All Forum Posts by: Collin Hays

 I would say you're a professional manager if I ever knew one!  ;)

I am an investor and a property manager, both.  You will tend to get embellished stories from self managers and third party property managers.  You need to sift through all of that to get to the truth.

Self managing is great, but don't let anyone tell you that you can hire someone in Bangladesh for $4 a phone call to take care of your guests.  That's baloney.  We manage 30 properties, and I have 2.5 FTEs to cover it.  I don't have those people because I like to employ people.  I have them because they are needed.  Calls in the night, locked out of the house, frig broken, no heat, snake under the hot tub, fireplace won't turn on, stuck in the driveway, and any of about a hundred other things.  We also take care of all monthly occupancy tax remittances - city, county, etc. - oversee housekeeping, pest control, and a variety of other things.

A good property manager isn't charging 40 percent of your rents.  Maybe years ago but not today.  Probably more like 25% to 30%.  If they are good, they will earn it, you will be glad to pay it, and your property will be busier than it is with you renting it. Almost all of our clients are former self-renters, and it isn't uncommon for us to double their occupancy in the first year.  We just took over one in April that is owned by an attorney in Cincinnati.   Did about $11,000 last year, and we are already over $25,000 booked this year.  He simply didn't have the time to mess with it.  We have clients that have never even seen their property! 

If you self manage, even assuming you could match the occupancy performance of a good PM, you are not saving yourself the entire management fee, by any stretch.  You are going to spend 6-7-8-9 percent of your revenues on marketing alone.

I encourage self managing, but to do it right, it's a part time job. If you don't have time for another job, you might find that a good PM lets you enjoy being a STR owner without most of the hassle. Look at it as an annuity and each month you get your check direct deposited.

which box are you thinking out of?

So I have been in the process of preparing to build a basketball/volleyball gymnasium to rent out.  The total cost is set to be around $450,000 including the land.  We are pretty far along in the planning on this though we have not broken ground.

Meanwhile, I came across an entire private school campus, complete with football field and gymnasium, that is for sale for $1.1 million.  This is a very old campus, built in the 50s, that is full of asbestos.  The gym is fine (kind of rough though), although it needs roof work and perhaps HVAC, and a new floor.  

The private school that owns this has moved to a new campus.  They still use the football field at this old campus for their football games. 

Well, I talked to the board member in charge of dispensing of the property and I told him "I don't need a campus, I just need a gym...and I am building a brand spanking new one for about $450K."  He said "We may be able to work something out...let's meet up and let me show you this gym."   I gather from that, that times are tough and the school could use some cash.

That tells me they are willing to consider an offer way less than $1.1 million.  And they should - there is zero market for an old dilipidated school campus, especially in these times when buildings everywhere are empty.  And they cannot separate the gym from the rest of the RE - it's a package deal.

So I have some questions!

- If I bought the whole deal for say $350K, and then I have to spend $100K on the gym to get it up to snuff, I still own a school campus with asbestos.  Would I have the whole thing razed?  What would it cost (roughly) to raze 10,000 square feet of single story space?

- What if I proposed a year to year lease with them at $2000 a month for just the gym?  But if they sell it, I'm suddenly without my gym.  Who pays for utilities if I lease it?  

- I will need to spend $30K on proper flooring for the gym.  If they sell it in 6 months, I've lost all my money.  Could I ask them to reimburse me the cost of the floor if they sell it?

- I told them that if I bought it, I would give them unfettered access to the football field and locker rooms next to the gym at no cost.  They seemed really excited about this.  

- Right now the tax appraisal on the complex is $1 million.  If I bought it for say $300K, would I have a case to take the appraisal district to get the new value at $300K?  Or does it work like that?

- Does the asbestos in the classroom part of the campus present me with any liabilities if I'm not using it?  What about if I'm renting it out to someone?

 you forgot baker and candlestick maker.

If someone bought the house next door to me and turned it into a hotel, I am pretty sure there would be no such thing as a "minor annoyance."  

Realize, you have opened a commercial enterprise in a residential neighborhood, with people coming and going all of the time.  Your neighbors probably have a chunk of their financial nest egg tied up in their homes.  Their property values are at risk with this. Grand kids come to visit.  They like to get out and walk their dogs.  They like to open the windows at night to have some cool air. 

Meanwhile, a mini-Hilton has opened up a few feet away that has an outdoor pool.  Music, drinking, drugs, fornication, and all sorts of other debauchery are going to be taking place.  You can't have enough cameras and monitors to stop it, nor will a book of policies and procedures prevent it.

Have fun.

I would think Orlando.  Dallas is a nice place and all, but who is going there on vacation?

I think he’s wanting to scale something?

If you are referring to new construction, yes.  Money well spent.

If you are in a mostly residential neighborhood with a STR, get ready for some flack, whether or not zoning allows the STR. I would be highly annoyed if my next door neighbor turned his house into a hotel. While you may have strict rules and a manager, your neighbors will still be able to write a NYT Best seller of all of the things they will witness over the next 2 years.