All Forum Posts by: Adam M.

@Wes Steimel Based on a $200K ARV my MAO would be in the $60-80K range depending on the condition of the property. Trust me, you don't want to do this unless it's a screaming deal.

@Wes Steimel What is the ARV? You can factor in at least $15-20K/unit. I would get a firm bid from a contractor and go back and negotiate a lower sales price with the owner. Sounds like he's pretty motivated and that means opportunity.

We're trying to save $60K/yr. for the next 5 years to put into purchasing more properties. It's going to be tough with 2 young kids. The key for us is not eating out, minimal travel, and budgeting.

Also, we drive old, reliable cars like early 2000s Honda's and Toyota's that I've paid $3500 and $2000 for. 

Yes! Educate yourself by reading, listening to podcasts, and finding your local RE investor meet-ups.

Do you have a full time job or in school? Do you have a current career track or know what you want to do? A good salary is a great tool for RE investing.

@Kim Meredith Hampton Well the good thing is my wife is an expert at SEO and actually looking to launch an SEO/marketing business. 

I already have a great team of subs, but the biggest challenge I foresee is getting started and obtaining the first 10, 25, 50 doors.

Are there any legal issues with paying referral fees for something like this? Could you give me an example of something you would offer?

Thanks!

@Kim Meredith Hampton. Thanks so much for sharing your insider knowledge. These are some great questions and answers you brought up!

Yes, absolutely on the license. I have a good friend that owns a brokerage that I would run under. 

2.5x of the gross seems way to rich! haha. I would only look at a multiple of net, this would be deducting a salary for someone to mange the business. My day job is pretty much a professional negotiator so I'll be ready to play ball or walk away. 

The other question I always ask myself when evaluating acquisitions is for example...if he wants $100K for 100 doors, how much would it cost me in marketing, networking, time etc to obtain 100 doors? I would hope a lot less than $100K. The hard part is factoring in the time to acquire 100 doors on your own. 

I have a lead on a older gentleman retiring and wanting to sell his property management business. I don't have a lot of details yet, but will be meeting in the next week to discuss. He has around 100 doors, but I'm not sure of his fee structure. In my opinion, the only guaranteed income are what's left on each contract. 

I've been looking to start a PM business and this might be a good way to grow quickly and have some credibility with potential new customers. Any advice would be much appreciated! Here are some of my initial thoughts:

1. After you pay a manager to run the operations, what is the net profit?
2. What kind of multiple for this kind of business, if any?
3. How much time/money is left on each contract?
4. If his fees are too low for me, would I "grandfather" them in?

@Anthony Giannette. Thanks for you insider info, very helpful! I agree, in my head a skilled PM should be able to handle 100+ doors IF the proper systems are in place, can outsource, and focus working ON the business instead of IN the business. 

What did you mean by "half is given to the brokers?" Are you saying all of the brokers are partners on the PM side of the business?

@Tanya Bass It looks post rehab now. Did you decide to sell it? Is it in the flood zone?

@James Orr...I agree, that's what I would do also as a landlord. That being said, I would need to network hard and grow by word of mouth and quality service. I probably think getting the first 25 doors would be the most challenging. 

@Jeff Copeland...Wow, very impressive and nice work! It sounds like from your model that the PM business and transactions really feed on each other with most of your revenue coming from the transactions? I'm starting to realize, that you almost need to have both of those income streams for it to work. Also, PM is probably one of the best ways to find good deals. 

I really appreciate everyone's feedback in this thread!