All Forum Posts by: Michael Smythe

Welcome!

Are you a member of NARPM?

@Scotty Wo nothing in your story shows motivation on your end:(

Mom gave you a house
You have crappy credit
You spend more than you make with $30k in debt, despite having little monthly housing costs
You have no savings

How will you rent out your house when it needs a new roof and water heater?
Why aren't you motivated to do the landscaping yourself?

I got into this business working my day job, saving money for a down payment and then working from 6-11pm and weekends renovating the crappy houses I bought, so I could then rent them out.

Recommend you find a way to motivate yourself and get your finances in order.

What rent can you get?

What would be the return on the investment of the repairs?

@Jake Brooks from our website, this is NOT a solicitation, only for information:

A bad tenant can lead to thousands of dollars of losses via unpaid rents, legal fees and property damages. We’re one of
the few property managers that require W-2’s and a bank statement and we go way beyond the traditional, “income must =
3x rent” qualifier.

Below is more information about what our Applications Department does to screen applicants and find the best tenants
possible for your property.

1. 1. Required Info
      We require the following from each applicant over the age of 18, that is not a dependent of another
      applicant (as evidenced on a tax return):
      • Copy of acceptable state picture ID
      • Recent YTD paystub
      • Recent W-2
      • Recent Bank Statement, all pages, no info blacked out
      • Recent tax return if self-employed

      Applicants are often slow about turning this information in, asking us why we need it and then taking
      several days to submit. Then they complain that our process takes too long!

   2. Credit History
      Many companies use credit summaries, but we find these rarely tell the whole credit story. So, we obtain
      a full credit report and review collections, chargeoffs, age of credit accounts, active accounts, etc.
      to build an overall credit evaluation.

Source: Fair Isaac Company

1. Public Records
   We also obtain data from national databases about evictions, convictions and sex-offender histories. These all
   require applicants to submit an acceptable Letter of Explanation addressing each specific issue and occurrence.
2. Rental History
   Because a current landlord may say anything to get rid of a bad tenant out of desperation, we also require
   information for the previous landlord of all applicants. Verifying rental history often takes a long time to
   complete due to applicants not giving us correct landlord contact information, landlords not returning our calls
   or refusing to give us any details.We also deal with applicants trying to have family or friends pose as their
   landlords. To address this, we verify the property owner per government records and use this information to vet
   imposters.Anything that seems suspicious will lead to us requesting an acceptable Letter of Explanation to
   address.
3. Analyze Income
   Many landlords require a month of paystubs from applicants and just use these to calculate a monthly qualifying
   income. In our opinion, this doesn’t result in a viable income amount or analyze income stability. We use a YTD
   paystub and last year’s W-2(s) to calculate income several different ways:
   • Hourly or salary income calculated to a monthly amount
   • YTD income divided by number of YTD months
   • YTD + W-2(s) income divided by the corresponding number of months

   If these numbers vary too much, then we investigate and require an acceptable Letter of Explanation.

4. Employment Stability
   Unless an applicant has exceptional credit, we strive to determine their stability of employment to make sure
   they’ll always be able to pay the rent on time. So, we require a detailed employment history for the last two
   years and verify as much of it as reasonably possible.
5. Assets
   We are one of the few management companies that requires a bank statement as part of our application process. We
   think it’s important as it allows us to check for Non-Sufficient Funds (NSF) issues and to determine if an
   applicant is living paycheck-to-paycheck. Bouncing payments or only being an illness or accident away from not
   being able to pay the rent, are issues considered by our underwriting.
6. Letter Of Explanation
   Any time there are credit issues or we discover an inconsistency, we require a written letter of
   explanation (LOX). Many applicants just want to tell us their excuses over the phone, but if they won’t take the
   time to put it in writing, we find they rarely end up being good tenants.
7. Underwriting
   Traditionally, landlords have only looked at the income of applicants and approved those having income equal to
   three times the property rent. This crude method ignores all the other debt payments tenants have. Given that
   many tenants will make their car payment before their rent payment, we’ve copied the mortgage industry’s method
   of debt-to-income (DTI) ratios. We calculate rent plus all debt payments as a percentage of gross monthly
   income.
   Our underwriters strive to analyze and balance all the information above to determine the statistical likelihood
   of a tenant paying their rent on time.
8. Approval
   Once an applicant is approved, we require a nonrefundable Holding Fee to make sure they are serious and don’t
   change their minds. We actually keep marketing your property and accepting back up applicants until your
   property is actually occupied.

@Shannon Berry seems to be a bit light.

$100 Placement Fee? What SPECIFICALLY does the include? Are they going to put on MLS and what will they offer other agent that brings a tenant? What other websites will they place it on?

Lease Renewal Fee?

Eviction Fee?

Inspection Fee?

@Loren Souers

In Metro Detroit area, it's always finger-pointing between City, USPS and local utility company.

Recommend getting info from all 3 IN WRITING for accountability:)

Spoon-feeding newbies and giving them a participation badge won't help them at all!

For the repetitive posts that literally hundreds or more of them have asked, try to respond with a well-written copy & paste post. 
-Have been called out by some members for doing this, yet it's the only way to efficiently respond.

For others, I try to respond open-ended questions that hopefully will be like a trail of breadcumbs, leading them to the answer.
-Many newbies are offended by this approach as they expect to be handed everything on a silver platter.

My #1 issue is that many newbies don't even take the time to think & create a good, specific question!

@Amy Perry depends on your goals and how organized you are.

How likely are you to stay on top multiple PMCs (different states)?

How much research are you doing for each new market you enter?

@Jay Y. so you're saying you fell for their SEO and slick marketing and hired them without understanding what they'd be charging you for?

The language you posted is from the wrong section of the contract. You want to look under the fee area to see the Late Fee split.

@Thomas Delisle you'll get scammed if you don't start doing your own research!

There are even members that will respond here that have ulterior motives, so you shouldn't trust them.

Go through the content available here on BP and then start looking for a Property Management Company you can build a relationship with - but, still verify & validate what they do as no one is perfect and even an honest mistake can cost thousands.

Some agents may post here to start with them, but 95%+ of agents don't know how to properly identify a rental property to buy. Also, since they are transaction-based, they get their commission and can disappear. 

A PMC, has to deal with whatever you buy on a daily basis, so they have the most "skin in the game" with you.

PM us if you're interested in the Detroit market.