All Forum Posts by: Greg Weik

Mostly very good information in here, but a couple things:

-NARPM (1) doesn't mean anything, other than the PM paid an annual subscription to say they are a NARPM member.  It definitely doesn't mean the PMC is better educated, better qualified, more ethical, or more competent.  It's similar to being a "BBB Member."  They're paying to use a logo and brand recognition. 
-NARPM (2) - locally here in Denver I got into it with the VP of our NARPM chapter about "unattended showings", which are becoming prevalent in the PM industry. In addition to being a PM, I have a legal background.  Short version: The issues with unattended showings are too many to list here.  PMs allow them because they are lazy.  The fact that a NARPM authority would be fine with this, and that NARPM would not take a position against it, tells me it's not a serious organization. I have a blog on my website about unattended showings if anyone would care to read about why they are a problem for the industry. 

I agree with a lot of what the other PMs have said here - new clients typically shop based on price, but once they've been with a bad PMC, the client realizes that price is only part of the puzzle. 

We get a lot of new doors to manage from all of our local competitors.  The reasons clients tell me they made the switch to RES are usually related to communication and repairs.  So those are the things we focus on the hardest at my company.  Excellent communication, excellent handling of all repair situations.  We fall short sometimes, but we are constantly improving our systems, our training, and our personnel. Company culture matters.  A lot. 

Repairs: Any company that profits from repairs are not watching your back when it comes to controlling costs. 

Last point: keep in mind that companies charging a full month's rent for tenant placement (or the equivalent thereof) have little incentive to keep your tenants in a property at lease renewal time.  If a PMC has 300 doors coming up for renewal in the summer, do you think they want those tenants to stay, or do you think they want the new tenant placement fees?  A good PMC has a fairly even spread of charges throughout the life-cycle of the rental property; that keeps their interests more in line with the client.  If the PMC's fees are all front-loaded, that should be a red flag. 

I agree with @Nathan Gesner but I would also just request that you do not call yourself a property manager.  You are a private landlord and that is very different.  If you do not have any formal training, if you don't possess a real estate license, if you do not have an understanding of the proper systems and legal documents, if you are not familiar with the Warranty of Habitability, etc., you are not a property manager.  You are a private landlord. 

You're not a lawyer if you represent yourself in court. 

No offense intended, but those of us that put in the time and dedication to make this a career, are property managers. 

This may not be a popular answer, but you don't really have to put yourself in a category (introvert or extrovert). 

Be what you need to be, at any given moment, to get the job done. 

By default, I prefer systems to people.  I am passionate about efficiency and much less so about human interaction.  :)  But I'm also socially adept when I need to be.  I think this describes a lot of people - maybe it describes you as well.  My career as the owner of a property management company requires me to step out of my predisposition to avoid people. Talking to prospective clients, meeting with new clients, handling showings, training new employees, etc. 

If you're motivated to be successful, you will do what it takes.  I would suggest not labeling yourself. A label such as "introvert" is only noise IMO and not helpful to achieving your goals. 

Originally posted by @Eric James:

Originally posted by @Greg Weik:

Always focus your investment dollars on appreciation.  Homes that appreciate faster, do so because they are more desirable.  In my many years of property management and personal investing, the clients who typically chase cash flow, will often have properties that do not appreciate all that well, and those properties tend to be less liquid.  The factors that add to strong appreciation also benefit liquidity.  

Appreciation allows you to pull equity and buy another property, another, etc. 

The best rental properties to own are some of the more difficult to acquire.  There are not often deals out there, and sometimes you have to buy at market price - and that still can be a winning strategy if you buy the right property. 

This being said, cash flow and appreciation are not mutually exclusive concepts.  If you can find a good deal on a home in an area that has consistently strong appreciation, that would be the best of both worlds. 

When I think of cashflow properties, I think of multi-unit or house-hack.  Both of those property types/approaches have added risks and pitfalls associated with them, in my experience.  Oftentimes, I see people go into those types of properties with spreadsheet (or worse, their sales agent-assisted) projections, and the projections often do not match up with the reality on the ground. 

When I think of appreciation, I think of a single-family home in an established neighborhood with good schools and low crime.  

Advice: build a relationship with an experienced property manager if you can.  On any given home you're considering putting an offer on, check with your property manager and ask what they think of the property you're considering.  There's a good chance the property manager knows the area, knows the rental rates, understands the tenant qualifications common to the area, etc. My best clients do this and when they close, and we begin managing the property, it works out better for everyone. 

A problem is, without good cash flow you reach your DTI limit and can't qualify to refinance your equity out of those appreciated properties.

If you have a good relationship with a bank and you have even break-even numbers on your rentals, there's usually a solution to be found to acquire more properties.  Even if that is not the case initially, strongly appreciating properties also tend to see corresponding market rental rate increases - meaning that an initially weak cash flow property could become stronger in a few years' time.  

I was curious about this, so I just looked up the rules in Washington State.  You only have to wait 30 days if the value of the items is >$250.  I'm not seeing any definitive rule that states "who" makes this determination, so if it were me, I would say it's simply not worth that amount.  

Here's why:  1) It was left at the property.  Valuables would not reasonably be left.  2) the items being on the street for more than 1 day is prima facie evidence of the value being under $250, in which case, you only are required to wait 7 days to get rid of everything. 

Good luck!

Always focus your investment dollars on appreciation.  Homes that appreciate faster, do so because they are more desirable.  In my many years of property management and personal investing, the clients who typically chase cash flow, will often have properties that do not appreciate all that well, and those properties tend to be less liquid.  The factors that add to strong appreciation also benefit liquidity.  

Appreciation allows you to pull equity and buy another property, another, etc. 

The best rental properties to own are some of the more difficult to acquire.  There are not often deals out there, and sometimes you have to buy at market price - and that still can be a winning strategy if you buy the right property. 

This being said, cash flow and appreciation are not mutually exclusive concepts.  If you can find a good deal on a home in an area that has consistently strong appreciation, that would be the best of both worlds. 

When I think of cashflow properties, I think of multi-unit or house-hack.  Both of those property types/approaches have added risks and pitfalls associated with them, in my experience.  Oftentimes, I see people go into those types of properties with spreadsheet (or worse, their sales agent-assisted) projections, and the projections often do not match up with the reality on the ground. 

When I think of appreciation, I think of a single-family home in an established neighborhood with good schools and low crime.  

Advice: build a relationship with an experienced property manager if you can.  On any given home you're considering putting an offer on, check with your property manager and ask what they think of the property you're considering.  There's a good chance the property manager knows the area, knows the rental rates, understands the tenant qualifications common to the area, etc. My best clients do this and when they close, and we begin managing the property, it works out better for everyone. 

I'm with @Lucia Rushton, buy and hold.  Don't be swayed by a "sellers market."  Those come and go.  The value of your homes, over time, will always trend upwards.  And adding passive income to the mix is a no-brainer to me.  

Pull some equity from the homes if you need to, to build your dream home, but use that debt to your advantage.  Having three homes is the smarter play, vs. selling the two and then building the new one with cash.  

A simple analysis looks like this: If you have $500,000 to invest, would you buy 1 home for $500,000 cash, or would you buy 5 homes, each with a $500k sales price and with $100,000 down?  Some people "feel" better without debt, but if you buy a single home with the cash, you are not building nearly the wealth (x5) you would if you had the 5 homes.  

In the example above, assume each home appreciates at a certain rate.  5%, for example, or $25k/year.  If you own 1 home that appreciates at 5%, great, it's worth $525k at the end of a year.  If you own 5 homes that are appreciating at 5%, however, your wealth grows 5x faster - $125k wealth built in that same time frame.

You alluded to being nervous about being a landlord and renting out your properties.  Don't be.  If you prepare them - ensure they are in great shape when they go on the rental market - and if you find a property manager who knows what they are doing (and how to place great tenants), you will do just fine.  

@Greg M. That's very interesting, thanks for sharing that approach.  I would never do that, but I'm sure you can probably get away with it.  

@JD - "Ruing the extra work" and "rolling with the punches" are not mutually exclusive. 

Rolling, we are.  Using the new legislative changes to our advantage, we are.  I linked an article above from our company site/blog post that was scrubbed, but in it I spell out that the value add based on our knowledge of the laws is a huge reason to hire our firm.  And we've seen a significant uptick in new clients who are intimidated by all the rules coming down from on high and who trust us to navigate the landscape. 

This is an online forum, I see no problem with communicating real estate laws in my state and how they impact my business and venting from time to time.  

@Joe Splitrock How have I gotten to over 500 doors without understanding human nature?  Maybe I understand it better than you think - maybe I'm just too much of a hard-*** to care if people get money from the government for housing but still end up on the street.  Maybe I don't think other people should make their problems, my problems.  Just like I don't make my problems other people's problems (other than this post, but participation is voluntary lol.) 

Also, I guess we have always managed properties nice enough to not have to deal with Section 8, so it's somewhat foreign to me.  We are now being forced to interact with this world a lot more, and I'm not a fan. 

I get the concept behind "poor people are poor because they make bad choices" but the point of my post is that it's fairly draconian for the government to come in and force private companies to play babysitter and administrator for programs such as these.  Why not simply make the tenant prove they are renting a property and then provide the benefits?  I.e., lease, utility bill as proof of residence.  In most cases, from what I'm seeing, the Section 8 applicant already has to come up with the app fees and initial deposit anyway. 

It's interesting to me that the vibe of responses so far is that this is all totally ok.  I'd personally love to see something more along the lines of UBI and not all the piecemeal programs such as Section 8, unemployment, etc.  It would eliminate so much red tape. Just give the money to the people, and if they really can't figure out how to keep a roof over their heads, so be it.  

I guess my major gripe is that my operation is run on brutal efficiency.  We make money by being fast and not having anyone or anything in our way to slow us down.  Section 8 pumps the brakes on that to a point where it's hard to even put a dollar amount on the time-suck we face when dealing with it.  

The tone of our legislature in CO is such that people who make bad decisions are increasingly not being held accountable. 7 Day notices became 10 day notices, became 30 day notices.  Late fees are now only after a week has passed from the date of default.

In any case, it is what it is.  I appreciate the responses.