All Forum Posts by: Andrew Koster

@Andrew Koster you should start by deciding what your end goal is and working backwards: Do you want to be a developer? Do you want to be a landlord of just 4 units? Do you want to expand and hold multiple properties. Are you looking for cash flow or wealth creation?

If the properties are contiguous and if the zoning is right, easiest thing to do would be to do a package sale to a developer and then 1031 into an apartment complex. A step up from that would be to get the project entitled and then sell it. Much of this has to do with the actual location of the property, but I would definitely look into that. This would be especially be attractive if all of the units are empty.

If you just wanted cash-flow, fixing up the units and renting them out should not be difficult. You could then do a cash out refi after the renovations and a "seasoning" period and then invest those funds into something else. 

Those are just a couple of options. There are a ton of driections for a relatively large block of land in San Jose. Just think about where you want to be and then decide on a path.

Good luck!

Arlen

Managing property on your own is easy . . . until it's not.

You have lost tens of thousands, maybe hundreds of thousands, on these properties by leaving people way below market. You're literally living on good luck right now. All it takes is one bad tenant to trash your property or sour your taste for real estate investing. You may even think you've had good fortune because you kept the rents low, but that's not true. A large percentage of below-market tenants will still trash the property, stop paying rent, or otherwise make your life miserable.

the price of a good property manager is worth it. They can get your rents to market rate, keep an eye on the property, find better renters, etc. It may cost you $200 per rental but the increase in market rates will probably put hundreds or thousands more into your pocket every month. 

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Sounds like you have a gold mine down in SJO  - good for you.   I use to work the mid Peninsula and SJO some -     You might need to do some upgrades to get your optimum rent.   I'm sure all of these will make great long term rentals - short term may be a bit more challenging.   Rentals have always been high in demand in that area.  Congrats.