@Billy Britton I am not sure to be 100% honest! We have most definitely reached out to all of the companies that are easy to find on google, and I have been there in South Bend multiple times networking to find the smaller, boutique firms.
The area that is the most under served is the C and D class apartments and section 8 apartment spaces. The property I own is a C class (ok maybe C-/D+) class apartment complex. There are a core of tenants who pay like clock work, but we can't find a management company that knows how to do a good job with section 8, VA voucher programs, etc. That is an important component in this space, and so far everyone seems to just want to manage Notre Dame grad students... I could do that from a beach in the Bahamas!
@Billy Britton I am sure there is an opportunity for someone who wants to take on the challenge of dealing with this type of tenant. Being good with your hands doesnt qualify you for the type of management @John Warren is describing though. Dealing with D class tenants in SB is no joke and something a person has to be truly prepared to take on for pennies.
Lets say we rent a D class house for $500/mo off Olive Rd. and charge a typical 10% management fee. For $50/month we get to deal with rigorous screening of less than ideal tenants, constant calls from tenants, damage to the property every time we turn around because people do not care about things in this class of property, Section 8 and the government (who doesnt love to deal with the governement), maintenance requests because none of the plumbing is updated, codes enforcement because the tenant decided it was a great idea to put a couch in the yard, and last but not least angry owners wondering why their pro forma isnt being met ("I was gunna get a 75% COC on this thing").
Now this is a pessimistic view of what it is like but PM is a pretty thankless job, especially in low end properties. If you do a great job then it was expected, if you do a crummy job then you get yelled at. I have to imagine that it is simply not worth it to most people for $50/mo!
That's very fair. Though certainly somewhere out there someone has cracked the code on it. I guess its just a matter of going out and finding that company and see how they operate.
@Billy Britton you are right that people have cracked the code, and this has all been done before. Our PM company recently mentioned that they had just found this amazing software that allowed them to do national criminal and eviction searches.... transunion smart move! BP has had articles about smart move for a decade I would imagine.
Like @Aaron Linden said, it is tough to build a business in the C and D class space. It requires a lot of scale, and a solid maintenance team. The funny thing is, the tenants in our property haven't really been that much of a headache. It is definitely a space that is available to someone who hustles there in SB, although it is probably not the most glamorous!
The one interesting angel on C and D class in SB is that Section 8 offers substantially higher rents than market for one and two bedrooms. I believe you can get around $650 for S8 for a one bedroom, whereas the going rate for a market rate in this class is about $525. In Chicago, there are management companies that focus exclusively on subsidized housing since it eliminates the rent collection issues, and this could be an interesting play in SB.
Greetings all South Bend investors here to network with all entrepreneurs and build our companies together!
Hi guys, I'm in SW Michigan just following this post.
I've invested in Benton Harbor for many years so similar class and management issues. Looking at buying in Niles currently so will likely drop into a South Bend meeting.
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