All Forum Posts by: Golan Corshidi

You have a kick butt deal, if you generate ha;f the cash flow you’re planning on you’ll be ok. So it won’t matter if you forgot things like management fees (or the value and costs of your mistakes if you plan to self manage.) Advertising (photos and listings.) turn over costs, snow removal, and those kind of things. The big deals will be vacancy, capex and appliances. (3 water heaters, stoves, fridges, microwaves?, washers? dryers?, dishwashers? ac units, furnaces, etc etc.) best case you only have 15 of those, not 21 or 27. With an average life spans of 6 years you’ve got 2-3 per year. I know, you have “repairs”already. But that’s going to be toilets, faucets, leaks, garage doors, etc etc. 

I’m not saying you have a bad deal, or I wouldn’t buy it if it was located somewhere warmer without income tax. (Ps. Subtract income tax and tax prep from your cash flow. :-)) Run 2025 through quicken and at the end of the year you’ll have real numbers and you can come back to this post and see how close you were. Hopefully you’ve increased rents and your above expectations. 

Congrats on at least taking action.

You've got nothing budgeted for vacancy that I can see; it depends on how much turnover there is in your market and what your prices are like compared to the rest of the market, but most people would budget 1 month of vacancy/year/unit. In your case that would be $2825/year or about $235/month.

If your place is not fully rehabbed, you have nothing budgeted for capital expenses. Roof, HVAC, water heaters, flooring, etc. You're budgeting less than $2400 for the year for maintenance and repairs for 3 units and that seems unlikely. Who cuts the grass? Where I am, and we have a lot of units under contract for lawn care, we still spend about $1000 per SFH on annual lawn care. There's HVAC servicing once a year on each unit. Assorted things.

Realistically, on a triplex that's not fully rehabbed, without assuming tenant damages I'd be factoring in roof, flooring, HVAC at minimum on nothing more than a 10 year cycle (5 is safer). So let's say $8k for a roof, $10k for new HVAC, $10k on flooring, that's $28k/10 = $2800/yr or about $235/month for just those things.

$235+235 = $470/month, $1582-$470 = $1112 = 33% COC annual.

Either way, you're renting out a place for $2800 that you paid $140k for. That's hitting the 2% "rule", and if you can maintain regular rent on that you've really hit a home run in today's market. Most people are struggling to get 1%. 

NOT a good idea, why mid term? Now you need staff to be 100% reliable, not easy there. Also need to furnish. At the end of the day maybe you make 2% more then you would with yearly. Be happy with your 10- 14% net and move on. Oh I assumed you are a cash buyer

Good luck 

 A lot of PMs will not deal with MTR Have you thought about self managing?

@Golan Corshidi 

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊