Need some advice on a property management company in my area.

[Account Closed]

               I was wondering if anyone on this site has used this property managing company before? Or if any of you more experienced investors could over look over this info to see if this company offers a good product.  http://www.abccapitalinvestments.com/

                 They offer properties near University City part of Philadelphia and properties usually in West Philadelphia. While it is not the best area it is close to the University of Pennsylvania, other colleges and local hospitals. What worries me the most is they insist on renovating the property for you and it is the majority of the cost. They claim (but don't guarantee) the houses will appraise for more then the purchase price and cost of the flip. I have looked up many of the properties on their website they have in past renovated and they did appraised for the amount they predicted. But they may just be advertising the times they were right and not their mistakes. 

But the most appealing feature is they are replacing everything thus hopefully eliminating maintenance cost for a few years. Also they offer to help with acquiring financing. In addition they offer some interesting financing options for cash buyers. They say you can get 46% ROI by buying cash then using a equity loan to extract all your money you invested in the property. And will set up an LLC for your real estate holdings, offer rental insurance, guarantee at least one years rent, also they cater to overseas investors which means I would assume they offer full service property management.

                      Mainly my question is does what they say sound right? It is a sound investment? Would this be a good way for a first time part time investor to get into the "game"?

[Steve Babiak]

Originally posted by @Account Closed:

Thanks for the advice Joe Mulcahy. I will defiantly use rentometer in my research. But I have no interest in "doing it myself". My parents rented out two duplexes in Drexel Hill and Morton both which are not so bad areas in Delaware county. They held on to them for about 15 years but dealing with tenants, screening them, and finding them was a massive headache especially for my mom. Tenants tried to sue us, had to evict about half a dozen tenants, and collecting rent was like pulling teeth. I would rather avoid these headaches. 

A (mis)management company might give you similar headaches. If the areas you described are truly "not so bad", proper screening would have eliminated the sorts of tenants you described - lawsuits, evictions, not paying rent are all indicators of poor tenant selection if the area is a decent area; if the area is crappy, only lousy people will be living there, and that's the sort of tenant you end up taking. 

I can tell you of one local management company where the owner had a bunch of his own properties get foreclosed. I bought one of those as REO and it was a mess, and I looked at a few other of his former properties as REOs and they all were a mess. If his own properties were such disasters, I can only imagine how the client properties would look.

Starting out you might be better off learning how to do the management yourself if you are close enough, so that you get a sense for what your tenant market will be like. You learn to screen, handle showings, manage repairs, and then realize that with a good tenant you will have minimal headaches. Finding a good tenant when vacant might cause a bit of effort, and dealing with contractors always seems to be a pain (until you luck out and find the ones who are wonderful); the dealing with contractors pain isn't guaranteed to go away just because a management company did the choosing for you - read enough posts here on BP about owners complaining about the PM contractors and you will see what I mean.