The Everyday Millionaire Show
The Everyday Millionaire Show
Navigating Legal Challenges in Real Estate with Diana Khan (Full Podcast)
Dive headfirst into the complexities of real estate with returning guest, Diana Khan, the legal eagle who's transforming the way we tackle property management and eviction quandaries. Whether you're a seasoned landlord or new to the game, our chat with Diana provides a treasure trove of strategies to ensure you're not just afloat but sailing smoothly through the legal seas.
In an industry that's constantly evolving, riding the wave of change isn't just smart—it's necessary for survival. We dissect how emerging regulations and innovative business models are reshaping the real estate realm, offering insights on how to adapt your approach and thrive in this ever shifting market.
There's a reason why some attorneys are really great at what they do. But if you're not working with a real estate attorney, you have to be very mindful that even attorneys aren't this like end-all, be-all. It's not very knowledgeable. There's benefits to hiring an older attorney who's taken CE courses and they know what they're doing, but not all of them are made the same.
Speaker 2:After the failure to pay rent, how do they get to the eviction state?
Speaker 1:If you're doing a failure to pay rent yourself, try to personally serve the tenant. That's one of the things that most people don't realize. I mean, if you personally have the sheriff, go serve them, the letter you're later avoiding having to do a money judgment.
Speaker 3:Welcome to the Everyday Millionaire Show with Ryan Greenberg and Nick Kalfas. All right guys. Welcome back to another episode of the Everyday Millionaire Show. We're here with Diana Khan and Nick Kalfas. What's up, guys. What's up, what's up. We're in the new studio here in the middle of nowhere, Owings Mills.
Speaker 1:Hey, hey. First of all, every time you film me we're in a new studio. That's true. I don't know what's going on.
Speaker 3:The first time it was a new studio at my house.
Speaker 1:And time it was a new studio at my house and then my wife, uh, got tired of us filming podcasts in our brand new house, so so I'm actually really mad about that still to this day, because I did a whole scout of your studio because we never really worked together and I was like, okay, like gets it from here up, and then you made me sit on those ugly, ugly chairs they're not ugly chairs, but yes, the, the setup was not um, was not ideal.
Speaker 2:That's fine, it was the first one.
Speaker 3:It was the first go around with that setup, and this might be the second one. We might be on a third one after this.
Speaker 1:We'll fix it, we'll fix it All right.
Speaker 3:So I got a lot of news. Diana was just on, I think a couple months ago, and a lot has happened since then. Couple months ago and a lot has happened since then. Yeah, so I guess quick background. We diana's team hit me up about sponsoring one of our events and then that snowballed into coming on the podcast, and then that snowballed into being business partners and her taking over all of our law needs.
Speaker 3:Attorney needs, right yeah um, so that's pretty cool, so we. So right now, we have Diana doing all of our collections for a property management company Failure to pay rent, which is something we're going to talk about today. What else do you do, diana? Evictions.
Speaker 1:Evictions. We do trusts, estates, wills.
Speaker 3:We talked about all the trusts last time. We'll touch a little bit on that. But now we're going to talk about some specific property management stuff that Nick wanted to touch on. So, Nick, you want to let it rip?
Speaker 2:Yeah yeah, definitely so. For those of you who didn't listen to the last episode with Diana, we talked about trust. We talked about liabilities, LLCs, operating agreements and life insurance. So if you guys want to learn about that, listen to our prior episode with her. I guess we can start with failure to pay rents, and this can be a question for both of you. Really, when is a good time to file a failure to pay rent?
Speaker 3:The first day you can.
Speaker 1:Yeah, I was going to let Ryan answer first, but it doesn't sound like he's going to get tripped up. So you know, number one thing people call me about is I. So you know, number one thing people call me about is I try to be a good guy and we let these people go. And now it's been two years and they're still on the property.
Speaker 1:So when you're doing failure to pay rents, remember that they get three chances. Right, that's three different filings where you take them all the way up to eviction and they can pay you the day the sheriff shows up and they're not going anywhere. So the moment they fall behind, you should file. It's a very it's cheap to file, it's under a hundred dollars and the worst case is you're wasting a little bit of your time. But once you have three of them in your pocket, then at that point they can't do the whole pay and catch up thing. So I first say you can, so that's you know. You have to give the notice and then, once the 10 days of the notice is up, file that's here in maryland too, so anybody that's listening out of state.
Speaker 3:There's probably different rules, I'd imagine, for different places.
Speaker 1:Yeah, and and they're changing the rules next summer. The filing fees are now going to almost triple. That's fun.
Speaker 3:Make it even more difficult for landlords so I think one of the things that I noticed with, uh, mom and pop landlords that I end up taking over management for, is that they did that thing where I was just trying to be A good guy. They built a relationship with that tenant. That tenant fell on hard times. I had some sort of sob story. There's emotions involved and that was me in the beginning too and you hear like, oh my god, this person's aunt died or this person lost their job or whatever, and like if you're a property manager, you're gonna hear every single excuse, but it's business too, and you've got to kind of like separate emotions and business especially. You know it's different, I guess, for you, if you're managing your own properties, you have your own decisions to make, but if we're managing other people's properties, it's somebody else's money.
Speaker 2:Yeah, and I would think that that's easier to take the emotion out when you're doing it for other people who are relying on you to get their rent collected and fall as soon as possible, whereas, same with me at the beginning, I would give them going to pay rent in two weeks. Just give me a couple of weeks that they would come and they would just push it off. So I'm starting to tighten down on everything now and I do agree with you guys, like you know, file as soon as you can, and that doesn't mean you're going to kick them out right that day yeah.
Speaker 2:And I even text them to like, hey look, but I do have to follow this just in case you don't get caught back up. I need to get my property back.
Speaker 1:So I find that the property managers that have us hired to kind of do their corporate counsel moment somebody is like five days behind, they get a letter from us they're more likely to catch up than the people who don't have that. Something about don't have that, it's something about the law firm logo. They just get you know, they pay it right away, which you know works out in our favor. But I will say that, even being in the field where I actually evict people for a living, it still gets you. I mean, we had a tenant holdover. This man's wife passed away like two years ago and now his kids are 11 and six and the landlord did everything to get him out nicely, like everything before he hired me. He even offered him like here, I'll give you $10,000, relocate back to where you're living from. I understand you lost your wife and this man was just like I can't keep a job, All everything is wrong.
Speaker 1:We did a tenant holdover. We went to court. He showed up to court same sob story. We won in in court. He then had eight weeks before the eviction date and we decided to serve him, even though baltimore city requires you just give notice we decided to serve him for the eviction right, and he evaded service by having his kids answer the door. And we went there 13 times. Um. So the day of the eviction, we get their sheriffs there and we're knocking on the door and we're thinking they're not there. So we're about to like break open the door and this like 11 year old answers the door and there's a six-year-old in the background and we go in father's not there. We're like where's your dad? He's like oh, he had an emergency. We're like can you call him? We call him. He's like I'm in the hospital. I didn't know this was happening today, just total total bullshit.
Speaker 1:And sheriff looked at me it was like well, I can call child protective services for you to get the property today or we can reschedule. And this was almost two years of not paying rent and we still are sitting there like dude. You're gonna have me call child protective services on your kids, like that's insane.
Speaker 3:that's crazy that they're. He was offering that much money and they still wouldn't get out. But for me I've kind of taken myself away from that completely, where it's just like today Diana was going to court on our behalf and I had no idea, and that's probably the best way to do it. It's just like the staff in the office knows that this day of the month if you're late, they send out the letters or they send the documents to Diana's team and then it goes out. It's like that's a system that just can't be broken by anybody and if I don't know about it, there's no emotion can be even put into it.
Speaker 1:Yeah, the most effective property managers work on that system. There's many times where their staff talk to me and I'll go up to like my friends and I'll be like, hey, like such and such as evictions next week. They're like I have no idea who that is. That's a good thing, you don't you know, it's, it's facts and figures you pay to stay in the house.
Speaker 2:It's just that simple. Yeah, yeah, and every, every tenant that I've dealt with, tenant, you feel sorry for their situation. Everybody has a situation and some of them might be true, some of the stories might be true, but unfortunately you can't just live for free. Yeah, that's unfortunate.
Speaker 3:So one of the things that I think, too, is that we like to do is try to empower people or educate people. If it's like a single mom, like we just did this I tried to do this with that girl that you went to court with today we sent her all the documents and stuff that she needed to apply for like section eight and you know the, the voucher programs or whatever, and she just didn't do it. So like we gave her all of the things, we gave her all this was she started falling behind during COVID. We her all of the things. We gave her all this was she started falling behind during covid. We gave her all the stuff to get the covid money. She didn't do it. She then went finally last minute, before she was about to be evicted, went and they released like a couple grand in covid money and then they she had to like refile to get more with the new ledger or whatever, and she just never did it and it was like ten thousand dollars.
Speaker 3:Ten thousand dollars is what you got today yeah, so if you can only help, you can lead a horse to water. I guess they say right but make a drink yeah.
Speaker 1:So, like in that situation, we did everything we could to uh be good people and unfortunately that just didn't work out and I think, and you know, they're passing this bill that's going to come out next summer, but there's a whole bill coming out that's going to make it impossible for landlords can be more expensive to evict people. There's going to be a lot more like notice requirements and all that. So it's very important that if you're a landlord and you're listening to this, you know those rules, because even in my job the evolution of it has changed right, like a couple years ago. We just do failure to pay rent, no-transcript base right now, where it's people who kind of broke the lease. Early tenant moved out and I left the property destroyed and now the tenant's suing them for the security deposit.
Speaker 2:Yeah, I'm dealing with that right now. A tenant went to the courthouse and filed on me for the security deposit and they moved out like five days prior to that. I have 45 days to return a security deposit and they broke the lease. They left the lease early and they stayed. I forget exactly what month it was, but they told me like two weeks before they were moving out on like the first, but they didn't move out until like the seventh.
Speaker 1:So we kept a whole months of rent for that month that they didn't move out and they were supposed to be out and they also didn't give that 60-day notice that we've required in the release and I guess people don't realize how important those deadlines are, because somebody who goes to court for all this stuff, I'll tell you right now the judges, just like they don't care about the tenants, like sob story if they're behind on rent, they also don't care about our sob story if it's like one day off on the notice requirement.
Speaker 1:So if you're doing a lot of this stuff yourself, you could lose security deposits or you could get a bunch of stupid lawsuits just because you're not counting the days right. Because I think you know, even when you hear it's 45 days to return the security deposit, if I ask a landlord, well, when does the first day start? Is it the day they move out the next day, when does it start? And they're like what do you mean? And I'm like well, if they move out today is day one, tomorrow or today. And most people don't realize that there is an actual statute that says that defines the word days if it's not defined in your lease. So it's little things like that where you're kind of not thinking about it until something happens.
Speaker 3:Yeah, that's how it goes. So we have one situation in Baltimore City but it's like a high end home and I know you've already been sort of across it. But the tenant asked to leave in like December, november. We said their lease was up in July. We were like no, but we'll break in like April, which is we said their lease was up in july. We were like no, but we'll break in like april, which is like a better season to try to rent, you know property or whatever. And on christmas eve I got a notice or call that her whole house has flooded out and it's suspected by us, the plumber, everybody else that somebody went in there because she was away. Apparently somebody went in there and left the um vanity, turned on and purposely flooded the entire house. We had to redo hardwood floors, basement floor, everything. We had a mitigation company. I was on christmas day, so we had like 12 people working there on christmas day this year. She's now asking for her security deposit back and we had to like do all this stuff.
Speaker 1:So we have a situation in similar, which is fun, and I'm gonna call you out for a second on that one, because one of the things that happened is she did all that right, the water accidentally happened and then she served you to end the lease early, like you caused it, and your resident agent didn't give you the letter because it was like mailed wrong. So you ended up losing in court even though you had a very valid case.
Speaker 3:Yeah.
Speaker 1:Because we didn't even know it was happening. So that's where it's so important your, your stuff, is in line. If you're going to be a landlord, like, make sure your resident agent is lined up, make sure you're working with an attorney or you're working with somebody who's doing it well, Because the little things matter.
Speaker 3:Yeah, that's true and and I also heard um so we were, we were doing, we were using one of those big companies for, uh, you know, failures to pay rent and stuff, but we were finding that they were taking like months and months and months and then we found out that they were batching all of their cases and like putting them all in the system at once.
Speaker 3:So you could like if you filed with them today, they might not put that in for a week or two, which was causing some of these like three, four months where we didn't have a court date. We're like you know what the heck is going on. So knowing who's filing, knowing that they know what to do, is like super, super important, especially here in Baltimore where it's very tenant friendly so right before covet hit, it was seven days.
Speaker 1:If you filed a failure to pay rent, you had a court date seven days later that's crazy so that would be like we knew I would know that if I went to go file on monday, I'm going to court the following monday. Like I could predict, if it wasn't monday it'd be tuesday.
Speaker 1:It wouldn't be like too far off so now if you're working with somebody and they're telling you we don't have a court date and it's a failure to pay rent and it's like it's been a few months, they're not filing because while it's not seven days, it's not taking five months either, right? You know pg county. I think we ended up having like a three or four week turnaround. In baltimore county we had a two-week turnaround. So really, if you're taking quite a while, they probably didn't file it.
Speaker 2:Yeah. So after the I guess for those of the audience who's listening right now after the failure to pay rent, how do they get to the eviction stage? Like you file a failure to pay when a tenant falls behind, and then what's the next step in that process to eviction?
Speaker 1:So after you filed a failure to pay rent. So a couple of things. First, if you're doing a failure to pay rent yourself, try to personally serve the tenant. That's one of the things that most people don't realize. You can put a failure to pay rent on the door, and if you put it on the door, cool, you'll get the court date. But if you serve them, if you personally have the sheriff go serve them the letter, you're later avoiding having to do a money judgment because they will give a judgment for the back paid rent. So a lot of the time we do both, we will have them serve personally. So when you do the failure to pay rent, you're also getting that money judgment for the back rent can anybody serve somebody?
Speaker 1:um, we use a third party process server and you can also ask the sheriff to do it from the courthouse and pay for it. So you have to use like a certain service we usually will just pay for, I think the sheriff is 25 bucks when you file to do it and they will attempt to do it. If they don't, we tell them just put on the door. But we always pay that extra 25 because it when you do the failure to pay rent, you're now avoiding six months of litigation later to get that back right. So they'll give you the money, judgment or not. And then there's basically an appeals period where you can't do anything. You're just sitting around and, depending on the county, it's anywhere between four to 11 days. You're not doing anything but waiting for the tenant to pay you. The tenant doesn't pay, you're then filing what's called a writ of restitution. So a writ of restitution is literally like a judgment order that says hey, you know they haven't paid, we'd like to go ahead and enforce the eviction, and just like working with bigger firms. The problem is that when you file the writ it gets scanned into their system and a judge literally gets an email with hundreds of them and then you have to wait for the judge to sign off on it. It could be a day, it could be five days, it could be 10 days. There's no like time period. So my office we call every single day because we have so many of them. We'll call Baltimore County and be like, hey, we filed five writs, where's the decision? Because really what we're trying to do is just remind the clerks we exist and like, hey, get this off your desk.
Speaker 1:Once the writ is approved, it goes to the sheriff, where you get that date, where the sheriff will meet you at the property. As of last week we used to have to call the sheriff's office. They'd be like, yeah, we're sending the writ to the sheriff, wait a week and then call the sheriff and you'll get a date as of like a week or two ago. Now there's a website. So once you have the writ, you have the case number, you go online, you submit it and you wait a couple of days and you'll get an email. It'll say your eviction date is on this date. And again, every county is different. Baltimore City is about two to three weeks. You'll get a sheriff's date. I had one in Baltimore County that was like seven weeks.
Speaker 3:The moral of this story is just hire somebody that's really good at this, because all that sucks.
Speaker 1:Yeah, I was watching your face.
Speaker 3:You were kind of glazing over I was just like yeah, I don't even feel like listening to you talk about this anymore, because it's that mundane and silly it is silly and if you're not working with the right people it just gets lost like that's.
Speaker 1:That's the whole thing is. It doesn't make me a good lawyer to know how to do this stuff right. It's just deadlines and time frames and it's really just having that back office that does it for you and if you're working with an attorney that's like, yeah, I'll do everything personally.
Speaker 3:You're calling the courthouse every day for or if you just try to do it yourself. It's just never worth your time. I feel like that's the other thing. It's like it would be easier just to say you know, kind of, fuck it, I'm not going to do it. Because once you try to figure out all that whole process and then you do it wrong and you get like you know you lose in court or whatever, then you just wasted a ton of time so I'm gonna call out nick on that one oh yeah, you guys saw each other at court, didn't you?
Speaker 1:I filed for him, so we charged for the filing and then we charged for the court appearance. So nick decided that he wanted to see what the experience of a failure to pay rent was and he decided not to pay me to appear. Now, I had several that day so I sent one of my staff and she was like well, do you just want to tell nick, we'll just go for him? And I was like no, and he went out there and I talked to him later and he's like I thought it was just a quick thing. I was the last person called. I was sitting there for three hours and I was like yeah, we both got called around the same time too so, nick, are you going to do that yourself again?
Speaker 3:probably not. I just feel like if it's like a big judgment too, and you already had lost the money, like if it for me, like that, was a collection case the lady's out, right, right, so I already lost that money I might as well just like send her to do it. Oh yeah, for sure, I mean, I've never done a collection case on my own can you? I don't think you can. Can you well at?
Speaker 2:folio. They have a feature that you just click a button and it says sends the collection and you've never collected a single dollar. No, it's like some company out of like california, I think, and they don't really help out much.
Speaker 3:Yeah.
Speaker 1:It's okay, I finally got Nick to the dark side.
Speaker 3:He just gave us a few today.
Speaker 2:So, aside from failure to pays, and tenants who are actually supposed to be in properties. What should someone do if they either purchase a property or if they own a property, somebody breaks into it and now they are dealing with squatters. What should someone do in that situation?
Speaker 1:So with a squatter, if they're a squatter, they don't have any like notice requirements, right? You just can file to get them out, and then the court date is still not two to three weeks out, and I think you and I had a similar one like that. The problem is squatters are showing up to the courthouse with fake leases and they're saying here's my lease I'm not actually a. So most people ask me well, it's a fake lease, it's fine? I was like no, the way the courthouse works is if you file for a squatter, that's not the same as a tenancy eviction. So if you're in the wrong courthouse, the judge won't even listen to the facts, they'll just throw it out. So you have to be prepared that the squatter might have a lease no-transcript notarized at settlement so that you have something from them, so that whoever's representing you for that squatter will show it to the courthouse and be like hey, here we go and what's the timeline on?
Speaker 3:like we, you go into a house. You've noticed there's a squatter there, until the time that the sheriff typically is going to get them out of there 48 weeks, sometimes 12.
Speaker 1:Yeah it's, it's a lot and I mean they should be out right like. The idea is that hopefully that you don't get to the sheriff's point, but once they're in you can't turn off. You know the bg you can't really like, you can't force them out. So that's the mindful part you have to be careful of.
Speaker 2:So, yeah, they just did one for me. I think it took about six weeks from the date of filing to get the court hearing and the whole time, as you know, they created a fake lease and as if they were in the property legally.
Speaker 3:So you bought the property and there was somebody in there.
Speaker 2:Yeah. So I bought the property. The house was listed on the mls and the seller got a call from a neighbor and a neighbor said hey, I think someone's in your house. Did someone move in? Did you sell it? He's like no, no one's supposed to be there. So he went there. The cop showed up. He said even like a police helicopter came and there was nothing they could do. They couldn't get the people out. So at that point you know they're good to stay in the house as squatters and he decided to take it off.
Speaker 2:The market called an auction company. The auction company called me and said hey, I got the seller. Squatters just moved in two weeks ago. He just wants to sell the property at a discount, obviously now that it's occupied. And I bought it knowing they were in there After I settled we filed the wrongful detainer and the girl presented a lease and she didn't bring it to court, like she didn't even bring it up in court yeah which I was very surprised, because I feel like that was one of the grounds that she may have had.
Speaker 3:So if she has a lease with clearly like a forged name on it, that's not even potentially at that point. The owner does that still hold up in court.
Speaker 2:So the lease was james weisinger as the as the landlord. So I emailed him. I said, hey, can you give me a document and sign it, saying that you have no relation to this property? You don't know who these tenants are, because I knew he didn't sign it right so I had just the agent trying to sell the property.
Speaker 2:No, not even it was just they. They look they must have looked up a real estate agent online, found his name, decided to sign his name. So when we went to court they shoved the court with the document from him signed in case we needed that as evidence. But the squatter showed up and she didn't even present the lease, which I was very surprised.
Speaker 1:Can't they get in big?
Speaker 2:trouble for that.
Speaker 1:Yeah, you have to prove it. And again, I think a lot of people think when you get in trouble, like unless you're doing a criminal thing, right, trouble is really.
Speaker 3:Like forging somebody's name.
Speaker 1:Yeah, but you have to actually file and go through it. And who's going to do the time and effort for that? And I think in this case you brought up a really good point is because we knew they had the fake lease. We got proof from the named landlord and if you have a name of a fake lease, I can find their information and then we'll contact them and get proof ahead of time.
Speaker 1:The other thing that you can do is if you're purchasing the property from a seller that maybe does multiple properties, maybe they're like a Ryan and they have a property management company, ask them to show you a few of their leases and say, hey, can you give me a copy of three of your leases? So then what you're doing is, when you go to the courthouse, we've actually shown like, hey, your honor, the previous seller's name was Ryan. You know he's a property manager. Here's the leases that he typically uses for his business. We've brought three or four of them as examples. The one that you know the squatter has is not typical of his business structure. We don't know where this came from, and that's a big factor because, remember, if you purchase it and they say fake lease, the judge is not going to take the stance of like you're the new owner.
Speaker 3:Now they're going to tell you to file in a different courthouse. Jeez Makes me want to just start buying houses in Florida. More and more, I feel like there's better places.
Speaker 1:Nick used us for that one too, and I think he got a little nervous right.
Speaker 2:You were saying I was sitting there and I'm listening to the judge. The judge was talking very slow and she had to ask the clerk a couple of questions in regards to the cases before ours. I'm like, does this judge even know what she's talking about? But thankfully, when we got up there, you know the evidence was presented very well and I was surprised that the girl showed up the squatter. But she did and she tried to say oh well, someone scammed me out of this lease and I signed this lease and you know, singleton asked how much is the market rent for the property? And I said 1800. And she's like, see, I have a lease that says 1800. How else would he know that the property is rented for 1800? I said, well, that's just the market value of the property. But you know it was. It was cool that we won that case because I was very nervous leading up to it because there was a handful before ours that really weren't going that well.
Speaker 1:And that goes to experience too. I had a trial in Essex, right, and it was a district court and this was a professional tenant, by all means. It was a very simple case, but she came to trial and she objected every time I spoke. It was a very simple case, but she came to trial and she objected every time I spoke. It was to a point where you could tell the judge wanted to take a shot of something because he couldn't deal with it. At one point she started screaming that her cat was cremated.
Speaker 1:And I'm trying to remain professional throughout the whole thing, right, and I have a witness with me and we're asking the witness questions and the judge interrupted me in the middle of it and goes where are you going with this line of questioning? And and goes where are you going with this line of questioning? And your honor, I'm just trying to show why we don't have a rental license for this, because now for tenant holdover, you're required to have a rental license. The judge in February of this year said that's not true and I was like, with all due respect, the law changed last October. He took a recess and went to the back and printed the statute and printed the wrong one and brought it to me and was like, well, where does it say that? And I knew it changed. I just didn't know the statute number. So I was like, with all due respect, your honor, like I'm gonna go ahead and present my case because I don't want this to happen.
Speaker 1:On appeal he ended up stepping out a second time, printed out the statute and on the record, said, as counsel taught me, the law changed and now you're required to have a license to evict people through tenant holdover. The law changed like five months ago. I was sitting there like you sit on this docket, you make decisions every single day for landlords and for tenants and you are not even privy to the full scope of the law, and that makes me so nervous. So I will say that if you are listening to this or you are a landlord or a property manager, it's not always that the lawyer you hired is not good, because as lawyers we always talk to each other about the fact that district court is the wild, wild west. I could go to a case three times in one day in front of three different judges and have three very different outcomes. So that's one of the hangups when you have failure to pay rent or landlord situations is how the judge is feeling. That day is very, very much a big factor. We're very tenant friendly.
Speaker 2:And I just want to add on to that that anyone listening who decides to follow failure to pay. And I ran into this jam. When I first started out I didn't have most of my properties five years ago. Um, rent, uh licensed. And when I would go to court or try to file, they said you needed to be licensed. And I'm like, oh crap. So then I would scramble around and try to file, but then if you don't have a, let's say it's it's uh April right now and you want to file for a tenant that didn't pay April, you file and you get your license on May 1st. Well, you can't legally collect that rent prior to that date. You were filed. And a judge can say, well, did you collect money before you were licensed? And if you say yes, they may hold you accountable to pay that money that you collected back to that tenant.
Speaker 1:Well, the statute also says it's a $1,000 a day. Fine, really.
Speaker 2:Yeah.
Speaker 1:I've never seen anybody enforce it. I doubt that that would be the case.
Speaker 3:They're trying to on one of Chad's properties I believe we're a client of his right now that they can't get a rental license because there was no building permit pulled and they need to pull permits, and I guess there's people in there and, yeah, they are at least threatening it. They're not necessarily.
Speaker 1:Chad, you need to call me, I can help.
Speaker 3:Yeah, well, we're handling the building permit part of the the thing, um, but yeah, so that, um, that's that next on our list on, I guess next on my list. We partnered on luxe realty your, your brand yeah um, so we could tell people about that and how nick's coming over. Now to the dark side of lux. We have Chase over here, team Lux, everybody.
Speaker 1:Live better live Lux, Team Lux. That's the whole idea.
Speaker 3:It is a little bit of a girly kind of name. Hey, hey, it's okay.
Speaker 1:Look, the whole idea of Lux really is that there's a lot of traditional brokerages out there, and I think what makes us very special is that all of us that are at Lux are vertically integrated across multiple income streams. So you're not working with people who are yes, they're doing traditional real estate as well, but for the most part, we're all talking about how do we get better together. You know the agents next to you are also flipping houses, or they're wholesalers or they're you know they can walk through a house with you and help you figure out how do I flip this. It's my first flip, because all of us are in that industry, and having me as the broker, with being a real estate broker of traditional brokerages and also my law firm that's so investor-friendly, gives you the scope of. This is what you can do according to the MR contract. This is where we need to kind of be hesitant and allows us to grow while not necessarily focusing on just a real estate career.
Speaker 3:Yeah, I think it's hard to make a real estate career right now as a salesperson without having other things in play. For us, the investing is number one, but having the brokerage and having people out there at least finding deals, sourcing deals, being able to pitch the oh, we could buy your house in cash or your house is okay, we can probably just list it on the MLS. For you, we have multiple different kind of options. I know that's something that Chase has been doing with the leads that we've been generating from the cold calling is kind of going and offering them. Hey, we are a traditional brokerage but we're also investors. So if you want to make this quick and easy, we can buy it for cash. Or if you want maybe to squeeze some more money out of it, we'll be able to list it and put it out on the open market.
Speaker 2:for you, that maybe owns one home and wants to get involved in real estate investing. They may go to, you know, remax or long long and Foster or Keller Williams and try to find an agent, and not all agents know about real estate investing. I mean, I know, when I became an agent at first, I didn't know anything about real estate investing, and a lot of the agents around me didn't as well. So it's it's nice to have that.
Speaker 1:I teach a lot and I have agents come up to me every time I teach and they're like oh, you know, I'm at Keller Williams, I'm at REMAX, I just did a wholesale and I use the MR contract, Like how do I fix that? And I'm like come to Lux, we will teach you how to do it and you'll capitalize on it because we'll allow you to use our leads or we'll have you use our cold callers so that we are growing together and the idea really is that when you are with us, you know you've got access to my law firm. You can ask questions without getting charged $500 for a general question, but in exchange I also know that if you're doing a probate, it's likely going to end up at my desk.
Speaker 3:Yeah, and I also, when I've been on appointments with Chase, I'll be like I fake that I'm not even like the real estate agent at all, like I'm just a contractor there to like figure out a price to fix stuff or whatever. So we do have a lot of things like in-house that we can, you know, help new agents. I think there's every new agent out there is like always looking for a contractor.
Speaker 4:Yeah, I mean, what I'm aware of, Diana and you can pitch this a little more too is like, with this whole NAR thing, like the traditional broker or agent is going to like kind of disappear right, Like you're going to have to get more creative, especially as a buyer's agent.
Speaker 1:So I'll share something that I did not sign, do not disclose. So this is really awesome. I think this is going to get you quite a lot of views on this one. I was driving the other day and I got a phone call from a random title company and so sorry, they're going to come after me on this. And I picked up the phone and we're talking a little bit.
Speaker 1:He said you know, I'm an attorney, I'm in DC and we are starting a coalition of attorneys that are going to use this NAR thing to create an association of attorneys willing to do the buyer's agent's job for a much cheaper rate than two and a half percent. They're like, if they're going to pay two and a half percent and now it's not up to you know, the seller isn't going to pay it maybe they'll choose not to. Why would you hire a realtor versus a lawyer? So they asked me to head up the Maryland location and be part of that website and be part of one of the approved attorneys with these vertical businesses. So that tells me that attorneys themselves are kind of going to capitalize on this issue and I got to say it's pretty smart, because if you're going to pay 2.5%, you could pay me 1.5% and I have a law degree to go with it.
Speaker 3:Yeah, I feel like, with the whole NAR thing or whatever, the way I view it is like we're just going to be doing listings Like we're heavy on listings anyway, typically with everything that we're flipping or whatever we're going to be doing listings in-house with a like an employee-based showing agent essentially, so that it's not a buyer's agent, it's just somebody to go open the door.
Speaker 3:It's kind of like what redfin already has a little bit. They have like, yeah, you know, 20 an hour employees that can go open the door for somebody, but the real agent doing the deal is sitting, you know, behind their desk, which is normally what happens in with like a you know higher end uh agent anyway is typically going to have their assistant showing the properties and they're just like negotiating on their behalf, and I feel like it's going to be the same thing. Maybe, instead of charging five percent, we charge three and a half percent and we're getting three and a half percent minus the 50 or 60 bucks we pay the you know showing agent or whoever it is. They'll have to be licensed, obviously, but they'll just be an employee essentially.
Speaker 1:And I think it's just so important now that we're coming into this different time is. I've spoken to different people across the board and there's agents who are traditional and they're all nervous about it, right. But then there's the people sitting in this room and there's the people that work with us at Lux and they're all nervous about it, right. But then there's the people sitting in this room and there's the people that work with us at Lux and they're like, yeah, this is not going to change anything we're doing. And if you are listening to this and you are a traditional realtor and you're not currently looking at how to vertically integrate your business or how to grow in a model that allows you to sort of be self-employed or grow your own, now's the time to start because, ultimately, I don't think this is going to hurt the market. I think it's going to hurt the traditional realtors.
Speaker 3:Yeah, I absolutely think the traditional buyer's agent is not worth paying as a buyer, correct? So just to get a listing, just to get a property shown, you don't need somebody that's licensed to do all that, right, you just don't need somebody that's licensed to do all that right like you just don't.
Speaker 1:I think, with the amount of open houses too, like people aren't utilizing agents before you know used to be. Oh well, buyer's agent gets you a list. It's all on zillow now. There's nothing really. The benefit to using a traditional agent is going to go out the window if you're paying them full right, like they're either going to have to sacrifice their feet or anything else. But for the most part, for Lux, for us this is going to be a huge advantage.
Speaker 3:I also. I don't know if you guys have heard of show mojo. Have you heard of showing mojo? Yeah, so it's like a, a technology platform essentially, and they come with like lock boxes or locks, door locks, but they're essentially camera lock boxes that you can set, send one day codes to, or one hour codes, 10 minute codes, whatever, and you can actually show properties to people remotely. So, like you, you won't even be there, you just let them in, and then there's like a camera set up inside that you know make sure that they lock the door, the door will automatically lock or whatever. It's pretty cool. But in certain areas I could see it being an issue, obviously, like if it's if it's in like a low income area and people are, you know, breaking into squatters or whatever.
Speaker 1:But you know, you got that bot, like that seller who's got a five million dollar house and he's like no yeah, yeah, there's probably definitely a time or place for it.
Speaker 3:But again, if you have a $5 million house, you can afford to send somebody from the listing team to open the door for somebody. But I think that's where it's going to go. It's where our listings are just going to be sold. It's like almost like everyone's going to be a dual agency. Essentially, they're just going to be all in-house.
Speaker 4:Well, I don't know if you guys follow, but over in Europe the attorney thing, they have two attorneys on both sides and then they have a listing agent, and then that listing agent has showing agents, so they go do the showings, and then the two attorneys, the buyer's attorneys.
Speaker 3:They call them vendors, but they're sellers. I think I was talking to you about that too, the lady from New Zealand that we met with. She's coming in on the 22nd of June, and that's how they sell properties there. There's one broker and the broker deals with both parties, and that's just easy.
Speaker 1:And I think if you are a traditional realtor, you are thinking how do I attack this? You know, even attorneys now are starting these coalitions and all that. This guy basically wants me to head up the Maryland one and I was like that's my referral source, dude, I'm not knocking where.
Speaker 3:I need to be.
Speaker 1:But I think the other thing you have to keep in mind is not all realtors and not all attorneys are made the same, and I think what most people don't realize, at least in the state of Maryland. As a lawyer I can graduate law school and not do a single continuing education course until I die. I'm just a lawyer.
Speaker 1:On the realtor side no, we're not just as an attorney. So the problem is that if you're hiring this like attorney to represent you in a real estate contract and that's not your better butter you know there's a reason why some attorneys are really great at what they do. But if you're not working with a real estate attorney and you're dealing with, like you know, your aunt's cousin who does workers comp and you're like here, review this contract, for me it's no better than hiring a real estate agent that does one transaction a year. You have to be very mindful that even attorneys aren't this like end all be all. That's not very knowledgeable. It's very often I get hired after another attorney's been fired and they're like well, my attorney doesn't know what they're doing and it's like they just don't know Cause that's not their bread or butter. Like there's benefits to hiring an older attorney who's taken CE courses and they know what they're doing. But not all of them are made the same.
Speaker 2:So for the buyers opening the door for them? I feel like that's just the very small factor. I guess you both can answer this question who would do the negotiating Ryan for, for example, if you had a showing assistant open the door for a potential buyer who would be representing them as far as, like, helping them negotiate the deal?
Speaker 3:I mean, you could negotiate without being the showing agent right, or without jumping on this yeah, so the typically, like in europe, the buyer represents himself.
Speaker 4:So that's where they're kind of at a disadvantage, right, like you're going against a listing agent or a broker who negotiates 200 plus transactions a year and they're kind of at that slight disadvantage. So like when they were looking at America they were like, hey, that's kind of like a fair situation that they have going on, but now the buyer either has to negotiate themselves or have an experienced lawyer that is in real estate and understands law and can negotiate on their behalf. Now the other part to this to think about is like there's always been a Mr Listed or flat fee brokerages, so like how much will this really change what is going on in real estate? And then two like the other part is like I think Washington has took MLS fees for buyer's agents off the MLS for like a year now and nothing's really changed.
Speaker 2:So in those cases is the buyer picking up that fee?
Speaker 4:So there's a couple of ways it can go right. Like the buyer's agent can be really creative and they can negotiate their fee within the purchase price, you could get closing seller concessions right. Or the seller can just agree to pay the buyer's agent, or the buyer pays their own agent.
Speaker 3:I also feel like there's just maybe a little bit more emotion than needs to be or whatever, because there's other things that we can buy in this world without having three fucking attorneys involved or three realtors or whatever.
Speaker 2:Yeah, but the first time you buy a boat it's the same thing.
Speaker 3:The first time you buy a camper, it's $250,000. It's the same thing. Right, you're going there, you've got to negotiate on your own behalf. You should be educated in the thing that you're about to purchase, buying a $250,000 camper.
Speaker 2:You already have a house. You've already been represented by a buyer at that time. Well, also, I don't think most normal people are buying a $250,000 camper and then a lot of first-time homebuyers don't even know about home inspections and what to do in that scenario of requesting items to be corrected.
Speaker 3:Then the good brokerages will put out education courses and I've seen other brokerages do this, where you have first-time homebuyer seminars, where people come in and there's a lender there, there's a title person there and they go through that whole process.
Speaker 2:But that's to get buyers. Now that that fee's getting taken away, they have no desire to get the buyers if they know that they're not going to be getting a fee.
Speaker 3:at the end of the day they will want the buyers if they have the houses to sell.
Speaker 1:So I just had a transaction where it was in an Orthodox Jewish community and I listed the house as coming soon.
Speaker 1:And the moment it hit coming soon, I got a phone call from like a synagogue or something nearby and they had like 20 buyers who are looking just in this particular area. So all 20 of them wanted to see the property, wanted to be unrepresented, they just wanted, they wanted the property. They would have literally given me anything they wanted. So I had a buyer who was unrepresented and I was on the other side representing my friend and I got to tell you it was a cluster. It was like a complete cluster because first I had it listed at 420. He offered 450. Then he got declined for his loan. He didn't understand what FHA versus conventional appraisals meant and I it took me a whole week to figure out he didn't even qualify for the loan. And then it was just. You know, it was very hard for me to maneuver because I kept thinking he was lying or dishonest and I had to keep reminding myself that he doesn't know what I know and it's he's just Googling things.
Speaker 1:And after four or five weeks of this house being under contract, we ended up putting it back on the market and we could have probably avoided all of that if they were represented just the beginning.
Speaker 1:And when it was all said and done, they then got representation right and they tried to get the earnest money deposit back. And I said, listen, like my clients want at least half to cover their mortgage payment. You can have the other half, but they want at least half to cover their mortgage payment. You can have the other half, but they want at least half. And they text me and they said we're going to report you to the commission because you tried to take advantage of us as a buyer.
Speaker 1:And I'm sitting there like I literally did everything I could to get you, to get this house. My clients waited five weeks for you and it was just this whole unrepresented factor. So there's got to be a solution. What it's going to be, I I think, is going to be brokerages like Lux, where we can afford to give representation to the other side and not be looking at a bottom line, and how that happens is you're surrounded by contractors or handyman or anything else we do, so that we are not too worried about the bottom line of one representation, and that's why Lux is going to be very successful.
Speaker 3:And I also think that if you are a buyer and it's your first transaction and you really need feel the need for somebody, there's going to be agents out there that'll be willing to take a check probably a lot less than two and a half percent to to represent you Right, maybe a flat fee, like I'll pay you five grand or 10 grand or whatever to find my house, depending on you know what price range you're in. But if you feel that that you need that, then then you can get that. You know you could.
Speaker 1:still, it's not like that doesn't exist, but I don't think it's necessary in every transaction at all. It's also awkward. Right like same house, I listed a two percent. My clients didn't want to pay two and a half and we accepted a new offer and there was an addendum in there that said sellers will pay two and a half percent and my clients didn't sign it. So we were ready, inspection was set for the next day. Agent text me and she was like well, I, you know, can you have your clients initial the two and a half percent addendum? I was like no, they don't want to pay you two and a half percent, they're paying you too. And she got like she was texting me like every second. And she was texting me like every second. And then this was over the course of three hours. We had like four messages exchanged because you could tell she didn't know how to process the information. She was like well, you said the offer was accepted and I was like the offer is accepted, your compensation is not part of the offer.
Speaker 4:Yeah, and that's where, like the bad listing agents will sink to the bottom and the good will rise.
Speaker 3:I think we needed kind of a weaning of agents anyway, right, because every person that hated their nine-to-five job and saw like selling sunset became an agent and they're kind of just a liability at a lot of these brokerages that they're. The brokerages are not and we found this out from you know, ike, coming as well Like these bigger box store brokerage kind of things. They're not motivated to really teach their agents how to do things, navigate this world Like they're just taught. This is the transaction, this is the marketing that you want to do. Attack your sphere of influence, whatever the sales training that they get. I know Keller Williams does a good job of like sales training, but that's not going to really help in the world of needing to bring stuff more in house and kind of keep things smaller, less overhead. So then that two and a half or three and a half percent that you're going to get, as the whole listing, actually means something, rather than trying to split three percent between two people.
Speaker 1:Right, and I think again, a traditional box brokerage. Remember, if you're making 2.5%, they're not actually making 2.5%. They could switch to a brokerage like Lux. They could switch to a brokerage that's more economical, probably make almost the same, but then have a lot more resources on how to do more. Do more for yourself, do more for your wealth building, help buyers, but also help yourself in a way by vertically integrating or learning the business from a different perspective.
Speaker 2:So I think it may be similar to you. Know, if a lot of buyers who need seller contribution obviously they don't have the money to give that two and a half percent to their, their buyer's agent, I think it'd be very similar to them just tacking it on to the list price, right, you know tack. It'd be very similar to them just tacking it on to the list price, right, you know, tacking on that two and a half percent plus whatever seller contribution, it doesn't come from the seller's pocket, it just comes from, you know, from that loan that the seller the buyer's going to have for the next chase and I talked about this.
Speaker 3:The only problem is going to be the loans yeah the loans. Right, because who? What mortgage company is going to be like? All right, yeah sure, I'll give you an extra 10 grand as a 30-year loan.
Speaker 2:But how many times does an appraisal come back what's not going to be on the paper, like that? How many times does the buy, uh the appraisal, come back at exactly what the contract price is? And that's like a lot.
Speaker 3:So if you paid that buyer's agent out of your pocket, you're just, you, just, you're underwater.
Speaker 2:No, no, it's getting tack back with the loan amount.
Speaker 3:No.
Speaker 2:So let's say the purchase price is $200,000. Let's say the buyer needs 2%, so that's $204,000. And let's say that they want to pay another 2.5%, so that's another $5,000. So let's say the total purchase price is $209,000. That's what you give as a contract and you let them know like, hey look, I have to get my commission out of this fee, which is going to be $5,000, and then your seller contribution is going to be $4,000. So the net to the seller will be $200,000. The bank's going to say, all right, the loan amount is well, the purchase rate is $209,000. The appraiser is going to come and he's most likely going to make it $209,000 at the appraised value, and then that buyer will get whatever percent, whatever loan. They're getting 5% down, 3.5% down.
Speaker 4:Can I ask a question? How is that any different than what we're already doing? Yeah, isn't that exactly what the first thing we're doing?
Speaker 2:now. So I think that's what I'm saying Right, that's what I'm saying.
Speaker 1:Are we going to full circle this?
Speaker 2:I think it's going to be added in like a solid contribution will be added in.
Speaker 3:This sounds like the fact that we now have non-. We're full circled from just like regular seltzer to hard seltzers, white claws, and now we're back to alcohol-free white claws. So this is like the same thing, right, like we're full circled back to just traditional fucking listings.
Speaker 1:The only problem that we now have is we have to explain it to a regular seller and a regular buyer, which good luck with that. Right, Like I'm thinking some of the sellers that I have, they're looking at their bottom line and they're going to be like well, if the purchase price is $209 and I didn't want to pay a buyer's agent, they shouldn't have offered $209.
Speaker 3:You know, what's really fun is that we have four full-time real estate professionals in one room and none of us know what the hell is going to happen or what's like. Even the rules that are like going to change, kind of thing, like it's like is it everything going to just stay the same?
Speaker 1:ultimately, I think the most important part of that conversation is that we have four full-time real estate professionals in this room and not a single one of us is sweating about what's going to happen in june yeah, no, I'm excited for it whereas I think most, most are, most are very, very stressed.
Speaker 3:This is I told jason, so do we have to list any of these flips with fucking buyer's agent commissions built in like? I guess we might get less looks, but I'm ready to put out a couple of one percenters.
Speaker 4:I think we are One and a half percenters.
Speaker 1:We want to recruit at Lux. Don't get enemies now you know Nick's going to come to Lux after this conversation, right?
Speaker 4:Come to Lux and we'll teach you how to be a good buyer's agent and sit down with buyers and have buyer agent consultations.
Speaker 3:I won't do that, but chase will. Yeah, I'm not a good agent, I'm a good negotiator. No, I'm okay. I just personally, like I've done so many transactions for myself where I just like know exactly what I want.
Speaker 1:So when I hear this, like the buyers like complain about something, it makes me, it makes my, makes me cringe right and and here's the thing as being a real estate broker for quite a while, I know the real estate brokers out there, though I've talked to some of them mostly in situations where I'm suing, so conversations always go a little different. I know none of well, not none, but most of those brokers don't have the experience I do. Like I listen to myself give advice to agents who are on our brokerage.
Speaker 1:I'm like no way they're getting this advice somewhere else because, most again, a real estate broker themselves doesn't have to be an attorney right which I think speaks, I think that's a huge selling point for us, getting just recruiting agents too.
Speaker 3:it's like, hey, we have an in-house like our broker is the attorney, so if you get in trouble, like, or something happens to one of your transactions, not even in trouble and just in a situation, you can either call a bunch of real estate attorneys there's like a couple of them and they'll charge you this 400, 500 bucks. But if you're here with us, you can make that phone call and it doesn't cost anything and it's all keeping everything again vertically integrated in-house. I think that's a huge part of the power of being together with multiple different businesses. We have so much to offer, especially for investor-based people. There's no other better place than at Lux.
Speaker 1:And I think it's also the idea that we're not competing with each other. We all do very similar things. You do property management, my husband does property management. We're all at the same brokerage. We're not sweating about the competition. We're sort of like yeah, like we're, we're rocking it. There's no business for all of us. That's the one thing I love about real estate, though.
Speaker 3:It's like all the people that we hang out with. Like I'm we're, you know, planning a trip to Cabo right now with a bunch of real estate guys that technically all compete with each other. Like like Ryan right, gimay and I, we're like direct competition. We literally have quoted the same jobs, but we're in multiple group chats like fucking around with each other, joking around, like no one's out there, trying to like steal this client from this person or do this from this. So there's so much in real estate that go around that like you really need the army.
Speaker 1:It just gets a little difficult because when I tag a recommendation I have to figure out what. Should I put the H in the Ryan today or go like which one am I doing? Am I doing both?
Speaker 3:Yeah, I mean, I think it's. We're both fortunate, like all of us are fortunate to be so busy that none of that even really makes any difference in anybody's world, and a lot of the clients, too, that I'm after are in New York, california, all these places. So, like our business is countrywide, even though it's based here in Maryland, like our clients are all over the country, we can get anybody to invest in real estate anywhere in the world. We have a lady from New Zealand coming into town, so it's like.
Speaker 1:And now that you say that, I think a great example of that is I had that client who came in last week and they were doing a probate issue. They own a $5 million warehouse in Florida and I am not licensed in Florida and normally if we weren't vertically integrated I would probably have to find an agent and somehow beg for, you know, a kickback which is going to be more than my legal fee for whatever.
Speaker 1:I'm doing them here, but I think I called you at the appointment before they walked out of here. We had an agent who works with us in Florida.
Speaker 4:We had.
Speaker 1:You know, we, we, we've been in contact with somebody in florida like before they walked out of here. We knew all of us were making money off this transaction and the people who were here were hugging me and thanking me because they'd gone to so many people that didn't have the resources to connect all of these people together yeah, I think the phone call came in and within 10 minutes we're in a group chat with our agent in florida getting comps and getting appraisals done on this like five million dollar building.
Speaker 3:So it's the abundance mindset yeah I'm good I got my phone is like blowing up right now.
Speaker 1:These midday podcasts are tough I don't know why we're doing.
Speaker 3:I know well, it's because coming here at five o'clock is a nightmare traffic. But thanks everybody for listening. Diana, thank you for letting us come and set up the studio here at the Lux DK, whatever other businesses you own.
Speaker 1:All offices, yeah, the all offices. It's your office now too.
Speaker 3:Yeah, well, it's too far. I've actually put in a petition already, so we're all going to start signing.
Speaker 1:I'm just telling you that our office space has multiple offices, so we could use the one near your house.
Speaker 3:I'm not driving Two of your employees live above my actual office in the city, so we could say we should, we could. Laura, would you want to sign a petition stating that we move the office closer to home? Yes, okay, laura you're fired. I heard it here first, everybody.
Speaker 1:You're fired, Laura.
