All Forum Posts by: Alex Fidelia

hey Tchaka,

Those are some great points! 

1. That makes sense, but is there an easier, more direct way to measure a property's class...for example by using rental rates?  

e.g. C-class may be $600-$750 (I'm just making up numbers here).  In theory the rent should be set by the market.

...I realize this will be a ROUGH estimate, but it will at least help me filter out a lot of properties and narrow my focus.

2. I'm not interested in section 8 because:

- You have few options.  There is only one property manager in Indy that I know of that is good with C-class section 8. I do not have other options, and the PM knows it. Thus that PM will cost more...its kind of a monopoly.  Sure I could start renting to regular tenants but that would cost time and money.

- Section 8 forces you to make repairs on the most minor small things on their annual inspections.  Those costs will add up even if my PM charges reasonable rates.

- I heard that tenants often do not pay their portion of the rent

- If the tenant damages the property, there's no money to go after.  I realize you can garnish wages but I hardly see that as being worth it unless there is a lot of damage, and wages sometimes are not garnishable

- the tenant has no skin in the game.  If most of the rent or security deposit comes from Uncle Sam, why would the tenant take care of the property? They won't -- it's just human nature

- What if section 8 rent is below market rent?

- Even if the tenant takes care of the property, there's another problem. They are not financially responsible people, that's why they are poor. Thus they probably have some history of evictions or paying late rents.

Source: https://www.biggerpockets.com/member-blogs/11099/76035-4-reason-landlords-wont-rent-through-section-8

best

Alex

hey All!

Newbie investor here.  I've been bitten by the real estate "bug" and love the prospects here in Indy.  It's economically diverse, affordable, there is a fair amount of inventory and selection, it's large, the evictions are shorter than many states, etc.

I am looking at properties in the 50k-80k range.  That would be considered the C range I believe? (correct me if I'm wrong pls!)

Looking for a great PM. 

I will be buying single-family. I am not interested in section 8. 

The main things I'm looking for is:

1) They make their money on volume. If they rely on any other method...such as maintenance (marking up materials, labor, etc.), turnover costs, other excessive fees, or other methods to make their money, it will not turn out well for me. I realize there will always be a mark-up, but it cannot be excessive:

-----A) Low average tenant turnover time

-----B) Low average turnover costs

-----C) Clearly documented fee structure

...........I realize that some property managers may have high management fees, as high as 12%. I am okay with that...In fact, I would prefer it! I might be willing to pay even more. A high management fee means they are likely making less on the hidden stuff (maintenance, turnover, hidden fees, etc.). That's what I worry about.

2) Has a stellar reputation

3) The average tenant stays for a long time.

- Great tenant screening

- Doesn't just look for warm bodies. The PM actively looks for tenants that want to be there long-term. Even if it takes a bit longer to find them.

- If the tenant wants to leave, the PM finds out why and fixes that problem.

4) When they get a service call from a tenant, they do over-the-phone troubleshooting before sending someone to inspect/repair the problem.

5) Always uses an unlicensed handyman when possible. Only uses licensed contractors when necessary

6) Cares about their investors and understands them. Realizes the importance of maximizing long-term profit

7) Responds quickly to the needs of tenants and investors.

8) Handles evictions smoothly and quickly

9) The manager is selective. He/she refuses to manage D-class properties

       - If the PM would manage a property in a war zone, that's a bad sign. If the PM is desparate for business, there's a reason for that.

10) Has been in business for at least 5 years

11) Experienced with C areas

If I am being unrealistic, please let me know! Hopefully this is not a "mythical" PM.

thanks

Alex Fidelia