All Forum Posts by: Jeff Takle

I'm a realtor in both Virginia and Massachusetts and my current work situation has me jumping all over the East Coast. As a result, I've shifted my business almost entirely to doing referrals, but it's driving me crazy. I still get a pretty decent flow of folks moving each spring/fall but because many of them are moving outside of the areas I worked specifically, I'm having to refer them based on my broker "sourcing" new referrals to people I've never met. Each time, I've phone interviewed the agents first, but I'm batting about 10% on getting quality realtors. As a result, my friends, family, and clients are getting crappy service and that gets attached to my credibility.

I basically don't trust any of the services I am aware of that claim to provide or source out "qualified referrals" because there is no incentive for those third party services to provide a good quality service to someone who isn't a repeat customer (listing agents, home sellers, and buyers aren't repeat customers for them...the business model doesn't encourage repeat customers). [size=18]Does anyone have any suggestions?[/size]

Or, another tack...putting together an ePinions.com or realtor review website that allows freedom of commentary, allows users to rate their Realtor--does this exist somewhere?

-Lousy job of screening tenants. Kept bringing in people with no credit, several judgments against them, haggling for rent reductions, etc.

-Not proactive in finding tenants.

-In general, I never felt they were my advocate. I was paying them and they executed a service but always seemed pretty indifferent as to whether I was happy with the service or whether I was making money on the investment, had good tenants, etc.

I've never used them for anything but the listings b/c I found it easy enough to develop a network of maintenance folks and handle it myself. Rent collection is normally a snap if you invoice, accept online & recurring debit payments, and communicate early and often.

While LLCs are handy little suckers, their use for new investors can be somewhat limited in a practical sense. I've started several; the first one I started just to learn how it's done. If you choose to do this for real asset protection or tax sheltering, though, it is worth seeking an attorney because a poorly set up entity will provide neither asset protection or tax shelters. And, to clarify, you don't need an attorney to file the paperwork--that's easy--you should seek an attorney's advice BEFORE filing any paperwork to help you select the right entity structure(s) to accomplish your goal. Here are a few considerations....

1. The short version is--it might not provide you with the asset protection you are hoping for. If you have a single-member LLC and somebody sues you, because the company is a single member entity, they may be able to attach the LLC as your personally owned property and thus make it and the real property subject to a lawsuit against your person.

2. As a pass through entity, LLCs won't provide you with any tax benefits that you wouldn't have by just filing your rental property on a Schedule C on your personal return. However, they may help if you are ever audited for expenses you claim relating to owning and operating rental properties, but ONLY IF YOU KEEP EXCELLENT RECORDS and in no case will it help you if you are cheating on your taxes. If you create an LLC that doesn't have income statements and balance sheets, a budget, separate checking accounts, etc., a court will pierce the corporate veil and will not allow it to provide you with legal insulation. Setting up an LLC is very easy, but like all things, it requires maintenance.

3. There are very few real situations in which having your property owned by an LLC will be an issue. It will only help you if you: 1) are sued for something, 2) you lose in court, 3) the claimant is awarded damages greater than you can afford without selling the house, and 4) you refuse to make a deal with the claimant outside of court. Only in this narrowest of circumstances will the issue of whether or not you hold your property in an LLC even be an issue.

4. In some states (like Virginia) if you own over 4 rental properties, at least one of which falls inside certain counties in Virginia, you are subject to the much more restrictive Landlord and Tenant laws. Some owners have sought to avoid these restrictions by plopping groups of 4 houses into LLCs so that no one entity owns more than four and are thereby subject to the restrictive laws. Unfortunately, Virginia court decisions don't seem to agree and, at best, it's uncertain whether they will give you an exemption from the restrictive rules.

5. Using an LLC will not mask your identity. State corporation commissions and county courthouses both hold LLC paperwork that lists members and addresses. If you want to hide the identity of the true owners, there are ways to do this using trusts, but it requires the involvement of several people--you cannot be both the trustor and the trustee for example. You can do it, but I would recommend getting your specific road map for this from a competent lawyer and shy away from self proclaimed real estate gurus telling you how to outwit tax law--take your advice from a professional or you will not get professional advice. Poorly laid out entities will encumber you with paperwork and fees and not stand up in court. Judges aren't stupid.

No, I am not a lawyer. There is just a time and a place when they are helpful. :shock:

Liz,

One suggestion that I heard recently was that if you aren't sure about some of the books, tapes, videos, etc. being offered, you may be able to take a look through them at your local library. Most library staffs are fantastically helpful and resourceful...if it's not on the shelves and you ask if they can get it, very often they will.

That would allow you to preview the materials w/o having to purchase first. Unfortunately, I haven't used foreclosures.com or any of their products.

Good luck and let us know what you think about them if you do get them!

- :superman:

I tried that in Northern Virginia, but the MLS system there (called MRIS) would not allow you to join without the approval/supervision of a broker. I suppose you might be able to find a broker somewhere who would sponsor you or allow you to get an account through them. Nothing I saw or heard said explicitly that you had to be licensed, just that you had to have a broker. Might be a gray area you could work there...not sure.

Quarterly fees for me have ranged from about $60-$90, well worth it if you buy even one investment a year, I think.

Al,

For my two cents, I'd recommend two things. First, learn the fundamentals well. There are a lot of colleges now that offer degrees or specializations in real estate investing, development, or management. Learn about calculating cash-on-cash, ROI, and how money lending works. Second, find someone who is really good at what you think you want to do and work for them. If it's development, get a job at a development firm, seek out a responsible, intelligent and successful partner at the firm and ask if they would be your mentor. Might sound corny, but people like to pass on the knowledge they've gained--just look at this FORUM and how fast it's growing!

Good luck and ask away... :groovy:

Oops. Also, tenants don't need to have internet to do recurring rent payments, only to pay online. Recurring payments can be set up through one of many vendors by passing some papers and signatures and a voided check.

Yep. Credit cards are a little more expensive--normally somewhere in the range of 2.2%-3% per transaction plus a small monthly fee. Again, many companies that offer this and the pricing structure (% + monthly fee) varies so seek out one that fits how many properties you have. It is a growing trend, though, among larger property management companies. I have no data on individual landlord use. The Journal of Property Management reported that in 2003 there were something like 55,000 properties using credit card collections; 2004 there were around 350,000! Still waiting to see 2005's numbers.

It's easier and less painful to bury the processing fees inside of the monthly rent if you can get away with it, than it is to bill a tenant separately for the service. They generally don't like that. And, if they use a credit card with airline miles it's a WHOLE bunch of free miles for them; probably a free trip every year.

Of course, you'd have to decide if you felt ethical about encouraging a tenant who doesn't have a checking account to pay hundreds (or thousands) of dollars for rent on a high interest rate credit card! :shock:

ABSOLUTELY! I have been doing this for about 2 1/2 years and it really does make a remarkable difference. Probably the easiest way to do this is to set a calendar reminder in Outlook or whatever else you need to go off on the 23rd of each month. When that pops up, send out your invoices. If you use Quickbooks or Quicken or something else, then you can make professional invoices across all your properties and tenants at about three clicks of a mouse. Or, invoice templates abound on the net for free. Emailing them out seems to be just as effective as mailing them, too, and it doesn't cost postage.

Also, conducting online rental payments or recurring rental payments, like those done to collect your car loan, a mortgage, or condo fees, is relatively easy to set up. It does cost you about $15 a month, give or take, depending on which of the five million ACH/EFT companies you choose to go with. But, for about $180/year you can virtually guarantee rent collection on time. This has the added benefit for your tenants of: 1) not having to remember when to mail in a rent check, and 2) they know precisely when their checking accounts will be debited, so there are fewer worries with tenants living hand to mouth.

Great point!

Oops. Need to add here that my comments above apply only to incentives to "keep tenants happy" versus incentives to get them in the door. To get them in the door, you can use a lot of different techniques. Surf this forum for ideas like:

-paying moving expenses or moving truck fees (my favorites)
-discounting first month's rent
-paying utilities, etc.

The key there is the reduce the transition costs for your tenant, both financial and psychological. Make moving into your place easier and cheaper than moving in elsewhere and they should respond.

:D