All Forum Posts by: Jeff Takle

Or you can try: www.SearchSystems.net

You can go to any county in the US. Great web resource.

JT

Craigslist is free and works pretty good but there are a lot of flake callers.

In Boston (which is really not a normal place) the landlord doesn't necessarily have to pay any fees for a real estate agent to list and rent out their property. Very often, the tenants pay the fee, which is fantastic because you can advertise your rental all over the place at no cost. Then, as things get closer to "go time" you can always offer to pay half fee, or full fee, etc.

I've had less than stellar experiences with yahoo.com's real estate ads, and putting it in the paper--or the paper's online equivalent--has been pretty hit or miss and seems to depend highly on which city you're in. Some cities have great readership by renters-to-be. Others don't.

Well, the law is in place to make sure that people with superior knowledge do not take unfair advantage of others in real estate, so if these real estate agents you know are intentionally misleading, cheating, or curbing the law, then they should get rid of their licenses. If they are not, then they shouldn't have to worry about it.

Here is what I do in order to protect myself: If I'm putting together a deal that has a greater-than-normal risk, i.e. is particularly profitable for me, then I stipulate that the other party must engage the services of a credible real estate attorney and make them seek one out themselves (don't recommend one or you'll probably compound your troubles). I've sold options to elderly couples and I've sold homes at $80k+ over market value to new investors. You might call it overpriced, but I called it solving their problems and I showed them how the numbers would work out for them. I use real numbers and real conclusions--showing someone how they can still make money if they sell to you @ $10,000 less is darn good business. In all cases, I show my numbers to the people on the other side and treat them with honesty. You can do this when you find the compelling reason that they want to buy or sell and explain to them how you will help them get what they want (the home or a lot of money right now) but that you operate based on the criteria you set forth. Then, when faced with a "these are the facts of the case" situation, most people for me have moved forward.

Insisting that they get legal or agent representation actually encourages them that you want them to feel comfortable that they are getting what they want. Of course, I often also talk with those agents and lawyers and I've had more than one deal walk on me. But, I have no fear of being sued and I still maintain relationships with some people I've sold/bought with even though I made out like a bandit b/c I was upfront and explained the terms under which I was interested in making a deal.

It all comes from information assymmetry. If you use that advantage to encourage people to do things directly against their best interest, then you deserve to get sued. If you use that advantage in order to explain to them why this is in their best interest in a way that makes sense, and is ethical, then you're winning. That's fair business and I don't know of any agents (and I'm licensed in two states and active) who have been sued using this criteria.

Hot markets are tough. Two years ago in the DC market, an agent averaged about five contracts before they would get a house for a client. But, here are a few suggestions:

1) Get your client approved for a mortgage amount well beyond the asking price or sales contract price. Your client is in no way committed to taking out a loan for the amount stated on a pre-approval letter (see note below) and it gives the impression that the buyer should get their financing no problem so they won't be slipping out of the contract through a financing contingency. aka listing price is $250,000 and client is pre-approved for $575,000 in funding suggests they are nearly guaranteed to get 250k they need.

2) Get a "fully approved" letter from a mortgage company, not just a "pre-qualified" letter. This is just semantics, but I used this with fair success. The letter reads something to the effect that "We are writing to let you know that we have already fully approved Joe Xmas for $1,000,000 in conventional financing, provided that: the paperwork comes through, what he told us was true, employment verification is good, etc..." It is every bit as meaningless as the "pre-qualified" letter but it sounds more solid. And, when presenting the offer to the listing agent or seller, be sure to point that out-- "I just wanted to let you know that my client isn't just pre-qualified, they are already fully approved for well beyond the full amount of the purchase--they are very strong financial buyers."

3) Consider outlining to your client the risks and benefits of striking some of the clauses in the contract to make it more attractive to sellers. This gets painful and increases the buyer's risk, but it was common just last year to strike appraisals, home inspections, financing approval, all kinds of things. Terrifyingly risky but many buyers felt that was the only way to get the house they wanted. I am NOT SUGGESTING you do this, but I do know this makes for more attractive contracts for sellers.

4) Coach your clients that the market in your area is highly competitive and they should anticipate offering above asking price (if that's the norm or what it takes in your area) to get the house. If you are an agent, then look in MLS for historical data over the last year or two in the area and type of investment your clients are looking for (say, "2bdrm/1ba condos in Arlington"). Then compare the sales price and the listed price for all comps that sold in the last year to see % over / under and that will give you a feel. In San Fransisco, places were selling last fall for about 10%-25% over listing price. In DC it was about 5% over listing. Educate your buyers so they make offers that will win.

Or, suggest they rent and wait a year. Hope these help.
-Jeff

Also, in the future, you may wish to include the following language in your Articles of Formation (or whatever they are called in your state) when starting an LLC, and in your Operating Agreement:

Purpose for this company is: "To provide any and all other services allowable under the laws of this state."

You can check with your state's corporation commission or comparable agency for the specific language. You don't really have to be very specific with what your LLC will do when you form it and, I've never seen a benefit to doing so. Having this language in your documents opens the door for jumping on opportunities as they present themselves. Also, I'm not a tax/legal guy either, but I first read this in a NOLO How to Start an LLC handbook, checked with my State Corporation Commission (who licenses LLCs in VA and MA) and they ok'd it and I've used it for four years, without problem so far.

While I agree with allcash and biggerpo about intentionally violating the tax regulations, I like what you said about donating some of your profits to a charity. It's nice to hear someone talk about something other than just pure profit--though admittedly I don't know your intentions. I started a scholarship that sponsors energetic and promising young people that I meet in my travels and work who agree to meet certain academic standards of performance and attendance in return for half-tuition. Good way to contribute % of annual income and, yes, that reduces my taxable basis. I've also adapted a business model where 10% of every major good deal that goes through, gets funneled directly to these kinds of efforts--kind of helps keep me humble, oriented on what's really important, and makes sure it doesn't get brushed to the sidelines in a money making bonanza. If that is your intention, then please consult a tax attorney familiar with charitable organizations and come back and post the results!

tango-

Here is a list of REI clubs in your area:

http://www.memphisinvestorsgroup.com/
http://www.clarksvillecashflowclub.org/

Also, just a difference of opinion but I'd like to chime in that I've always disliked the "there are a lot of dirferent forms and legal issues..." argument. Almost a scare tactic and it infers that your clients are not smart or savvy enough to grasp the complexity. The value proposition I give to clients is not that it's too big and scary to do for themselves--you can also learn to become your own lawyer in order to defend yourself in court, or you can become a master mechanic in order to build your own car--the question is: do you want to do the work and research necessary to represent yourself competently? I save them time and effort, that's it. Instead of having to take the time and hassle to go learn local real estate issues (like laws, forms, procedure, market) using me eliminates 99% of the hassle. I just think that's a more fair approach to clients than propping up a boogieman.

FYI, it's "Quit Claim"

Depends on what your contract says. If it says the terms of the contract expire if not executed by_________, then it may be expired. If, however, you were supposed to give them a walk through before it expired or allow them to do a home inspection and did not do so, then you may have violated your responsibilities under the contract and that's bad news. Possibly, they could sue you for specific performance and force you to sell, or somehow quantify the loss they sustained when you did not deliver (hotel expenses b/c of no home to move into, etc.) and (also) sue you for those damages. I think everyone loses in a law suit so find a way to settle.

Another way to look at this is, are you willing to take their money? If so, then let them do a walk through and close the deal; worry about who was right later when you're drinking a Mai Tai on the beach. Regardless, if they are threatening, then I would fork out the $200 and talk with a real estate attorney and TELL THEM EVERYTHING, including the bad things you may have also done, and see what they say. A deal in your situation sounds too close to cecoming a massive disaster--I would recommend you spend the money and see an attorney.

I would also suggest posting this under the "Legal Issues" heading and see if any of the legal gurus around could give you more specific feedback.

"It's the season" is not an acceptable reason for not getting a property rented out. I would never just hold it empty and hope that spring brings more possible tenants.

Each month of vacancy costs you over $1,700. Are you spending that much money to get it rented? Why not? If I asked you to take a $1,700 pay cut out of your monthly salary, would you do it and be content that maybe you'll get a raise in a few months that will return you to what used to be your normal salary? Vacancy kills.

Lower your price and/or offer incentives. Tell everyone you know that you have a place for rent. Post signs. Take out ads. Do what it takes.

Yes, that's another way to accomplish the mission. You can get a domain name for as low as $7 / year or maybe less. At the domain registers, you can search through the available names to see if "allcash.com" is available or "makebigmoney.net" is, etc. Once you purchase the name from them, most of these come with unlimited email addresses-- "[email protected]" etc. The administration is very easy to set up and allows you to have a personalized email address.

My only problem with Gmail for a business account is that Gmail indexes all of your emails and uses that to provide targeted advertisements. There is great incentive for them to sell this marketing information to third parties, though I admit I don't know if they do so. This is why Gmail is free--they index your emails, note that you mentioned the word "flowers" 47 times last week, and send targeted ads for "FTD Flowers" to you on the web. This is not a conspiracy theory; this is their stated business model. This may be acceptable for your personal email accounts, but I hesitate to enable a third party to index my business emails. Frankly, it seems like a bad idea.

Buying a domain name yourself may be a safer route if you are concerned with these things. Some sites for domain names:

www.register.com
www.cleverdot.com
www.hostmysite.com

Billions others...