All Forum Posts by: Robert Gilstrap

Soooo your thread about this issue is based on a conversation from a friend of a friend? Have you picked up the phone and called the PM yourself and asked about the issue?

I get owners everyday who call our office in a rage about exactly the type circumstances you describe. The only problem is that the half story they've been told is either completely off base or the issue has been addressed weeks ago.  Get the facts before you assume they aren't doing their job. If they aren't then light a fire under them

I would agree with @Amber Gonion 100%. The notion that you can do it cheaper and more efficiently than a pro is a fantasy. Most owners haven't the foggiest idea of what they are doing and suffer from major "You don't know what you don't know" syndrome.

You can learn all that for sure but then you're a property manager. What do you want to be? A property manager or an investor? 

I'm not 100% clear on how your current manager can't move as fast as you want but if someone can't handle your 7 units with ease then you have the wrong manager.

@Laura H. I 100% agree with @Kaycee Miller. I own a management company and I can assure you that the last thing we want is a vacant property. This whole business with "reverse incentives" that others mention as though property managers are just sitting around all day praying for a maintenance request or waiting for someone to move out so they can get paid shows an incredible lack of understanding about how business in general works and more so how professional management works. 

Here's the most important thing to remember: What happens when a tenant moves out?  The money stops for both you and the PM and even more critical when a unit becomes vacant is when PM's are likely to be fired/changed. What also happens? The expenses start for both the PM and the owner. Utilities have to be connected, inspections performed, estimates obtained, work coordinated, advertising, showings, tenant screening, new lease prep, etc.   So PM's have an incredible incentive to keep the money coming in for the owner. 

@Chad Haes goto narpm.org and search by state. If they aren't NARPM accredited then you better look super closely at everything.  If you decide on GA give me a shout and I'll try and help.

There have been a ton of posts on this topic but:

Are they a member of NARPM? If not, then you really need to question are they a "real" PM.

Designations solely for PM?

How many properties do they personally own and for how long?

Reviews are important but negative review from tenants are to be expected. Negative reviews from owners means you had better keep looking.

@Brett Roth Having the PM LLC is fine and maybe you can generate a few additional expenses out of it but for one of two properties not sure it's worth the effort. The PM LLC can charge mgmt fees to the owner LLC so it has income and you should be able to generate plenty of expenses (vehicle, etc.)

The biggest thing you can do to save money on taxes as real estate investor is elect "real estate professional status" with the IRS. Non-professionals have passive loss limits of $25,000/yr where the professional has unlimited losses, the modified AGI rules don't apply and the income limit phase outs don't apply. If you have no clue what I'm talking about then do some research. If you can qualify it's a HUGE deal. Real estate can generate massive paper losses that can offset your regular income. These losses can be carried forward for 20 years and back for 2 or 3. You can virtually wipe out income taxes altogether.  My AGI in 2014 was negative $85,833. 

Happens all the time and can be a big advantage in selecting the right property. Remember the person who is helping you buy will end up managing it so they want a good property that's easy to manage for the same reasons you do. That being said @Kim Meredith Hampton is 100% correct; just because someone claims to be a PM doesn't make them one so you better vet that out very closely. 

Single member LLC's are transparent for tax purposes and the income or loss flows through to your personal schedule C so I'm not sure how it's going to help you tax wise.

Maybe having an entity offers you some legal protections as manager so I agree with that. Maybe there is some elaborate state tax reason.

Rental income is passive and not subject to self employment tax.

No property manager on Earth is going to let you have your name on their trust account. In this case you're past that anyway and just need to cash the checks. You can PM me privately and I can tell you how to do that. If you are going to a new PM then the new manager should have no problem depositing those checks into their trust account but I'm not sure which way you are going.

People with no established and steady source of income are a HUGE risk. If they claim to have the money in savings then great pay it up front to you in advance rent and your risk is mitigated.