Thanks for the info, @Lawrence Siers ! I wish I could make it - unfortunately I live in Southern California!
Posted this elsewhere in the forums, but thought I'd add here as well.
Hello, BP! I hope everybody's doing well around here.
In thinking through the 50% Rule, and modeling it out in my spreadsheets, I am finding myself very uncomfortable using it. Here is the hurdle that I'm mentally up against:
- While certain expenses are in actuality directly tied to your gross rental income (vacancy and property management) some expenses are not (maintenance and CapEx). I'm currently looking at purchasing a multi-unit in St. Louis. In St. Louis, like most other cities, there are premium neighborhoods (A's & B's) and non-premium neighborhoods (C's and below). The premium neighborhoods obviously demand higher rental rates - however, the cost to replace a roof or snake a sink in an A neighborhood is not going to be different than the cost in a non-premium neighborhood. So, with that said let's assume that a building in an A neighborhood will fetch $2,700/mo in rent, while a building in a C neighborhood will only bring in $2,000. Most investors I've spoken to have advised to accrue 10% of gross rents for maintenance expense (and 5% for CapEx). Why on earth would I accrue $270/mo for maintenance in an A neighborhood and only $200 in a C neighborhood that could be as little as 4 or 5 blocks away?
I know this is an old thread but I have the opportunity to buy a few Bank Owned properties in St. Louis and I'm looking for a good PM since I live in the SF Bay Area, California.
Can anyone here recommend a reliable PM? I'm also looking for a General Contractor to manage some of the repairs. I've heard of a few companies that do both. Any help would be great.
Hi Rafael, I use Deca Realty Company for PM. I have only worked with them for three months, but they have been great thus far. They can also manage repairs for you, but they up-charge for some of those services, so you should compare costs to hiring a GC separately.
Hello Rafael, I live in St. Louis, born and raised and very familiar with ALL areas. My husband is a licensed real estate agent, Investor and contractor. I help him in many of those areas (Investing and Contracting) and would love to speak with you more about your "bank owned properties". If interested please feel free to contact. Thank you
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