All Forum Posts by: Damien C.

Hello folks. I was interested to hear Jered Strurm, on his BP podcast interview, discuss his experiences vetting property management companies. He mentioned having reached out to local property management outfits in the role of a renter, rather than as an investor with a portfolio. And in that way, as I understand it, he was able to get some (grim) insights on how these companies handled their business with tenants and residents. I thought that was a clever, but very logical, strategy. 

Just curious if other investors here have some solid strategies, and/or out-of-the box strategies, for assessing/vetting property management companies.  

I have a bicycle. And I paid cash... ;)

These three episodes might be relevant to your situation:

BP Podcast 023: Flipping While Working a Job, Partnerships, and Military Investing with James Vermillion

BP Podcast 025: Four Newbies and Their Very First Real Estate Success Stories

BP Podcast 074: Buying My First Investment Property- A Newbie Podcast with Jordan, Jacob and Jeromie

Hi John. If you have sufficient income, good credit and you can put 20-25% down, I don't think getting financing will be an issue for you. You should be able to confirm your ability to borrow by simply calling a few lenders. Having some reserves set aside for unexpected expenses is important too.

Would you be able to manage a property while you are serving? If not, you should think about who will manage the property for you and budget accordingly.

If you have not already, I hope you take the time out to read up on real estate investing and to network with some seasoned investors here. Learn from other people's mistakes and successes before you fork out your own money. Check out all the BP Podcasts too. They are very informative.

I understand why people are bummed out about taxes. But I don't understand why people think that all their tax dollars are going to welfare for the undeserving. Tax revenues pay for social security, defense, medicare, debt interest, welfare, infrastructure, education, etc. The 10% or so of the total revenue that goes to welfare is not given only to undeserving people. Some recipients are working poor--i.e., they work but their skills or life circumstances are such that they cannot earn a living wage. Some recipients cannot work due to actual disability. And then, of course, some people do scam the system. Since welfare is a relatively small slice of the revenue pie, and since not all welfare recipients are scammers, I would argue that there is a disproportionate emphasis placed on the welfare issue. Dollars are wasted on the fringes of all programs. That's the larger problem. Ideally, only deserving people should receive welfare benefits. But even if that ideal was realized, I suspect the overall impact would be somewhat marginal (assuming nothing else changed).  

To the question of "are the rich the greedy ones?" (per the title of this thread), it seems to me that greed touches all classes. I recently read the Millionaire Real Estate Investor, and at the end of the book, Keller talks about how part of the joy of creating abundant wealth is that it actually frees up the investor to be truly generous. The rich have the resources to give to their families, to their friends, to charities, and to society as a whole. 

Hey @Julian L.

I live and own a property in Cambridge, MA; and like Venice Beach, the area is expensive. My current monthly expenses (mortgage, insurance, taxes, fees, etc.) are less than local rents. While I did not fully consider the opportunity costs when I bought, I do not regret the purchase at all. I like the area so I would be renting here if I didn't own. And I've built substantial equity. It was good timing.

With all that said, if I had to invest in my area again today, I would not do it. Local property values have gone up substantially in the past couple of years. I believe the same is true in your neck of the woods. It would be cheaper to rent in my area than to assume a mortgage at today's prices. I'm guessing that is also the case in the nicer parts of LA.

You appear to be in a strong financial position with knowledge and experience in a good out-of-state cash flow market. I can't help but think you would be better off with a handful of income producing assets in ND rather than a borderline liability in LA. I also wonder how wise it would be to buy in LA given you are considering moving in a year or two. If you are tied up in an LA property that would cash flow negative as a rental, then you would want to sell it if and when you move, correct? The appreciation is not inevitable, but the transaction costs would be. Seem like a less than ideal short term play with limited upside.

Hi Reggie. Can you contact an experienced local agent, who is not tied to the deal, just to confirm that folks are in fact reliably renting similar units in the area for $725? 

Hey John. I’m guessing it will be a challenge to find a substantial property in Somerville that cash flows for you right out of the gate (assuming you mortgage the property, that is). Property values in Medford and Somerville (particularly Somerville) seem to have gone up quite a bit in 2012-2014.

Are you considering buying a multi-family and living in one of the units? That might be a more attractive proposition, and you could potentially do a lower down payment too. 

@Jay Hinrichs Thanks. Good info.

@Jay Hinrichs 

This is an interesting conversation.

This statement struck me:

Sounds about right to me. The only issue I see is that the PM only "sort of" has skin in the game. Of course, if they are reputable, they want to do right by their clients and help them secure great cash flowing properties, which they can in turn manage for years to come. But regardless, the PM is not the party who is putting down 20-28k and mortgaging the property, or paying 100-140k cash (if we consider J Wong price criteria, for example). The other thing that concerns me is the potential for conflicts of interest. For example: perhaps one of their clients wants to unload a rental home; if the PM arranges the transaction, they potential profit regardless of whether it is a really a good deal for the investor. Probably a bad example, but surely something vaguely similar might occur (?). I’m just curious how one might implement some checks and balances on the management team beyond getting references and building the relationship, etc.

I think the reverse engineering, starting with the PM, is really smart. I’m just not clear how one "manages the manager" during the acquisition stage to really ensure the out of state investor (who I think is inherently vulnerable) is reasonably protected.