All Forum Posts by: Peter Lohmann

Likewise.

Thanks for the recommendation @William Carroll!

Can't believe nobody has asked yet - what are the average rents? That makes a huge difference.

7% of $400/mo (class C or D) is pittance. I wouldn't even get out of bed for that.

7% of $1200/mo class-A plus 85% leasing fee, on the other hand, is highway robbery.

We charge a flat rate per unit with no leasing fee to most of our clients. They seem to love it.

I don't agree. What's the point? Just estimate the expenses as accurately as you can, then look at your cash-on-cash and IRR figures (or whatever you're shooting for).

Maintenance costs should not be calculated as a percentage of the rent. They have nothing to do with rent. We look at them on a cost-per-square-ft basis. $2 per sq ft per year is a good starting point. Use half that for capex.

Management is going to cost at least 10% plus one month's rent lease-up fee (although we don't use this model, all of our competition here in Columbus does). Assume that lease-up fee gets charged, on average, every 18 months. I'll let you run the numbers on that and report back with your actual management costs. Don't forget to also include setup fees, markups, and other misc management fees.

I believe there are some good PMs in Columbus still taking on this type of property (we are not one of them). You'll have to do some calling around and researching.

Aaron Smith Investor from Denver, Colorado

Aaron Smith

Hi there BPers,

I have a deal in a D area. Mistake #1 right? 

Stop. Do not pass Go. I find it hilarious how all you out-of-town folks think you're finding these AMAZING deals in Columbus low-end neighborhoods that local folks, incredibly, aren't buying. Ever wonder why?

Spoiler Alert: Because they don't work. Turnover, Maintenance, Capex, Legal, Pest, Landscaping, and Management fees are all 2x to 10x higher than you are probably estimating (if you even accounted for all those), once you account for ALL the costs, the true costs.

Stop buying junk properties people!

Mostly accurate. Great starting point.

Purchasing Only D Property Strategy - Do you recommend?

No.

David Panzera does a great job helping investors who are new to Columbus. He'll both assist you with finding a property, as well as manage it for you.

Congrats! Best of luck with your first here in Columbus.