All Forum Posts by: David Yee

Hi Everyone, 

I have a quadplex in Akron.  I've been pretty frustrated with the two property managers I have had in my short time as an owner.  Based on the amount of work and the scummy service, I'm looking to sell it.  My thought is I could probably get a decent amount more with seller financing.

1. We have a rate of 4.5%. 

2. I think the property is attractive.  Monthly rents (fully occupied) are 2.6k while the price we paid was 125k.  It should look better but the P&L isn't horrible.  It has been cashing flowing okay YTD.

3. It's in decent shape.  No major repairs are needed.

Based on these three factors, I feel like I can get a decent amount more than what was paid for the property.  However, I'm not really sure if this is just a case of wishful thinking or if I'm making good points.  So, I'm looking for help with 3 things.

1. The seller finance process.  I am giving up the title so I'm assuming I'm no longer liable (please confirm).  However, since I'm still on the loan the bank could call the loan at any time.  In that case, I would be responsible for paying the full amount.  Is there some sort of insurance I can get to protect myself in this situation?  I'm sure I can put some sort of verbiage in the contract but that won't do me much good if they can't pay.

2. Where to go to find local agents with experience in seller financing + multifamily?  I don't really know where to look.

3. I see seller financing with wholesalers all the time so I assume there are models in place to determine the markups.  Where can I find something like that? 

 Uh oh, i think i might have bad a miscommunication with my realtor then! You might have just saved me from a big headache in a few months!  Thank you for clearing this up and don’t listen to my last post.  I will edit it out.

I think you probably want to start an LLC. I don't think the lending process is that different and you have protection if something goes wrong in your rental.

@Drew Sygit I think you're missing the point. My goal is to better understand the role of a property manager, understand common tools/technology in the industry, and the work it takes to execute some of these requests so I can make reasonable requests and do a better job managing the relationship.  I think you definitely make a good point about owners having unrealistic expectations and making sure to ensure you discuss these items with the PM beforehand but please try to limit your snark.  I am very new at this and I'm just trying to understand the business.

Rent Analysis: To answer your question, I asked a lot of questions because I'm very interested in learning property management and I think I did a pretty in-depth screening process for someone without any experience in the field.  As it relates to rental analysis, I asked her prior to hiring if she could check the rents to ensure they were at market price and she said she would need to view the properties to make an assessment.  

Maintenance: I don't expect any extensive list of the condition of everything in the property.  However, I do expect the property manager to have a running list of any defects/issues with the units.  This is probably not a comprehensive list as it isn't reasonable they live in the property but when they're at the property they should be scanning the unit for items to add.  When renting open units, I would expect them to be aware of issues with the property prior to a new tenant coming in so if they leave we will be aware of any damage they caused.  

I think maintenance lists are pretty easy to find.  I was able to find a few after a quick google search that gave me a list of things I should probably do on a weekly, monthly, quarterly, and annual basis.  

@Drew Sygit The two big things are a rent analysis for each unit.  I would expect it to be standard practice to do a review of all the units and determine repairs needed, what monthly/yearly maintenance should be completed, and a rent analysis to set expectations for vacant rooms.  

@Nathan Gesner Great post!  From my research, I didn't think there was any magical rent formula but I was hoping there were some generally accepted guidelines that would put me in the range.  I will keep studying the market and asking people smarter than I am until it becomes second nature.  I am researching online pay solutions but I've read new owners have had a lot of success with Zelle.  I'm thinking I might bring that up as it is better than the existing website that charges fees for online pay and no the PM wasn't sure if they do autopay.  I will also check out tenant cloud.  We have an open spot that the PM is lagging on and it would be nice to get a few ads out there!

Hi. I am new to the property management space.  My interactions with my property manager have been much different from my expectations.  I think this gives me a good opportunity to learn more about the job to provide clearer instruction and set expectations.  Here are areas I'd like to understand.

- Rent Analysis: I have a lot of trouble trying to create a rent analysis.  It's hard to find comparable properties as quads are somewhat rare and my rental units are efficiencies of various sizes.  Is there some sort of industry standard for getting rough rental estimates?  It seems very paper nakpin-y to me. 

- Rent Collection:  What is the best software for rent collections?  How do you feel about autopay?  I was thinking I'd be happy to reduce rent a little bit in return for setting up autopay but this seemed like a foreign concept to my prop manager.  Is there a reason against it (outside of renters probably not wanting to do it)?

- Maintenance Checklist - Are there any industry standard maintenance lists?

- Value-Adds: What are the big value adds for property rentals?

- New Tenant Marketing: What are some of the best places to advertise for new tenants?  I think my property manager just created a sign outside the property.  This seems highly inefficient in 2021.

What to look for: Responsiveness.  You want someone who will answer your questions and be willing to move quickly when you find something you're interested in.  Generally speaking, I don't think you will find a lender that is considerably cheaper than another so I look for responsiveness and willingness to explain things so I'm comfortable with each step and I can prepare for what's coming.  

Recommendations: I wasn't happy with my last lender so if you find someone you like please let me know, too!  I'd suggest whenever they give you a rate always ask if that includes points. 

Credit Rating: Here is a good article.  You generally have a 14-45 day window to shop around.  I think I was told 2 weeks.

https://www.equifax.com/person...

@Joseph Cornwell thank you for your response!  I'm sorry if I'm a little unclear - this is really new to me so I'm a little unsure of the proper terminology.  

Cost Segregation - I think I misunderstood the concept of Cost Segregation.  I did a little more research and unless I'm a real estate professional (I'm not) I will only be able to offset passive gains with cost segregation so it won't be much use until I get more cash flow.  

LLC Ownership - My lender said that his company has never called in a loan but my concern is a few years down the road my loan will look a lot better as interest rates are much higher. At that point, it would make sense for the bank to call my loan so I would have to pay a few K to refinance into a loan that has a much higher interest rate. I'll talk to my lender and an Akron lawyer for my LLC to see what I can do.

Selling Debt - There was a tenant who has roughly 3k in rent debt.  I don't want to hire an agency to try to collect on the debt, I was thinking I could just try to sell the debt to someone else to try to collect.  I don't expect I'd receive much but I figure it wouldn't take that long and I could make 5-10% back on the bad debt.  

Thank you so much for your response!  

Hi Everyone, 

My friend and I purchased our first investment property in July.  It's a 4 unit in Ohio (we are both in CA).  I was wondering if a few savvy investors could help assist me with a few things.

1 - Cost Segregation - The property is only 125k.  I'm wondering if cost segregation is worthwhile.  I was going to get a quote and seeing how much it costs.  Has anyone had any experience w/ this service?  

2 - LLC Ownership - I wanted to purchase the property directly from the LLC but it wasn't feasible at the time. I was told this wasn't a big issue. However, I learned that if I transfer the property I could trigger a due on sale clause in my loan. I know I can bypass this with an asset protection trust but I really want the LLC protection. What is the optimal way around this?

3 - We had a difficult tenant who owes us a good amount of money.  The tenant is gone now and the odds of them paying the money owed is very very low.  I know I'm getting like 8% of the money owed but I'd like to sell the debt to get something.  Anyone have experience doing something like this?