All Forum Posts by: Gregg Cohen

Cameron Gaskill is great!

Parts of Paxon and 32209 are great for buying and holding.  Some aren't.  Just need to work with someone who has the necessary experience and boots on the group if you aren't sure yourself.  Cash flows are great and we seen significant appreciation specifically in the Paxon area in recent years.

Hey @Zachery Holley and all others on the thread, I'd love to connect as well!  I have been investing in turnkey rental properties with property management since 2006.  I own 300+ rentals in 4 main neighborhoods in Jax (Westside, Southside, Northside and Arlington.)  We manage over 3,600 units as well.  Happy to help in any way I can.

I love those areas.  You'll find better cash flow in the Oakwood Villas part of Arlington as values in Ft. Caroline have gone up and it's tough to make the numbers work.  We've built and renovated probably 300+ homes in those neighborhoods over the years and they continue to be a bright spot for us and our clients.  We're building another 50+ in Oakwood Villas as we speak.  If you've got a deal where the numbers work there, go for it!  

Full disclosure: I'm an owner of JWB Real Estate Capital.

@Bradley Sriro - Thanks for sharing your experience with us!

@Alicia Harrington and @Vinod Badami - I'm glad you're both interested in investing in rental properties.  Single family rentals offer the best risk-adjusted return on investment due to the 5 profit centers, in my opinion.  Just a few things that I would pay close attention to when choosing a turnkey partner and a real estate market:

1. Is the company that you are buying the property from also the property manager?  It's really important to make sure that the company that makes the promises as far as what your returns on investment will be is the same company who actually collects the rent.  This will make sure the goals are aligned and increase the chances of a successful working relationship for you. 

2. Does that company only sign 1 year leases?  Don't settle for this.  Make sure they only sign 2 and 3 year year leases with rent escalators.  Your success as a rental property investor will be tied to how long your average duration of tenant stay is and the best way to influence this is to sign long term leases. 

3. If you are a buy and hold investor and you plan to be owning the property for a full market cycle (10-20 years or more), then look at all 5 profit centers when determining which market offers the best returns.  Most investors only focus on positive cash flow and ignore home price appreciation.  However, history shows us that home price appreciation rates in a given market tend to repeat themselves over a full market cycle.  Knowing this, you can look back at the historical averages for home price appreciation and you'll have a good idea of what your investments will do over the next market cycle.  Invest in a market that has both positive cash flow and higher-than-normal home price appreciation.  Most cash flow markets have appreciated 2-3.5% on average per year since 1991.  Jacksonville has appreciated at a rate of 4.3% on average.  This is a big deal when you are invested in a $200k asset and you hold on for a long time.  It can equate to hundreds of thousands of dollars in additional return on investment simply by buying and holding in a growth market like Jacksonville. 

I'm happy to be a resource any way possible.  Hope this helps. 

Agreed that I would not get into the habit of reducing rent even if there is a maintenance item that causes stress. We manage about 3,600 SFR properties here in Jacksonville and have been doing it for over a decade and I can't remember one time when we reduced the rent with a current resident in place. There are always other solutions to the issue. I'd first just start by just employing excellent customer service skills...that's probably all you need on this one.

Full disclosure - I own a property management company in Jacksonville, FL.

Hi @Titus Hill, those terms seem very fair to me.  However, the most important thing to focus on when hiring a property manager is how long their average duration of tenant stay is.  Most investors never ask this question.  But the greatest correlation to your success as a rental property investor is how long your tenants stay in your home.  Turnovers are costly in terms of maintenance and vacancy costs as well as additional tenant placement fees.  Most investors need residents to stay 3+ years on average in order to hit their original return on investment goals. 

So, 3 additional questions I would ask:

1. What is your avg duration of tenant stay?  

2. How long are the leases you sign with your tenants? (don't accept 1 year leases...should be 2-3 years)

3. What are your tenant placement fees?

Hope this helps! 

Will do!

Full disclosure - I am one of the owners of JWB Real Estate Capital in Jacksonville, FL.  

Couldn't agree more with you @Chris Clothier as far as the difference between a premium servicer provider in property management versus the low-cost provider.  And thanks for the shout out about using the term "residents."  In your business and mine, it is much more than just a term, we make sure every member of our team fully understands that nothing works in this investing model unless you treat your residents like gold.  If we make our residents happy, our owners our happy and that makes our business successful in the end.  

Sometimes low-cost property management may be the right solution for a particular investor.  If you are a local investor and you may have the experience and desire want to spend more time and have more input into the management of your property, then this may be the right solution for you.  Just understand there is a cost for this somewhere and it may be in the amount of time you spend, higher maintenance costs because you don't get volume pricing discounts or longer days on market due to a lack of staff at the property management company.

However, for an investor who is truly looking for a "turnkey" experience, premium property management is a must in my opinion.  This is the type of investor who may be pulling money out of the stock market and wants a more consistent asset class so they come to rental properties.  However, they live thousands of miles away and have no experience in real estate.  They are extremely busy and want this asset class to perform similarly to an investment in stocks, bonds or mutual funds.  They require high level talent, technology and systems in place to make this a passive investment for them.  When small issues arise, they want it handled for them without their involvement.  And when bigger problems come up, they want the problem identified and solutions offered by the time they get on the phone to make the decision.  This type of relationship just doesn't happen with low-cost property management providers in my experience. 

Poor property management is the biggest reason more investors don't take advantage of this asset class and you're much more likely to find those experiences with those who paid bottom dollar for their property management services than those who paid more and worked with a company who delivered on premium service.

@Bradley Sriro

@Bradley Sriro - Thanks for sharing your experience with JWB!  

@Matthew M. - Great post. I hear the cash flows are strong in those markets that you mentioned (PA, NW Indiana, Indianapolis, KC.)  You'll get the maximum cash-on-cash return there because of the low purchase prices and high rents.  But don't forget about the other profit centers when building your rental property portfolio.  The 5 profit centers of rental property investing are positive cash flow, tax savings, principal paydown, property appreciation and inflation-hedging.  Investing in a market like Jacksonville won't get you as much positive cash flow as the ones you mentioned but it may give you the best overall return on investment over a full market cycle.  But you'll also be investing in a market that has appreciated much more than those markets you mentioned over the last 30 years.  Many investors don't realize it but history shows us that home price appreciation rates in a local real estate market tend to repeat themselves over a full market cycle (10-20 years.)  If you are a buy-and-hold investor, your best overall return on investment will come from a market that has both positive cash flow and above average appreciation rates.  You just need to buy and hold for a full market cycle to count on appreciation.  Of course, it's important to find a property manager that you actually want to work with for 10+ years as well.  If you have any more questions about Jacksonville as a market, I'm here to help.