Just Getting Started in REI

[Nick DiFinzio]

Hi everyone, my name is Nick I am trying to build a team in an out of state market. I live in Long Island, NY, house hacked my current home so I got a taste of being a landlord and I became addicted. Been researching past few months and I am interested in investing in SFR in Houston, TX, Fort Wayne, IN, or even PA. (mainly for landlord tenant laws). Plan on borrowing from my 401K to get a downpayment together to buy a long term rental. Would need a recommended property management company, realtor, and contractor in one of the above markets. Any input for a young ambitious REInvestor such as myself will be greatly appreciated. Thank you!

[Davartay Miller]

@Nick DiFinzio

Welcome to BiggerPockets and how exciting is it to see those goals being checked off? It is nothing like seeing the vision board coming alive. You are definitely heading in the right direction and now it’s time to execute. First, having a team is great but you want to make sure you have the right team members on the bus! The University of Alabama football head coach Nick Saban once stated: “Mediocre people don’t like high-achievers — & high-achievers don’t like mediocre people.....My goal for spring practice — get the right guys on the bus. Get them in the right seats & get the wrong guys off the bus.” When you are interviewing those agents, property managers, lenders, etc. . . You want to make sure that you both are a great fit for one another. 

We are currently operating in the following markets:

1. Memphis, TN
2. St. Louis, MO
3. Birmingham, AL
4. Huntsville, AL
5. Tuscaloosa, AL
6. Dallas, TX
7. Houston, TX
8. San Antonio, TX
9. Oklahoma City, OK
10. Tulsa, OK
11. Little Rock, AR

I tell many investors that I speak with that it’s okay to interview companies. You are entrusting that company or individuals with your investment. If they are not a great fit . . . That is okay, but you would rather know that up front. So ask your questions, get your data, and do your research. When you have the opportunity please check out this forum https://www.biggerpockets.com/... and some of the great advice in here (click the link, read through this, and please see @Nathan Gesner remarks which are definitely helpful as well). But some questions I always tell investors/clients to use in their interview are below. 

Are you an investor?

Do you own in the exact neighborhoods you are managing/selling in?

How many investors do you work with?

Do you own all aspects of the operation? (or do they hire third party companies)

Do you offer rental or maintenance guarantees? If they answer yes, ask them why. Then ask them if they will put the guarantee on year three.

Do you defer maintenance?

How many properties do you manage?

Do you sell properties and if so, do you own the properties you sell?

How long have you been in the business?

What is your average vacancy rate?

What percentage of expiring leases will renew their lease each month?

What percentage of signed leases fulfill their full term?

What is the average number of days a property is vacant between residents, move-out to move-in?

What percentage of billed rent do you collect each month?

What is the cost of an average repair bill after move-out?

Do you mark up maintenance costs?

What are your management fees?

What percentage of collected rent goes to yearly maintenance on average?

What is your average number-of-months occupancy per property?

What is your average occupancy rate?

What programs do you have in place to keep residents happy?

What customer service programs do you have in place for owners?

Will you call me every month with an update on my portfolio?

How many team members are dedicated solely to providing service to your clients?

If you are an investor, What has been your biggest mistake as an investor? How do you protect your clients from making the same mistakes?

Please understand that no matter who you select to hire the cheapest option is not always the best. In fact, I typically tell clients . . . Look, we are neither the cheapest nor do I want to portray that image. Can you find cheaper? Sure! There is always someone who can do it cheaper.... but at what cost? Call around and get your feel for those whom you feel would be a great fit. You are looking for professional, honest, and proactive service at a “fair and realistic” price.

Please do not hesitate to reach out if we can be of any assistance in any of our following markets, including Houston. I wish you the best in your search/interviewing process. 

Best of Luck!