All Forum Posts by: Brandon Weis

I know there are large property management companies that manage properties everywhere, but I am curious how they overcome all the challenges of not being near the properties. I think many can be easily overcome like finding an attorney and contractors in the area, but the most interesting challenge I can think of is how to hire someone to deliver late payment notices one day a month. We obviously handle the ones near us in-house, but hiring someone in another market to work one day a month is a bit of an odd task.

My guess is that remote property management companies need to have a sort of Swiss-army-knife person in the area that can do many variable tasks for them and works on an hourly basis as there may not always be things to do, but I don't know that for a fact.

How do remote/long-distance property management companies overcome the challenges of not being in the area? And what are the challenges I'm not even thinking of?

We are not expanding outside our immediate area yet, but the thought is there.

This is a great point (that I also find myself guilty of as a guest) that I did not think of. Thanks Miguel

In our small corner of the market, ~1,000 units in Northwest Ohio, our rent increases are softening, but we are actually at our lowest level of late payments and evictions in over 2 years.

It's a saying I used to hate but have come to realize is kind of true. "The best time to buy is right now." Waiting isn't usually rewarded. 

I will soon be operating a medium-term rental in a small city in Ohio. While there are certainly no vacationers here, there are a good amount of people that use short-term rentals for contract work for 1-3 months. I'm sure the answer is "it depends" but in general, do people that operate medium-term rentals tend to find a better response from a unit that looks pretty or a unit that might have some more perks while someone is there for a short time? I'm asking specifically because I am thinking about throwing a treadmill or elliptical machine in the living room if the person wants to exercise a little while they're there.

The unit isn't huge (around 1k sq feet) and it will probably look tacky, but I was wondering if other people have found value in providing some simple exercise equipment, even if it seems out of place.

If you are open to moving, the best way to make a smaller down payment is to house hack and get a primary residence loan to buy a 2-4 unit. There are whole books written on house hacking that will outline everything better than me, but if you're looking for a way to get started with a small down payment, it's the way to go.

@Rene Hosman I am building the triplex in the main market we manage in - Lima, Ohio. It is a small market with a population around 30k, but since we have so many connections in the area, it really helped get something unusual like this off the ground. For example, a bank would never give someone like me who hasn't built before, a loan to build like this, but we are doing it through our company which has a great track record and I will buy it upon completion.

I mainly went with a new build because I thought it was a very unique opportunity given the connections I have working in a development and property management company. There is a lot of really old housing stock in our area, but I really thought this would stand out. It will be the only ranch-style triplex in the area that I know of. That, combined with a couple other factors, has me confident that it will get the top rent in the area for any multifamily unit!

It definitely comes with its risks, but I'm confident the high rent and income-driven appreciation will make up for those.

A lot of new constructions are more of equity plays than cash flow plays. While it certainly would be better to also cash flow, the objectives of many new builds are to create instant equity upon completion. 

For example, you may build a house that costs $1 million to build, but once it is finished is immediately valued at $1.3 million, so you created 300k in equity out of thin air which you can use to borrow against. However, most banks have seasoning periods now so you probably wouldn't be able to actually tap into that equity for at least a year since your original loan was likely just to build.

These equity plays are a different strategy, but combined with usual appreciation, can also work, especially in some markets more than others. It's obviously more important to have more conservative cash reserves when your property is not cash flowing.

I don't know about cheaper insurance (yet), but at the event I went to, they said that insurance companies were advised/required to NOT price them higher just because they were concrete homes as opposed to regular construction.

I do think it's feasible that eventually they'd have lower premiums as they prove to be more durable/less risky.

Since you mentioned investing out of state, I'm assuming you're asking about getting a partner online, or at least not a friend/acquaintance. That is an extremely risky proposition. Even partnerships of the closest friends can fall apart, but putting that much trust in a stranger you've only met over the phone or maybe in person a couple times would not be a route I'd go. I do not personally have a bad experience yet, but my real estate mentor has been in legal battle for about two years trying to dissolve partnerships with his closest friends from back in elementary school. In anything, people are always the biggest variable, so it can happen to anyone, but adding in a variable of someone you don't really know exasperates that risk.

If you just want "boots on the ground," hire a local property management company, and don't go with the cheapest option. You get what you pay for, so if you want more of a presence in that area and possible leads on more properties, ask the property management company what they could all do for you. They will charge extra for any extra work performed, but it could be much more beneficial than tying up that much equity in a partnership with someone you don't know.

Also, if you ever do have a partnership, spend the money on the front-end with an attorney to get a sound operating agreement that makes the divorce less messy if it comes to that.