All Forum Posts by: John Michael Roberson

I’ve been working with one that has everything in-house already. I didn’t really like the 100% of late fees portion though. Especially coming from a PM that has much lower fees and gives the owner 100% of late fees. I feel their 8-10% management fee should account for getting payment even if it is late. And that should be the reasoning for the PM to get better quality tenants. If I have to pay 10% a month then they also get 100% of all late fees, and a month’s worth the placing fees, I’ll just do it myself.

Recently acquired 3 units in 38119 and 38134 and am almost finished renovating two of them and they will be ready to list for rent. I am curious of what PM’s everyone would recommend for the Memphis area? 

I’ve been in touch with a couple of local PM’s and their fee structure seems….well.. bad. They take anywhere from 75-100% of all the late fees and then charge a placement fee. The placement fee I understand, however, with the way they have their late fees setup, it’s advantageous for them to put in late paying tenants because they end up reaping all the benefits of late fees, leaving me with nothing to be gained at all by a late rent payments. It’s also set up to be advantageous for them to pick tenants that will have to be removed so they can get more placement fees. I have an excellent PM back in GA and they send 100% of all late rent fees to me so maybe I’ve gotten spoiled by thinking that’s how things should be? I’m really looking for everyone’s input here since I’ve only been in my investing journey for a little less than two years.

I have been in talks with a GC in Georgia and his method of building is: He builds everything at costs and doesn't include any markup or fees, he oversees everything, I only supply funding, and we split 50/50 the profits after paying back the bank and all other associated fees.

Since I am only supplying the funding for the deal, is there a way I can structure doing this so that this is considered passive income for myself since I won't be involved with the construction or overseeing the project? I have some rentals and have more depreciation than what they rent for so if I was able to classify the new construction as passive income, I could then use the "losses" from my other passive investments to help offset the income. For additional reference, I live in TN. Married, both W2 earners at 225k combined. I fully plan on 1031-ing every property I ever own as a rental, so I'm not concerned regarding depreciation recapture.