All Forum Posts by: Chris V.

 Very good point. I struggle with this myself. We could come up with plenty of systems that would help incentivise property managers to align their goals with the owners. If I had say 400 properties, I would spend a lot of time perfecting a system like that.... The reality here is that beggars can't be choosers, you have 4 units that solidly promise to be a lot of work for very little pay. I would not exactly call that a great negotiating position to set term from:).

Besides that; even if you had a bunch more units and they were all $1,500 dollars, fully rented with long term tenants and in nice neighborhoods you'd find that property managers have the commercial awareness of the DMV and are about as flexible too. On top of that they have a technology toolkit that includes fax machines, clay tablets and actual trips to the bank... :)

Just saying, don't expect too much, but DO shop around! Call as many as you can (I still love the idea of pretending to be a prospective renter:)) and see which ones seem to make sense...

10% does not seem too wild. I pay 8% but my rents are more than double. 

First months rent is a lot but move in/out fees are not unheard off.

$250 p/m on top of everything take calls seems over the top. Maybe it is because the rents are so low altogether? This might be something to think about in general, while your building was extremely cheap your rents are low (which by itself is not a problem) but certain base costs are going to pretty fixed. A plumbing repair in a $300 unit will not be much cheaper than a repair in a $900 unit. But I digress...:)

By the way, price should not be your only criteria when you select a manager. The best way I heard someone finding a property manager is calling all listed property mangers and pretending to be a tenant interested in a unit. They chose the best one based on how they were treated, called back etc. This might seem like a lot of work, but having a property management company that sucks is very expensive and extremely annoying. And because you are somewhat invested in them its not easy to switch once you have picked one. Most property management companies suck (I know my main one that I "inherited" does too:( ), so choose carefully and don't be afraid to spend some time on that... It will prove to be a very good investment.

Good luck!

BTW: Amazing that you can even buy a 4plex for 18K by the way...

Thanks! This is good to know, I did my "research" about 3 years ago and it sounds like things might be changing. I might have to reevaluate. 

Either way, I will continue to do everything I can to make sure my units are compliant, save and well maintained, and that issues or perceived issues are taken care of promptly. I think that is a point that is often skipped over in tenant-liability discussions which tend to skip right to the scary frivolous lawsuit part.:)

Thanks, that is good advise! They are separate legal addresses. So I'll call the utility company (PG&E) and the city (water) to see if they can re-meter them and if so what it would cost. 

I would much rather pay up front and take myself out of the utility loop altogether. I don't see much of an upside for me in sub-metering, especially since you can not charge tenants beyond what you pay (that much I did find out). So I'll try to go that route first.

Thanks Again. I'll try an update this post if I find out more.

Hi All,

Hope this is the right place to ask; I am in the process of buying some additional property and one of the new properties is a Triplex that does not have individual meters for Gas/Electric/Water for each unit. The previous (I guess technically current:)) owner was charging a flat fee but it was ridiculously low compared with the real usage. 

All my other units pay there own utilities and I really like that setup. So I am thinking of sub-metering the units as that will be a great opportunity to lower my expenses which is easier than raising the rent and I was hoping anyone had some experience with sub-metering a small building like a triplex. 

Like how does that even work, who bills the tenants etc. I googled around a bit and found some companies that offer services, but it sounds like they are geared towards bigger apartment complexes. 

I would even pay PG&E and the city to come and actually re-meter the units (so i dont have to sub-meter) but I checked their websites and it does not sound like they even do that. Which is strange because you'd think that they would like to increase their number of customers...:)

Anyway, very curious to hear other's experiences with Sub metering small residential! (bonus if this experience was in California:)

Thanks!

Chris

Hmmm, I am not a lawyer or expert, but before I bought my first properties I looked into the LLC for the same reason that you asked about (lawsuits). What I remember from my research (you should do your own as your state will have different laws!) is that if I were the sole owner of the LLC the LLC would not really shield me. I would have still gotten an LLC but then I found that the yearly costs of an LLC were significant (I think I remember like $700 or so??).

I am not advising you don't get one (do your own research for your state and situation) but don't do it for the wrong reasons What I did instead is I bought a 10M umbrella liability insurance policy (on top of the 500K that each of my properties has in its regular policy). This is only like $600 per year and covers all policies. 

The main thing however, like someone above pointed out: keep your properties in good repair, follow the rules, use common sense, take prudent (and even of the the top) safety measures and in general "do the right thing" BEFORE a situation escalates. If you did everything you could that will help in court if it comes to that, and if it does not.. .Well; at least you'll sleep better:).

What I would recommend is to first run your numbers. Then make the decision. Only then bid based on what *you* think its worth based on your numbers. You can even explain these numbers to the seller / selling agent, and ask them where they think you are wrong. Maybe that will help them see your way, or maybe there is something important you missed that they can point out that changes your calculations.  If you for example think that based on your numbers it is worth $75K you should not go a dollar over that. Don't look at what you can afford, but look at what you want to get out of the deal and work your numbers from there. BTW I am assuming your operating cost projections include more than just the mortgage?

If it is a good deal buy it else, look around some more. Don't make it an emotional decision; leave that for your primary home:)... Good luck on making your decision!

Wow! What a great "quicktip";). Thanks! Just checked that out and found a nice one. I have worked with Excel for almost 20 years now and I actually never found that gallery! Thanks again!

Once read a book by a guy who did research for his work on people that has a net-worth of over one or two million and he found that most of them were not living high on the hog, but way below their means. Can't remember for the live of my which book it was. Anyway, not surprisingly this mindset had helped these otherwise unremarkable people (they were not brilliant inventors or anything) achieve the level of financial success that they had. I think most of the people interviewed for the study had like a 10 year old Camry or similar car that they bought used. Maybe I'll trade up to a nice used Camry myself one day; when I can afford it:). 

Come to think of it I have tenants with: Lexus, Mercedes, Jaguar and some other more sensible cars that are still worth way more than mine. For me that always makes me smile; their bad priorities are my business after all...:)

Hmmm, I'd say definitely get an agent, but I would not settle for the services of "a" real-estate agent. Go and find a *great* agent that specializes in working with investors and rental properties. I tried out a few different agents before I found my "guy" and if I were to do it again I would call them and just ask them if they have worked with investors before.

I found that most regular agents don't know much about rentals or investments. They just drive around nice couples with 2.3 children until they pull their leased 5 series up to the house that the couple totally "loves" and has to have. That is actually exactly how I bought my own primary residence :))). I also found that a lot of regular agents don't even want to work with investors because they know you are not going to "fall in love" with a house and they don't have the patience / stomach to submit dozens of offers to find you a good deal.

Anyway, my advise... Shop for an agent and remember; not all agents are created equal. Call a few and ask lots of questions specific to their experience with investments in rentals in the particular area you want to buy. Even if they are really nice (and most are), if they don't have any experience move on. Keep in mind that a good agent and a bad agent charge the same commission but a bad agent will turn out WAY more expensive... A good agent that specializes in investment property will also be a great asset *after* the sale be cause they can hook you up with the people you need to run your business, give advise etc. 

Anyway, good luck with your project!