All Forum Posts by: Ben M.

This looks like a tear down to me. I’d rather have an empty lot.

There are enough cosmetic rehabs (sometimes including roof, windows, siding) out there that I don’t get involved with huge rehabs like this that could tie up me and my cash for far too long. 

Howdy BP Fam!

I'm looking to owner occupy a duplex in Houston (would prefer a 4plex but I can't find any turn key properties in my price range). That said, I've decided that a "turn key" property would be my best bet. So my question is... do Yall think it's possible to get ANY cash flow with these current rates and home prices? When I do the math it just doesn't seem feasible... and cash flow is what I want. Does that mean right now isn't a good time to buy? 

Also, I would prefer to put 3.5% down or at most 10%., but With so little down I believe I'll have to pay PMI which will also drive up the cost. Not sure if I should wait/hope I find something with a better cap rate "eventually" or if I should just buy and know that eventually my property will appreciate.... and if I'm able to refinance at a lower interest rate....then at that point I'll be able to make cash flow. Since it's gonna be owner occupied for hopefully as long as possible I'd prefer to live in a place I actually dig.

@Ben M. IT'S NOT THE COMMISSION IT'S CONTROL!

Think about, how much of the commission does the PMC actually get to keep and how much do they pay their agent?
-Usually, the majority of a sale commission will go to the agent!

So, as others have stated, it's really about having to deal with a pushy Realtor that treats the PMC badly.

There are legitimate liability concerns:
- Tenant's possession(s) go missing during a showing
- Prospect is injured at a showing and sues EVERYONE
- Realtor shows up at tenant's home and strong-arms their way into walk-thru or showing, causing tenant to file lawsuit for violation of their privacy rights.
- Etc.

Our contract states we charge owners $50 for any appointment NOT related to property management. We also will NOT give a listing agent a key to the property or tenant contact info while we manage it.

@Ben M. - What services do you need your PM company for?

Is your unit occupied or vacant?

Is it ready to rent / sell or does it need any construction management/turnover rehab?

Is the PM paid whether it’s rented or not? (Especially if it’s vacant now?)

Are there any fees to terminating the agreement early or selling with your own real estate agent? (One PM agreement I looked at said the owner HAD to list with the PM if selling for a commission of 6%, and that the agreement auto renewed for a whole year every October (whenever it was signed).

If the property is vacant, I feel like the right local agent with vendor / construction worker connections can help you get the house ready to sell. Not all agents will do any construction management (getting you bids, checking the work was done). Agents offer different services. Hungry agents don’t mind helping you coordinate a paint job on your dime so they can have a listing that looks great.

I PM several properties myself and it’s mainly about having a team of vendors in place like a landscaping crew, a handyman, etc.

Read your PM Agreement to verify they have this in writing. If they don't, you can probably push back and force them to stay involved.

As a Property Manager, I understand their concern. It's not just that they want to keep the commission from the sale (although that may play a role). When you list the property for sale with another agent/office, your PM is not stuck doing a lot of the work on behalf of your REALTOR. They have to schedule showings, inspections, appraisal, etc. It can be a real pain and a lot of work for your PM.

The ideal solution is to take over management and let your REALTOR deal with the tenants directly.

@Ben M. 

They can not force you to use them, but a lot of management companies will have in their management agreements several different types of clauses; If you sell to the tenant, they get xxx$ amount if they purchase, or they will sell your home for xxxamount. Or if you use someone else to sell the property, their management agreement ends. I would read your management agreement and see what it states specifically. Other than that, they cant force you to sell with them unless you signed on an agreement to do so.

As a side note, they can also give you a notice, per outlined in your agreement to cancel your management services. I will say its never fun to be on the other end and have to deal with the tenant and realtors who try and barge in to show, people show up at your door at all hours, and the rude ones who make an appointment and never show up!!! Its is always best to get the house vacant, do your clean up and sell the property, unless its set up and perfect as an investment property.