All Forum Posts by: Luke Grogan

thanks, @Luke Anderson for your thoughts here. I tend to agree.

@Michael J. No, I didn’t proof read and that doesn’t make much sense as it’s written. He takes 10% of the current rent. It would be obvious that he takes 10% of the rent and his take goes up as the rents go up, so it’s always 10%. For some reason, I added that line, even thought it’s unnecessary. They do not get paid if the unit is vacant, only on collected rents.

I believe he takes 50% of late fees and keeps the security deposits in escrow and pays for repairs after move out. I don’t recall specifically, but I believe his 10% fee is also collected on the security deposit.

I interviewed a property manager that was referred to me by two contacts I have. They are real estate investors and really just acquaintances. I know one of them because I made an offer on his self managed portfolio. In discussions with him, I mentioned that if I bought it, I would hire a property manager. He said that even though he manages his own, if anything happened to him, he instructed his wife to immediately call this guy to manage the property. 

Through that deal, I met another guy who also recommended him as a great PM because he has rentals, has his GC and real estate licenses and does some pretty creative things. 

Here’s where I got stuck. In discussing this deal and his terms, he presented me with a master lease as his standard way of business. It is not a fixed lease in that he pays whether it is rented or not, but that he takes 10% of the rent and future increases (n lease up fees). 

We talked about training tenants and keeping them accountable for small repairs on things they break (generally under $150 and things that can reasonably be shown they caused to break, but generally not plumbing and electrical). I interviewed three other managers and this guy really did stand out. Definitely talks the talk, has good properties in his portfolio and has offered references, which I haven’t called yet, but I just have not really heard the master lease angle. 

It’s similar to a one year management agreement since the rents are good for a year and adjust with each increase, but he wants a longer term (which we have not discussed). He specifically mentioned David Tilney as the guy that taught him this and he’s very high on David’s methods. 

Has anyone seen anything like this from a property management stanpoint? Any thoughts on what to watch out for if I do progress to an agreement with him? 

Originally posted by @Marshall Hooper:

Value-add investors getting busted for fudging the numbers.

https://www.wsj.com/articles/u-s-pursues-one-of-th...

 Any way you could post the article for those of us that don’t have a WSJ subscription?

I think feigning shock at the headline is one thing, but just reading the first line to see the length that this group appears to have gone to in making vacant units look rented is shocking. 

@Jupshy Jasmin I started using Buildium this year and have liked it. It takes some getting used to, but I wanted it for EFT payments, tracking the late fees, sand tracking expenses, so it acts a little like QuickBooks in that regard. I also like that I can send leases and lease renewals and have tenants e-sign.

That was my only thought is to call the closing agent and see if I can get them on my side. not sure what other recourse, but definitely skeptical of a non refundable down payment. 

That’s what I don’t get. While I was fine with him looking for another buyer with a verbal agreement to get the deposit back if so, I haven’t signed anything disolving the contract. And yes, I can close. I’d rather get the deposit back since I’ll have some issues with insurance, but will look into the memo of contract. 

Edit - it is supposed to close tomorrow, so I may be late on filing a memo of contract. 

This situation is not covered in the PSA. It uses the term “non-refundable downpayment” and the broker required down payment paid prior to “putting it under contract.”

The PSA states that I cannot assign the contract to someone else and that if I don’t meet the obligations of the contract, the downpayment will be released to the assignor. 

Here’s the basic info: I put a house under contract by paying the wholesaler, who is a FL real estate broker, the assignment fee. In working to get insurance, I found out the home was not insurable and I wouldn’t be able to complete the repairs in under 30 days to get it insured because it is currently tenant occupied until the end of the lease.

I notified the wholesaler that there are some issues here and I would either need to buy it with cash (as intended) and leave it uninsured while hustling to do the roof, AC, and electric panel in under 30 days (a little tough to do with the permitting of a roof in Brevard county, FL right now).

He said he’d check to see if any other buyers were interested and would “consider” refunding the assignment fee. I understood that if he couldn’t move it, it would not just be on him to lose the deposit, so I could understand keeping it in that case. 

The wholesaler has found a buyer and is now refusing to return any portion of the assignment fee. The fee was $5,000. What would you do?

I’m resurrecting this thread rather than starting a new one. Here is my issue and something I’m trying to reconcile. I tell all of my tenants at the start of the lease that I don’t mind late payments because it means that they are paying more than what we agreed to, and I’m ok with that. I tell them from the beginning that late fees are non negotiable, but I give five days as a grace period and and the late fee is $10/day. So on the 6th, there is a $50 fee and $10 because it’s the 6th of the month (Buildium does it this way).

Here’s my question. I have a tenant of 3+ yrs that complains and negotiates for every annual renewal. My tenants know to expect 3-4% increases, but he always wants less than that. The funny thing is, he’ll pay late every couple months, or has a couple months in a row and doesn’t complain. I called him to discuss because he doesn’t usually pay multiple months late and he didn’t have much of a reason for it. I told him I’d waive $20 out of the $70 and he was fine paying it.

But here’s my question: would it be better to make the late fees $30 on day 3 and $5/day? Basically encourage paying late to collect higher rent? I’ve only had six instances of late fees on 12 rentals year to date, but does anyone here encourage late payments with lower fees to collect higher rent? Most of my rentals are in the $1000-1200 range, so $30 would be 2.5-3% higher per month. Thoughts?

Early on in my “career” I would accept rent weeks late and not charge a fee. I was a reluctant landlord, but as soon as I took it seriously and let everyone know I wouldn’t waive late fees, it typically only took one time enforcing it and it hasn’t been an issue. It’s it shady to make the fees low enough so it doesn’t cause much pain and I earn slightly more?

@Cody L. & @Account Closed Just nailed the answer with a similar take: if you don’t know the numbers amen how they’re derived, your fudge factor will be too far off regardless of which tool you use. 

I’m a big fan of using spreadsheets to help me answer the questions, and I don’t have experience with the one you’re asking about, but I agree with Cody that if you want to convince yourself a deal is good, you’ll do whatever it takes. Do as much work as you can to verify your numbers, stay a bit on the conservative side, and then make a lot of offers that likely get rejected. ;)