What Are All These Real Estate Fees?
Articles,  Blog

What Are All These Real Estate Fees?

What is up with all of these real estate fees? I mean, are they fair? Are they legitimate? Is someone taking advantage of me? Am I getting fleeced but I don’t know it? My name is Kris Krohn. I’ve done thousands of transactions. And today, I’m going to help you understand
where you might be getting ripped off and likely where you’re definitely not. Check it out. I’m going to invite you to actually step into
my office. And what I’m going to do here is I’m going
to put up on the screen some of the different fees that you’re facing in the game of real
estate. And I want you to understand which of these
fees are legitimate. I want you to understand what you should be
concerned about because when you buy a property, property, property is like the biggest commodity that
the average person will ever buy. And here is the concern that people have:
Number 1, they’re like, “Okay, so if buy this property, what about rehab fees?”; Because
by the way, even before you buy property and you’re worrying about realtor fees and loan
fees, you’re usually saying, “How much money do I actually have to put in this property?” And here’s the concern: If you’ve never hired
a contractor before or handyman, you’re going to find that if you have 3 bids, you can literally
have one really high and one really low. And you might be thinking lower is better. But I’m going to tell you right now, sometimes
lower means shutty-crappy, got to do it all over again work. And I have to do that. It can be really painful. So, it’s really important in the game of real
estate to first of all make sure that you’re working with the right kind of people. You know, speaking for my self, I’ve got track
record here. This document is called Krohn Consortium. It is a track record on the last 4,000 deals
that I’ve done literally, those are the addresses on those pages. There’s a link below where you can actually
download get this document for free. And from all that experience, I’ll tell you
what I’ve learned. I’ve learned that in this game that if you’re
doing enough volume of real estate, you can hire the rehabers to do deal after deal after
deal after deal. Brings the price down. But really what I’m predominantly worried
about is number 1, someone charging too much. Number 2, taking too long. And then number 3, not doing the job that
actually promised. So, those are 3 considerations that you want
to do with rehab. By the way, rehab is… Or real estate. And it’s something that should be factored
in. Number 2 that I want you to be focusing on
is, there are realtor fees. Good news: When you buy a property, the seller
pays for all them. And it’s 6%. So, 6% on a 200,000-dollar house is 12 grand. That’s a lot of money. When you buy a home, someone else is got to
pay for them. When you sell a home, your responsible for
paying all of them. I’ll share with you later strategies of what
you can do to actually make it far more advantageous for yourself. Number 3, you’ve got loan fees. And for those of you that are watching this
video because you’re one of my brand new partners, I want you to understand this stuff. On the lending side, these lending fees usually
get wrapped in the mortgage but have to be disclosed and they’re not making money on
the back end. And lending laws have changed since 2008 to
make it actually a much fair game. What I can tell you is that if you’re working
with an organization that is doing a lot of loans, they usually end up reducing the fees
and making it in volume. That’s my game. I want to work with someone that’s doing hundreds
of million of dollars in loans because I’ve put that in place. Our fees end up staying super, super minimal. The forth one that I want to bring up that’s
really important here is that there’s going to be closing cost. And you need to understand that when you buy
a property that you got to pin the title company. There’s going to be title insurance to make
sure there’s no weird anything happening or the title isn’t cluttered by any judgments
from the past. Those things are Legitimate, they’re important. And title companies that keep their fees in
check. No one’s breaking you over the calls on that. On the other hand though, you got to understand
that we’re going to collect up front money for taxes. If it’s the start of the year, we might be
collecting money on taxes for later. And so, every month, money is taken out to
give to the mortgage company so that once a year they can send it to the county to have
taxes paid. That’s also part of closing fees. So far, nothing I’m sharing here is really
out of wack. Now it gets a little bit interesting. The fifth thing that I want you to understand
is property management. And you’re like, “Argh! Now, I got to pay a property management set
up fee.” I mean, you look at this and the reality is
that they usually want the first months rent. And their set up fees. There’s some different things that they have
or getting things set up or getting automatic bill set up or collecting the rent and sending
it automatically to you. I want you to understand that most property
managers charge 10%. Now, because of the volume that I do, my property
managers charge 8%, 7% and in some situation 6%. It’s crazy. But with volume, you can drive prices down. Before I go on, I want you to understand 2
things. Number 1, i think it is important for you
to understand that you need to be price sensitive but only to a certain point. You need to understand which fees are part
of the game in real estate. And then you need to be willing to pay them
without whining and complaining. You also want to be educated or know where
someone might be taking advantage of you. And I’m pointing some of those out to you
in just a moment so that you can make sure that everything that’s happening is exactly
the way that it should. One of the most important fees that we pay
in the game of real estate is actually what we call an acquisition fee. The acquisition fee is basically covering
all of the non-license individuals that are making this happen. In my world, my team charges traditionally
about a $4,000 fee for doing 341 hours worth of work. Most of them as by non-license individuals. So, I’ve got people that I’m coming through
every week thousands of deals. And these people, they don’t have licenses
so I pay them to do the research, narrow it down and find the deals that actually meet
our criteria. Then I’ve got to pay a team to go the house
and actually get pictures and video and verify the condition of the home. Especially if you’re going to buy this from
like an auction or something like that. Then I got to pay a team that after it’s acquired
to actually go and do all of the rehab. And it’s not just hiring a contractor. It’s someone that manages the contractor that
says, “Dot eyes, cross this. Did everything happen in the way that it was
supposed to.” 341 hours of work in average that acquisition
fee, we have found that we can help my partners win instead of it being 8,000 on one home
and 4,000 in another and 7,000 in another. We’ve been able to hire staff to supply economy’s
scale. So for $4,000, we get about $15,000 worth
of work that my partners don’t have to do. They love it. Outside of the acquisition fee, there’s a
couple of more to be aware of. Number 7, you’re going to have to set up an
LLC. You’re also going to set up accounting. Now, I’ve done another video for my partners
on accounting. I have a CFO and his team is come in. Which means that we get all this over sight. All the books are kept immaculately. They do quarterly reporting. All expenses, depreciation, mortgage interest
are recorded appropriately. They charge $50 to set up the first property. They charge $10 to do every property after. See by 5 homes and you’re paying $18 a month
per property and that’s cheap for having some of the most intelligent people in the planet
that are actually managing the books. Outside of that, the last thing you’d ever
worry about is what happens if I ever sell this property? You’re going to have rehab fees. You might have to like fix up the property,
make sure your property is set up to the proper condition that you want. But this for the most part, these are the
fees that you want to worry about. Or at least be aware of. Don’t be me. One of the first mistakes I’ve made when I
got in the real estate game was I was terrified about being ripped off. So, I went in crazy skeptical and I read through
everything, I got myself educated. Do that part. That’s important. But I went in and assuming the worst in people. And when you’re going to get in the game of
real estate, the purpose of this video is to show you…. These things, they’re all real. They’re all legitimate. It’s the money going out to different people. And I want to actually just break down a couple
of things. I sometimes get my client set freak out and
they’re partnering with me like “Kris, I’ve heard that I can get a loan on a primary residence
for 4 and a half percent. And they’re charging me 5 and a half percent
to actually get the investment loan.” And they’re freaking out like, “Someone’s
ripping me off.” And I’m like, “First of all, investment lending
is usually a full point higher because there’s a more risk to the lender on a property that
you’re not going to live in versus one that you are going to live in. So, it’s completely standard.” But more importantly, one will say, “Whoah! I found out that I could get this bank to
do it for eighth of a percent lower.” And at the end of the day one of the things
that I want you to understand is that you got to look at the total ROI. If I pay all these fees. But let’s just say I’m earning 25% of my money. Let’s say I’m earning 25% of my money. Then like, a loan interest fee might make
the difference of actually instead of making 25% now, now I make 24 of a quarter percent. Like, bottom line is I’m multiplying my money on a pretty fast basis. So, I want you to get that. I want you to understand that in this game that everything is relative. And there’s always a give and a take. The lowest price is usually the best. That’s what I’m always fighting for. That’s where I’m yearning for. But that’s not what you always to get. What I want to invite you to do though is
be educated enough where you don’t become that person, that becomes in a mud of work
with. Because for example, with some of my partners,
I’ve ejected a couple of my partners for having bad attitudes where I said, “Hey, you’re not
worth the drama. You’re observing all my team’s time. My team doesn’t like it. They don’t want to work with you. You might not be prepared mentally to go in
the game of real estate. Because you’re so concerned with fees when
this is the nature of the beast. This is how you make a lot of money.” And there’s just a lot of people that actually
just don’t get that. So, here’s the take home message that I want
you to be aware of. Number 1, there’s a link in the description
below to learn more about my partnering. You can actually get a free downloadable copy
of this book that takes you through my entire philosophy, track record, what we do. So you can learn, read and understand what
we’re up to in the game that we’re playing. Number 2, my advise is that if you’re going
to get in the game of real estate, you have got to come out to one of my events. I put them on a regular basis. There’s a link for that also below. Kriskrohn.com/events. The reason why you want to go there is because
I spend the time training you how to make all this money in real estate and I spend
the rest of the time training you in how to develop the psychology of a financially successful
person. Because you need to make room for millions
of dollars in my mind. You got to be able to take cost and put them
into proper perspective. And in other words, don’t take this the wrong
way. But we got to fix your mindset. Many of you will watch this videos and be
like, “Oh, I want to do real estate. But I’m not. Oh! I want to do a deal. Then I’m not.” And I want you to ask yourself “Why aren’t
you doing the deal?” Because something up here in your psychology
says, “Don’t, can’t, doubt, shouldn’t.” And it gets in your way. So, I think that 2nd take away is come to
an event where you get some training. 3rd take away is just talk to a member of
the team and get yourself educated. Bottom line is that if you are just… You’re in a roast over fees like crazy because
you’ve habituated yourself your entire life to think that “Someone’s trying to steal me
or cheat me or there’s a saber-tooth tiger that’s going to jump out in my 2-year old
brain and try to kill me”, you definitely don’t want to partner with me and real estate
is probably not a game for you. What I would recommend is partnering with
someone that knows what they’re doing someone you can trust. They can be that game changer, they can make that happen for you. Guys, thank you so much for watching this
video today. I hope it was helpful and useful in just understanding
that there are these fees. Some of you need to watch out for. Many or most of them are actually legitimate. You got to keep them in check. And if you work with me in a volume game,
I get everything for less because we’re doing so much more. It’s a rare game to find someone that can
scale single family the way we’ve learned with this kind of ROI’s. But that’s what’s available to you my friend. Thank you so much for watching. If you’re watching the partner series, enjoy
the next video. And otherwise you now have some suggestions
on what you might like. Otherwise, subscribe and I look forward to
seeing you on the next video.


Leave a Reply

Your email address will not be published. Required fields are marked *