All Forum Posts by: Account Closed

NO - property management should not blow-up your deal. The issue is what are you getting from the Property Management group. Under about 60 units you usually can do without onsite management.  For small projects <10 units, your biggest cost is leasing, bookkeeping, maintenance, and other cost can be done relatively cheap and there are many ways to get those done at very competitive rates. As for leasing, with smaller projects, you may be best serve by doing that yourself and saving that cost. Lastly, whether you self manage or use a third party, the time involved is always a concern and should be consider as a cost before evaluating strict return on investment.

Please feel free to contact me if you want suggestions on how to streamline your management and save on property management cost. 

Due to SEC regulations, I can not post much here but I would be more than happy to give you some options that you can do without being an accredited investor.

Please contact me via BP or my profile.

Thanks

Talk to your bank, Banks like Chases have bill pay setups where your tenant can simply log in and make a payment. Its usually free

Anthony,

There are deals to be made in every market, the key is to know your market. The best markets are those that you can relate to and know how they function. If you are investing in a new market the most important thing you can do is develop a team that understands your investment strategy and that you can trust to execute you plan.

As for us, we count warm bodies. As long as a market continues to attract new residents, there will be a need for housing, our goal then is to deliver on that demand.

You can try a low amount but increase it once your due diligence period ends. Additionally, we have used LOC as earnest monies. Really depends on the deal.

Mike

I have extensive experience with both the funding and subsidy programs run by the USDA. You are correct that there are many moving pieces but generally in the end it is a good program designed for long term ownership. Give me a call and I will be happy to help out but I need a lot more info than can be discussed here.

Thanks

Management companies can get big breaks on insurance and your property can be covered under their policy. Additionally, Insurers like professionally managed properties and you may get a discount for using one. As for The $1200 savings, that would depend on the property. For us, since each of our assets are single entities, bundling them up under the management company has saved us 18% vs having individual policies.

Defending Property Managers.

Let me start by saying that we manage our own properties, do third party management for others, and use third party managers as well - so I feel that we have seen and done just abut everything both good and bad.

I think that all the responses here have merit but I will take exception to the notion that property managers are expensive and cost to much.  The truth is that a true professional managers does far more than collect rents and take of the bills. A professional manager not only saves you money they actually can make you money. Any experienced investor will tell you that one of the first things they do is put together a team when investing. That team consist of attys, accountants, brokers, lenders, contractors and property managers.

If you manage your own property(s) and are spending say 10hrs a month. then at $10 an hour, you are "earning" $100.00 of you investment return. That's not cash flow!! that not paying your self for your time. If you factor in a PM overhead and travel time, they really are not making a lot of money until they get to a point where they have some economies of scale. But for argument sake, lets say that you have a $1000 a month rental and you are paying 10% or $1200 a year. Any manager worth their title should be able to save/earn you that much. For those of you who actually tell your insurance company that you rent your property, the savings on insurance alone can be more than that.

The real issue is finding a true professional manager not an agent or broker that dabbles on the side. The difference between a good PM and an average PM is probably not that big a factor --- BUT --- a bad PM will cost you plenty. As the saying goes, you get what you pay for.

As for leasing - a good PM should be willing on small properties to charge you a nominal flat fee for leasing provide that if a third party is used, then the leasing commission is paid separately as an operating expense. If they will not negotiate this, then you probably need to rethink your PM. PMs make money managing, not leasing. That's what leasing agents are for.

Property Managers are professionals and the forums here on BP are filled with DIYs who have made big mistakes that have cost them plenty. I am not saying that you can not or should not manage your own properties only that in the big picture, property management is an essential function of running a rental property and that whether you do it yourself or hire someone, there is a cost. A good property manager can be an invaluable member of your team and be a resource just like any other professional.

Zack

Being a hard money lender is not without its downside. Remember that you are lending to individuals that cannot borrow from more conservative lenders hence you are by definition not conservative as a hard money lender. Knowing how to underwrite a deal is a combination of knowledge and experience. I would highly recommend that you spend sometime working with a lender before investing your own funds. Rainy days happen and knowing how to deal with those problems is how to avoid losing money. Take your time, there is always another deal.

I believe there are 17 units and after vacancy and bad debt you will probably collect less than $90,000 annually. Given the overall low rent, I assume that this is an older property and while $300 per unit/per month is a bit high on operating expenses, the property was in foreclosure so I assume that maintenance is deferred and will need higher than normal cost for while until the tenant quality improves. Even if you do use a lower operating cost, the initial repairs will simply reduce the investment value.

As for the $290,000 assessed value, I am not familiar with the Columbus Tax Office but, I have never relied on that number as an indication of value. Mass Appraisal technique is not a good indication of value for investment purposes. My guess is that the Tax Value is representative of the area. At less than $20,000 a unit, this property is probably heading down a death spiral in which the rents can not maintain the property so more maintenance is deferred hence rents continue to decline, hence less maintenance, hence less rents....... in the end you have land value.