All Forum Posts by: Kenneth LaVoie

We own 34 units in Central Maine and want to really step back into the shadows and have the portfolio managed. However, I LOVE the paperwork and reporting, balancing checkbooks, creating documents, etc. and want to keep that part. My wife does the leasing and really would love to outsource that but she's a "control freak" (and rightfully so. She's a true bad-*** leasing agent). We have a young lady whom we've gotten into the business by giving her 13 units we sold to another party. She's open to a "blended product" whereby we handle the office and paperwork and she handles the boots on the ground part. 

So my question for you property managers is, "what percentage of your time, roughly, is spent "boots on the ground" vs. "hands on the keyboard"?  I managed the 13 units in question for one year and found at least 80% of my time was at the desk. Some was "one time" learning how to setup Quickbooks and do more precise reporting vs. how I do reports myself. But even after accounting for that, very little of my time was spent boots on the ground. We have class B tenants so they're pretty "low maintenance" in general. 

My thought was to offer her 4% or hourly rate with 4% max gross income  for 

Fielding calls (maintenance, emergencies, questions re policies, complaints, etc.)

Inspecting units (bi annually, more in questionable situations)

checking for leaks twice per year (part of inspection, putting blue tabs in toilet tanks, etc.)

driveby's once per week (check for trash, exterior problems, etc.)

We would do everything else. For leasing we'd give first month's rent with a MAX "once per year" per unit and a 50% refund if we had to evict for any reason, or there was any unreimburseable damage or other fees (i.e. if she doesn't do a good job placing a tenant, it costs her!)

These are just ideas, not set in stone. But paying 10% management fee is so unthinkable to me (whether it's earned or not). I know after one year of charging 8% to the man I sold my buildings to, that 8% was mostly gravy. I probably earned the highest hourly rate I've ever earned managing property for 8% of gross income. Of course one was an 11 unit that I'd owned for 7 years so it was a little easier. 

Thanks all!

@David Hutson - I have some of these sites bookmarked for future...love to hear more about note investing from you if you don't mind? I've toyed with it but not bitten the bullet. We already hold the paper on a 6 year baloon 78K mortgage on one of our own properties but once that's paid I'd like to move into paper and crowdfunding deals. 

@Andrew Angell - Thank you for mentioning the infinite banking concept. I do consider myself a bit of a finance geek but even I have a tough time fully wrapping my mind around the whole thing. I've read the book, spoken with two providers, etc. and would LOVE to do it. I'm 52 and could afford to tie it up. I LOVE the idea of borrowing against it, but having your entire balance still get interest as if you hadn't touched it (so as long as what you're doing with the borrowed funds earns a return, you can literally "double dip" ... and I DONT think you're charged interest on the loan/withdrawal are you? (just what you "charge yourself" right?)  

Have you really gotten 5% though? I think that's the whole thing that stops some people .. the projections are that: projections. The whole concept starts to fall apart if your dividend/return gets much below that. 

Thanks again. Just wanted to throw some ballast in in case you were flamed! haha!

What what fantastic replies. It does verify for me that purchasing beachfront in Florida might not be the wisest thing to do. 

@katie magoun thank you for your thoughts on Sanibel Island. Heard so much good stuff about it I think we may consider renting there, if even for a quick jaunt down before the end of this summer the scope it out. I have entertained the thought of renting a house or condo year round that I could possibly sublet if I wanted with the thought that that would still end up being cheaper than purchasing a condo and would allow us to travel light and have a place to escape 2 at a moment's notice. This is not a typical thing to do, renting a place year-round only to visit it 30 days a year or so, but I will have to crunch the numbers a little more.

@rush wall I hadn't thought of dipping my toes into the post-hurricane market. I don't think I would like Puerto Rico although I shouldn't say that because I've never been... What instinctively I would lean more toward one of the other Caribbean islands.

Carl! A brother from Maine! Glad to meet you. I'd love to keep in touch with how you are finding being a snowbird. We also were thinking it might be a good idea to rent. We plan to travel the world. I'm semi fluent in spanish now, and have been practicing an hour or so a day 365 days a year, for 3 years so I'm anxious to immerse myself in a spanish speaking culture (I'm half deaf so it hasn't been easy!). 

We actually toyed with the idea of renting year round once we knew we'd spend a few months down there so that we had a place to run off too any time. I actually ran the numbers and it's FAR cheaper to rent year round than buy a 300K condo even factoring in VRBO'ing it to a certain extent. 

We anticipate domiciling in central or south america at some point but have dozens of places to venture to so we've resisted buying. As you know, we'll probably both make more money buying multi units in Central Maine vs. vacation rentals any day, so even buying a few VRBO's here and there for fun and to  have a place to crash doesn't really make alot of financial sense. We talk each other out of it about every 3 years! The "draw" is our personalities. We both love to have a place of our OWN vs. renting, regardless of how financially silly. 

Have not been to Sanibel, but heard great things about it. My Dad lived in KW but that's too expensive and too removed from everything else for our tastes. It is our first destination when we start traveling without our daughter (now 17). We have friends that have an "inland" condo in Venice and they absolutely love the area. So besides Cocoa Beach on the Atlantic side we're pretty sure we'd hang out somewhere between Sarasota and Naples! 

Let's keep in touch! I'll PM you with our websites as well. 

Basically we've put our buildings for sale at prices which, while still fair to a buyer, would financially trump keeping the properties (even if management were free!) Meanwhile, we've actually sold one, managed it for a year for the buyer, and then enabled a young entrepreneurial lady we know to become a property manager and turned it over to her. She is open to a "blended situation" whereby as we start to travel, we hand over more and more "ground time" at a vastly reduced rate. In managing the 11 & 2 unit for our buyer for one year, I discovered 70% of my time was office, communication, etc. vs. actual "on the ground" manangement so I think we'll be ok. We really need someone to answer the phone and take care of things when they go wrong and handle all leasing. I think we've found an affordable "quasi" solution and I thank you all for your input. 

Good Day!

My wife and I keep getting the itch to buy a VRBO'able vacation condo, preferably on the Gulf coast. (MUST BE Ocean front or nothing) We already own 34 units here in our own town of Waterville Maine, but we plan to travel more and more. We are age 52 and are already semi retired and feeling the itch ... the VRBO condo would serve the purpose of A.) Having a warm place to fly off to at a moment's notice as long as it's not rented at the time, as well as a great place to hang out and travel FROM. Sort of a travelers "HQ" if you will. (Flying and cruising from Siesta Key will be pennies on the dollar vs. Portland Maine). 

Questions: 

What are some decent areas on Gulf Coast. We have friends that have condos in Venice but it's not a good place for VRBO's that I know of. 

Is this a good time?? My perspective is that we're again at the "peak" or at least certainly a seller's vs. buyer's market. 

What are the "best" places to buy a VRBO on the West Coast?

Thank you all!

Just need to brainstorm with anyone interested: We've put a great deal of time and energy into marketing our properties for sale. But to make it "worth it" we need certain prices. I suppose they are "retail prices" creating a 7-8% CAP rate overall. We ended up selling one 11 unit, a duplex and single, which allowed us to pay off the mortgages on two 7 units and a SFH. This almost entirely offset the loss in income from selling the buildings. Nice consolidation. We're in good shape now. But we want to "retire and travel" soon and want to be done. Our prices are such that we fear the appraisals won't come through and we don't want to lower our prices. I don't like wasting time and I feel like that's what I'm doing ... We could simply hire a manager but we could also just create a "quasi-management" situation where we have someone that is boots on the ground and we continue the "office work" which is fine with me. (It's my favorite part actually). Have any of you faced a similar situation? I think it's easy to say "just offload the management" but I don't think a managed portfolio of buildings is quite the same as a managed portfolio of stocks and bonds. (i.e. there's still some risk, stress, etc. involved) Not to mention that paying 10% + leasing fees "goes up my bum sideways! haha!" Without divulging my entire financial picture, our networth is roughly divided equal between equity in our buildings and retirement accounts. If we sell any cheaper than asking price, we will "take home" less money than if we keep the buildings (even paying a full priced manager). So it's a little bit of a condundrum. Leaning toward keeping forever...avoid the tax hit, more income (on average) and as long as our systems are in place, we should be able to travel in peace. I think part of the resistance is that we worry and we care. So that won't go away unless the buildings go away (maybe invest in some psychotherapy for that part! haha)

Ok, just looking for thoughts here, nothing more. I feel like there's somebody out there that must be going through the same wonderful decision. It's really a good problem to have. No complaints!

Thank you all. 

In my in my case we actually have enough to pay off all of our mortgages. I'm only looking at this Fannie Mae type option to save money over the course of our holding period, now that we're anticipating owning them for life. But I did think of another option. I've got two of these 3/3 loans, currently 60k each with 10 years left. I can take out a cash out refi on my own residence and retire one or both. With my portfolio lender bank, they will let me slide with no appraisal and I'll be about to take out 40k additional, 4.375% 30 year, $500 total closing costs, bi-weekly, one point (I can do no points but the rate will be .5% basis points higher). I take out 20k of my own money plus the 40k and retire 1 of them and my cash flow increases $500 per month. Taking 20k out might be prudent because the stock market is in the top quintile historically (valuation wise). 

@Robbie Wyness - thanks for the currency reminder! For labor, yes, I'm always curious about labor hours. I don't really know how to do much of this stuff (well enough to satisfy me, anyway!)  so I'm always "sneaking around" looking for data to see how fast or slow my man is! He's freaking awesome but I still would like to know how he compares.