All Forum Posts by: Eric Weireter

On your management agreement, how did you figure out what to charge for the flat fee if occupancy was not stabilized?

Currently, my agreement reads... Property Management firm should be paid X% of gross revenues for the Property for the month, or $XXX per month, whichever is greater.

How do you determine the second part (the minimum flat fee) you'd accept for managing the property if there was significant vacancy? Is it based on a price or rate per square foot?

Background: the properties I'll be managing are Class B multi-tentant office buildings.

@Mike A. I have a 30 location credit union as a client and have first-hand experience... remember, vaults were made to be intruder resistant. Depending on the location of the vault in the building, you'll have 4 concrete walls surrounding the vault. Which would be very expensive to demo. I agree with what others have already mentioned, repurpose the vault. I've seen one of my clients (a start-up hub) turn the vault into a conference room while I've seen another use the vault for storage. Just remember if you activate the space as my client did that runs a start-up hub, you need to condition the space with some sort of HVAC/ventilation to get the air moving.

@Mark Eichenlaub I'd like to take a stab at answering your quistions... for the past 3 years my W2 has been a combination of managing a 700k sq. ft. portfolio of Class A commercial office space, industrial, retail and more specifically, right now 30 credit union locations. 

AVERAGE DAY IN THE LIFE - tenant maintenance requests, vendor management, project/construction oversight, bid gathering, tenant moves, financial reporting, budget tracking, rent collection, tenant/vendor networking.

BIGGEST CHALLENGE(S) - problem tenants (consistent unwarranted complaints), CAM calculations, Property Manager (employee) turnover - our market has a lot of PMs seeing if the grass is greener on the side.

CHANGES NEEDED IN THE INDUSTRY -  proprietary equipment needs eliminated, 

To follow up on what others have mentioned regarding lowest return - after working a W2 for 3 years in the commerial property management field, I'll be launching my own commerical property management company in a couple weeks with a portfolio of ~$1M in gross receipts (83k sq. ft). At a 4% property managment fee, I'm certainly not making bank. If you multiple that 9x, which would roughly equal the 700k sq. ft. portfolio I managed at one time, we would collect $360k in property management fees. With that amount of assets under management we'd probably need to have 2 maintenance techs, an accountant and a property manager on staff. Once you consider business expenses coupled with 4 salaries & benefits we're certainly not be profiting much if anything. 

Where property management companies make their money is in the additional fees that are outside of the management agreement... such as leasing, project management, asset management, etc.

Despite this example, I've worked for 2 real estate investment firms that have brought the property management operations in house rather than outsource the task. In each scenario the real estate firm saved money by making such move. 

Hi Wesley,

The Triangle MLS cover covers 16 counties in the Triangle region: Alamance, Caswell, Chatham, Durham, Franklin, Granville, Halifax, Harnett, Johnston, Lee, Nash, Orange, Person, Vance, Wake, and Warren.

To answer your question(s) above... Raleigh, Durham and Rocky Mount are included in the Triangle MLS. Goldsboro and Greenville are not.

While this visual aid doesn't have the cities/counties listed, it is a map that highlights the Triangle MLS coverage in reference to the entire state. (I do not work for the brokerage/firm the link takes you to. I just found it after doing a quick Google search).

@Carloz Gil Unfortunately, I do not have a roofer to recommend. I have yet to need one. 

I utilize Triangle Air Conditioning out of Bridgeville.

Hi @Maricruz Romero - Multi-families are a hot commodity in our market and the inventory is extremely low. For example, our MLS covers 16 counties in the region. As of 4pm on 5/22, only 45 multi-family properties are listed in the MLS as active and available for purchase.

Those 45 properties are broken down as 33 Duplexes, 1 Triplex, 4 Quads and 7 properties that are 5+ units (up to 29).

I've got a vacant apartment in Carnegie that I just started marketing. I've had about 3 inquiries asking if I accept Section 8. Frankly, I never thought about it, but am curious to know the experience of other investors in the market:

• What's the process to become an approved landlord/property?
• How long does the process take?
• How accurate is the is  ACHA Fair Market Rent Schedule vs. what you are receiving/charging?
• Part of me wonders if I would even pass inspection because my property doesn't have an entry/front door (you have to enter through the garage door).

Thanks in advance for your insight.

I really enjoyed working with Dean Sowers, looks like he is now at LoanDepot.

@Tony Gunter I'm based in Durham and got a HELOC on my primary residence from Allegacy Credit Union based out of Winston Salem, NC.

I didn't have to pay anything out of pocket (beyond a small deposit to open a bank account at the institution) as they gave me a "credit" to cover the appraisal fee. If I recall, they gave me the option to do a table appraisal, drive-by appraisal or a full-fledged appraisal on the property. The first 2 options were less than the credit they were providing, but if I would have chosen the full-fledged appraisal I would have had to pay a bit out of pocket.

Another option I looked at was Coastal Federal Credit Union. If I recall, I would have had to pay ~$150 out of pocket if I went with them...

If I remember correctly, both credit unions had 100% HELOC financing options available - your interest rate would be just a bit higher than the 70%/80%/90% options.