All Forum Posts by: Nate Garrett

@Tammy Donivan

Check out landlordsource.com. They have some great materials to get a property management company off the ground. I have no affiliation besides being a satisfied customer.

I agree with @Trevor Ewen that there is a terrific need for hard-working, ethical property managers. The barriers to entry in the field are fairly low, so if you run a good business you will likely exceed your expectations (and your clients too!). However, IMHO I believe adding another business line such as investor sales right away would not be wise. Property management can be a very profitable business if done correctly, just like any other field. I would recommend you focus solely on the PM business. Small operations that try to focus on several different lines of business try to be the jack of all trades and end up the master of none.

@Jay Hinrichs

Gotcha. Sounds like a heck of a deal. It pays to follow what congress is doing with the tax code!

What kind of airplane?

@Jay Hinrichs

I've always been under the impression that real property can never be depreciated under section 179. This article would seem to agree.

Is it possible it was another tax section that permitted you the bonus depreciation specifically on GOZONE real property?

@Zach Adams

I have always maintained that the best choice for out of state owners is a class A property in a desirable area. 

We have out of state investors who are buying new construction here in the Tulsa area for around $155,000 that rent for roughly $1400.

They most likely won't be getting any phone calls in the near future about replacing roofs or sewage leaks. And I'll bet you their returns are very similar to those magical "2%" properties after expenses and long-term capex are figured in.

Why do you think the really big money guys - the hedge funds - buy class A properties in desirable areas? Answer: they believe it will produce the highest risk-adjusted rate of return on invested capital.

@Chris Simmons

Depends on how much below 100k he's willing to go haha. Good luck finding someone to manage them, though.

@Zach Adams

I would be very careful using a 2% or any kind of % rule to screen properties. Just because a property rents for 2% doesn't mean your returns will be any higher. It's important to evaluate income and projected expenses and capex in your evaluation. Can't tell you how many times I've spoken with investors that regret buying that $30,000 house that rents for $650 / mo.

I know a few investors that specialize and have done well with that type of property. They self-manage, are local, are very handy, and deal with a ton of problems on a daily basis. 

If you aren't local, you will likely pay a hefty price for someone to deal properly with those headaches, thus eating up most of the supposed extra return from a "2%" property.

Hi @David Schneider

Sure, as part of the normal closing process. What questions do you have? If I can't answer them I can probably point you in the right direction.

@Anil Samuel

If I understand correctly you have your license hung with a broker but also have a separate property management company?

You should ask yourself what you would do if you encountered a large judgement against your property management firm. Would you close the doors and walk away (IE, company declares bankruptcy) or is it important/valuable enough to you that you would like to survive a major claim?

When they are first starting out with only a handful of doors under management, some property management companies might decide to forgo E&O insurance. It is likely as you grow you will reach a threshold where you will desire to insure against such risks. Also, some states have requirements for E&O insurance - double check your state laws and with your broker for specifics.

Hope that makes sense. As always, it's a good idea to talk with an insurance agent and/or attorney to review your individual situation. I'm not just saying that either - it's money well spent to schedule a few hour meeting with both and pay them for their time. Take a big list of questions and you will walk away a smarter person.

Most large property management companies will carry professional liability (referred to as E&O) as well as general liability.

If you are a National Association of Realtors member, Pearl Insurance offers some pretty good rates (no association, just satisfied customers).

@Derek A.

If you want to be a professional in the field of property management, you should look into the National Association of Residential Property Managers. They also have some great educational offerings.

I would also find your local chapter and touch base with them to begin attending networking events.

@Stephen Lassiter

What to look for? Everything! Lots of potential issues with a house that old, but a licensed home inspector / structural engineer should do a good job reporting on what you're getting into.

I use Sean Wilson with Horizon Home Inspections (918) 553-1919 for home inspections and Joe Ramey with Stresscon (918) 836-0021 for structural inspections.

Did you get something near TU?