All Forum Posts by: Account Closed

Christian,

No problems. I figure you are a professional and you operate like one.

If the need is temporary they might choose to pass or move on rather than fund the changes. They sound like a tenant worth keeping (they pay the rent) so maybe they will prefer to stay and adjust how they live.

Good luck with the conversations with the person.

I have managed a portfolio of 7 units (6 properties) in one neighborhood (I should be saying 'hood) on my own. I did all the maintenance unless there was something really major or it required a license.

That was in the past.

I now have property in multiple locations and have property managers for all. Some property managers are better than others. Like some investors are more successful than others. It depends on how you screen the PMs and mange just like the tenant quality depends on how you screen and manage the tenants.

I could not physically manage my investments directly as they collectively cross 11 time zones. I also recognized that I am not all that good at some things. I can be paid $3,000 a day for my technical skills yet I am not worth anywhere near that doing administrative tasks. Call it how my DNA works.

People do not do their own surgery; you find a qualified doctor even if it takes more than one opinion to find someone.

Most people do not repair their own cars. Even fewer fly their own planes compared to taking a commercial flight. Most use lawyers and accountants for what is seen as a required activity but not core to the REI business.

I happen to like working with good PMs. Most of the bad ones are easy to spot when you look at their experience levels.

The key is to do what works best for you. As Mike and a few others note you will pay less in maintenance when you are front and center with the activities. You make on the spot decisions and know who to fix things to a standard that works for a rental. You have more incentive to get it right. At the same time some things just do not save you enough compared to the time they consume.

If someone wholesales deals and makes $50K for a months work being on call to tenants might be much more costly than it first seems.

Keep an open mind. Do what works for you and stick to the plan unless you find a better plan. What worked 10 years ago for you might not be what you should be doing today. Change with your circumstances.

Most new investors start out managing their own. As Mike might say they do so because they misunderstand how to buy so they can not afford to hire a PM. They pay themselves nothing to be the PM as they have nothing left over each month. Some grow to a stage where they hire it out. Many burn out dealing with tenants and exit the business rather than outsourcing the task that is causing them all the headaches.

Consider your options carefully and do not forget that your time has to be worth something. Even MacDonalds would pay you something per hour so your REI business better do the same if you are the PM.

To all,

I use the note feature to store info about specific people who I have discussed things with or as a way to save something interesting (advice they offered).

On a CRM system that I have seen there is the concept of a default note. You can create as many notes as you like but the default note always is on top and is displayed in the box. The idea being you put personal info about the person which you want to remember every time you see their profile or maybe the last promise you made to them which still need attention.

I would like to store personal tidbits that one picks up in conversation so that I can remember when I next want to have a conversation with them.

As this is the forum for suggestions I am posting it as a way to help advance or improve BP. No specific time line expected. It could even be a bad idea for other reasons that I am not thinking of.

Anyone else have similar thoughts or requirements? Is there a better way to implement the same concept?

Maybe I am missing something obvious as I only recently started using the new site. If not I have a feature request.

When I read a thread there is normally an ID, maybe an avatar that is unique and maybe a signature or name indicated. Some folks I recognize from past discussions and other folks I do not.

Would it be possible for an indication to appear in the forum when reading a thread that shows who is already a colleague? Just something simple would be find. Or a button which lets me strike up a conversation (which therefore implies I am already connected).

A few times someone posted something interesting but it would be off topic to comment in the thread. As the BP site says conversations are a great way to discuss a tangent I figure I would have a conversation. Some of the time I am connected to the person so i can do so and some of the time I find that I am not already connected. I can bounce back and do a PM from the forum in those cases. Still, knowing in situ if I can have a conversation with a person (they already being a colleague) would be a nice addition.

Comments?

I am not requesting a date. Just interested in knowing if the idea makes sense or if there is a better way to navigate and accomplish the same result.

Be careful about your thinking on this.

1. Mike has built in the management costs as if an external person is doing it.

Management costs money.

2. Never forget to pay yourself. If you work for free I have some property you can come and manage.

3. Mike and all the others who do their own management could be unable to do so one day. Best to know the cash flow is there to hire a PM on short notice when the bus happens to run you over.

4. Some folks figure $100 a door is a good rate for PM work. One investor I know wants a minimum of $200 a door. In a sense they are defining their hourly rate and they are signing up for the PM job.

Other investors realize that they are crap at being a PM.

Others can do the PM but realize that they make $10,000 to $100,000 each time they find a great deal. Hence spending hours on PM stuff when they could be making X times more money finding great deals is not a good trade-off.

5. Many PMs who manage their own property enjoy the role in many ways. They like doing the maintenance. They are handy. Or they enjoy working with people. Granted there are bad days and some tenants are a nightmare.

I have managed my own rentals and I have used external PMs who are paid based on what they collect. Horses for course. I think managing your own does give you a better sense of what it takes and who to hire when the time comes to use an external PM.

Last point.

People who manage their own tend to run small operations. They stay local and they have a limited number of units. It takes time. People who grow to large portfolios or buy larger properties (commercial or multi-family) hire managers. Direct employees or an independent contractor. Hands-on, direct management is not scaleable so decide how big you will grow your business and then find the model that works best at each stage along the way.

Being a REI is closer to running a business than it is to a completely passive investment (stocks or bonds). Still you get a lot of choice as to where you time is best spent. Marketing, maintenance, management, financing, etc. Jack of all trades of master of a few?

So legal advice from someone who is not a lawyer.

1. Never publish any comments about you thinking about throwing them out just because they might be disabled. It could come back to haunt you even if you are joking. Claiming something is a joke is a common defense that does not work.

2. As you note you are not a doctor and have no qualifications to evaluate their needs in this area. Do not even try or comment. Just let them supply the normal proof and take it seriously. If the documents are incorrect challenge the documents but not the condition.

3. Beachbum is one of the professional PMs on the site. He can offer plenty of advice.

4. The building might not be a great solution for someone with mobility issues even if work was done. Assuming the needed work could be done it might be a great deal for you once the tenant pays to do the work (or has it done for them). They could become very long term tenants. Other people who need the same access might also be interested in the place if you maintain the changes. Consider the economics and the market competition. Similar to some folks who accepts pets and find they have low turn-over as pet owners can not easily move on.

5. A bad tenant who does not pay is a bad tenant. If the tenant does not meet your standards based on your screening requirements consider not renewing them. Just be careful if you develop a history of failing to renew people who fit a certain profile and the profile can be demonstrated. You have no obligation to renew but you can not target a protected class even if the individual decisions would be legal otherwise.

Frankly, here is what I would do.

Sit down with them and discuss what modifications they would like to make. If they are something that would work with the property and the tenant can demonstrate how all the changes will be funded before any work begins then I would consider the changes. Speak with the HUD office to see what they normally do. Would a rent change be in order or is there a backlog of people who need similar changes. I would want to understand what I might be getting into and I would be learning the regulations. Any tenant who stays long term who has invested in their present home could be a tenant worth keeping even if they tend to whine. Whining can be dealt with by hiring a PM if you really find it hard to deal with but the money is good.

Eisenhower said something like:

The reason for planning is not so you can follow the plan. It is so you can think through what might happen and otherwise prepare.

The quote if I could find it is a good bit better but I think you get the idea.

1. Just doing a plan will force you and your other half to line up. You will find where you share goals and objectives. You will be training the team to think the same way so when decisions need to be made and the other person can not be consulted the right decision is made.

2. Plans do impress others. Partially because they confirm that you are more than just hot air. That you take things seriously. The other party could be a co-investor, it could be a seller who you want to offer seller financing, it could be a banker.

3. Most SFRs are funded using a loan process where a business plan is never going to be consulted. if you want a line of credit or a blanket facility they a banker will expect a business plan almost before they start talking to you. You are on the commercial side of the bank and only businesses come to that side of the bank. The residential side is very different. SFR can be funded from the commercial side but normally they will do so only when you own a few properties so you fall outside the risk profile of the residential department.

Business plans are great because they make you think. No plan will last all that long when you are starting out. The market will force you to adjust the plan. That is not a bad thing. It is the process by which the plan gets better.

Go for it. Just do not spend too much time planning vs. getting out into the market to see if the plan will work.

Note that a proper business will commonly go off-site to work on a business plan. An off-site working meeting at a nice location where the team can focus on the planning and get away from day to day business as usual things. Sounds like a good way to for a couple to focus and do some team building. Speak with an accountant as to what might be tax deductible.

A trip to HI to do the plan? Maybe not when you are first starting but you get the idea.

Leverage:

You are being asked for a deposit. You are not expected to fund the full cost of construction or to get a loan. It would be impossible to get a loan on a condo project at this stage as you do not have title to the property (it does not exist as it is only air now).

So, small deposit that is a reservation fee to hold a unit at a fixed price. If the property was to go up or down in value then you are getting the effect of leverage on your investment. Similar to options and legally much closer to an option.

Note BeachBum's post. In OR all new projects starting around 2000 had to have sinking funds for all expected costs (roof, etc). This means that when you buy in the HOA charges are more or less on target with the long term running costs. No sales can happen with tiny HOA charges which later jump when maintenance start to happen. Check the WA laws. If the project does not have a sinking fund when it comes on line expect special assessments later and problems when you go to resell.

Conclusion: I can talk for quite a while on off-plan pros and cons. How much you want to cover in a public thread is up to you. Some questions might only come up later so get in touch when that happens.

Toby,

One problem is the marketing can produce results months later. You have to commit to the program for a while so that the van's advertising becomes part of the normal landscape. Then when people need something they call or they refer someone to the number on the van.

There could be ways to team up with related businesses who will help with the costs.