All Forum Posts by: Al D.

@Aj Parikh I don’t know anything about the TK provider, or who told you that the area is one of the best in the country for appreciating, etc. I don’t know whether you should trust anything - including two prior buyers you spoke with - until you verify important things by someone not recommended by the seller. And you should do that before closing. There is some intel gathering that you can do through public records. Because you are new at this, please allow me to guide you through the minimum:

I don't know where you are in the process, but see that "MFR 5 LLC" owns this property. I know that they are not you, because they own many other properties in that county. This is where you can learn about such things:

https://fiscalofficer.cuyahogacounty.us/en-US/REPI.aspx ,

as well as confirm the ownership of the other TK buyers you spoke with of their respective properties (unless they own through an entity/another name/in a different county,) as well as from whom they bought them - I expect to see the name of the above LLC (though, they may have used a different entity.)

Then go to Zillow and see how many times each of these properties that these two customers have presumably owned for some time has been posted for rent in the time span since they have been rehabbed - if multiple times per year, warning sign about the PM company/area, and those customers should not be happy. (Assuming the ownership data confirms what these customers told you, this is just another step at making sure they are not plants. Still, no guarantees. Although, at that point, we are talking some awesome conspiracy - I’d be impressed at the level of such cover-up.)

About appreciation: A quick look on Wikipedia shows continued trend downward in that specific city’s population - not conducive to appreciation unless the local government demolishes/condemns abandoned properties as they become vacant. The city seems to have a good website with some great data for prospective investors:

https://www.citymapleheights.com/housing (read everything on the page to get an idea that the city is trying to take actions. But more specifically: read the August 11 update, and pay attention to page 19 of the PDF that shows the number of distressed listings - keeping in mind the COVID-19 limitations placed on banks/landlords in the spring.)

I would confirm with the seller - in writing (like you should conduct all REI business) - whose name is (mandated by local regulations - if so) to be on each of the utilities (the property owner's or the tenant's.) If the owner's, please keep in mind that you may be on the hook for a delinquent tenant's utility bill.

It does not appear that the city requires you to register the rental and submit to annual inspections (these have been challenged in a number of municipalities around Cleveland, so they may all go away where still required, hopefully soon.)

Once you own it, please familiarize yourself with a specific income tax that you have to account for with your other annual filings:

https://www.ritaohio.com/Municipalities/Home/MemberPage?id=460

Great for you for taking the plunge. Good luck.

Sure (I just didn’t want to take the spotlight.) Warning: TL; proceed only with a cup of coffee at your side.

My initial interest in Indy was as a new market for buy and holds. The broker in question - let’s call him Jekyll - was recommended by a friend who had been using Jekyll for her own buy and holds for a few years by then. Jekyll would represent her as a buyer and then would market and show the property for rent to prospective tenants. She would then choose the tenants based on her specific criteria, and then self-manage from California. I, too, was already doing that in other markets, with trusted agents.

Jekyll’s reviews in public review sites were positive (this later changed on one website, but only subsequent to my experience - and not by me.) He first became an agent and later a broker a good number of years ago, with no reported complaints. He was also a REALTOR.

I reached out to Jekyll before scheduling my trip, which also involved other states. During our phone conversation, he asked me whether I’d be interested in doing a flip. I told him that I had never done one, did not feel it was my expertise, but was open to any potential opportunity with the right numbers and trustworthy people on the ground. I specifically told Jekyll that I had been considering using a real estate agent/federal law enforcement officer in another Midwest state, where numbers just weren’t right - but at least had trust in the person on the ground.

During my visit to Indy, Jekyll showed me areas where he brokered purchases and lease-ups for my friend. The locations were fine, but I could get better cash flow elsewhere in the country, and told him so.

Jekyll also took me to two or three current/about to be started on rehabs that he claimed he was managing for OOS/country (I specifically recall Greece) investors. He claimed some amazing profits, much experience, and repeat success in delivering for his clients as their broker and project manager. I then told him I’d be open to considering properties for a flip with him as a project manager.

With no experience in that area of REI myself - and with no interest in doing a flip from the friend who recommended Jekyll, and who reminded me that she had only been using him for a limited purpose - I ran the idea by another friend who had done numerous flips (but only within her local SF Bay Area,) as I knew I needed someone who knew more than I did to partner with. (While I knew other people who had done/were doing flips, I needed someone who had the cash, like me, to be equal partners in the deal. And it helped that this friend was also the CFO - with an accounting degree - of a family business.)

The second friend was interested and excited about the potential profits that I relayed to her Jekyll claimed to me. We had a number of conference calls and emails/texts with Jekyll over the next few months, turned down a number of prospects, and finally agreed on a property - after Jekyll had “his” contractor give us a full rehab estimate.

Jekyll’s compensation was to be a share of the total gain, and/but, as planned, he did not put up any of his own money - his job was to find a suitable property, broker the purchase, manage the rehab, and bring the project to a successful sale, in which he would be our selling agent/broker.

It took almost twice as long to rehab than planned, and almost 2x the budget - but we still had room for a fair profit. Two of Jekyll’s contractors had to be fired by him for I can’t recall what reasons. One of them placed a lien on the property just before it was ready to be listed - despite having been paid directly by us (our expected/preferred method,) and with an unfulfilled purchase order for materials worth thousands of dollars we paid for. Jekyll claimed that the contractor also threatened his life when Jekyll tried to get our money back for the unfulfilled order (I never saw the police report, despite telling Jekyll to make one - based on his allegations to me.)

It took me to visit Indy within the next two months to personally find and (politely) “serve” that contractor with a “put up or shut up” notice - the lien was removed within days after that. (During the curbside conversation at the contractor’s job site where I located him, the contractor and an unidentified person in his truck told me that Jekyll was “a crook.” In hindsight, I should have been taking notes. Unfortunately, at that time - already short on time and needing to leave Indy for my next destination - I dismissed it as “pissy talk.”) My main mission for that visit was accomplished; I was happy that the $16k+ lien was no longer going to be a thorn in our side. (Note: the attorney of record for the contractor never replied to my contact attempts, and the contractor also ignored my written communication until we were face to face. That lien sitting there against the property - and easily found through the address search in public records - that just hit the market had to be dealt with right away.)

As I already stated in the previous comment, there were apparent “oversights” in the rehab. One specific, “in your face,” example: the laundry closet was missing a vent “hole.” Jekyll also told me about issues he had discovered personally, before my visit, but after the house was “done,” like: once the water was turned on, there were numerous leaks in the first-floor ceiling. Or the one finished room in the basement would have “sweaty” walls - contractor drywalled over the existing vents, instead of creating access to them in the new wall. And other issues, all of which Jekyll claimed he made contractors repair at no cost to us, and assured me that there was no “water damage” from. All of that made me wonder how much on-site oversight Jekyll did during the rehab. But I bit my tongue. And Jekyll was certainly proud of having discovered, and fixed, all these issues prior to my arrival. My own punch list was also dealt with in the next two days. But it was too apparent that quality corners were cut in the rehab. To fix those would require more money than we were willing to add at that time. And Jekyll did not see any problem with leaving those items as they were.

Suspicions begin:

After the property sat on the market for months, and we kept dropping the listing price, it became apparent that our man was not the right person for the sale. On this particular point: he claimed that he was going to hold an open house on both weekend days of a particular late summer/early fall weekend. When I happened to check Zillow that Sunday, there was no mention of an open house. Same on Jekyll’s own website. When Jekyll answered - many hours after my inquiry - he blamed the issue on failure by his $10/mo listing syndication service. But he also claimed that he had put up directional A-frames for the open house, and a number of people still came. I had to buy that apparent bs. It also made me wonder whether Jekyll actually held initial open houses during the property’s first weeks on the market, as he claimed.

With our insistence to think outside the box before the winter, Jekyll recommended we use his mother - a larger broker, allegedly with a number of agents under her and a large mailing list of investors. We signed with her (while wondering why her investors list had not been used up to then.) But Jekyll’s contractual project management duties were never terminated/amended.

(Important side note about insurance here: For a number of months after the end of the rehab, we still had our original “Under Construction” policy. To save money, we switched the policy to “unoccupied property,” which lowered our premium, but also provided less coverage, which, later, we wished we’d still had:)

Then we suffered a burglary, discovered by an agent visiting with a prospective buyer. I asked Jekyll to order specific security items, like a real alarm and a number of dummy cameras to be placed at specified points on the exterior, as well as to reinforce a vulnerable entry point. I even sent him a link to the cameras available at his local Lowe’s, and offered to buy them myself and hold them under his name for pickup. He told us he got it.

When asked by us a couple of days later, he claimed that he got the cameras installed and the entry point reinforced. He kept stalling (for unknown reasons) on ordering the alarm, claiming that a local cop told him some brand name, but he misplaced the note. I put up with that for another couple of days, until I ordered a security system (the self-instal one that we’ve all heard/seen commercials for) to come to his house - I could also track when it arrived. Then, for the next few days, I stayed on top of him: “Did you get it installed yet? This cannot wait.” From day to day, he gave excuses that he was either sick, or his in-law was visiting, etc. I stayed on him.

Finally, after yet another inquiry, he claimed that the security system was going to be installed that evening. The following day we learned that we suffered another burglary, which resulted in a vandalized furnace, among other things. While this was December (Indianapolis,) I made it clear that I needed to see proof of how my security items were installed and the vulnerable point reinforced before putting in a new furnace (before it would also get stolen.) Part of the rehab was installation of all-PEX plumbing, so we felt we had a bit of a safety net.

Jekyll’s answers were “strategically” vague - as was the case on numerous prior occasions of less importance - but he was clear that he failed to succeed in connecting the alarm system, as it was not as simple as I/the advertisements claimed. (I knew that was complete bs.) Since the alarm hardware was also in the house during the latest burglary, the thieves helped themselves to at least one major component of it. I immediately re-ordered that part. It took additional days before Jekyll would realize and tell us that another major component was missing. I ordered that one, too. But by then we had another burglary (third.)

Somewhere between the second and third burglaries, we made the decision to take the listing off the market and to remove any RE signs and lock boxes from the exterior, so as to get rid of the “easy burglary here” mark. We directed this task to his mother, who agreed to take care of that. We also directed her to get her handyman to winterize the house. She agreed to all requests. Unfortunately, we then could not get a hold of her for about a month to confirm whether any of that was done, and Jekyll was no better at getting answers out of. We had no one else we knew in Indy.

I decided to hire a photographer through Thumbtack, asking him to take photos of all sides of the exterior - I was looking for the dummy cameras. The photos turned out great: not only was there no sign of any cameras, but a conspicuous lock box was still adoring the front door. As an unexpected bonus: there was also visible the top part of a sign apparently planted into the front lawn. The sign read: “RENT TO OWN.” Unfortunately, the photographer did not catch the bottom portion of the sign in any shots. We were never offered or agreed to market the property under such terms.

Having suspected Jekyll of lying to us previously, I now had proof of one lie - cameras. And that was all I needed to confirm before treating a person I knew to that little extent like a suspect.

I requested the initial police reports of the burglaries, and left a message for the reporting officer from one of them. Instead of getting a call back from him, I got one from a detective assigned to one of the cases: the second burglary was reported in-progress by a neighbor. Unfortunately, the suspect’s vehicle had been reported as stolen, and there were no other leads. But a detective was assigned to the case.

Apparently, he'd been trying to get a hold of the owner of our property (an LLC) by leaving messages on Jekyll's mother's business phone line. He told me that he was planning to go to the property to get a better understanding of the events. I warned him that it now had an alarm.

The following afternoon, I got a call from the detective: he had walked around the property, found a potential easy point of entry - the back door - and gently pushed it. That simple act set off the alarm (and the alarm company was calling me on the other line.) The detective waited for a uniformed unit before going inside, and then called me back with additional info:

I was able to confirm that the door which was supposed to have been secured weeks before was not. Not only that, but on the inside door handle, there was a key hanging on a thread; that key fit the lock on the exterior of that door. The detective further advised me of apparent water damage to the property, including a partially collapsed ceiling - no surprise. Unfortunately, the “FOR SALE” sign still remained - as was the case with the “RENT TO OWN” sign. I got good pics from the detective. He secured the property as well as he could prior to leaving.

I researched the “RENT TO OWN” contact info, and learned that it belonged to a company whose head’s RE license had expired years before.

Being in the forensic “case making” mode since confirming my suspicion about the cameras, I was in no hurry to share my findings with Jekyll or his mother, but my partner and I - taking turns - continued to try to get them to actually protect our interests, to no avail.

I was also attempting to get Jekyll to provide invoices for certain items, specifically the dummy cameras purchase. He would answer that he’d get on it. I’d remind him again the next day. He’d ignore the request. I’d remind him again. He’d promise to get on it again... but never did. Had he provided such an invoice, I would have some evidence to suggest that prior (far larger) rehab expenses may have been fake. I believe that Jekyll suspected that I was not trusting him by then - and he was well aware of my professional background to commit an obvious act of fraud.

As my partner and I continued to take turns in prodding Jekyll to provide latest expenses invoice and to show us photographic proof that the property was secured, he simply stopped acknowledging us.

I was able to find a reliable former co-worker of a friend, who was an Indy resident, and happened to be visiting California on business. He was willing to be “inserted” into the situation as an alleged security consultant. Unfortunately, between his own schedule, Jekyll’s silence and Jekyll’s mother’s own scheduling conflict, it took some weeks to get our man in the house.

Just in time for that day, I played out a simple scheme: Jekyll had a couple of commercial properties listed for sale. I contacted him from a fake email account with a pretext request about one of these properties. He answered within hours - while shunning the real me and my partner for weeks already. I pretended to be from another part of the world, and would potentially need to have work done on the property. Jekyll did not miss an opportunity to tell me that he has clients from where “I” was from. He also told me that he had work crews (multiple) that do a lot of work for him for any of my construction needs. He sounded big.

Once our “security consultant” had gone to the property - and took all the necessary photos - he confirmed that there was still no sign of any cameras having been installed anywhere, and that the property was still not secure. At that point, the fake me came clean to Jekyll by email. His reply? “This is Jekyll’s assistant.” I did not bother asking the “assistant” why he/she did not reply to numerous emails from the real me for weeks...

I also then told Jekyll’s mother that I had known about the “RENT TO OWN” sign for some time. While I appreciated that she did not attempt to insult my intelligence - unlike her son - by denying her involvement in that, her explanation for allowing a third party to place such a sign on our ~$250,000 property left me underwhelmed.

After discussing it with my partner, I made Jekyll a generous written offer to make things right to a - reasonable - point. It was a Hail Mary attempt to get him to conform to the contract that he (not his LLC) signed. It was certainly going to cost him at first, but it would also be the right thing to do, and could have potentially - still - resulted in a profit for us. With about an hour before the deadline to reply to us, my partner and I received an email from a law office - he lawyered up.

Now that we had someone we knew we could trust there, it was time to get rid of the family’s involvement - definitely Jekyll’s. His mother’s contract was not up for another month. And our “security consultant” - while willing to get his hands dirty on a rehab for not a lot of compensation - was not a licensed agent or a contractor, and would still have to get a crew together from scratch. It was clearly time for us to cut our losses.

I reached out to a BP personality whose name would sound familiar to most here, whom I knew in the real world, for a referral for an agent in Indy. That agent/broker charged 7% - the property was in bad shape, and he also had to share with the BP personality. I did not argue - beggars can’t be choosers. The decision to go with that broker was made easier by the fact that he is also a local firefighter - I expected, and received, professionalism on another level.

We sold the property, as-is, within a couple of months. When all was said and done - and after our insurance paid us (exactly what we deserved, verified by a public adjuster we used,) we lost in the neighborhood of $65k in the 1.5 years of owning the property that we had planned to flip in six months...

As another indicia of Jekyll’s negligence and a confirmed event of what could easily have cost us more money: Just before bringing on Jekyll’s mother, Jekyll told us that he was going to be able to get a deal on staging, and was going to pay for three months of it himself. That was great, as the floor plan was odd, and proper staging could have made a difference. Of course we took him up on his generous offer, especially after about two months of prior discussions with him about staging that never went anywhere.

Unfortunately, whatever deal Jekyll may have made with his stager at his own alleged expense turned out to almost cost us: Two months into renting the furniture, Jekyll forwarded to us an invoice from the stager. I believe it was for just over $1,000 for the prior two months. After getting that unexpected surprise, my partner and I - in turns - inquired about it. It took Jekyll about two days to finally reply, by which time I was rather demanding a reply. In a way I later referred to as “child-like,” Jekyll told us that he did not want to reply because he was not our employee, and would not put up with such treatment (to clarify: I did not start by demanding anything.)

To make matters worse: I asked Jekyll for his contract with the stager, which Jekyll said that he had and was going to forward to us (he never did, ever, despite our repeat reminders.) Because I did not want to end up with another lien against the house, I contacted the stager directly. He was also a licensed local RE agent. I told him that I had not been aware of any potential charges for his service, because we never entered into a contract with him, and that Jekyll told us that he was getting some great discount and was going to pay for it himself. I was willing to take a look at any contract the stager may have had with Jekyll. He, too, told me that he would forward me the contract... He, too, never did. And that is actually sad: much of his furniture was stolen or damaged in the burglaries. He also told me that two or three of his other staged properties in the area were also burglarized around the same time. I genuinely - as I typically operate - tried to make sure that he would somehow be compensated. But, as much as I may be genuine, I don’t like being lied to, especially by a licensed professional: Despite my additional requests for the contract - and his additional confirmations that he had one - I eventually decided to convince him to admit that he did not. Unlike Jekyll’s, this guy’s conscience listened.

(Note, because the above may end up becoming a part of pre-trail discovery: I did not use notes to refresh my memory in writing the above, which was written solely for the benefit of this forum. I may be off on some/all events/facts. And the above story is absolutely not the full story, as “Jekyll” exhibited additional negligence and potential fraud not mentioned above. It is my specific intent that the above is solely to benefit the BP community, and absolutely not intended for forensic purposes.)

So, this tells you what he did that I referred to as negligent and fraudulent in my original comment. As for telling anyone what to do - beyond what I stated we did - to avoid becoming a victim, I can’t give that advice. There was a time I’d tell you that what I did would have been sufficient for an OOS flip. Clearly, I was wrong.

Now, certain people here (whatever happened to “Sally’s” comments?) would probably like to tell me - or indirectly suggest - how dumb I am. I could not care less what those winners may think of me. I have a very thick skin, and may bully the bully. So many others in this world do not have a thick skin, and will back away in what they think is shame. They should not; they have no less of a right to make mistakes than you do. And shame on you for making yourself feel better - about yourself - at someone else’s expense. It irritates me to see your (if you are one of the “certain people”) judgments of the OP in this post. You either have not lived long enough, or are just another person on this forum with an ever-lengthening nose when you comment by judging others. The Internet has given you an option to be able to use a fake profile name in forums. But that doesn’t mean that you have the right to be mean. Grow up...

Getting on a plane may sound easy for some. My partner and I are busy people, running our businesses, and I also have a W-2, as well as other responsibilities. I specifically remember being overseas when Jekyll told us about the contractor’s lien. I am sure I was somewhere else I could not leave at other times. Whatever. We counted on a licensed professional to do his job honestly.

But we did not take the licensed professional at his word - we entered into the flip with a specific contract. Having spoken to attorneys in Indiana and California soon after the closing of the sale, we know that we have a case. (Whether we win and collect is, of course, up for guessing by anyone until it’s all done.)

Should anyone be wondering: “Where is the fraud, Al?”:

While jurisdictions may legislate their own definitions of fraud (criminal or civil) by statutes, here is one specifically related to a real estate transaction in Indiana, as stated by the US Supreme Court in Lawyers Title Ins. Corp. v. Pokraka:

“The elements of fraud which a plaintiff must prove are: (1) a material misrepresentation of past or existing fact which (2) was untrue, (3) was made with knowledge of or in reckless ignorance of its falsity, (4) was made with the intent to deceive, (5) was rightfully relied upon by the complaining party, and (6) which proximately caused the injury or damage complained of. Automobile Underwriters, Inc. v. Rich (1944), 222 Ind. 384, 390, 53 N.E.2d 775, 777; Tutwiler v. Snodgrass (1981), Ind. App., 428 N.E.2d 1291.”

https://law.justia.com/cases/indiana/supreme-court/1992/56s03-9207-cv-529-4.html

I know that our case meets each of these elements. I also know that we have a breach of contract. I also know that - if proven - we stand to win a judgement higher than our fraud-related loss.

I’ve been ready to go since the day we closed on the sale, and so - initially - was my business partner, once we confirmed that we have a case, and in what jurisdiction(s), based on terms of the contract and facts of the matter. Unfortunately, the whole situation did not go without some effects not only on our wallets: my business partner had a miscarriage during that stressful time, and I need her to help me prosecute the case. We still have some time. I still gently remind her every so often when we come across each other. We can choose to forget about it and move on; but we know it’s not just for ourselves. We have the financial means to absorb the financial loss of the flip and to fight a legal war. We are keeping an eye on Jekyll: despite not having had his own listings for quite some time, he did renew his license this year.

@Sally O Leary I would hate for this post to somehow become a “blame the victim for not doing X, Y, or Z.” And that is where I am afraid your comment will take some.

I bought my first ever Ohio property sight-unseen, from a licensed agent I had never met, and whom no one I knew had recommended - chance encounter on Zillow over an unrelated listing months earlier. I did my DD on the agent and on the property. And it was a great start to a relationship that is still alive years later.

On the other hand: I had a licensed broker recommended by an investor friend in Indianapolis, flew out there to look at the market and meet him, partnered with a local to me friend who had done local flips (that was my first flip, but I was no REI novice) and has an advanced accounting degree, also had the friend vet the broker and each property he brought to our consideration for a flip, finally agreed on a specific property after months of turning down others, signed a very specific (our attorney-drawn) contract that outlined project management responsibilities by the broker, kept in touch through the (delayed) process (and numerous excuses that - at that time - did not seem unreasonable,) flew out there again when the rehab was completed (and found a bunch of issues "on the surface" that he quickly addressed,) only to eventually lose a lot of money through the broker's apparent negligence and downright fraud... And I am not someone people would expect to become a fraud victim in the first place.

Though we have not heard the full story - and may never hear the other side - let’s be careful looking for a reason to blame the person we currently know to be the victim.

@Thomas Loretz We may come from the land of unicorns, but I have not seen anything like this yet. Please let me know if you find one.

If I understand you correctly, your concern is in making sure that your property manager is incentivized to keep your operating expenses low. I share your concern. I believe I may have once pondered upon the possibility of paying my PM like that. That mental exercise would have been some years ago, though, and short-lived.

I don’t know what your numbers look like, but am imagining this scenario: today your $10,000/mo gross rental income commercial property may cost $3,000/mo in loan interest and another $3,000/mo in property tax, insurance, utilities, and beauty upkeep. (Specific numbers used for simplicity’s sake.)

If you are able to find a PM to be paid off of your net income, I’d guess they’d want ~15%. In the above scenario, they’d make $900/mo in months with no issues. That may appeal to someone. Or you could have found someone for 6%-8% gross ($600-$800/mo.) Perhaps you can find a “net PM” for 10%, which, in this scenario, would equal a 6% “gross PM.”

But I don’t think the numbers really matter in the end, because two potential outcomes appear to me right away:

1 - Unless you will have a way into the PM’s maintenace request system or for the tenants to communicate with you directly, you may soon start to have higher vacancy due to tenants who may have leaky plumbing appliances that keep them up at night, tree branches that hit their windows in light breeze, garbage piled up around the dumpster, broken irrigation sprinklers, and the like. I think each of these is not a habitability issue that absolutely must be fixed, like no heat, etc. But some of this may also lead to violation notices and, over time, to still-higher maintenace/repair costs. And - most importantly - the appeal of the property is likely to suffer.

2 - (You said commercial multi-family.) Do you have a balloon due in four-five years? What is to stop you (except for bad market conditions) from further leveraging this property, which would almost certainly immediately result in lower income to the PM? You’ll likely be needing to renegotiate/find a new one. And what if your property then is not as easy to manage as it had been initially?

3 (I know I said two potential outcomes, but I am also seeing a rather predictable outcome from the first one that would affect the second, or make it impossible) - Given that the property is likely to deteriorate before you have to refi, its worth would be lower. What loan terms would you be able to get then? Would you be able to sell it in time for at least what you paid for it?

I am not all-seeing. If you can think of some way to keep your PM fee down - while making sure that your property does not suffer - in paying off of net, please explain. I’d love to give it another thought.

@Allen Tracy Personal experience: I had a Class A, less than 15 years old SFR in a market with lots of PM choices. The original PM did not charge a fee for managing contractors, but I fired that PM for other reasons. I next gave a chance to a newish PM in that market, who charged 10% from the rent (like the first one) and also 10% on top of repairs. When I asked about the reason for that fee before signing the contract, the young broker told me that he would be able to get lower-cost labor for me than what I could get on my own, and that the end result would be a lower end bill for me. Sounded fair; I gave him a chance.

Unfortunately, it was a year of small and larger calls, including a change of a kitchen appliance. As a result, I was able to compare some “handyman” calls to the original PM’s prices: I was paying a higher price under the new PM - and the commission on top of that. Jokingly at first, I began to refer to the PM’s repair emails as “death by a thousand cuts.” I also pointed out that his costs were not lower than the previous PM’s (who did not charge a commission.) The final straw was a pre-approval of an AC call that I had a chance to compare on my own - which he was ok with me doing, of course: I found someone cheaper (and still highly rated.) We had to part ways.

The third PM was not only charging a lower monthly PM fee, but also did not have the “let’s fix every small thing the tenant asks for” INCENTIVE, because they were larger and had their own maintenance staff. And when the tenant - again - called to fix the laundry closet door that had been fixed under the previous PM (and was working when the tenant first moved in,) instead of rushing to fix this minor issue with no prior notice to me, the third PM simply told the tenant that they would combine the issue with another future call. And that is exactly what I do for such issues where I self-manage. And I still have happy tenants. It is also important to have a PM who knows when to tell a tenant to wait.

To be clear: I do not think that the second PM was lying to me. He was also a nice guy. But he did not deliver on the lower-end-bill promise - and “trained”!the tenant that I would take care of any small issue.

When you have options - if you have options - I would recommend that you make sure that you don’t incentivize repairs, especially when a lower quote may be obtained from someone who is not a preferred provider not only because (allegedly) they may be reliable, but are also not too much more expensive than the next reliable contractor to make you question the bill. Little by little, small premiums start adding up to a loss.

I have PMs today in various markets who do not charge this commission, and are happy to get more than one quote for me when they - themselves - see that the first pro quote they got may be unreasonable. Perhaps this comes with experience on their end. I simply call it “great customer service.” I always remember to thank the PM for the additional work for my benefit. There are months with no issues when they still charge the rent commission on multiple of my properties each. And they deserve it.

I learned/confirmed that I like having aligned interests. Unfortunately for the second PM, he provided no financial benefit to me beyond perhaps being more personable. And I also wanted to help him out in his early days. But, looking at the numbers, I remembered that this is business, and I had this forum if I needed to get personable with someone..

Perhaps your PM provides value in some other way to justify the fee to you. My example is just another thought exercise, one of many here. You must do the literal and figurative math for yourself. And you should feel free to negotiate.

@Brandon Despras Assuming you will be checking the Do Not Call Registry first, I sincerely wish you the best. I presume you would play by the rules. Just in case you are not aware of where to check: https://telemarketing.donotcall.gov

I registered all my numbers years ago. I did my part to play by the expected rules. I also understand/respect the need to market oneself/one’s services to make a living. But there are just too many marketers, some of whom do not even mind the time zone for a given area code.

I prefer post cards. I’ve actually given business to some of those, but not to a single caller - I find that, after 15 years of the Registry’s going live, getting telemarketing calls on my registered numbers is a sign of disrespect from the caller.

I keep a detailed list of those who call or text me with various RE offers I never asked for - licensed agents especially. I am professionally good at getting info out of people. Some I have reported to the FTC: https://www.donotcall.gov/report.html#step1 . (No, I don't expect a direct enforcement action.) Others - depending on whether they continue - I may end up suing. I have not - yet - reported any licensed agents to their respective state agency/NAR (if member,) as I respect their need to make a living, as stated above. I politely remind them of the rules. Not one licensed agent has called back again yet. But my skin is only so thick for all the violators.

I am also fascinated by how some licensed agents on this site do not appear to give a damn about “my” peace in relation to cold calls.

Good luck.

@Marco Morkous Silly/stupid question, given that you’ve had a pro work on what everyone appears to presume is a utility sewer line, but: are you sure that the house is not on a septic tank, with the root of the problem there?

I work in Silicon Valley. I still go to the office.

My building’s parking lot is at about 30% of its pre-pandemic use. My next building over (same company, but different type of work) is about 5% occupied - ~95% of workers in that building are working remotely. I have no idea how much longer that will last, but am not aware of any productivity impact of those workers’ WFH so far.

Within about 1 mile radius of my job, I know of hundreds of advertised rentals (a quick look on Zillow in one direction just showed 199 available rental units from among just 3 large properties - and there are plenty of others. Two of these three complexes are currently offering various bonuses for new tenants, up to and including 8 free weeks.) And this does not account for what I am still seeing under construction and (wisely) not listed as “coming soon.”

A co-worker, who has to work on-site, recently moved to a cheaper apartment, closer to the job site. He also got some moving incentive, but I don’t recall the details.

I have never owned anything in Silicon Valley, but I own in the East Bay:

My (original) 10-year tenant in an East Bay condo just moved out into her own mobile home in a 55+ community (where just the HOA is over $1,000/mo.)

There are now dozens of brand-new, amenities-filled apartments that have become proximate competition for my class C condo. And some of them are also offering “up to” 8 free weeks. I know that I can lower the rent, and get an OK tenant that way. But California, and that municipality, have changed some laws since I first bought there in 2010 - not in landlords’ favor... I was actually glad when the tenant gave me her notice - I could choose to sell, which is what I am doing.

The bigger picture is that the condo is now zestimated at almost 6x (give or take $100 on a given day) my purchase price. My tenant was paying just under 2x more in 2020 than what she was paying me in 2010, at market. I can probably get that again today. Maybe. But I have long ago “moved on” to other states. I will do same this time.

Do I think that this condo will be “worth” more sometime in the next 20 years (a time I expect to be making major decisions with my portfolio?) I do. However, the concern I have - besides the fact that I am predominantly a cash-flow investor - is that I don’t know where its market value will be in the next five years. You see, before I was able to buy it in 2010 for almost a song, similar units were selling for almost the same prices as today. While that, in itself, means nothing about its underlying value and expected value in the future, given today’s (known) facts about the economy (including what is keeping it afloat) and changing (reportedly shrinking) Bay Area population with still-increasing rental stock, I’d like to take the opportunity to sell this property.

If I am right (in guessing) that it will go down in value in the near future, I’ll be happy to buy it again in that future. If I am wrong, did I mention that I am predominantly a cash flow investor?

I think that if this property were an SFR, I'd likely err on the side of keeping it: I have no idea whether there'll be a downturn in the next year or five, or whether it would be as bad as from the last recession, etc. But, from experience, I know that if one comes, there is a good chance that certain types of residential real estate (condos, to not name one) may suffer more than other types in some markets.

This is my own perspective, based on my specific facts, each of which I choose to value as I please for my own calculus of decision making. As part of this, I choose to discount certain historical perspectives in favor of putting a premium on other historical perspectives. But I don’t know it all. Make your own decisions based on your own situation.

@Jason Ma I asked my original question yesterday - you still have not replied. I’ll try your recommendation, I guess. I’ll press on. I am sure I won’t be perceived as a pest. In my own mind, at least, I know I am not.

“... You’re not bugging anyone... if someone’s not responding well to your call follow up try another form of follow up. Try to text, send a video., send a gift, visit them...”

I am amazed that this statement has received praise from (licensed?) RE professionals. But I am not surprised.

You are still leaving me guessing as to who you are in your scenario... I’ll go with a wholesaler, since you won’t answer my original question for me to know for sure (or as for sure as can be alleged by someone for social media purposes.)

If you are a wholesaler, I believe your calls to originate without there being a listing for sale/prior relationship with the “seller.” I get these calls/texts all the time. Can you guess from my written tone that such calls have made me mentally unstable?...

But I guess there must be willing “sellers” out there for these calls/texts to still be made to me as often as multiple times per day. I’ve been wondering about that:

Would you mind telling us how many deals you have closed with your described tactic, and in what time period? How many times an FTC/FCC complaint may have been filed against you (if you'd know by now?) How many times a person on the receiving end of your affection has taken you to court? Any restraining orders? Do you have an LLC? Do you believe your LLC can protect you personally?

I await your prompt reply in not leaving me guessing further.

P.S. I hope you won’t take it the wrong way, but - since I did not hear from you the last time - I put flowers on a bedroom windowsill with a note addressed to “The beautiful woman at the house,” and signed the note with, “I am excited about pursuing a transaction between us,” before I learned from five of your proximate neighbors that she is your sixteen year old daughter. I innocently thought that the pretty girl who likes to sleep with her pink teddy bear and a nightlight was your wife, who could help you with your decision making on the sale. You see, sending a gift to an unresponsive seller is a tactic I read about in a real estate investors forum... I assure you that there was no predatory intent. You can trust me.

Joking aside: I hope that people will seriously think about what consequences their words of advice/motivation - and approval of such by professionals - may have in the real world.

@Kajohn Chen Check your contract with the existing agent to make sure you won’t owe them any fees for some period of time after letting them go. I’ve seen contracts that have this provision. It is a fair expectation, in my view - so, even if the next PM may have it, it’s fine.

But: Personally, I’ve entered into such contracts only if/when that section was amended to read something along the lines of “...unless terminated for cause.” If the future PM won’t budge on such stipulation, it’s a warning sign to me (but does not necessarily make them a bad operator - they may just stick to “Our lawyer told us not to change anything” explanation/excuse. I just have my own quirks - due to prior bad experiences - so, such a small amendment/stipulation should not be a big deal for their “lawyer.”)

Other than that, I expect the oncoming PM to get in touch with the outgoing one - once they’ve been told by me that I am letting them go - to make sure that nothing falls through any gaps during the transition, including advising the tenants about whom to call in an emergency after a specific date.