All Forum Posts by: Account Closed

Shari,

You asked the same question in another thread (one started by someone else on a related topic).

This link will help people find that thread where a few people have commented to your specific question.

http://forums.biggerpockets.com/viewtopic.php?p=75391&highlight=#75391

I suggest that people keep future replies here but this will help everyone see the replies there.

Shari,

You are a licensed agent in CA. Assuming I got that correct see if the local Realtor board has an attorney that you can consult with. Likely for no fee.

The CA laws tend to be pretty clear. As an agent you are expected to know the laws so a judge will hold you to a higher standard.

If you have photos of the problems you might have room to negotiate a settlement even if you are not on completely firm ground.

If you have no photos or other evidence then you will have a hard time arguing your case.

You might have just paid for an expensive class in property management. Expect that you will need to learn even more so best to read up on the topic as it applies to CA before you run into more tenants like this one. There are some real sharks out there who take advantage of newer landlords. They know what they can do and they watch for when you drop the ball.

BTW - Hang in there. Over the long term being an investor is a great way to go. There just will be some bad days when you get conned or someone is trying to con you. Be very careful with your tenant screening as that stops most problems.

Jason,

1. Agency rules and regulations are set at the state level. Check the CA department that regulates agents. Their website has a lot of info.

2. Anyone who is not a principal in a transaction and who is paid only when the buyer and seller complete a deal is someone who is brokering. They are being paid to match a buyer and seller. For RE most states require that the person has a license.

Some dress the transaction up and call it a marketing fee, a referral fee or any other thing. All would be illegal if the state regulates brokerage.

3. A person who is a principal is different. They have a stake in the asset being sold. If the deal does not complete they still have a position or have suffered real losses.

4. Double closes will end with you having been on the title. You are not brokering. You are buying and then you are selling. You are a principal (at one point you were the buyer, then the owner selling).

5. You can sell things you own. If you buy the right to purchase something you can sell your rights. Assigning a contract or selling an option which you purchased is an example.

There is a lot of confusion out there as to what is illegal brokerage and what is legal RE investing. One guy in OH was shut down and fined because he was using a trust system to match sellers with end buyers. No one told him he was operating illegally. He even asked the promoter of the program and an OH lawyer. Both got it wrong.

Good hunting. :shoot:

Brian,

You can document payments in and out of a company without a contract. You just need to track payments.

A contract to pay someone based on a deal closing will not be enforceable if the state requires only licensed agents to be paid when brokering RE.

So, the contract might help to document where the money went. It may also not be valid if taken into court if there is a dispute. Contracts for illegal activity is difficult to enforce in a courtroom.

Good point Tim.

John sold his guru business so he does not even control how it is marketed. He sold a long time ago.

Brian,

Check on the licensing laws. Short term rentals normally fall under a different set of rules. You might need a business license in addition to a real estate license to manage this type of property.

Vacation rentals is a well established field. If there are other rentals in the area call around to the management companies and see what they charge. They are always looking for new business so they will tell you their rates if you have a property that needs managing.

25% up to 50% of the gross rent is not uncommon. 50% tends to be where someone owns a room in a hotel or resort.

There are some dedicated mailing lists or forums for vacation rentals. It can be a fine business. It is very different from RE investing and normal property management. The rules for eviction do not apply. More like how a hotel treats a guest who has not paid.

Minor history lesson.

ARMs came about in the late 1970s more or less. I had one in 1983 and it was one of the few on the market.

The banks borrow short term from depositors and the wholesale market. They then lend the money out long to borrowers on 30 year loans. When they do this the bank can end up with loans that have fixed interest rates for 30 years but they might find that they end up paying more than they are earning. The interest rate the bank has to pay for the money is more than they are getting on the loan so the bank is losing money every month.

Two solutions. The bank can set the loan up so that it adjusts every so often. If interest rates go up or down the lender can change what they earn and better line up the interest income vs. what they bank has to pay out to the folks who give the the money (depositors, wholesale money lenders).

The other alternative is for the bank to sell the loan to someone who has cash and wants to hold a long as an asset (investing in loans) to collect the income. Insurance companies and others who buy bonds are the people who are interested in long term income.

When interest rates spiked in the 1970s a number of banks ended up closing as they could not get the income to match the expenses. ARMs were a solution.

Back before Fannie Mae was set up housing loans were due every 5 years. There was no fixed interest rate long term funding for 30 years. Banks could not take the risks so they could only lend up to 5 years. Similar to why many commercial loans held by banks have 5 year call options or other mechanisms to reset the interest rate to the market rate.

Jim,

You posted the same request for ideas in another forum. So that people can see the replies to both I have added the URL for the other thread below.

http://forums.biggerpockets.com/viewtopic.php?p=74590&highlight=#74590

Karen,

Asking for help is a good sign. It is a starting point.

I would say you are confused and there could be some other issues related to the documents. Being confused is not a bad. It just reflects that you do not deal with titles and liens as your day job.

Have you spoken with a RE attorney so that you can get a professional opinion based on the actual facts (documents, recording dates, etc)? Your options could vary a lot depending on what happened and if people actually did their job or delivered what they promised.

Good luck!

Herding cats comes to mind.

There are limits to how easily you can train tenants. At some point it is best to change out the tenant. Granted a bit of trash is not much of an issue if they pay up on time every month.