All Forum Posts by: Richard F.

Depending on your locale, its pretty easy to check local newspaper classifieds, and online sources such as Craigslist which are excellent in many markets. Track the ads to see how long they have been running- if you print them off your computer put them (line listings, and occasional pictures) in a three ring binder for a great reference. If you are new, do some role playing as a renter and go LOOK at some of them! See what the competition is doing.

Check your local laws, but in at least two jurisdictions I know of, the action for possession (Unlawful Detainer) can be granted due to the past due rent or other charges, and ultimately specifies the total amount owed including legal fees. However, obtaining the monetary judgment is a separate and optional step. The monetary judgment, once granted, is the actual "lien" that you can utilize to put a brick on their check, or force a sale of other assets, etc. In Hawaii, that judgment is good for ten years, and then can be easily renewed if it seem prudent.

There are times, and especially based on the additional attorney fees, when it does not make good economic sense to take that extra step. Keep in mind, life does not always travel in one direction. If at some point in the future, your deadbeat becomes born again (financially speaking), and is in a position to get a loan for car or home, they will have to clear up that lien. Then you can have the last laugh!

It really depends on the preferences and circumstances of your local market. I manage both types of properties, and fundamentally, I prefer unfurnished (well, actually in this market, what is called partly furnished-which includes major appliances only). Furnished units take more time and effort to inventory and document condition at movein and moveout; furniture needing repair is a big headache; and, well, they call it moving because you are moving STUFF, and you need a place to put YOURS. If you aren't moving, you are visiting, and then you need plates, silverware, Mr Coffee, Towels, etc. etc. Sure, if you are talking student housing, or other niche areas, some basics are good, but really, useable used furniture isn't that hard to come up with. Finally, if you are talking high-end furnishings, then insurance and other issues come into play.

First off, what exactly is it that you want to change? Generally, you can change the "house rules" simply by giving 30 days written notice. These rules have to apply to everyone on the property, but you can accomplish quite a bit with this, including (check your local laws) late fee charges, and most other items EXCEPT the term and base rent. It can also NOT "materially alter" the original bargain--in otherwords you can't, for example prohibit parking in the driveway. You CAN prohibit unlicensed vehicles on the property.

Again, depending on what it is you want, you can ALWAYS negotiate. Offer $$ (in one form or another) and people will do most anything. Of course, if the unit is severely under priced, you're probably out of luck. Just be SURE to make it clear to them they will be a holdover tenant, subject to holdover rates (per the existing lease or local law) if they stay one day extra!

Depending on exactly WHAT repairs are needed...

I have seen many owners buy a property in marginal condition, then do "just enough" to get by and rent it out so they get the cash flow started. So, you move in a tenant that's not too picky about the condition. He's probably not picky because that's the way he left his last place...his family is just hard on things. Of course,since the unit isn't "sharp", you have to rent for well below the top of the market, in other words you are giving up cash. And then the service calls start coming. You send a plumber...oops, $150. Then an electrician...oops, $300. Then a closet door "just fell off", and you spend another $125 rehanging and repainting it. A few months slip by, and its time for a renewal. You actually take the time to look INSIDE the unit...and discover amazing "artwork" about 4 feet up the wall....EVERY wall! Well, the kids sure liked it... and there's the rusted through trap with an overflowing bucket under it. They never reported a problem with the drain, and now you have a sink base cabinet delaminating, mold, and more repair bills.

Yes, some of this you can bill the tenant for, and maybe even collect it, eventually. In the meantime, YOU get the aggravation, the 6 PM Friday calls, etc. etc. Repairs and maintenance done piecemeal (and often at "afterhours" overtime rates), and especially low quality repairs that you end up Re-doing in a year, will break you.

Or, you take into consideration that when it was new, the property had a design life of 40-50 years, and now, most of that life is used up. So you renovate...STARTING with the mechanical systems...plumbing, electrical, HVAC. (Today's tenants need LOTS of grounded outlets, and many expect air conditioning or at least nice ceiling fans) Update your cabinets (or faces) and fixtures, the tub and surround (at a minimum reglaze), some paint and floorcovering, and now YOU can expect 20+ years of pretty trouble free service. You have a modern looking, attractive and fully functional unit that interests the more discriminating tenants...the ones that actually take care of their home. They actually appreciate that you have provided a nice home, and they pay top rents, on time. Service calls are virtually eliminated for the next ten years. Life is Good.

Over the next 10-15 years your cash flow will be better than the marginal property, and you will have much less aggravation. As an added bonus, in all likelyhood the value of your property has appreciated

OTOH, if the basic structure is ALSO in poor condition, AND the roof is bad, and its not that great of a location, or floorplan, or... then it won't make any difference- you're looking at a teardown.

It also probably won't work if you are unable or unwilling to do any of the work yourself; and/or if you are picking all new contractors out of the Yellow Pages.

In general, I disagree with the idea of doing just enough to get it rented, then make it nice when its time to sell. Why give someone else the benefit? Make it "new" for you, get the best tenants, the highest rents, have the least headaches, and enjoy life!

Thanks to all for your welcoming comments...

To expand a little on my reply to REI, what I am referring to goes well beyond the commission check vs. mgmt. fee. It is a more fundamental difference in the approach to daily operations: Proactive vs. reactive. Value vs. cost.

Any given task can be accomplished a number of different ways. The methods and products you choose affect your investment for years, and can make or break you!. In my experience, at least for long-term holdings, understanding and considering the long term effects of today's decisions will allow you to maximize your ROI over the life of your investment.

NARPM offers a venue where (generally) multi-property PM's can share and learn from each other. While there are similarities, site managers, association managers and others have an even more narrow, and in many respects, quite different focus. Many of the challenges and solutions differ for these PM variants as well.

IMHO, To put it simply, it is their focus.

PM is NOT sales. The goals and/or driving forces are completely different for these areas of real estate. If your focus is PM, you will naturally gain knowledge pertaining specifically to that area. "Part time" PMs, and typical investors have only one way to gain that knowledge...trial and error. And boy, that can get expensive!

The folks in NARPM are all focused on PM, and openly share their experiences (good AND bad) and their solutions. This cuts down considerably on the "trial and error", although the nature of the beast is that sooner or later everyone gets at least one "lesson". I've been at it over 12 years, and still learning!

A large percentage of PMs are simply lucky. Are you a Gambling Man?

Well, I imagine the OP has finished and sold his project already, but I'll throw in my 2 cents for the next guy/gal...

Knockdown (or ANY) texture is probably the worst possible choice for bathrooms and kitchens. These areas get the most soil, and therefore need scrubbing from time to time. The texture will rub off. Kitchens and baths should be painted with a "semi-gloss", for easy cleaning.

Other rooms, bedrooms, hallways, etc. can generally be painted flat or satin, depending on your preference.

ALL TRIM (unless it is stained or natural wood of course) should be painted with "semi-gloss" the same tint as the wall. The contrast between flat and semi-gloss generally makes the trim stand out nicely, and it also cleans easily.

Do not paint walls/ceilings all one color. The house will look like a cheap rental. Use "hi-hide ceiling white" exclusively for the ceiling, then your walls should be generally any "off white", beige, cream, or whateva...just LIGHT in color. Even actual color can be used judiciously, in a common, light, pastel, especially in small kitchens or bathrooms, or as a single accent wall in the entryway or in larger rooms. Don't go crazy, and don't put color in every room! You just want to create a little "interest" to stand apart from the crowd, while still providing a nice clean canvas for the buyer to easily personalize their new home if they choose.

Sadly, yes. If they were late model, they steal'm to resell, if older,they strip'm for the scrap value. Lately here they have been ripping down copper gutters, cutting out exposed copper piping, and stealing the street light wiring!

You have to ALWAYS think safety & security first! Don't "hide" the condenser unit behind shrubs or privacy fencing. and be sure your security lighting is all "dusk-to-dawn". We use a lot of split systems here, which means the condensers are smaller, and frequently they will be mounted rooftop, or second story height.

Depending on your specific circumstances, the price of video security systems has really dropped making them accessible for a variety of purposes. Catch'm and JAIL the rat ba**tards!

I would reserve final judgment until reviewing the actual contract, but agree it appears quite high.

More importantly however, you really need to understand how the company operates. If their primary focus is sales, and they just do PM as a convenience for their clients, chances are they do not have the expertise, or the motivation. Sales organizations have one focus: the next commission check. Many will do/say what they think will keep you happy, without considering the operational long term effect.

I certainly would never entrust a property to the neighbor down the street that happens to be a Realtor in a three man office. (Unless of course, you are in a one horse town and have no choice!)

Look for a company who's Primary business is property management, of a similar type and location as yours. If your property is on the other side of town from their office, it probably won't get the attention it should.

LOOK at properties they are managing. If possible, walk the halls, or at least the parking lot. Does it look like they are doing a good job?

Once you do select a PM, let them DO their job! I can't tell you how many owners seem to think they know more about PM than those of us that do it full time. Set and discuss expectations. Walk the property with the PM and discuss issues, BEFORE signing the management contract. How will they address these issues? What recommendations do they have? What options to they suggest? Learn to read and UNDERSTAND your monthly cash flow statement and supporting documents. Then do so EVERY MONTH. Review with your PM at year end, and stratagize for the next year.

Be sure you build a reserve fund and/or have adequate credit available to handle emergencies and make timely repairs or improvements when they are recommended.

Don't think for a minute that owning an investment property is the same as owning your own home. You can't even imagine what tenants will do to, and in your property, or what kind of pitfalls await you. You DO need professional help.