All Forum Posts by: Joseph S.

I'm probably 8-12 months out before I'd consider buying, but I want to "ease" my way into multi-family when I get there and would be looking for a duplex/triplex/quadplex.

@Fred Heller Your points are well taken and I think I'm seeing that no arrangement perfectly aligns interests: it's a classic principle/agent dilemma. Conflicts of interest are also present in the standard flat fee arrangement so I guess it's just a matter of minimizing those conflicts by finding a PM you really trust.

@Michael D. Your points are well taken and in particular I've thought most about your last point of the PM doing shotty repair or no repair for short-term gains even if it is at a long-term cost to the homeowner. I guess it comes down to which structure has the least flaws. I'm just thinking that if I have the PM with me in considering different properties, it's easy for him to claim that a given property will offer a good return if his incentive is to get me to buy a property fast so that he can start making money (either because he is the agent also buying the property on my behalf or because he will start his PM duties); but if he has skin in the game, I feel like I may get more accurate information as opposed to the most optimistic information.

What are people doing to mitigate concerns that the PM is making the best repair/maintenance decisions for the property? Is it purely a trust thing? Do you guys have clauses that prevent the PM from getting a kickback or "referral fee" for the people he hires to do the maintenance work? A kickback or "referral fee", in my opinion, is equivalent to taking directly from the owner because if a repairman is willing to give a $50 kickback to the PM for doing $500 of work, he could have just charged the owner $450.

I currently own two SFHs in Florida and am looking to learn more about multi-family properties and would consider properties located in Florida, Arizona, or Arkansas. Real estate is currently just part-time for me and it will likely stay that way for the foreseeable future.

I'm new to BP and am considering doing a 1031 exchange on one of my 2 SFH in order to get a multi-family property (likely a duplex/triplex/quadplex). I currently am an out of state landlord and feel that I have managed my 2 SFHs with some success, but I definitely would want to use a property manager if I did a 1031 exchange for a multi-family property as I would likely be an out of state owner again.

Has anyone gotten a property manager involved in their actual buying process? Here is my thought: Because I work full-time in a corporate job, I'm thinking about getting a property manager involved so that as I look at prospective properties, he/she can use their expertise to advise on the kind of rent/maintenance/repairs they would expect at such properties so that I can make informed offers. Also, I would want them to have some skin in the game, so instead of just paying them a flat fee (say 7 - 10% of gross rent), I would prefer to pay a smaller flat fee, but give them a bonus if the property each year generates a profit above a certain threshold (say give them 30% of profits above a 5% cap rate).

As someone who doesn't know as much (yet), I feel like this kind of partnering makes sense to align my property managers incentives with my own. That way, he is incentivized to find quality people to make necessary repairs and to get the best rates possible, instead of just hiring his buddy who gives him a kickback. I know this may sound distrusting, but I'm a big fan of aligning incentives so that everyone can win.

Has anyone else tried this? Would potential property managers go for it? What do you all think about this approach?

Yes unfortunately it did not end well: http://www.cbsnews.com/news/guilty-verdict-in-kidnap-murder-of-real-estate-agent/