All Forum Posts by: Account Closed

At a group showing an applicant loudly announced and I mean he was loud...."I have to take a $hit, where is the bathroom?"

Could be fine. You're not looking for museum quality but my point is to roll your sleeves up and get involved. Could be a great deal but you get hard numbers to crunch.

What do you expect as a return on your money?

Some questions you verbalize outright others your answer via research.

In your case I'd ask-

Why do you want to unload it? Who's the agent? Who did the rehab work? How much was spent on reno.? Did you GC it yourself? Receipts? Did you have it professionally inspected? Can I see the report? Did you have a licensed pro with a trade card replace or work on the HVAC/ Plumbing/electrical? Were permits pulled? Improvements within code? You're investigating for sloppy crap rehab work vs. the right way.

Then you verify on everything they said. If they say they had XYZ plumbing overhaul the plumbing then you call XYZ plumbing and talk to the plumber that did the work. Talk to everybody in contact with the property.

Of course, the basic always apply- pulling comps, check rental rates, tax records, look at the chain of title, etc. We even talk to neighbors, drive the neighborhood in the evening, Google searches.

Now you don't want to go in guns blazin' but be cool and play detective.

The numbers will tell you everything. Scroll down to the Real Estate Deals and Analysis section here on BP and start digging.

Also, be reasonable. Avoid a decision based on emotion.

My mantra is- ask tons of questions, verify, and follow up.

Hope this helps.

Mehran,

Smart move reviewing the management agreement carefully. I encourage all owners to do the same but sadly, some do not.

Everything is negotiable but property managers enjoy uniformity in rules and regulations among their properties for the sake of ease and comfort. However, at the end of the day it is your investment and any good manager will respect that.

As for your list, I am not a fan of item #2. Where is the incentive for your property manager to try to retain a good paying tenant? We don't do this.

Do you plan on acting as a wholesaler and as a real estate agent simultaneously?

Contact your state's real estate commission and ask them.

A property manager operating without a management agreement is like a being in a canoe without a paddle. Listing agents have a listing agreement and property managers have management agreements.

How will they manage the property? What's the plan? A solid management agreement must include topics like maintenance, repairs, leasing, rents, eviction, fees, contract duration, liability, termination clauses, owner vs. manager responsibilities, the list goes on. I'd ask for a copy of their lease agreement for good measure.

Roll you sleeves up and get involved. Never take anybody's word for it.

I saw the title of your thread is "Rent to own". If that is really your goal be very careful. If you find a house be sure to do your homework, research and ask a lot of questions.

How did they arrive on the purchase price? What happens if after the lease term I fail to qualify for a home loan? Who pays for repair and maintenance? Has the house been inspected? Has the house been appraised? What if during the lease term the owner fails to pay the mortgage? Will the lease/option be recorded as public record? Are their liens on the home? Are there judgments against the owner?

I know it sounds rude but I'd like to know the financial stability and credit history of the owner too.

It's a lot but it will keep you out of trouble.

First, unlike some vendors a contractor must be carefully managed. Contractors, whether they're GCs or subs are a different breed. Having one as a partner could work but put it in writing.You're also dealing with project management here which means you, as the other partner need to be involved at every step.

Second, Will Barnard (see his post above) is giving great advice by questioning the contractor's incentive to "keep rehab cost down".

How true!

But let's not limit his way of thinking to contractors. It's smart to consider the role and function of each partner. What's their incentive? What are they getting out of this? How do they benefit?

Is it a good idea to leave a task or function entirely up to a partner completely unchecked? Make sure its in writing and they're held accountable.

I can't agree more. I work in property management and there is not much of an industry standard and a significant lack of professionalism. Here just a couple biggies.

1. Do they have a leasing agent show the property or do they just give a key to a prospective tenant for a self showing?

2. Maintenance- what is the process and procedure here? Is there in house maintenance or do they contract out?(pros and cons for both) Do they use skilled trade pros for plumbing/HVAC and electrical? Lots of money is lost on maintenance. Sometimes a water heater can be repaired for $20 and not replaced for $925. But what do they care, you're in another state!

3. How many properties do they manage? How many on staff property managers? Looking for a ratio here. Many property management shops are in the business to collect thousands of properties and some don't care about quality service. They're usually overwhelmed.

4. Do a quick Google search for complaints. Check Yelp, BBB, etc.

5. What is their vacancy rate? How long before your property rents on average?

6. Hidden Fees- lease up fees, repair fees, ask for all of them.

7. Management fee- SPEND A LOT OF TIME READING THIS DOCUMENT!!!!!!!!!!!!!!!!!!!!!!!!

8. Do they work primarily with investors or are they used to people who just can't sell their house?

That is all I can think of in 2 minutes.

PS-Don't be a sucker!