Hello World! Semi-new investor here!

6 Replies

Hi all! I've been a long time lurker and I'm a somewhat new investor being that I purchased a property in Oakland, CA, in 2009. I was only able to get private funding from my father's real estate network. I had worked tons of overtime at my federal security job in order to pay it off as there was quite some pressure from the investors to get back their capital. At the time, I spoke to a couple mortgage brokers who for one reason or another declined me for refinancing. So just like David Greene, I worked hard to pay it off in 2014. 

Since then, I hadn't looked back into REI as I had believed all the markets were too hot to get back into. Fast forward 4 years, my home appreciates by 400% and I began listening to all the amazing BP podcasts and began showing up to meetups. Locally, REI seems to favor those that can purchase properties with all cash. Which is the reason why I read David G's book on out of state investing.

I've met a few investors whom seem to be losing money on OOS investing due to a poor property manager or contractor. One individual told me that the PM they had charged them a "15% PM fee" on top of the labor and parts that was charged for a HVAC replacement. I do like the fact that David Greene stated in a podcast that he leverages the power of scale. So if a PM or contractor attempts to cheat him, he can instantly pull many properties from them and give it to a competitor. Not sure how that would work if an individual only owns 3-4 properties in that region.

That example is for a 'project management' fee which you should watch out for, with something like HVAC the friend could have handled it themselves with a couple phone calls and only require the PM to schedule with the tenant.  Usually that is reserved for major rehab projects.  Completely agree with doing your due diligence on a PM though.

Originally posted by @Aaron K. :

That example is for a 'project management' fee which you should watch out for, with something like HVAC the friend could have handled it themselves with a couple phone calls and only require the PM to schedule with the tenant.  Usually that is reserved for major rehab projects.  Completely agree with doing your due diligence on a PM though.

 I'll definitely get more details on it but it did sound like his PM just told him the HVAC needed replacing and he discovered the fee after receiving the bill. Do you happen to have tips on how to vet an OOS PM? 

Btw, this investor had purchased a few properties in Detroit last year in case anyone was curious. 

@Ced Chan — Legitimate concern. I often say that you “live and die by your property manager“

Having invested out of state for over 15 years I can tell you that property management is one of the most important functions and members on your team.  Vet them well.

Continued success!

Originally posted by @Ced Chan :

Hi all! I've been a long time lurker and I'm a somewhat new investor being that I purchased a property in Oakland, CA, in 2009. I was only able to get private funding from my father's real estate network. I had worked tons of overtime at my federal security job in order to pay it off as there was quite some pressure from the investors to get back their capital. At the time, I spoke to a couple mortgage brokers who for one reason or another declined me for refinancing. So just like David Greene, I worked hard to pay it off in 2014. 

Since then, I hadn't looked back into REI as I had believed all the markets were too hot to get back into. Fast forward 4 years, my home appreciates by 400% and I began listening to all the amazing BP podcasts and began showing up to meetups. Locally, REI seems to favor those that can purchase properties with all cash. Which is the reason why I read David G's book on out of state investing.

I've met a few investors whom seem to be losing money on OOS investing due to a poor property manager or contractor. One individual told me that the PM they had charged them a "15% PM fee" on top of the labor and parts that was charged for a HVAC replacement. I do like the fact that David Greene stated in a podcast that he leverages the power of scale. So if a PM or contractor attempts to cheat him, he can instantly pull many properties from them and give it to a competitor. Not sure how that would work if an individual only owns 3-4 properties in that region.

 Welcome aboard Ced.

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