All Forum Posts by: Michael Smythe

@Mohsin Mazhar why didn't your rental insurance cover the hotel expense?

What you are experiencing is what just about every rental owner goes through!

Try to think about where you might be in 3-5 years when rents are a bit higher and your properties have appreciated.

If you can't see this vision, then sell.

@Richard Benjamin Wilhite unless you setup a C-Corp and pay double taxes, any income will flow through to your personal 1040 via Schedule E.

@Navid Sadighi if you sold your dad's business - where did that cash go?

Why aren't your parents getting Social Security Income?

Given all this, how much monthly surplus do they have?

Why can't that surplus be saved for downpayment on next investment?

@Jaekwan Lee what price do you have to offer so rent covers your mortgage, property taxes, insurance and other expenses?

@Richard Benjamin Wilhite

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😊

@Marcus Tim aren't you going to have to furnish the property while you live in it?

While living in it, why don't you rent out furnished rooms to generate cashflow to recover the costs of the furnishings?

Only buy stuff, even for your room, that you plan on leaving behind when you buy your next home.

@Steve Sayler in our management contract it clearly states we will not pick up rent nor accept cash payments directly.

Tenants can either mail us a money order or deposit cash directly to our bank. 

Under ZERO circumstances will we pick up rent from a tenant! It is NOT safe to do so.

Funny story to illustrate: over a decade ago we took over a property with a senior citizen. Previous PMC picked up rent in cash. The tenant expected us to continue this practice. Tenant gave cry story they were wheelchair bound and couldn't go anywhere. Their story did NOT make sense as how were they cashing their disability checks to get the cash for the rent pickup. So, we told them we would charge $25 to pick up the rent the first month only until they could make other arrangements, but we would only accept a money order. We picked up a money order, then asked the tenant if they couldn't leave their home, how were they able to get the money order - they replied, my niece went and got it for me when she cashed my disability check". We politely told the tenant that their niece could then either mail the money order or just deposit funds in our bank account while she was cashing the disability check. Never had a problem with that tenant again:)

Telling you this story as it appears your PMC told the tenant they weren't picking up the rent and tenant didn't like that. So, PMC started eviction process to get the tenant to comply.

Check your management contract to see what they state about rent pickup or cash rent.

Regarding the Cancellation Fees, if they are part of the contract, all you can try to do is negotiate them. You can threaten them all you want, but it will cost more to legally fight them then just settling them - and you think you may win, but you may be wrong. If you lose, you may then also responsible for their legal fees.

@Alba Cheung wow, you went the cheap route and hire cheap attorneys.

Now that they are useless, you want to ask us for free advice?

None of us can give you legal advice!

When will you learn - you get EXACTLY what you pay for?

You may want to find the right UNLICENSED person, so you don't have to train them to forget the wrong way of doing things before you train them your way:)

Getting the license is pretty easy!

@Joanna Mendoza 50/50 split would be the highest you might request from your aunt.

Of course, the split would be AFTER all STR expenses are covered.