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.