Posted by ken in sc on September 09, 2003 at 13:06:41:
Thats great! I’ll trade you one of my houses that seems to turn over very often for that one. Or maybe we should just trade tenants. 
If you had a 15 year note, they would have basically bought you the house.
Ken
Property Management concerns!?!?!? - Posted by Tim
Posted by Tim on September 07, 2003 at 23:21:51:
I am in the process of writing a biz. plan to aquire a large sum of money and one particular concern of mine is Property Management! First of all, I am a new investor!
Now, my goal is to have a hands off investment with SEVERAL single family homes. Therefor, how is it done? Say my typical rental is $750/month. If I hire a management company I understand the typical fee is 10% and all that is for is to take calls/complaints and contract out all work on my property, and show the property. Im sure it doesnt include costs such having someone fixing toilets, changing light bulbs, etc. Also, what about lawn maintence?
Basically, has anyone here fiqured out how to have a completely hands off investment? If so, HOW, and what is the price you pay for this???
Re: Property Management concerns!?!?!? - Posted by doug
Posted by doug on September 09, 2003 at 12:16:46:
Just don’t kid yourself. Nobody takes care of your houses better than you! I have rental property houses many many miles from me and have management companies. I also own properties in my area and do my own mangagement.
I can tell you that if your renters spend any amount of time there, longer than 3 years, your expenses and time required to bring the unit back into rental condition could rattle your cage. Its worse when you hear it from a management company. You’ll always be saying that seems high to me and does that really have to be done. And you should question them just to keep them honest, but if you start having differences of opinion and make the property become a nightmare for the management company, they’ll drop you in very quickly. Then what do you do?
I have a house that the renters have been there for 16 yrs! I’ve replaced siding and painted the outside and kept up the street appearances, but make no bones about it, I’m going to have a rehab project when they leave. I know it and I’m going to have to deal with it and this is a home that is managed through a company. Believe me management companies don’t spend your money for maintenance and as long as the tenant keeps paying they keep collecting. They only respond to problems, and not necessarily keeping the house in good condition. Then again there are some owners who milk a property and then dispose of it after it’s wasted, too.
Just my $.02 worth.
Doug
Re: Property Management concerns!?!?!? - Posted by mark
Posted by mark on September 09, 2003 at 11:15:02:
I don’t think you can have a completely hands off business and make money in single family homes as far as rentals go. You would have to put a lot of money down and since we are buying creatively most of the time we are not doing that.
In my area, if you buy for under $100,000 then it is a pretty good deal so with rents around $850.00 your mortgage eats $725.00/mo with taxes and insurance; if you pay $85/mo. and then some vacancy and repairs you are a slight loss.
I am managing my own rentals right now. I did sell the ones that were 25 miles away cause they were too far. I only have two rentals that are far away.
I did have a 10 plex that was 25 miles away and I didn’t have time to manage so I hired a management company. I was losing a lot of money per month and eventually sold the property. It was in an area that had a bad reputation but in terms of the management company I noticed that when they fired the one girl and the new one took over the results improved.
It was costing me $300/mo to have them manage but since I wasn’t available to go show the apartment it didn’t really cost me anything. I think that I could have made money on that apartment but I had an expensive loan of 8.75% with prepayment penalties. I would then also have to find another lender because the lender I had didn’t do that small a loan anymore.
No matter what you do you have to stay on top of your investments.
I have single family houses that I am managing myself. My plan is to take these houses and then trade for a multifamily which could be somewhat hands off.
I traded a 4 plex, a single family house and refinanced another single family for a 39 unit complex. I have a onsite manager. an older couple where the husband does most of the repairs but I am still involved. I don’t have to show apartments which I didn’t like doing and didn’t have time to do. I have to manage and motivate my managers.
If you are going to buy and sell to make money then it might not be worth your time to manage but that part of your investment plan would probably be losing money or barely break even.
By the way, I don’t do any repairs myself. If something is broken I call someone.
anyway, do your research and it might be worth it to turn over a management company especially if you are not going to spend the time to do it but overall you might be better off to just sell the house rather than operate at a loss.
Only you can decide your plan.
Re: Property Management concerns!?!?!? - Posted by Chip JPN
Posted by Chip JPN on September 09, 2003 at 05:13:07:
I can give you some details abut the property management company I will be using, if you don’t mind receiving info from a fellow beginner.
I’m in the process of buying my first rental property now. It is in AZ and I am in Japan, so I need a completely “hands off” investment. A friend of mine did the same deal about six months ago and so far it is working out for him. He is using the same property management co.
The management co. charges $500 for finding a tenant. This is a one-time charge (or at least until you need a new tenant). After that they charge $59 a month for managing the property (collecting the rent, taking maintenance calls, doing the bookkeeping.) If there are maintanence bills, those will be extra. Then they take out their fee and the homeowner’s association fee ($43 a month) and send what’s left to me. I have to pay the mortgage myself. They also send me a report, which I will use for my bookkeeping.
Re: Property Management concerns!?!?!? - Posted by Ed
Posted by Ed on September 08, 2003 at 17:41:48:
Another factor in how ‘hands-on’ or ‘hands off’ is the property itself. Some properties will lend themselves to being more ‘hands-off’ than others. For example, a condo with a GOOD homeowners’ Association can be the most hands-off investment you may ever have (assuming you don’t use partners). That is because a lot of the exterior maintenance (including lawn care) may be covered by the homeowners’ Association. So you might look into condos if there are any near you. But also remember you pay a monthly fee for that ‘hands-off’ mgmt provided by the HOA, in addition to your property management fee. So it’s sort of like having two property managers for the same property (and you’ve got to factor in both fees - the property mgmt fee as well as the HOA fee into your cash flow analysis)
But I emphasize “GOOD” HOA, as opposed to a bad HOA. There are bad homeowners’ associations just like there are bad property managers. So if there are condos near you and you consider them, interview the HOA just like you would interview a property manager.
Also I believe if you’re in this for the long-term, you don’t necessariy want everything ‘hands-off,’ because you want to learn about the best ways to do this. For example, to understand what makes a good property manager, over time you should want to go through at least some of the property management headaches yourself, so you appreciate first-hand good property management vs. bad property management.
Re: Property Management concerns!?!?!? - Posted by RichV(FL)
Posted by RichV(FL) on September 08, 2003 at 11:00:58:
Hey Tim,
Pick up Leigh Robinsons book “Landlording”. Its a real step by step book. You will find that it will come in handy from time to time as you move foward in your investing business.
In my opinion its one of the best landlording books ever written.
Great Success,
RichV(FL)
Re: Property Management concerns!?!?!? - Posted by ken in sc
Posted by ken in sc on September 08, 2003 at 08:47:56:
You are exactly right. Just factor in the property management expense along with your other expenses when computing cash flow. If the property can afford to pay for management, then you are OK. Interview by phone then in person several companies to manage as they are not all the same. Know going in that no company will care as much as you about your property as you, so it depends on what your time is worth. If it is better spent buying more property to own or flip, then great.
Ken