All Forum Posts by: Account Closed

Hi Everyone,

So we recently rented out one of our rentals and the tenant moved in on 8/1. Before they moved in they handed the August rent and non refundable pet deposit to the management company on 7/31. When I went to check my online portal on Monday, I noticed the PM charged their management fee for July based on the total amount of money received, meaning the rent and pet deposit combined. 

So 2 questions here:

1. Even though the pet deposit is non refundable, and can be counted as income the minute it was received, why do I have to pay the PM a percentage just to receive that deposit and to the tenant I still have to say I have the full pet deposit set aside when they are ready to move out?

2. Even though the rent was received on 7/31, the rent the tenants paid really isn't due until 8/1, is it right for the PM to charge that fee in July, when for the entire July month the house was basically vacant?

This is a new PM that I inherited from purchasing the home, and I have had a lot of issues with them. We have another rental with another PM and they don't charge a percentage for the pet deposit we received from the tenant. Maybe the above points are all normal and I am just being suspicious about their operation, but any input would be greatly appreciated.

This post is really interesting because I am constantly looking back and thinking I wished I had started REI sooner. I do believe the system is set up for people to fail, not specifically just our generation but to anyone in general because there are just so many bad advice out there that don't fit the trend of the world any more. Advice such as you should buy a house and get the interest write off to offset our income, or put money into 401k and trust them with a financial adviser to grow til you retire are just out of date thinking that will never work by the time us 20s/30s retire.

With that said I bought my first SFH when I was 29. I got married last year, bought our 2nd property and will be owning a total of 5 or 6 SFH by the end of this year. We are both college grads who recently paid off our student loans, I also paid extra to get an MFA, and we have one car payment that will be paid off Jan next year. I've owned my car since first year of college and never missed a maintenance so it doesn't need replacing. I don't want to undermine the problems you mentioned in your post, because they are legitimate issues that people are dealing with everyday, but they really just are obstacles. I think the point here is if you are going to have a 9-5 job instead of trying to do hard money flip so you can get cash quickly, assuming you know how to do it right and in the right market, then the real problem is time not money. You've mentioned over and over again that your husband and you are doing everything you can to save and you don't live lavishly, and you are doing your best on debt reduction, then all you really need to do is wait til you have everything paid down to the point where you can save large chunks of your paycheck so that you can put money down as down payment.

I bought a condo when I was 23 borrowing money from my parents. The condo was cheap and the market was right. My parents were gracious enough to give me that loan interest free and I sold the condo last year with a 50% profit. Doing that for the 5 years I've owned the condo lowered my rent to $400 a month, and I was able to pay my parents back and then some after I sold the property. I know not everyone has the luck that I had, but what I was trying to say is that I knew I had to do REI when I was 23, but I didn't actually jump in the game until I was 29 because I simply couldn't afford it. Just because you know this is what you should do doesn't mean you need to start right now. Have a game plan and play accordingly and you will get there.

Also don't undermine the power of working more when you are young. Try to do at least a little bit of that when you are still young to build up a base. When I was doing my MFA, I worked as a bank teller from 8-12, interned from 1-6 and then went to classes from 7-11. I did that for 6 months and my internship got switched over to full time, so I left my bank job and did 9-6 and then 7-11 classes. I got my MFA without debt because I was already working full time and could pay everything as they come. I also graduated from college in 2.5 years instead of 4 because I always took summer classes, so the school was only able to hike my tuition for 2 years instead of 4. Not everything needs to be done in order, things can be overlapped. I am sure there are things you can do now that would have the same affect. Don't give up and get creative and you will get to where you want to be.

I am looking into investing in KC as well and was wondering if anyone has any thoughts on the appreciation in the area and the exit strategy?

 Thanks! We will consider it!

Good Luck! If you were able to get the warranty transferred please let me know, that would be great knowledge for me as well on my next rental!

Happy investing!

@Tyler

I recently went through something similar and found out that major appliance warranties actually work in 2 ways as far as I was told. If you are the original purchaser of the unit (HVAC/water heater etc) and you have registered the unit, labor warranty usually lasts for 2 years and parts warranty usually lasts for 10 years. If after installation the home was sold to the next owner, labor warranty immediately expires and parts warranty gets reduced down to 5 years.

If the unit was never registered, I think you get no labor warranty and parts warranty defaults to 5 years ...? This part I am not too sure on, but the warranties are tied to the original purchaser so it's not transferable, as far as I know.

If anyone else had a difference experience I would like to know as well.

Hi Everyone,

I have been looking into the KCMO market quite a bit recently. While all the TK deals well qualified under the 1% rule, I can't help but think that KCMO is a pure cashflow market, as the homes available for out of state investors are really just not going to appreciate. A lot of these homes are also not brick homes, so even if I do a gut job and put in new everything, the life span of the shell of the home is still limited, not to mention MO has state income tax. And yes, since I am out of state I can only consider doing TK deals.

So it will basically take me about 10 years to make my money back if I purchased with cash, and by that time all major appliances and the roof might need replacing, and I will have to hold onto the home forever because the chance of selling the home to an owner occupant is slim. Unless another investor comes along and has no problem replacing all major appliances at a steep discount, what exactly would be the exist strategy in KCMO?

Am I just making this up or are these legitimate worries?

Thanks everyone for any input!!

 Did you find one you like?

 I understand the unrealistic expectations part of the equation, but I wouldn't expect to use that equation when the market the home is in was marketed to me as a market they understand well and know how to get the home leased at the right price. The estimated rent this particular company gave, from low to high, was a difference of $250 just in case, and our home rented for $150 less than the lowest estimate, and they contacted us to make the drop. Even when I am prepared to take a dive in profits per month I wasn't ready for a $300 dive from the number they were confident with. 

On the positive side, even at our current we are still cashflowing, and we will definitely be raising rent next year after the lease is up.

I am interested to know if there are any reputable turnkey operations in the DFW area as well. We found and purchased from a semi turnkey company and the experience was, honestly, really really bad. 

Their product was good, we love the house, but their pro formas were off or on the lowest end of their estimate, a lot of the things they said wouldn't matter in this particular market ended up being big deals on the home not renting. Their strategy was to help investors find the right homes and you let them manage, they find a lot of new construction outside of the major suburban areas to negotiated with the builders to only sell to their investors. 

The management part of their business is what we are fighting with right now. Communication is horrible, they offer online portals but don't upload everything, you have to keep an eye on them so they update things. I had to make sure they record my owner contributions because they just get the money and don't record anything in their system, and it takes e mails after e mails to make things happen. Just yesterday I had to e mail them to upload the lease that was supposedly signed early last week, and found out they never even processed it! All their signatures were dated yesterday after my e mail and the tenants move in 8/1!! Reviews on their management is also really terrible, and they have so many of their employees leaving 5 star reviews to boost rating. They would be a solid, solid one star if they don't have overseas investors who don't visit their properties and employees helping them. Unfortunately they are associated with a large investor network so it's unlikely that they will lose any business.

PM me to get this company's name so you can avoid them if you are interested.