All Forum Posts by: Account Closed

FM & FM are not really there to stabilize markets. They have to operate a business and focus on being profitable. Legally they are private companies and not a direct arm of the government.

There are other agencies and entities that rate markets. The PMI folks will publish reports of declining markets. Lenders will lower LTVs if they feel a market is more likely to decline.

It has happened in the past when markets were down in some areas of the US.

Markets will stabilize when enough buyers re-enter and prices are at a level so they buy. In much of the US the prices are stable. Granted those are not markets that have risen much between 2000 and 2006.

In markets where jumbo loans are the norm does FM & FM matter all that much? I believe a jumbo started below $500K so much of CA fits.

Jim,

Have you reviewed the ebook MikeOH has produced. I have not read it but others I trust feel it does a good job.

What books have you read so far?

Some of the time you will need a local book so you can learn the local laws. When I started investing in OR the City of Portland had a great book for $5.00. They produced it to improve the quality of the rentals and it covered all the laws plus had great advice on screening, etc.

You can use Google to see if there are local resources for your state. A good source for landlord forms is the state chapter of the Apartment Owners Association. They pay lawyers to keep the forms up to date and then send them to members. They generally publish regular news updates so you can stay current with the state and community regulations.

GW,

A couple of things.

1. You can refinance the property so that the two of you are on the loan. Maybe nice for your partner but not exactly required for the business venture.

2. You could be the one who takes out the loan on the next property in your name with the same deal for splitting the deal like you did for this one. That would more or less rebalance things. Granted there could be some slight differences in what is borrowed and the interest rates, etc.

3. If you are sharing the deals and have it documented it might be close enough without needing to waste money on a refi. It depends on how long you want to keep the place and some other things related to the relationship you two have. Spending money just to rebalance things if both sides feel well protected is wasting money.

Discuss all such ideas with your partner so you stay on the same page.

Ryan,

Good points.

To add to people's understanding...

In your experience are the folks putting up signs and operating as office assistants paid through a share of the commission if and only if a deal closes? Or are they paid a salary or an hourly wage?

If someone is entitled to a fee only when a deal successfully closes between two parties where the person receiving the fee is not a principal in the deal they are brokering a deal. They are not a part of the deal other than to bring the two sides together. Check the state laws on brokering or agency and you will find that a contingent fee paid for a RE deal where the person is not a principal will be covered.

Lawyers are exception from agency rules if the RE deals for a fee are not the main business for the lawyer.

Pay birddogs for information. Pay them for all info and do not vary what you pay based on if a deal closes. No bonuses or other things. Just a flat rate like the sign people, the photographers and the office assistants.

Jason,

If it quacks like a duck, walks like a duck the judge will call it a duck even if you call it taking photographs.

A key test will be if the fee is normal for taking pictures. A second test will be if the fee is paid even when the deals do not close.

An online appraisal service is paying $15/hour for photos in Portland OR and not deals have to close.

If someone wants to work for $15/hour and nothing else if a deal happens to close they will not be operating illegally.

Putting stuff on the HUD means nothing to the state office that regulates agency. They look at the services provided and the way the compensation has been handled. On the HUD or off. Note that if the payments are on the HUD it likely means the fee was contingent on the deal closing. The HUD also leave a paper trail for future legal action against the illegal birddogs.

Read Bronchick's books if you want to see how a RE lawyer talks about the issue.

If a local lawyer licensed to practice in your state says there is no issue have them write it down in a letter and then save the letter. If they are correct for your state, great. If not you can make a claim against the lawyer's insurance if you get shut down, fined or sent to jail.

In REI many people think of being a birddog the same way many folks drive. They break the law and get away with it so figure it must be legal.

If commercial is the focus take a serious look at Ray Alcorn's manual. He does not offer seminars, retreats or other things. He has been in commercial since he started in the business. His farther was a developer. Ray invests with his brothers and has been active in most areas of commercial (hotels to office buildings, multi-family, MH parks, construction).

Now check the NC laws for RE agency.

Likely there is a clear statement that no one other than a licensed agent can be paid to bring two parties together. If the person has no direct interest in the deal and the fee is contingent on the deal closing the 'birddog' is acting as an unlicensed agent.

The disclosure on the HUD-1 is nice but has no bearing on the situation. Actually, it is slight value. There is now documented proof of an illegal fee being paid if the state wants to pursue the person later for operating without a license.

Just because you have seen it done does not make it legal. Check the NC laws for agency. If you ask a lawyer for their opinion ask if they will put it in writing. That way they will make sure they are being accurate rather than just shooting from the hip. They have liability if they offer an opinion on a matter of law and they get it wrong.

The following quote made me think of BP and the community here. People helping others to learn and learn effectively.

http://www.bartleby.com/73/486.html

"An education isn't how much you have committed to memory, or even how much you know. It's being able to differentiate between what you do know and what you don’t. It's knowing where to go to find out what you need to know; and it's knowing how to use the information you get."
William Feather

John,

Good to have you on board.

:welcome:

It sounds like you arrive here at BP with some good experience. Well done.

A suggestion. You profiles shows no deals done and no active. You might want to change is so people get a better idea of your experience.

Enjoy, post questions, offer suggestions and contact others when you need help.

Jared,

A rather complete profile. Well done and welcome. I like how you have focused on moving forward in a specific way, one step at a time.