Hello, everyone, Im a newbie and I have a question that I wanna share with you. Im living in Beijing, China, and I am able to save a lot of money here that I want to invest into rental properties, and since Im soooooo far away Im following the ideas of David Green, about the long distant investing, I picked up Indianapolis as a city and a region where I want to invest and I have found a local agent and a property manager , so they can , in a way, control each other, in a sense that I will have two separate source of information, because I will not be able to be there and I need to choose the right property, especially because this is my first one and Im still learning about all of this. So I found this property manager here, on BP, one of the women recommend me this person and we start communication. Now, I found that there are 3 potential problems that bothers me about him:
1. He offered me to help me with building a portfolio " I will help you build a portfolio"
2. when the agent sent me a few deals that looked pretty good to me ( I was using and following the calculator on BP and the numbers were good) my PM told me that these deals were not good, and when I asked him why he didn't reply ( at least not until this moment when Im writing this here)
3, in general I feel like we have a bad communication, he replies to my emails slow and sometimes I need to write him 2-3 emails before he replies.
Now, I know that it is not a job of a PM to send me deals or to check them out ( or maybe it is, if he is going to be my future PM for a lot of properties shouldn't it be in his concern to know which kind of properties will he be working with), but I was wondering if maybe this is not a very good property manager, maybe he is also an agent, or maybe his wife is an agent and they are working this together so he doesn't want me to buy properties from this other agent.
Or maybe Im just being paranoid? :)
@Nikki N. - I would say trust your gut, if you already feel funny about him/them, then perhaps it's time to move on. Also, keep in mind they are essentially working for free, so their priority should be helping existing clients - so keep in mind the level of requests you make to them. It could just be where they are willing to help some to earn you business but it won't be a high priority.
Feel free to PM me if you want some property manager recommendations. I have been in Indy since August and am very involved with CIRERIA (the investor meetups) and have heard the good the bad and the ugly about certain companies. I am happy to share.
@Nikki N. I haven’t read into David Greene’s methodology enough to know if he advocates using an agent and a PM (two different people, instead of one for both) but for me and my OOS investing, I find it has worked best to use one person as your agent and PM.
You have to know what motivates each Individual. Your agent is motivated to sell you a house, really any house. Your PM is motivated to make sure your house is in a good area, because if it’s not,they’re job gets much harder. If you trust your PM, I’d go with what they say. You can also call a couple other local PMs and see what they say. If they all say it’s a questionable area then that’s probably your answer.
I trust someone when they've earned my trust and these kinds of things that you mentioned in the OP are doing just the opposite. If you can't get to Indianapolis right now you should get someone you trust to go be your eyes and ears. If this isn't possible either you should consider making a trip there or do some more searching before you pick someone to be on your side. After all, you wouldn't start building on something until you're sure the ground below you could hold what you're trying to create.
I trust my team over there (even though I haven't been there before) because these are the people who answered my questions and cleared my doubts when I was in my learning stage and they were not profiting from it, not until I've felt comfortable enough to send money their way. Yes I spent a long time cold calling and crunching numbers without actually 'taking action'. However, when I was ready I was taking deals down because I knew what I was looking for and if I wasn't sure I'd have my local advisors to further educate me. It's only been about 4-5 months since I started with my first rental property and I'm working to find property number 3 to put on my team's plate.
Hope you'll find your A team and invest!
1) The fact you need this PM in order to do out of state investing (out of country in your case) means that you need him to be super responsive. It won't work any other way.
2) It might be a little early to ask a PM to review deals and such. As of now, they aren't making any money from you. You might want to pay him to look at these houses until he gets a few properties from you.
The best PM will not be a great salesperson. The best salesperson will not be a great PM. Using two different people for each function is crucial.
If you are asking your PM questions that your agent should be able to answer, he may be busy dealing with frozen pipes and lack of heat- two issues that are dominating our time today. You want them to be prioritize your properties and tenants first, and not speculate about the best neighborhoods for your next acquisition. This is the job of the agent.
I am an advocate for recognizing these two different personalities, and job types, and get them working on the same page. The best way to do this is to find an investment brokerage that offers acquisition services with management and leasing. Then you will work with two different people in the same organization that will both call you "the client".
There are a lot of potential dynamics of what you are experiencing. To get your team working together they likely need to not only be working for you, but also working for the same team.
You aren't being paranoid even in the slightest. If I learned nothing else since I started investing, it's that if you are suspect about something early on, you can pretty much plan for it to go exactly as your fears are suggesting it will go.
A couple thoughts/questions about this for you-
- Are you planning to visit Indy, or any market, before you purchase something or are you planning to trust and agent and/or PM?
- Are you looking for properties that will need work? Light rehab or more?
- Realize that a misc agent and a misc PM don't necessarily have to control each other. In fact, they probably won't. Neither of their businesses are dependent on the success of the other person. Not only do they not have to control each other, or technically help you in any way, their incentive to do right by you isn't huge because you are one person and as of right now just buying one property. Not saying they won't, but if they don't do right by you, they don't lose anything outside of your business. Especially with you being so far away...won't be much of a snowball effect on them. This is exactly why international investors got taken to pasture so hard in 2011-2012...because any agent or any turnkey company or any anybody could sell them anything they wanted to and the investors weren't there to know otherwise. I don't say all of this to scare you, and there are absolutely ways you can make this work, but just be aware of where your power is and where it isn't.
- Are you a US or Chinese citizen?
I've got to agree. If your PM is not responsive now, when s/he is still earning your business, expect more of the same when s/he has got it. I also agree that you have to be sensitive to what you are asking of a PM when they aren't getting paid, and overloading with questions.
Hey thank everyone for answer. I am not @Nikki N. I am his brother, and we are doing this together.
I am in the Bay Area, he is in China. We want to build a portfolio and are starting in Indy.
We got a reference from someone on this forum that that guy is a great PM.
So we contacted him, he answered all my questions, was many years in business etc.
We also found an agent by contacting many of the best agents on zillow. One of them had one guy on their team wanting to work with OOS investors.
He seems ready to do stuff we expected (go video record properties, answer questions, etc).
However as per David Greene's book we wanted to cross check with the PM, and the PM initially agreed that it is a smart idea that he 'vets' places because he will be managing them and Indy can be tricky block to block.
Now he tells us that even a duplex where a rent is 1.5% is not good for money reasons (pay attention, he didn't say it is a bad neighborhood, or an old house, or anything else. No, he said the deal is bad because ROI won't even be 6%).
That doesn't make any sense. I would get it if he said "don't buy there it is dangerous", but this just rubbed me the wrong way.
I presented how i see numbers and showed the calculation that it is about 12% ROI and ask him to clarify what he means. He never answered.
He just sent a few properties that his wife is hoping to get 3% as a buyer agent 3 days later :).
Yeah we are trying to not fly often, and we are trying to buy fix rent. So BRR part of BRRRR :)
Houses where I live go 17% over the listing price and 40% of the time with cash offers (yes people cash out 2 million dollar crapy 1907 houses, amazing).
So we are trying to do it OOS.
Sorry for the long post, and thank you guys, you are amazing!
Feel free to connect and I will offer you free opinions on any deal you are considering.
We may be able to quickly discover which person (Realtor or property manager) is giving you better
information. If you get 3, 4 or 5 opinions you will begin to see the truth IMO
@Nikki N. The vendor has sized you up and they think they have a remote sucker owner on their hands. Let me know if you need a pep talk. You have to show them who is the boss. Yes I pay a remote investor premium but I don’t get gouged.
I agree with the rest. If you aren't getting the respect & service while in process of establishing a relationship, it will only go downhill from there.
One additional thought. Duplexes in Indy are often over-valued to out of state investors. We commonly find that between deferred maintenance and capital expenditures, the investor spends much more in the initial stages than they had planned. This will affect your ROI and it could be this is what the PM is stating.
They need to respond to you though so you can understand better the situation.
I want to say thanks to all of you, wonderful people, for all the advice that you have given me, I will definitely give up on that PM. I tried to reply to each one on you on private chat but after I came back home from the classes I realize that I was banned from sending inbox messages...:) I guess it wasn't the right way to do it, I just wanted to say to each one of you thanks for all the things that you wrote me. So I can see that I have 4 messages in my inbox but I can not open it now, I wrote to the administrator and I apologize, so hopefully I will be able to go there and read it.
Andy, you are a real estate broker in Indy, maybe we can start doing this together?
Joel, you are a PM from Indy, so it is great!
If it is not a problem, maybe you guys can write on my email.
Im new into BP, I hope that I not doing something wrong again, I am just very serious about all of this, and I want to learn everything, so maybe Im just to pushy sometimes...