All Forum Posts by: Jay Dewberry

Ha Ha Ha. Forgive me for laughing @David Faulkner, but there is a lot of truth in what was said. It's true that many property managers have the game rigged for them to get paid any and every which way loose. But I wonder if its systemic or just reserved for a handful of PM's in larger markets.

Hi Zach, welcome to BP. The property managers job is to, well, manage your property properly. This may include:

Assessing your property’s rental value

Receiving rents/late fees

Coordinating repairs/maintenance

Handling Evictions

Screening tenants

Providing financial reports

and so forth.

The fees charged by the PM is determined by their Management Agreement. This outlines what they will charge you and what you should expect from them. The monthly percentage could range from 8-12% in most cases. They may even charge one months’ rent for bringing you a new tenant as well. But each PM is different and handle management in different ways. Perhaps it would be a good idea to find a local PM and give them a call. Or, go online to a PM near you. Many times they have copies of their agreements online for you to view. Hope this helps.

Hi Alexander. Justin is correct. Your goal is to get as much information as possible, namely the owners name, mailing address, and if possible a phone number. You want to make contact either via, yellow letter or hand written letter, and/or phone to see if he/she/they are interested in selling the property. If you get a call/letter back and they seem motivated to sell, have some questions to ask them (there are questionnaires on BP to help) to determine if it may initially be a deal. In the meantime, look at some local sales comparables as this would give you an idea of what the property may be worth in new condition. Then work backwards to determine what a asking price range would be. Hope this helps. Try the Bigger Pockets 70% Calculator along with the Fix/Flip Calculator.

Hi Adam. Welcome to BP. From the looks of it your numbers seem okay. The only thing I would change is to increase the budget some for Repairs/Maint and CapEx. Make sure to get several estimates on rehab during the due diligence phase, because a 10k rehab can change to a 22k rehab if not careful. Otherwise, good luck.

Hi Dan. For the most part, your numbers seem pretty solid. That seems to be a hefty monthly bill to pay for garbage though. Perhaps also consult with the agent and/or property management company for Vacancy rates in your market. And call a insurance company for an estimate. This may fine tune the numbers a little more. But for all practical purposes, this looks like it may be promising. Good luck. Keep us posted. 

Hi Daniel, welcome to BiggerPockets. The numbers for the variable and/or fixed are very important to your analysis. Being too far off can be the difference between an average deal and a great deal. Or a great deal and a horrible deal. With fixed expenses, this would depend on the SFH you're analyzing. Many of these figures can be either gotten from the previous owners' bill(s), or you can call for estimates. PMI depends on your financing choices. With variable figures, many times it depends on the market, age/previous rehab of home, and purchase price of the unit. However, many tend to use the following:

Vacancy: 4-8%, Repairs/Maint:5-10%, CapEx:6-12%, Prop.Mgmt:8-11%

Again, these are just ballpark percentages and may vary depending on each analysis.

When it comes to future assumptions, these numbers are not necessarily needed on the acquisition side of the analysis, however it helps in the event you want to sell sometime in the future. If you’re having trouble with some of the numbers, you can hover over the “?” mark and it offers more insight. You can also check out one of Brandon’s more in depth videos about using the calculator(s). Hope this helps. Happy hunting.

Hi Stefanie. Welcome to BP. The BiggerPockets Calculators have in an depth format for analyzing properties based on the exit strategy you have in mind. Try going through one, and putting in the figures of one of your purchases to see what the outcome is. 

Hi Donna. Take this with a grain of salt as I'm not an attorney, nor do I attempt to portray knowing Texas housing laws. That being said, here's my two cents:

Contact an attorney. Take lease to sheriff’s department. Let them know unauthorized trespassers are currently in your home and you want them removed. This, most likely, won’t work, but your goal is to get the names of the squatters, so you can include and serve them eviction notices. Have your attorney finish the rest. When (not if), they damage your property, have attorney file a civil lawsuit against the lessee for any damages occurred from violating his lease agreement as well as a suit against the squatters. Make sure to include all costs associated with having to go through this ordeal. You may or may not see a dime, but there will be a record of this nonsense for future background checks against these individuals. Hopefully this won't happen again. Take a zero tolerance policy against them. This is your property, not theirs.

Hi Chris. Welcome to BP. From my initial view, seems like a solid deal. The only thing else I can see a need for is a budget for Property Management. This should be included regardless if self-managing. Factoring this in would still give you a decent cashflow profile. I also would up my CapEx/Repair budget some. Lastly, make sure your rehab budget is sound. I've seen an estimated budget of 10k turn into a 25k nightmare. So get some contractors in there to make sure. Otherwise, good luck. Keep us posted.

Hi Vincent. Vacancy is determined by the market you are in. A good way to determine this is by contacting a property manager or investor friendly agent as many times they are aware of the demand for certain areas in your market. As for percentages, many use them but it would depend on the unit(s), previous rehab, age, usage, ect. Many people use an exact number instead of percentages so it just depends on the person and market. You'll also want to determine these numbers based on purchase/market price, and not the rent. As for your question, I suppose if you have a newer unit that does not require major repairs and/or capex expenses, then perhaps you can lower it, BUT you will still need to budget for these items in the long run. Hope this helps. Good Luck.