All Forum Posts by: Charlie Moore

@Charlie Moore

I don't have all that many good friends in this business. I know one other local small mom and pop outfit investor like me who handles security deposits as I do. Not coincidentally, I consider that investor one of my mentors in this field.

Let me break this down further. Primarily, my wife and I acquire and rent out single-family properties in C/D class borderline areas. We self-manage and I do most of the maintenance work.

As I see things, the overwhelming reality of western PA in my rental market segment is that small outfits like ours are almost exclusively composed of greedy and stupid landlords who routinely lie to, steal from, and cheat their tenants as a matter of course. Most of these landlords also hate the business they're in, hate tenants, and hate themselves most of all. They tend to self-destruct quickly and thoroughly, usually as they concurrently fail as parents and spouses.

I see this is an enormous business opportunity for the likes of me. The main focus of my business strategy is to clearly differentiate my product and service from other local providers. That's pretty easy to do when your overall competition largely consists of people who have trouble understanding the long-term outcomes of the bad business decisions they make and execute.

@Charlie Moore

As an attorney and investor from Pennsylvania, my experience has been that any investor that has their stuff together uses an escrow account for security deposits. It takes minimal effort to set up and maintain. Most banks will have a product available to serve as an escrow account.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

Yep. And now you do know someone in PA who holds security deposits in an escrow account.

If you charge a fee, the tenant will know it's non-refundable and therefore they have no incentive to try and earn it back. A security deposit provides some leverage that the tenant will try to abide by the lease in order to earn it back.

Deposits should always be held in a separate account so you can easily account for it and don't accidentally spend it.

I charge both.  My move-in fee is usually fairly small.  Refundable deposit is at least the amount of one month's rent, if not a couple hundred dollars more.

@Charlie Moore

Don't know the rules in DC. We do not charge move-in fees. Security deposits here must be held in an escrow account. Talk to your bank about this.

21 years ago I decided that I didn't want Property Management to a full-time job even though I was going to self-manage each property.

Now I have 28 apts with 60 or so tenants in 8 multi-family buildings in Brooklyn, NYC.

I use a LOT of technology including electronic rent collection, electronic locks, internet controlled Thermostats, WiFi Cameras, Cloud Based CRM, Electronic Signatures (DocuSign), automated expense payments, etc. All controlled on my Phone Apps.

Additionally, it's been 18 years since I had to do an eviction, which I did myself.

I normally get tenants who have at least a 700+ FICO. In fact, my last tenant which I signed a lease with in March had a FICO score of 822.

I look at the time you will be spending on management as a function on the kinds of properties you buy AND your skill as a PM and if you are willing to research and buy technology.

I probably spend less than 15 hours a week on average involved in Property Management issues.

When I taught Real Estate, I often told my students to be careful of buying yourself a full time job when looking for an Investment. Remember, the difference between an Investment and a Business is the less time you spend on the operations of the business, the more it is an Investment. I don't want to buy a Business, I want to buy an INVESTMENT. Therefore, I look for properties that will require less of my attention if I am self-managing it.

Properties that require a lot LESS management comes with a high initial cost. HOWEVER, over the 21 years as a buy and hold, self-managed Investment Property portfolio owner, it's an incredibly acceptable job for me! :) One that gives me raises every year as the consistent increases in cash flow and appreciation continues every year except in the financial crisis for a few years.

I will probably continue to buy properties and self-manage them until I see it will take more than 20 hours a week.

BUT, with all the automation, smart sensors and leak and smoke detectors, wifi cameras and locks, etc., I am wondering if the only time consuming event will be bad tenants that need eviction. Since my screening process is so difficult in a place where the vacancy rate is below 5%, I'm ensuring that doesn't happen much if at all.

I may even find that my time spent on PM will actually go down due to technology advances despite increasing my portfolio. We'll see!

@Charlie Moore What in the world? I don’t know what that means.