All Forum Posts by: Rick Novotny

Hi Joanne,

A project management fee is pretty typical if they are doing all the work and coordinating with contractors for work that can't be done in-house. With that said, if they are trying to push you into work that doesn't make sense it seems a little sketchy. If they can show you pictures or video of the issue to justify why it needs to be done that's one thing, but only then would I agree to do the work. Rental properties don't need all brand new stuff, they just need to be clean and safe for the tenants.

If you scale in one market, with one PM, you can negotiate a lot easier. Most PMs will charge top dollar for an investor who only brings one or two units to the table because there's almost no profit for a PM with one or two units, they need scale. My PM manages 21 units for me at 7%, half of first month's rent for marketing and finding a tenant, 12% project management fees when I do large renovation projects.

Welcome to the KC market! Be prepared to be aggressive with your offers. If you're not, the listing agents seem to not even respond. Cash offers can pull some weight, but even still.

I love this! Congrats on getting into the real estate business at such an early age. You're going to crush it!

First of all, congrats on making the decision to pull the trigger on your first investment. Most people get stuck in analysis paralysis! The BRRRR method is going to be difficult in any market at the moment because inventory is so low. There is tons of capital flooding into the real estate market making it difficult to compete. I recommend finding an excellent, investor friendly agent in the area to help you find some properties. That agent should be able to help you find all the resources you will need to start building your portfolio. Ideally, the agent you work with should be an investor themselves because retail agents won't understand your mindset.

I hope everything works out well for you!

Hi @Santos Madrigal

Make sure you run your numbers carefully and that you aren't working with a retail agent that will push you into something that doesn't make sense. It's difficult to compete in this market right now. I'm seeing properties go for way over asking on investments that will require a lot of repairs and have low rents. I see a lot of properties getting under contract at a 0%-3% cash on cash return. There's a lot of dumb money investing into real estate right now. If there is a correction, all of these people will get burned and sell. So there might be a big opportunity in the future.

I specialize in working with investors, and I am an investor myself with 21 doors in the KC market.

There's not a whole lot to it. Just be forward with the conversation. Tell the owner you're an investor and noticed the home is pre-foreclosure and that you are reaching out to see if they would like to discuss and that perhaps you can help them with their headache.

I'm not sure how many properties you own, but you can negotiate these numbers. Especially when you start to scale your business. For me, it makes sense because I have two full-time careers and 21 properties. I just don't have the time to manage them nor do I want to. My time is better spent on higher revenue generating activities.

I pay my PM 7% of gross rents and half a month's rent when they find new tenants (for marketing, ect.)

My business runs pretty much 100% hands-free which makes my life easier. I might have to send an email every once in a while to approve something, or review monthly statements.

Congrats @Connor Mather !

This is EXACTLY how I started. I bought a really nice townhouse in Denver in 2016 and rented my extra rooms. It turned into an excellent first deal. I ended up selling that one in 2019 to use the capital to buy in my investment market (Kansas City), where I also live now. Congrats again on getting into your first real estate investment. I hope it works out well for you!

I agree with a lot of what everyone is saying above. On the first property, PM fees will be higher. As you start to scale and bring volume, you can get great rates on management fees.

With that said, I did not self-manage my portfolio from the start. I was investing long distance right from the start. I was in Denver while investing in Kansas City. My W2 income was enough to cover anything if needed while I was starting.

I use Stessa to track my portfolio.