All Forum Posts by: Tony Castronovo

Wow, that’s an interesting story @Jim K.!

Kind of how I am starting to think about it @Matthew Olszak.

I will say though that the timing of the transition was exactly as you describe.  I waited until after we collected everything for March and gave my new PM enough time to get things setup before April payments were due.  Maybe the only thing to consider was the timing of my owner distribution.  I might have overlooked that.

@Jim K.haha...I think you are onto something. I used to self-manage my SFH's and developed really good processes and systems. But when I scaled up from 8 SFH's to a 20-unit apartment complex in another city I felt it was time for PM.

And you are right...all I ever found was complaints about property managers....which is one of the reasons it took me so long to make the switch.  I definitely learned a ton through this first experience and think I could author a few chapters of that book.  

I should have mentioned that this is a 20-unit apartment complex.  The management fee is several hundred dollars.  I am not managing it myself...had to hire another PM, who will be charging me at least a portion of the month.  That's part of the rub for me...being charged twice.  The new company completely deserves the money as they have been working very hard and we are seeing results already.  I suggested to the prior company that they might bill me for half the normal fee, which I felt was generous.  They, however, feel deserving of the full fee.

So I recently ended a very bad relationship with a property manager (large company) on the 11th of last month.  I've been waiting for everything to clear on my ledger to get my final distribution.  Earlier this week I saw that they charged me a full month's management fee (we were on a flat monthly fee), despite that they only managed the property for 11 of 31 days.  When I questioned it they said they deserved it because they collected tenant fees for the month.  I claim that they only worked 1/3 of the month....and to be honest, if tenants are paying without having to chase them down then there isn't much to collecting rent.

The problem is that they have my money and just deducted it from my account.  It''s not like they sent me a bill and I have the right to refuse payment.  I have absolutely no leverage here.  It's obviously not enough money to take it to court.

Do I just need to get over it?  Or is there something I can do?  Is there anything you put in your contracts to avoid/mitigate this situation?

Good lessons and insights here. I have an apartment complex in a college town that I picked up late last year. No surprise, we are getting a lot of folks wanting to pre-lease for August. At 4 months out I figured I’d want to make sure to have a non-refundable deposit as the demand is high for units with that move-in date. I like the “holding fee” approach that @Kyle J. suggests.

I  agree with the other comments.  I would not tie up $50k in something like this as @Tommy Cangelosi pointed out.  You also have to think about your exit strategy.  Let's say you try to rent it and you have difficulty...or you want to take another path and try to sell.  With new construction you might have homes going up all around you and you could be forced to sell at a loss.

But aside from the new construction I know several people who have employed a similar strategy....buying a home with owner-occupant / homestead terms and then renting it out after a year or two....rinse and repeat.  You could even take it a step further and buy something that needs a renovation (maybe utilize a 203k loan).

Hi @Chris Bystriansky  I missed the first event but am going to try to make this one if possible.

Hi @Nicholas Hill.  I've worked with some great and not so great wholesalers.  Unfortunately, my best one moved out of state...but I still have a great wholesaler I would recommend.  I bought several houses from him.  

Note that I am referencing the "individual".  Some people may have different experiences with the various larger wholesale "companies"...several whom I have worked with.  It's really key to find the right individual who knows exactly what you are looking for and knows you will close on it if it checks your boxes....that is the best relationship....because you are the first phone call.

PM me and I will provide you contact info.

@Ben M. what made this a diamond in the rough was that I found a property in Katy, south of I-10 for $113k. It was a $10k rehab and rented for $1375. Cash flowed very well. ARV was only around $140k (small 3BR home around 1100 sqft).

It was my first property so really just wanted to learn.  As you can see by the spreads, it was far from a home run.  But it was a solid rental...easy to keep long term renters being in Katy ISD.  It gave me confidence to take on the next one.