All Forum Posts by: Richard F.

A couple additional thoughts...

As to upfront money, depends on the size of the job, and the size of the contractor (small or large operation). Less than 5K, I rarely pay any upfront. Over 25K, and we schedule periodic draws, based on actual work completed.

Also, depending on your market conditions, you may want to insist on a penalty clause for missing a completion date. LOTS of contractors get too many jobs going at once, and leave you hanging for weeks!

If you have a PDA-->

http://www.geek-to-go.com/realestate.html

Pretty handy bit of software...

Well, I'm going to go out on a bit of a limb here, but this is my OPINION: First of all, regarding "buying wholesale", IF you do not establish an actual "Agency" relationship (referring here to the laws of agency, not the Agency you work for), you have no "duty" to a client. You are simply acting as an individual, that happens to be a licensee. Ethics certainly demand honesty, but you do not owe it to every seller you bump into to advise them on pricing. Of course, if you DO create the Agency relationship by soliciting the listing (or by other actions or statements), then you have a clear fiduciary responsibility to your client, and should obtain a separate, written acknowledgment that you have fully advised them of market conditions if you are going to purchase the property.

As to your actual disclosure of licensee status, your presentation of this fact is key to the type of response you will get. If, acting as an individual making an offer, you don't make a big deal out of it, and don't "announce" it, but rather casually bring it up when you reach a certain "comfort level" with the seller, (ideally while writing or presenting your formal offer), their focus will be on the $$, and your licensee status will not be an issue. To be clear, I am not suggesting you try to hide the fact, only that you find the best time to bring it up in a low-key manner (that is within the requirements of your local license laws). If the first words out of your mouth are "Hi, I'm --- and I'm a Real Estate Agent, I'd like to buy your property" then you will instantly put them on the defensive!

Bottom line...it is a delicate balance, and you really need to be able to separate your efforts as an individual from those as a licensee. You also have to understand and utilize the universal sales process to make the most out of either situation.

If you review the Fair Housing Act, specifically section 803 subparagraph b as well as the first sentence of section 804 you will see the exemption I was referring to.

http://www.usdoj.gov/crt/housing/title8.htm

Like I said, there are LOTS of laws that apply to landlords (and real estate transactions in general). In this case, not knowing wouldn't likely cost you. That is not always the case. A professional PM should be aware, and know when and where to look up the details that apply to YOUR situation.

I appreciate the kind words...

My usual caveat...check your local laws:

Often, you can certainly manage your own property (meaning the owner of record is you, the individual), whether 1 or 50 or more units. Often, you, as an employee of an HOA or a single person or entity, can manage that specific owner's property.

I dare say (somebody please correct me) you, as an unlicensed individual or company, can never manage (in the USA) for MORE than one person/entity (legally).

As regards managing your own, you even get a little "exemption" if you will, from Fair Housing regulations if you occupy a property of 4 units or less.

In theory, you locate a Property Manager with similar views and a compatible style that you feel is trustworthy-this is going to be a long-term relationship! For a fee, typically a percentage of collected rents, they handle the day-to-day operations of the property. This would include routine inspections, obtaining and qualifying tenants, managing tenant issues and routine maintenance, making mortgage and insurance payments, locating qualified vendors for repairs and capital improvements, then coordinating, monitoring, and paying them. (The PM pays for all of this out of rents collected, NOT out of the management fee). The PM also provides a complete, detailed monthly financial report documenting each of these expenditures and all income. In addition, the PM is the point of contact for legal service, tenants, government officials, utility companies, etc. (This simplifies Tax Time, as well as giving you an accurate picture of what is happening--Learn to Read the report, and do so each month!) If all goes well, each month along with your reports, you will receive a check for whatever is left over!

The management agreement spells out your relationship clearly--read it and ask questions, BEFORE you sign it! It typically limits the amount a PM can spend for routine items without your approval. It also should detail extra cost items, such as coordination fees for larger projects, eviction fees, and other extraordinary expenses.

Ideally, a PM will help you avoid lawsuits and fines due to ignorance of the laws...there are MANY that apply to "Landlords": City, State, and Federal. They will also "hopefully" select the best materials and products, correct advertising medium, and perfect tenants in order to maximize your investment. Just remember, they are only Human, however. This business is far more complex, and has many more variables than people realize. Simply owning your own home does not begin to qualify you as a PM!

Finally, as with most things in life, all of this is usually negotiable. Some PM's will provide more or less services, or tailor their offering to your specific needs. Property Management has been known to be somewhat stressful, they can relieve you of much of it.

A lot is said about unscrupulous PM's, and certainly, as with any profession there are good and bad. Ask questions, visit properties they currently manage, walk your property with them. Be accessible and responsive. If possible, don't use a PM whose "bread and butter" is sales. And don't use a friend or relative as PM, or rent to them!

Another point to consider-

Depending on your locale, you may be required to use a licensed contractor, especially for plumbing/electrical/HVAC , and in some areas ANY work over a certain $$ amount.

The REAL problem can come when its time to put the house on the market to sell, you will be required to "disclose" certain facts. A buyer may not be able to obtain financing if proper permits were not obtained etc.

My apologies for any confusion-

Some call it cvt, or commercial vinyl tile, others refer to it as
vct, or vinyl composition tile, as seen here...

http://www.armstrong.com/commflooringna/product_details.jsp?category=vct&item_id=381

It comes 45 square feet to a case, for around $32. You can cut it cold by scoring with a utility knife and snapping, or heat it with heat gun and it cuts like butter.

I do not know specifically about the Lone Star State, but many locales charge a "conveyance" tax or some type of recording fee which is based on the reported sale price. If you can find that tax amount, you can figure backwards to get a reasonable price.

My philosophy is not so much about the difference between nice, and nice enough, as it is about attracting the Best Tenant in a given price range; and minimizing expensive service calls and repeat repairs. This means putting some money upfront into some things a tenant won't pay you a nickle extra for, because they just expect things to work properly and safely.

You can buy a bath lav faucet for $12. Or $50. Or $500. It is not uncommon for the inexperienced to pick the $12 one. Bad Choice. You will definitely be replacing that within 18 months. If you didn't replace the $6 stop valves while you were at it, there's another opportunity for an emergency plumbing service call. What's that cost in your neighborhood?

A certain amount of WOW factor is good for a rental in any price range. There was a time I managed nearly 100 Section 8 units, mostly single family 4 bedroom, innercity homes. We bought cvt by the pallet for floorcovering. It didn't cost one dime extra to buy contrasting colors and install a "checkerboard" pattern in a large kitchen, and our properties nearly always rented very quickly, with nothing but positive comments, ie. WOW. The cvt was good for 20 years, showed great, and was easy to maintain for the tenant. It is also easy to restore if a tenant abuses it. If you use peel 'n stick tiles or sheet vinyl, you may get a better look, but ONE wrong move and the floor is trash.

A similar trick with carpeting was that rather than the typical beige or brown solid color, we used a carpet with a variegated color and rather long nap. When a tenant stained it, with professional cleaning, the stain would generally blend in and if not, it was easy to cut out a piece and patch back in with some original leftover scraps. The places always showed well in spite of the abuse. OTOH, a solid color carpet ALWAYS makes stains stand out.

The products chosen provided the greatest VALUE for my application- an appearance different from (equally important to not be horribly different!) and generally better than the average, all-one-color rental; and longer service life than other choices within a reasonable price range.

One last comment: I absolutely agree that the market limits what you can get in rent. It's all of the choices that you DO have control over that will largely determine how much you SPEND over the long term.