DEAR BOB: About six years ago, three of my collegefraternity brothers and I agreed to invest in single-family rental houses. Theyput up the cash and I managed our six houses, arranged for fix-up and repairs,and obtained tenants. Needless to say, we have done very well. The houses haveall appreciated handsomely in market value and we each get some annual tax-shelterdeductions too. All went very well until recently when one of the”brothers” got married. His wife is not keen on his furtherinvesting. In fact, she sweet-talked him into demanding he be bought out. Hisequity is around $175,000. We can’t afford to buy him out without selling orrefinancing several houses. Unfortunately, she is a real estate lawyer and shethreatens to sue us for a “partition sale” if we don’t come up withthe $175,000. Can she do this? What should we do? –Jeff R.
DEAR JEFF: Congratulations to you and your fraternitybrothers for making such profitable investments. However, you should have had awritten partnership agreement to prevent problems like this.
Purchase Bob Bruss reports online.
If you hold title as tenants-in-common, just one co-ownercan bring a partition lawsuit to force the sale of all the properties.
The co-owners should have a meeting to resolve the problembefore a lawsuit develops. Maybe one or two of the investment rental houseswill have to be sold or refinanced to buy out the “bad brother.”
Your situation shows why I advise against group real estateinvestments whenever possible. Sooner or later, especially without awell-drafted partnership agreement, problems usually develop.
DON’T PAY ALL CASH WHEN MOVING TO A RETIREMENT HOME
DEAR BOB: Almost a year ago, I made the worst mistake of mylife. I paid over $425,000 cash to buy into a relatively new retirementresidence. The place looks beautiful and I like my apartment very much.However, the property is run by a bunch of crooks. They have already raised mymonthly fee by $370 and the quality of the service and meals has declinedgreatly. We are treated like prison inmates. That’s almost our situationbecause there is no way I can sell and get my cash back. Now I know I shouldhave taken the finance option where I could have moved in for as little as$75,000 cash up-front. You should warn retirees about these “old folksscams.” –Lucy R.
DEAR LUCY: Now you know why I constantly warn against payingall-cash for any property, especially a retirement home. The situation youdescribe shows the high risk of paying a large amount of cash for retirementhousing, especially a new retirement facility.
I suggest you consult a local attorney who specializes inelder law to see if you have any legal recourse against the owners of yourretirement residence.
SHOULD HOME SELLER LIST WITH OUT-OF-TOWN RELATIVE?
DEAR BOB: We plan to sell our home within the next fewmonths. We’re in no hurry, but we want to close the sale by the end of summer.Our lovely niece is a new Realtor in a town about 25 miles away. She has onlymade one home sale in her first three months after obtaining her sales license.We would like to help her gain confidence by selling our home. She says she canput our listing into the local MLS (multiple listing service). However, friendsand neighbors advise against giving her our listing. What do you suggest?–Helen H.
DEAR HELEN: You have smart friends and neighbors. Listing ahome for sale with a relative is always difficult. But it can be especially badfor any home seller to list with a novice out-of-area real estate agent.Putting a listing into the local MLS alone is not enough to get your home sold.
My suggestion is to interview several local real estateagents about listing your home for sale. Include your niece, but also interviewtwo or three successful nearby Realtors.
Listen to their listing presentations, which should eachinclude a written CMA (comparative market analysis) form and written marketingplans for your home.
Compare these valuable CMAs, which will show recentneighborhood home sales prices, the asking prices of nearby homes now listedfor sale (your competition), and even recently expired listings, which didn’tsell. Each agent will include his or her opinion of your home’s market value.
Evaluate your niece’s listing presentation and her CMA withthe other agent CMAs. If she did a good job, I would give her a 30-day triallisting. Explain you expect her to perform like a champion, performing all theservices the other agents promised.
If she gets your home sold within 30 days, that’s great. Butif she does a terrible job, you only lost 30 days and you can then list with abetter local agent.
The new Robert Bruss special report, “How to Sell YourHouse or Condo for Top Dollar With or Without a Real Estate Agent,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News