All Forum Posts by: Jeff Rabinowitz

@Christopher Tabb, welcome to BP. It sounds like you are becoming very knowledgeable of our area. You cannot legally receive a commission before you are licensed. In fact, no licensed real estate salesperson in Michigan receives a commission directly. The commission is paid to the broker and the broker splits the commission with the salesperson practicing under their license according to the agreement between the broker and salesperson. You are close to getting your license. Don't risk your ability to practice later by jumping in a couple weeks early.

Technically, you could enter into a contract with the owner of the property, the bank, and then get an assignment fee when you find a buyer. If you go that route, you will probably alienate both the bank and the Realtor who hired you. This is a smaller community than it seems. Active investors and agents know who the bad actors are. It will not be good for your career if you end up on that list.

Best wishes. If you see me at a REIA meeting (I am not that hard to pick out of a crowd of investors) I hope you will introduce yourself.

There is also a possibility of a price decline. Real estate prices do not move in only one direction. 

This would concern me greatly. The seller only needs to get the first month rent and he benefits. You will have to deal with the aftermath. I would demand that the tenant pass your screening criteria before placement. If the seller places a tenant that you do not approve of I would walk away from the purchase. 

Investors will sometimes pay strong prices for homes that are leased at profitable rates, especially if there is a strong payment history. I bought one of these when I was building my rental portfolio and I recently sold a property with a tenant in place to an investor. When I purchased mine I did so with a bank mortgage loan and it was cash flow positive from day one. The property I sold was to a foreign investor for cash. The 3+ year tenant who was current on the rent was a definite plus for the buyer.

The transfer was easy. The buyer had the lease documents prior to closing and simply notified the tenant of the sale and how to pay the rent. 

When I bought it was even easier as I retained the existing property manager for a year or so after the purchase. The PM simply sent the payments to me instead of the previous owner.

@Sam T., I don't understand why you would want a property that doesn't seem valuable enough to search the title. You might find some nasty surprises if you don't know what you are taking possession of. I am not a lawyer but couldn't you just have the owner quit claim the property to you? You don't have to write a purchase agreement.

@Dylan Henke, welcome to BP. You state that there is a $56K balance remaining on the loan. That house is the collateral for the loan. If you tear it down the lender will probably accelerate the loan (will demand full payment.) Does your mother have $56K available? If not you may want to, at least, begin repairs to keep the Village from condemning the property (if they have cause to.) It is wise to contact a local real estate lawyer to review your options.

I always check. I verify the owner of the previous properties. If I find a lie I do not go any further. That is a denial of the application. As others have stated, it is the second to last landlord and previous ones with whom I most want to speak. They have no reason to not tell the truth. The current landlord may state there are problems with a good tenant they do not wish to lose or that there are no problems with a tenant they are trying to get rid of.

I do not get many calls for references myself. I don't have a lot of turnover and several of my former tenants moved because they purchased homes. A couple moved in with family.

@Dwayne Gilbert, welcome to BP. It sounds like you are willing to risk your last dollar on this venture. That is quite bold but it may not be very wise. It is not likely you will secure a deal if you cannot come up with an earnest money deposit. If you try you will quickly gain a reputation that you are not a real buyer and that may make it difficult to work with any of the people you have contacted plus their contacts. (Many real estate agents, investors, lenders, etc. know each other and network frequently.) Take your time. Explore subjects here on BP and elsewhere. Attend REIA meetings. Save some money. When you have accumulated a reasonable sum take another look at how to deploy it. Best wishes.

This could be a viable option and is worth pursuing. If you can put a considerable amount of your expected profit in your pocket without taking the risks inherent in the build and sale it may be well worth it. You gain considerable experience, make a profit and get to watch the rest of the project from the sidelines. It would be quite instructional when you decide to do your next project.

@Brin Weins, welcome to BP. Don't guess. The consequences of running afoul of the law could be severe. Contact a local real estate attorney and double check their answers with your State licensing board.