All Forum Posts by: Michael Smythe

@Antonio Campanella we help OOS investor every day do this in Detroit.

Most importantly, is having a team that knows which of the 183 Detroit Neighborhoods to invest in:)

PM us if we can be of assistance.

In our experience, the S8 guru/scammers promote buying Class D properties and then renting them out to S8 voucher holders.

It takes a lot of hustle and probably legally bribing the tenant with an appliance or two, to get them to move into a bad area.

No telling how long they will stay either. 

We just had a S8 tenant in a Class C property break their lease, with the support of their caseworker, due to fight with a neighbor.

S8 is a tool that, like any tool, needs to be used properly.

@Cliff Connor

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😊

But, it costs money to hire a professional!

Isn't it much cheaper to roll the dice and risk being ripped off to save pennies?

<this is a parody reply>

@Isaac Joseph if you experienced lots of theft with previous PMC, then learn to better manage your managers.

Try to think of everything that can go wrong and then figure out how you can monitor relatively easily.

Doing this will probably be a whole lot easier than trying to start your own PMC.

@Nina V.

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😊

What do you have to lose by sending them rent increase letters to see how they respond?

Never know if they will accept.

You can increase your chances of success by also including rental comparables in the area to show how much their rent is under market. Then ask them how much of an increase they think is fair. 

Of course, put a time limit on this so they can't drag it out for months - costing you revenue.

Also, how much will it cost to renovate these units to justify market rent?

It may be cheaper to only increase rent by $X amount, rather than spending tens of thousands on renovations and absorbing vacancy losses. 

So PMC charges 8%+, compare that to capital gains and what your kids could inherit with a stepped up basis.

@Paul Martynov how many investment properties does your lender own in TX versus Ohio and Kentucky?

Seems like another case of someone with little experience, trying to sell their OPINION as FACT!

Yes, this lender might see all kinds of deals PROJECTED on paper, but what about business returns showing the actual results?

Also seems like this lender is trying to swap the DSCR loan rate issue to the property tax & insurance issue to make their product look better.

BTW: we're in the Midwest and believe it offers better opportunities than TX market, but one shouldn't have to stoop to this lender's tactics to show this:)

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?