All Forum Posts by: Michael Smythe

@Alex Cardaniuc it's all fine and great - until something goes wrong and you get sued.

@Jeremiah Dunakin are you saying that landlords should just give tenants "take it or leave it" renewal amounts?

That was easy to do for the last 12 years with rent rates increasing, but no longer!

What research have you done on rental Days On Market?
-Do you know their up nationwide 38% since 2022?
-Do you know rents are FALLING in parts of Florida, California, Texas, etc?

To properly renew a lease with a tenant, several tasks SHOULD be done:

1) Evaluate the property to make sure tenant is taking care of it and you want them to stay.

2) Do a market analysis of rental rates.

3) Determine target rental increase amount

4) We present all this to the tenant, as we assume they're looking at rental rates on Zillow, etc.

5) We then ask the tenant what adjustment they think is fair and then negotiate rent amount and lease term (we always try to go for 2 years).

6) New lease sent electronically to sign.

All of this takes time, hence a Renewal Fee.

@Nicholas Olson So, let's understand your question, you're asking if you can STATE on a federal loan that you will be living in one of the units, but you then plan to rent out all the units and NOT live there at all?

OR are you asking,

Can you live in one of the units, to avoid fraud, and rent out the bedroom(s) you are not using?

We can help navigate!

@Jonathan Penalosa

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

@Shaun Beck

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

@Wayne Lee When rates were super low 2 years ago, and prices hadn't totally spiked, many investors got lazy because almost they could buy anything on the MLS at asking price and cashflow as a rental.

As prices went up, many investors started investing in STRs to get properties at asking price to cashflow.

Now, many are chasing Class C properties to get them to cashflow at asking price.

What consistencies do you see in all three of those scenarios?

The most important one is, "at asking price"!

Prior to the Great Crash of 2008, most investors looked at & analyzed 100 properties, to make 10 lowball offers (so the property cashflowed) to hopefully get one accepted.

Not many investors want to work that hard today.

They'd rather invest in high-risk Class C properties and take their chances, as opposed to doing the hard work mentioned above!
---Then, when their high-risk Class C investments doesn't deliver Class A results - they blame their PMC, agent, etc. - but, RARELY themselves.

Now, what are you going to do to find a Class B rental that cashflows?

@Derek Morrison IRS requires you to issue 1099 to all but major INC companies.

Contractor will need to complete W-9 form.

Do NOT make final payment to them until they complete & sign the W-9!

@Scoop Schneider

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

@Rianna Mcgee how much did the posters of the videos want to charge you for their S8 "expertise"?

Section 8 is a tool, not a cure-all.

It can be a great program if you screen the tenants well. 

Otherwise, they will trash the property, not pay their portion of rent or utilities, and then move on to the next property.