All Forum Posts by: Michael Smythe

@Patrick Flanagan no one's mentioned the challenge of MAINTAINING TO THE NEIGHBORHOOD!

From the postings so far, it seems if everyone is thinking of only Class A properties.

How much sense does it make to rehab a Class C property to Class A standards?

What about the finish level of renovations depending on the property Class?

@Brandon Vanderford well said!

@Jay A. recommend checking out and comparing their websites, then their management contracts.

CHALLENENGE: most PMCs really only list their services on their websites and brag about how they are better than the competition. 

The problem with that is YOU, as an investor, have no idea HOW they will perform those services. That's what separates bad from good and good from great PMCs. 

Yes, most PMCs offer the same services, but the nightmares start when they don't perform those services well!

Same goes for their management contracts. Don't make the MISTAKE of thinking shorter is better! There's a reason listing & purchase contracts are so long. They're to protect both parties by listing everything that can realistically go wrong and/or has resulted in a lawsuit.

Well written management contracts should follow the same logic. 

HOW a PMC will execute their services should be spelled out somewhere - otherwise how will you know they are doing their job correctly?

Of course, you can also just gamble and go with the cheapest PMC, but you'll usually get exactly what you pay for.

@Thomas Shepard, @Brandon Vanderford

We politely disagree with your opinions.

Ask any attorney about contracts and they will usually tell you the longer the better.

Looking at it another way, if you took your local real estate board listing contracts and expanded the font size from 6-point to 12-point and made it letter-sized, how many pages would it be? Why are they soooo long? 

The correct answer is - to protect BOTH parties.

So, how is a well written property management contract any different?

One of our local competitors has only a 4-page contract. Many owners hire them because, "it's so easy to read" and they don't have any junk fees. 

Guess what? The contract does NOT state what they can't do and can't charge for, so owners find out the hard way the PMC can do anything NOT covered by the contract and charge whatever they want for it.

Of course, an owner can still try to refuse to pay or threaten to terminate the PMC, but that all takes time and may cost money. This particular PMC has a very aggressive termination fee and one of the partners in the company is an attorney and they intimidate owners looking to terminate with threats of property liens and lawsuits.

Who still wants a short contract?

Why wouldn't an owner have an attorney review PMC contracts, instead of relying on BP opinions?

@Winston Eastman let's try to objectively (and Logically) look at this.

TURNKEY
Pros: 
1) Everything should be done, so no major repairs for near future
2) Can finance everything in one purchase loan
3) Can also buy with tenant in place

Cons:
1) Usually paying market price
2) Trusting that repairs were all done and done well, otherwise potential money pit
3) Any tenant in place may be misrepresented to make the sale

OWN REHAB
Pros: 
1) If done well, may have instant/forced equity
2) You will know exactly what repairs done and how well they were done
3) Can place your own tenant to your qualifications

Cons:
1) Rehab loans are expensive
2) Can run into rehab surprises affecting budget (watch any HGTV flip show!)
3) Finding trustworthy contractors can be VERY challenging

We've helped a lot of investors do it both ways, depending on their goals. PM us if we can help further.

@Geoffrey Rickaby let me know if you still have questions we can help with:)

Get some landlord experience in your own market so you can babysit problems.

Then you can look into OOS investing.

@Nadir M. see this thread and my comment...

Question: How To Scale My Property Management Company? (biggerpockets.com)

@Robert Ellis thanks!

We try to be very logical about investing and property management:)

@Leroy K. Williams man, don't look now, but you just showed your integrity:)

That's a compliment by the way!