All Forum Posts by: Greg Horn

Aloha @Ben Vandorn! Welcome to Kauai. I've been pulling together data on a duplex condo in Princeville where you're able to vacation rent out each unit. Would be happy to chat with you about it. Sending you a private message.

Mahalo!

Greg

@Chris Viglietta The market is hot. I can only speak for Kauai - I know @Michael Mazzella and @Michael Borger can speak to Oahu. Here, it's hard to find cashflowing properties unless they're vacation rentals, which can be tricky. There's a strong market for flips because you can buy distressed homes and turn them into great homes in a strong market, but I'm not into flips. There's also a huge need for affordable housing here on Kauai. I'm currently working with a group at Kauai Habitat for Humanity to determine how we can pool investor capital to go build more affordable housing and actually have a return for the investors - that return may be a combo of some capital and tax writeoffs from Habitat, for example.

Hope that answers your question!

@Aaron Mazzrillo sounds like the next trip to Asia needs to have a break in Hawaii!

@Aaron Mazzrillo haha - sounds like it's time for you to get out here and see what we've got going on. Come join us!

Thanks @David L.! Just started a fresh topic proposing next Tuesday 4/26 at 11 at Ha Coffee Bar in Lihue. Hope you guys can make it! Please feel free to bring friends / significant others!

Aloha All!

I've spoken to a number of folks here on BP who are on Kauai about getting together for a meetup, including:

@Marvin Romero @David L. @Jeremy Santy @Waylon Brun @Alex Day @Phillip Cuilla @Christian Marston @Brian Tafaro @Lani Forster @Davian M. @Alvin Ikeda

I'd like to get together this upcoming Tuesday, April 26th at 11am at Ha Coffee Bar in Lihue. 

I'm very open to how the meetup can go. I will bring my CASHFLOW board game so that we can play. I'm also working on syndicating a deal in Princeville that I'd love feedback on, so we can dive in and analyze that deal, if anyone is interested. 

Let me know if you can make it!

Mahalo,

Greg

@Brian Nangle Thanks for seeing things from my perspective! I hear you.

@Steve Rozenberg Thank you so much for your insight and wisdom from the other side of the fence. Your questions to help vet a good property manager are fantastic! I really appreciate them. 

It seems like you run a pretty great PM business, but I continue to hear mostly horror stories when it comes to property managers. I feel quite strongly that you incentivize the behavior that you want to perpetuate - this is not to say that you're "screwing" PMs out of their money. In my mind, you're simply shifting around when they get those bonuses and why. 

Also, you are sharing in the cashflow by getting a percentage of monthly rents. No, you're not going to share in all the other benefits of owning real estate because you haven't taken on the large financial risk of owning the real estate. I'm all for finding those win/win situations where everyone is happy and incentivized to work together and do great things. I still feel strongly that there is a way to make this work where everyone would be happy.

I know we're talking about a large paradigm shift here. Let me ask you this - if I had an apartment complex with 100 doors that you would love to manage and I came to you saying that I would love to work with you because of your reputation and here is how I want to compensate you (based on my original post), how would you counter in that negotiation? How can we make this work so that you and I are both in alignment on compensation. PS - for this imaginary exercise, please assume that there is some software solution that would allow us to easily track the data needed for this type of approach. I know that seems like it could be an administrative nightmare, and I agree, but let's take that variable out of the equation for right now.

Thanks!

Greg

Aloha all! 

I must first admit that I am a total newbie and haven't yet done my first deal, but I've been studying a ton for the last year and just had a thought about compensating Property Managers that I wanted to put out to the community.

I'm also currently reading The 7 Habits of Highly Effective People and one of the things they talk about is setting up systems and compensation for Win/Win scenarios. I realized that traditional property management compensation where they get paid a percentage of rent and then get a bonus for every new tenant is not in line with an owner's best interests. 

If the property manager gets half of a month's rent every time a new tenant signs on, wouldn't they be incentivized to regularly get new tenants in there? However, from an owner's perspective, we want to have tenants that are going to stay a while and pay rent on time.

What if you set up compensation for a property manager that said that upon first signing a tenant, they'll get 8% of monthly rent. Then, after a tenant stay for 6 months, that bumps up to 9%. After a tenant stays for a year, it bumps up to 10% and we give the property manager a bonus of half a month's rent. You could then continue to bump up the percentage one percent every additional year and continue to give bonuses. To me, this model will highly incentivize the property manager to find great tenants that are going to stay a while.

You could also tie a bonus to the property manager's compensation if the tenants consistently pay on time (or a penalty if they don't). You could also tie bonuses/penalties to the number of service calls a tenant makes or to the dollar amount of repairs that happen while each tenant is in.

I think you catch my drift.

I understand that this is going to create a more burdensome accounting situation for me as the owner, but it seems like it's well worth the extra tracking to ensure that everyone on my team is incentivized to do what are in my best interests as an owner. 

I know @Brandon Turner (great meeting you on Kauai!) and @Joshua Dorkin have talked a little bit about this on the podcast, but I wanted to open up the conversation further because I'm sure there's something that I'm overlooking as to why this isn't done more. 

Mahalo (Thanks) in advance for your input!

Greg

Aloha @Toi H., where did you buy a tax deed? Mind sharing details?