All Forum Posts by: Johnny Drago

Quote from @Carlos Ptriawan:

Quote from @Johnny Drago:

I had a property manager extend a lease on a unit M-to-M after the lease expired May 31. Unit became available middle of August after they moved out but wasn't ready to be rented out until the end of August. Now it's the first week of September and unit is sitting vacant. My question is wouldn't it have been more prudent to decline the M-to-M option and end the lease so that the property could be marketed during a prime rental month like June? I'm pretty annoyed by it and am venting. 

 If it happened to me, I consider that's blessing. Less headache ! I don't like turnover fee and new tenant.

I have one tenant that has been month-to-month since four years ago. Guy initially want to come back to Mexico for good but he keeps changing his plan.

 The problem is now i'm facing a vacancy at a time of the year where the pool is smaller than what it was in the summer. i'd gladly take a june/july vacany over a september to who knows how long vacany when the application pool is smaller.

Quote from @Tim Bratz:

If your property manager isn't clear on the expectations/policies you want to have in place, it will give them a significant amount of leeway to sort of do what they want, which is what it sounds like happened here. 

Being proactive can certainly help in these situations, making sure your PM knows how you want to proceed/what you want to offer at any given time is super important. 

I'm definitely learning that now. Had another property manager sign a lease longer than a year that expires in september 2024. I have to tell these guys to only end the leases in the spring/early summer.

Quote from @Michael Olmstead:

It sounds like the PM got lazy and that the lease auto renewed on a month-to-month basis. MTM is fine at a higher rate, in certain instances. The kicker here is that the owner lost out on the prime leasing months over the summer and is now heading into the fall with a vacancy. Demand definitely drops off of a cliff after school starts in late August early September. Seems very negligent on the part of the PM and this is all too common with some PM companies. It really still ultimately falls on the owner to be aware of the timing and keep the PM's feet to the fire. 

 Exactly. Yeah sure the extra tenancy for a couple months was great along with the added income but I'd still rather have my property marketed in June than in September. I'm not sure if it's negligence more so than it is lack of communication.

Quote from @Sam Yin:

@Johnny Drago

I'm not sure how much experience you have with apts/PMs in your area or as a whole, but from my limited experience, your PM did you good.

I have had units empty up to 3 months after renovations. It's better that you can get a tenant out amicably and dent it out the best quality tenant from your application pool then to be haphazard in your haste.

People will always be looking for places to rent. I do not put too much stock in timing or seasons. Just last month, I had 6 vacancies and 2 evictions going on at the same time. One eviction had not paid in 5 months. 3 of the vacancies have been vacant for 3 months. As of yesterday, one evictions is out and we are going to begin rehab. 3 of the 5 vacancies were filled with quality tenants at top market rates.

In the past, when I rushed it, I ended up regretting more often than not.

 Wow that's insane. I hope i'm not put in that kind of situation. I have decent enough reserves but those kind of tenant issues would put me in a bind. 

Thanks for the insights everybody. I'm relatively new to RE investing so I still have a lot to learn. Rules, laws, agreements...

They paid half a months rent for August which enabled them to stay half a month.

I just dread having a vacancy at this point in the year. I fully expected either a lease renewal or a vacate in June and the Month to Month threw me off.

I had a property manager extend a lease on a unit M-to-M after the lease expired May 31. Unit became available middle of August after they moved out but wasn't ready to be rented out until the end of August. Now it's the first week of September and unit is sitting vacant. My question is wouldn't it have been more prudent to decline the M-to-M option and end the lease so that the property could be marketed during a prime rental month like June? I'm pretty annoyed by it and am venting. 

I do it. I live on the east coast but have property managers out west even in your state. It can be done and it's easier today than it ever was. look for property managers and real estate agents and contractors and lenders with great reviews.

Look for a property manager that duals as a real estate agent. Their management of the property acts as a carrot. If they do a good job managing, they get the listing whenever it comes to selling. I wouldn't tell them that directly but it should be in the back of their minds.

I'd keep it as close to the mountain range as possible. You can get a decent entry level home for almost the same price as what you'd get in an area east of say....littleton at this point. There's always a lot of traffic heading into the mountains on the weekend so it seems like it would be a good selling point.

I'd be careful about leveraging in this market. If you must leverage i'd seriously look at New Albany Ohio where they are building those intel chip plants. 

Putting that money in a low cost area (central pa?) and milking that cash flow on paid for properties sounds like a plus in this market. Your downside risks are limited and you can save that cash flow for a down payment on a rental in another market.

As for property managers. I recommend finding one that doesn't just manages homes but buys and sells homes. That way they have a carrot  over their heads. If they do a good job, you're inclined to let them be the seller agent. That's a big incentive for them. And don't be afraid to get outside vendors not affiliated with the property manager to do repairs and maintenance. Being out of state you want to try and keep everyone honest. Look for vendors that have good reviews. Get multiple quotes, ask the property manager or realtor if you can set up for them to visit the property and check on work done by contractors. Basically a liaison. 

cost of goods won't go down. Wages are going to go up. Millennials are in the middle of their 1st time home buying era. People aren't going to be inclined selling a home at a low interest rate to move to another house with a higher rate.  Certain locations will have a softer pullback compared to others. I think it's pretty obvious what those locations are. It's a bummer to those looking to sell in the next two years but once inflation cools off and the fed cuts rates again, it's going to be pretty hectic.

It's the bubble markets that would concern me the most. And those are the markets with the most homes being bought by investment companies lol.