All Forum Posts by: Andrew Fingado

Welcome to BP. I'm in the same boat as you as a fellow CA resident. Wish California was better to invest in, but they are pushing me out.

Nice to see another Bay Area member. Welcome!

Welcome Rick!

@Raymond C. I was looking up there a while back and it seemed pretty dry to me. I am looking for lots and lots of cash flow. So I can pretty much scratch off the entire state of California right now.

Others who live and invest in the bay are more creative (such as J Martin). They buy a distressed property, rehab it, and get a higher return. If that's something you want to do i'd look into that. There are other Northern California investors who are OK with the current climate and search hard for the best cap rate possible and look more long term. Nothing wrong with that either. It depends what you value more: A better chance at long term appreciation and increased rents, or immediate high cash flow.

@J. Martin Yes, I have always lived by the rule that if you have a ton of qualified and willing applicants your rental is probably priced too low. Granted the bay area is a high demand/low supply rental market so you will generally see a lot more interest in general. You just have to know what's relative and adjust accordingly.

@J. Martin You have the right idea. Passive cash flow over time can be much more rewarding than a quick buck doing a fix and flip or selling after a property appreciates (and not to mention the capital gains tax!).

Don't get me wrong, people that do fix and flips and buy/hold/sell high have their place and I hold nothing against them. I plan on doing some fix and flips in the future. Also, depending on the market it actually could make since to sell if the property you own has poor cash flow and the numbers don't add up. Example, you own a nice personal residence in the Oakland Hills you bought for a million. You have since moved somewhere else, and now it rents out for just $4,000 a month. You could exchange that property through a 1031 and get a 1 million dollar apartment complex that cash flows better.

One of the best things though about holding is that it's a constant and over time the money you have earned from your investment adds up, often times much more than if you had sold. You can always do a cash out refinance, keep the property and buy more!

It's also something you can pass on to your kids too when you go (or partner, sibling, or whoever!). What a great legacy you can leave behind! A lot of the properties that my Dad owns were passed down to him and will someday pass down to me, and so on! My grandfather who was an architect designed many of them and although he passed before I was born, I feel like I have a connection to him every time I step in one of the houses. It truly is a generous thing you can leave behind to your loved ones, and they will always remember that and will be thankful for it.

In conclusion, I do think holding can have so many perks, but 1031 exchanges are just fine in my book. They have many perks. Once that depreciation on your original property dries up there is nothing wrong with trading up.

Here are my thoughts....

I would first read your contract with them very carefully and look for what it says about repairs.

Normally PM's are only allowed to use an agreed upon dollar amount kept in a reserve fund in the trust account to do repairs. However there is sometimes an exception, such as in an emergency situation. There can be a clause allowing a manager to intervene and spend/bill more if he thinks that by not doing the work right away it may cause significant damages to the property, significant loss of income, loss of life, etc.

I would think if you try to fight this, they may use this "fire hazard" as an emergency exception, if that is in your contract. Either way, it sounds a bit fishy that they never contacted you about this until after the fact. It would have been good business for them to call you right away when they realized that this work needed to be done. You may want to consider hiring a different PM and put in a clause in the employment agreement that if there is any significant repair that will go above and beyond your normal reserve amount (an emergency situation for example), they are required to make an attempt to contact you right away.

What does your property management contract say in regards to repair/maintenance allowances and emergency situations?

@Amit M. Gotcha. All the properties I manage are in the Richmond/Berkeley/El Cerrito area. So I do have a handyman I will recommend but it would be for bigger jobs since he's over here in the east bay. I know you said you are looking for a guy for small jobs, but I'm going to PM you with his name and number anyway. You never know when you may need a backup for something larger.

@J. Martin I'm PMing you as well with the same guy I'm going to recommend to Amit M. He's local, reliable, and does great work.

@Amit M. You are correct about craigslist. It's a hit and a miss and you have missed more times than hit.

My handyman is somebody I would highly recommend, but I first have to ask where are your properties located?

Thought i'd give my input about how I stay sane at my job since @J. Martin and so many others have given their input.

When you are a property manager you are never officially "off work". There is always the possibility of a call, even at 4AM. Luckily I have been able to outsource repair issues to a family member who is a contractor who takes care of emergency repairs. Even so, there have been trips at 2AM to a property for an issue which required my presence. That being said, I have created a life in which I can be a successful property manager and at the same time have enough free time to relax to do my job at the best of my ability.

My advice for anyone out there, just like J Martin said: outsource as many jobs as you can afford and are comfortable with. Solid advice. Also, don't take on more work than you feel you can handle. Let me explain.

I keep a smaller management portfolio than other companies because I refuse to let my work suffer to gain more income. I am the only real estate broker in the company I created and I plan to keep it that way. I serve as leasing agent, manager, but I outsource bookkeeping and repairs. I am somewhat selective about what jobs I take. If it's too far, too bad an area, not enough money for the work put in, I have no problem passing on it. I want to do the best job for my client and if I feel like there's a property that will somehow effect my work or myself negatively I cannot ethically take that job.

I have seen other property management businesses crumble because they grew too quickly and didn't want to hire out more help. Their reputation suffered as the owners became grouchy, overworked, and uninterested. This gives the property management industry the reputation it has now. What is good about having more money when you go to work unhappy and overwhelmed and come home exhausted?

I want to keep my business small, local, and reputable. This means at a certain point I may have to cap it and not take any more clients. If it means I take a hit on my income, I could care less. I don't need the stress and I refuse to let my work suffer. I plan on investing to supplement my income.

Moral of the story, your emotional health and happiness are much more important than money. I would rather make 100K per year, keep a mid size management portfolio and be able to have free time to relax, be proud of my work, etc. than make 300K a year with headaches every day, unhappy owners and tenants, all the while no time to enjoy life.

So my advice to everyone: Don't take on more and allow your work to suffer, and don't take on more than you can emotionally handle. If that means a pay cut so be it. What's the use of making double what you make when you are unhappy and will probably croak at 50 from a heart attack? Life's too short. Make money but know when to say "enough's enough".

@J. Martin

I will try to make it to the upcoming SF meeting, but if I can't I should be able to make the next one that is on this side of the bridge.

I'll reach out to Andy Kaufman and see if any plans are in the books about another meeting in Berkeley.

If you and I could try at some point to get together people in the area for a meetup around Richmond, I think it would provide investors a more local atmosphere along with detailed discussion about the real estate aspects of West Contra Costa County. I feel like investors from Richmond and the immediate surrounding areas are underrepresented on BP. Or they are just hiding out. :)

Maybe we could pull them out of the woodwork and get them on board. I know of a couple of local places perfect for a small get together. Food for thought.