All Forum Posts by: Bob Collett

You have it backwards... start with your required return on investment... assuming an all cash purchase.

Forget the 50% rule. Learn to figure actual costs. When all is said and done if you get 12% or 13% ROI, after all expenses including a maintenance allowance, insurance, taxes, property management fees, vacancy alliwance, professional services, etc; then you are doing better than most.

Bad neighborhoods will have higher initial ROI, but will be offset by higher vacancy allowance, greater legal expense, more theft, higher insurance, etc.

Then factor in your cost of money.

Water & Sewer is out of control. They just went to monthly billing so it doesn't seem so high. It's crazy... we have the greatest source of unlimited free fresh water.

It's all infrastructure expense... paying for the sins of our (political) fathers.

I am hopeful that sewer infrastrucure will one day become a Trump initiative. Imagine what cheap water would do for the growth of our region.

Logically, Water usage is a funation of:

1. Who is paying for it 

2. How many people living in the unit.

3. Leaks

Be sure to sign up for Clear Reads. PM me if you have questions.

 Bob

I heard a councilwoman speak a few months ago on this subject. She feels that since rental property owners are all wealthy, they can afford $15,000 or more to mitigate lead paint.

@Elbert D. It made sports fans and other people feel better about living in a "winning" town; and lots of good things coming together in Cleveland including the Cavs and the Indians contributing to the local economy, restaurants, etc... but in my opinion a local celebrity even one of James' class does not make "everything" better, unless you get the listing on his real estate deal!

Ron,

To be clear, without intending to offend anyone; I personally do not believe there is a "right and legal way" to ethically wholesale real estate... without a license, and certainly not with a license.

However, as with unlicensed property managers, the Ohio Division of Real Estate is reactive, not proactive in their enforcement; meaning that they only react when a complaint is filed.

Like others have said, contract law allows people to assign a contract within the law... but that does not make it right to take a property from a widow for a fraction of its value when one is pretending to help her.

Anyone who wants more info can PM me.

Hassan

As I stated, there is no set commission for a licensed real estate agent. There are several different "norms". Essentially, the listing agent sets the commission. So, when I show a home, the buyer side commission has already been determined by the listing agent; who may have set it at 2%, or 3% 3.5%, or some other number such as 3% on the 1st $100,000, then 2% on the next $400,000, then 1% on anything above $500,000.

In the Cleveland area total commission of 6% is most common, but so is 6% on the first $100,000 plus 5% on the remainder. 7% is rare today, and some agents will try to gain a competitive advantage by offering only 5%.

We even have some agents who will offer to sell a home for a flat fee... anything from $395 to $1500 for example.

Plus it is different in Columbus or Cincinnati, than it is in Cleveland.

Thus, as you can see; there is no "norm"

Yes. PM me. Thanks

Michael

Hmmm. As an agent in any State, you have a fiduciary responsibility to your client (the seller),  and duty to do the best for him. Sell it to an investor and get your seller the most that you can, and take a fair and customary commision... or tell your broker you need to do some property management... get the tenant out, then sell the property as above.

Any time Dave.

Interesting discussion here. As a property manager in the Cleveland area, I get most of my clients from out of state or foreign investors who already have been through one or more property managers.

Nobody has ever called me complaining that the typical fees they paId (one month for placing tenant plus 10% ongoing) are too high. 

Instead, it's always about things like poor service, failure to take or return phone calls on a timely basis, high tenant turnover, excessive maintenance costs, slow payment of owner dispursements, lack of timely financial reports, high monthly maintenance reserves, and even suspected criminal activity.

Investors are typically unaware or simply dont care about license law as it pertains to their PM, until the guy walks off with the rent money... or ignores problems until the owner is called into housing court.

It seems that otherwise good PM companies have a dropoff of service and responsiveness when they grow too fast.

I know of one local PM who is recommended by a local turn-key provider. The PM only charges $39 per month... but to contact the PM, you must make a phone appointment 7 days out!

The issue I see over and over, is that investors come to me unhappy with their PM, when they should really be unhappy with their investment decision... and their decision process.

Over and over, I get calls from out of state investor victims who paid twice what a property is worth and/or do not have realistic expectations about the cost of maintaiming a typical investment property. 

Unfortunatly, when you invest $70,000 in acquisition and rehab cost in a $35,000 neighborhood... it's still a $35,000 neighborhood.

Then there is the reality that almost nobody takes deferred maintenance into account... and I rarely see investors or their agents allow for meaningful  reserves in their investment analysis.

For example, if a new roof costs $5000, and the current roof is in good shape and has 10 years of remaining life; then what is monthly cost that should be allocated toward roofing. Many would say $0. The same goes for the driveway, the painting of the wood siding, the mechanicals, etc. These things are going to cost money.

Sorry about the long response, but I wanted to make the point that picking the PM is not just about 8% vs 10%. If your PM is expensive, but keeps your properties occupied and well maintained... be happy, sleep well and have a great day.