All Forum Posts by: Jason Mak

@Gary Nakauchi

Thanks for the update on Lewis Homes.  They are indeed a big and successful company and may not be able to provide the level of service that some mom and pop landlords can, however I've gotten to know them over the past few months and they seem like good people.  Hope you are doing well in AZ.

@Brian Adams   thanks for your input.  i agree, i own a property management company but need onsite managers to delegate and oversee the day to day

@curtis

@Curtis Bidwell  thanks for sharing that the combined payment to your onsite manager is around 5%

@Christian Brodin @Curtis Bidwell

Thanks for you input.  In California, any apartments under 17 units require onsite management.  I self manage all my properties so I don't use a property management company.  However, my other properties are larger and therefore need a full time team.  24 units seems to be in that zone where there is not enough work for a full time guy, yet by law and necessity, need someone there.

I think i get what you are saying...here's my take:

For pro-forma purposes, yes, absolutely include the capital reserves as that is what you "expect to spend" in worse case scenario

For historical performance purposes, then, you can make an argument to NOT include it since you never spent the money, but unless you distributed that money back to your investor, then you may as well include it too

that's just how i would do it...

Greetings BP,

Curious how others compensate their onsite managers.  Free rent?  Rent Credit?  Salary? Hourly pay? 

One of my buildings is only 24 units so it is not quite a full time job yet there are still weekly tasks to take care of such as maintenance, collections, etc..

Trying to gather some ideas.

Jason

Hotels are a great business right now because we are at that point of the cyclical market as Joel mentioned above.  I had the same thought as you and bought a Best Western 10 years ago and had to run it through the recession which was tough.  Economy aside though, my word of advice would be that a hotel is a completely different animal then typical real estate - hands on management, employee management, brand management, active marketing etc etc etc.  The annual audits and brand inspections with the parent company were very intense and there were pressures to meet quotas and standards.  

Unless you plan on being at the hotel 24/7 and have some experience, this is not for the faint of heart.  The hotels you are looking at in the $10m range may be suitable for professional management services - at that scale, this may be the way to go.

just my 2 cents...happy to discuss more

@Gary Nakauchi

Hi gary, how has your experience been with Lewis Homes?  Do they provide quality?  Also, how do you like living in Rancho Cucamonga?  Is it truely the Beverly Hills of the Inland Empire?  I've always been pretty impressed by the how nice the City maintains its infrastructure there and the developments, though homogeneous, are quite beautiful.

Don't have a podcast coming up but happy to answer questions for other BP members on the forum.

@Mark Mosch

Mark - your response was concise and more informative than most of the other stuff I have found on the web.  Thanks

@Amit M.

Hi Amit!  Yes, you are absolutely right.  The nature of the leases in office/retail certainly adds a level of complexity and risk in underwriting office/retail - especially when dealing with larger buildings, larger tenants, etc...  Small strip centers with a diversity of smaller tenants may enable you to offset that risk and you can move them in and out more easily (similar to apartments) - intimate knowledge and a good local network is hugely important here.  Don't forget that Tenant Improvement is a big business so this is not exactly a business that one can wander into undercapitalized.  

That being said, the reason why I have taken interest in commercial is that I prefer to be in quality locations and there just aren't any multifamily plays which is making explore other asset classes.  

Multifamily is also a natural progression from single family - so I think you will see on biggerpockets that this is the focus.  I have plenty of friends who have been in retail/office all their life and wouldn't touch multifamily with a 10 foot pole!  To them the liability of dealing with tenants, petty maintenance, and frequent turnover is scary, not to mention the comparatively low cap rates.