First House Taking Forever

[Angel Mora]

Purchased a property all cash 4 months ago. Went with a wholesaler in my state who had deals out of state and was somehow also the property manger for said deals. Initial projection was that I would be making a 21% return from the cash flow and only needing about 6k in rehab and that we would get it rented in two weeks. Closed in a week then one after another the nightmares began. I listed to about 100 hours, read two books about REI and david greens long distance, I even have a mentor who gave me tips on how to make the first one go smoothy. It seems like a cluster**** and anything that could have gone wrong absolutely has lol but I am open to the failure as this is how we become millionaires, but learning and pushing through. I fired the initial wholesaler/property manager because we started construction without a quote and no photos of the property. I kept pushing for documentation and transparency then I just finally said I wont pay any more money until I get to speak to the contractors directly. From there he got super defense, threatened to pull the contracting team off of the project and a few days later he caved and I got to speak 1 on 1 with the contractor. Needless to say the contractor went over by everything time wise and money wise. Now we are 10k into rehab and the contractor claims to be done. I fire the property manger and go with another company who thankfully goes in and does an initial inspection with photos and their estimate said its not done, its filthy and the paint job is patchy in some rooms. The photos look terrible he left it like ****. So then I go back to the contractor and tell him how can he leave a job uncomplete and not do what we had talked about. Lesson here is go with the most detailed quote before you start construction and the person who comes most highly recommended lol. The guy says ok ill be out there tomorrow at which I say ok what are you going to complete tomorrow for which I have already paid and he never replied. Fast foreword another month and another contractor recommended form the new property management goes through to complete the job for another 10K. Home has been on zillow for 40 days but has only had good photos of construciton being done for two weeks now, and the property management is telling me I need to lower the rent by 200 dollars a month to match everything within a mile from it. We decided to bring it down 100 for a week and see if anyone submits an application then bring it down another 100 if we dont hear anything in that week then wait. i have had to be on this new property managers *** 24/7 and they seem like a really big company since I keep getting pawned off to a new person every few weeks. They are definitely more transparent than the previous guy but after 4 months since first getting the house we are at a point to rent it. Its still not rented and my partner is stressed and starting to lose faith in us trying this but I am headstrong and know that if I can make it out the other end positive from all of this than I will be tremendously more prepared for every future deal. If we get it rented at the lower rate its about a 13% return. Has anyone gone through similar struggles with their first home and if so am what im going through normal? Thanks

[Account Closed]

Quote from @Angel Mora:

Purchased a property all cash 4 months ago. Went with a wholesaler in my state who had deals out of state and was somehow also the property manger for said deals. Initial projection was that I would be making a 21% return from the cash flow and only needing about 6k in rehab and that we would get it rented in two weeks. Closed in a week then one after another the nightmares began. I listed to about 100 hours, read two books about REI and david greens long distance, I even have a mentor who gave me tips on how to make the first one go smoothy. It seems like a cluster**** and anything that could have gone wrong absolutely has lol but I am open to the failure as this is how we become millionaires, but learning and pushing through. I fired the initial wholesaler/property manager because we started construction without a quote and no photos of the property. I kept pushing for documentation and transparency then I just finally said I wont pay any more money until I get to speak to the contractors directly. From there he got super defense, threatened to pull the contracting team off of the project and a few days later he caved and I got to speak 1 on 1 with the contractor. Needless to say the contractor went over by everything time wise and money wise. Now we are 10k into rehab and the contractor claims to be done. I fire the property manger and go with another company who thankfully goes in and does an initial inspection with photos and their estimate said its not done, its filthy and the paint job is patchy in some rooms. The photos look terrible he left it like ****. So then I go back to the contractor and tell him how can he leave a job uncomplete and not do what we had talked about. Lesson here is go with the most detailed quote before you start construction and the person who comes most highly recommended lol. The guy says ok ill be out there tomorrow at which I say ok what are you going to complete tomorrow for which I have already paid and he never replied. Fast foreword another month and another contractor recommended form the new property management goes through to complete the job for another 10K. Home has been on zillow for 40 days but has only had good photos of construciton being done for two weeks now, and the property management is telling me I need to lower the rent by 200 dollars a month to match everything within a mile from it. We decided to bring it down 100 for a week and see if anyone submits an application then bring it down another 100 if we dont hear anything in that week then wait. i have had to be on this new property managers *** 24/7 and they seem like a really big company since I keep getting pawned off to a new person every few weeks. They are definitely more transparent than the previous guy but after 4 months since first getting the house we are at a point to rent it. Its still not rented and my partner is stressed and starting to lose faith in us trying this but I am headstrong and know that if I can make it out the other end positive from all of this than I will be tremendously more prepared for every future deal. If we get it rented at the lower rate its about a 13% return. Has anyone gone through similar struggles with their first home and if so am what im going through normal? Thanks

Is there a paragraph in there somewhere? I can't make sense of it.

Try reposting with paragrahs, so it can be readable and hopefully, someone will respond. 

[Michael Smythe]

@Angel Mora so you jumped in without doing enough homework.

Not uncommon these days with all the investing hype.

Encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone give you a referral, don’t make the mistake of assuming that PMC will meet your expectations, just because they met the expectations of the referral source.

We also can’t believe how many owners hire the first PMC they speak with!

Then they complain their expectations aren’t being met!

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

[Andrew Syrios]

Unfortunately, in real estate (as in many other things) it always takes longer and costs more than you think it will. And also unfortunately, many wholesalers wildly oversell how good the properties they are they are selling. 

As useful as reading books and listening to podcasts is, the best teacher is a bitter one; experience. Your current situation isn't normal but it's not so abnormal to surprise me. It's good to know how sideways things can go as you move forward onto the next one. Make sure to do more due diligence and assume a larger contingency for expenses and time than whatever you expect it to be.

[Angel Mora]

Quote from @Michael Smythe:

@Angel Mora so you jumped in without doing enough homework.

Not uncommon these days with all the investing hype.

Encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone give you a referral, don’t make the mistake of assuming that PMC will meet your expectations, just because they met the expectations of the referral source.

We also can’t believe how many owners hire the first PMC they speak with!

Then they complain their expectations aren’t being met!

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Michael,

This is my first rental property and I really appreciate the information and things you have given me to think over. I agree with hindsight that I didnt do enough research on the house and trusted one persons word too much without conducting research. I tried city-data, and zillow to look on comparable properties as well as rental comps. Where do you recommend I do the actual research to find better data on what a house could rent for and where do I find property managers? Thank you for taking the time to reply to my post.

[Angel Mora]

Quote from @Andrew Syrios:

Unfortunately, in real estate (as in many other things) it always takes longer and costs more than you think it will. And also unfortunately, many wholesalers wildly oversell how good the properties they are they are selling. 

As useful as reading books and listening to podcasts is, the best teacher is a bitter one; experience. Your current situation isn't normal but it's not so abnormal to surprise me. It's good to know how sideways things can go as you move forward onto the next one. Make sure to do more due diligence and assume a larger contingency for expenses and time than whatever you expect it to be.

 I think your right, it seems to be a longer game and not everything goes perfect. I am grateful its not been a worse experience and that I didnt buy anything more expensive. 

[Andrew Syrios]

Quote from @Angel Mora:

Quote from @Andrew Syrios:

Unfortunately, in real estate (as in many other things) it always takes longer and costs more than you think it will. And also unfortunately, many wholesalers wildly oversell how good the properties they are they are selling. 

As useful as reading books and listening to podcasts is, the best teacher is a bitter one; experience. Your current situation isn't normal but it's not so abnormal to surprise me. It's good to know how sideways things can go as you move forward onto the next one. Make sure to do more due diligence and assume a larger contingency for expenses and time than whatever you expect it to be.

 I think your right, it seems to be a longer game and not everything goes perfect. I am grateful its not been a worse experience and that I didnt buy anything more expensive. 

Yeah, unfortunately things rarely go as well as planned. One reason I always recommend putting a contingency in your rehab budget and expected time of completion and to avoid really large projects unless you've done a lot of them before

[V.G Jason]

I stopped at wholesaler. Every single one I've entertained in 2023 has been way off the mark, this isn't stopping them from getting activity. I see whose giving them business nowadays. Sure as hell happy it ain't me. 

This board is a really underrated resource of excellent knowledge. People search for mentors, gurus, books, genie's, professionals, and everything in between. You get incredibly great free advice right here. Study this some here, then go back at it.