not sure how it will pan out yet--maybe there will be a miracle?). I actually do like my tenants and have never had an issue with them, but it looks like they will not be able to pay the full rent anymore. In that case I'll just have to get them to leave--business is business.

If you want to help people I would suggest donating to a charity or doing volunteer work. But these tenants entered into a contract and now they aren't fulfilling their obligations--that's their problem, not yours.

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All Forum Posts by: James Park

James Park has started 152 posts and replied 856 times.

Post: For those of you with a Broker license, what are the advantages / disadvantages as an investor?

Post: How would you invest 1,000,000 USD in 2012?

Post: Is a RE license necessary??

Post: Is a RE license necessary??

Post: Happy Birthday JScott!

Post: To pay or not to pay off your primary residence

Post: How would you invest 1,000,000 USD in 2012?

Post: How would you invest 1,000,000 USD in 2012?

Post: Where to invest -- Good areas/Bad areas

Post: New Landlord. How to handle a situation when tenant cannot pay the full rent amount