All Forum Posts by: Jose Remor

Hi Paul,

I'm in a very similar position as you and decided to shutdown 401k a year ago. After couple more books and learning I restarted my investments to the limit of my W-2 employer match. I see others suggested that in some other answers as well and I believe it's a good strategy.

Check your options to use 401k self managed to invest in real estate. Your results stays locked in the 401k but worth it.

I'm curious about your screening process. How did you end up with them. With all this "art" in place, I would guess they knew what was going on and probably have "experience" with the event.

Quote from @Kevin Sobilo:

@John Williams, a few comments:

1. IMO the 1% is just rule of thumb for filtering potential deals. If you are looking for cash-flow, you can apply the 1% rule and scan through many deals and then only focus on ones that have potential cash-flow. That's about all its good for.

2. Cash-flow is KING! Yes, appreciation has the potential help you hit the jackpot and make you more wealth. However, cash-flow is better for a number of reasons. Perhaps the most important of which is that its more predictable and more CONTROLLABLE. Except for forced appreciation, you have no control over appreciation after you buy a property whereas you can make decisions along the way to improve your cash-flow. Raise rents, reduce expenses (shop insurance, appeal taxes, refinance, etc).

3. You mention tax benefits. That is where cash-flow shines as you have an income to use those tax benefits with.

4. Appreciation is EXPENSIVE! Yes, it costs you money!!! Its locked up in the equity of the property and it will cost you money to touch it. If you sell, you pay closing costs, commissions, taxes (including depreciation recapture), etc. Even if you refinance, you have origination costs, appraisals, etc.

So, while cash-flow is tax advantaged aka CHEAP; appreciation is EXPENSIVE!

5. Most beginning investors need to and should invest for cash-flow. Most small time investors can't afford the risk to buy and hold a property that doesn't make money in HOPES that it appreciates enough. In additional new investors are more likely to understand cash-flow than how to predict appreciation. 

Totally agree! Nothing else to add.

Quote from @Max Yuan:

Management company only really become useful when you reach economy of scale. With a small portfolio, it will eat away at all your cashflow. Manage it yourself until you cannot anymore.

Completely agree. I started without enough knowledge to decide not to. I think I know better now.

Quote from @Drew Sygit:

@Jose Remor you PMC should have phone records to prove they made the calls they claim.

We track EVERY call, text and email for this reason!

Tenants & contractors always claim no one called them or they called and no one got back to them.

Those are the types of events we have one shot to not lose trust. I'm not going to ask them for proof, if we get to this point something was done wrong before. Having a PMC myself (probably will never happen and I'll just manage my stuff) I would never allow my clients to have to ask for proof.
thank you for the insights!

Hi @Troy Gandee,

I have prepared myself for this for a while and build myself the system to manage the rentals. The flexibility of being able to fix it when I find an issue will help me a lot. Maybe one day I could sell this system as well, we never know. Right now it's simple and does the job by solving issues on typical systems. I'm myself a tenant right now and I see what are the pin points from the tenant perspective. I'm solving all those points with extra stars :).

Hi @Josh Bowser

Yes GVL market is not bad but it has some downsides. Tax is to blame, inflation as well. Specially in South Carolina taxes are a killer. Coincidence I received the tax statements yesterday and there they come with increases and worse services. This is crazy.

Sent you a connection request, I'm in Atlanta area now and looking to add soon another property to the portfolio.

Hi @Nathan Gesner

I agree with you and I have started with The Self-Managed Landlord and will take a look at the book you suggested, very likely will read it as well.

I'm not relaxed right now. That's good fear to have and it's driving my need for education. Thank you for the list of things they need to transfer. I added some points to my list now.

Hi Michael,

I have evidence. I was contacted for the required service and provided all the information to them on how to ask for warranty as well as use the electrician direct contact that is printed in the kitchen cabinet. Two weeks later they email me saying they tried to work with the warranty team and the electrician and got no answers. The email was also saying that the South Carolina law forces them to give an answer in two weeks and that was the last day! I couldn't live with the risk. Contacted the warranty and as you mentioned they are experts in delays (nothing new here), but I also went ahead and contacted the electrician.

Both later mentioned that they never received any call about this issue. By the way the electrician was mad when telling me he was never contacted. He demonstrated to be very concerned about his image and answered very fast, scheduling a visit for the next day directly with the tenant. 

My contract with PMC doesn't state anything about them not working with warranty - if a PMC does it, this is a mistake in my opinion. Not because it's hard you should not do. If they are providing a service of managing my property, they must manage it no matter what is needed and charge me for a service under warranty would be even worse.

I also had an interesting event. When the rental was published, they added a mechanical lock with the house keys inside. Two weeks later I stopped by the unit (was passing by and decided to take a look) and found that someone was using the shower and leaving food and clothes in the house with visible intent to return. Initially the only person with a key was the responsible manager from the company but we found youtube videos showing how to break it - can't assign blame but something was not smelling good. I changed the lock to a digital lock. This person got let go weeks later of this incident. I called the CEO of the prop management company but he didn't want to tell me the reasons, just stated that they have high ethical standards.

This person that got let go was really fast on answers and I enjoyed working with him, reason why I was confident this management company was a good one. The person that replaced him was and still is really bad on communication. Slow on answers and have hard time to address my concerns by not understanding simple questions. The person hired a company to clean up my 3rd house and gave me a surprise of 400 USD bill for the cleaning when it should be at maximum 150/200. No communications in advance about the cleaning which I believe was not needed.
As we were living in it, we left the house very clean. The person probably never visited the house and just sent cleaning services without asking me if that was necessary.

I think I have reasons enough to stop using them, other than the money I'm saving by doing their work anyways.

To answer your question about interview new PMCs, I believe I have a chance to become a PMC myself. Not sure yet, but will learn from these 3 units and the new ones I plan to add soon.

Thank you for the insights!

Hi Rayn,

thank you for the insights. I'll kick off the notifications tomorrow, starting with the property management company, starting by asking them to let the tenant know this is coming. I'll do one at a time, hoping for no retaliations.

Hi Casi,

thank you as well for the rent increase insight. Instead of a % increase I'll do a market research and see how off I am. I know I'm off, just need to bring it to a fair value.

I really appreciate you both taking time to give me some insights. I'll post here how it went.

Hi all,

I'm new and found the bigger pockets after reading "How to Invest in real estate" book from Brandon and Josh. Very good book, thank you both for writing it!

I started long ago with no education in real estate. Started with a condo in construction, sold it when done and bought a beach land, sold the beach lend and bought 2 rental townhouses for rental in Greenville. Then got a new better job in Atlanta area and rented the house I was living in Greenville.

Up to here I had no education on real estate. Now I have a little and its time to take actions. First my units are  managed by a local company that charge me between 8% and 10% monthly. High price for low quality service. Slow answers. Let one Tennant hanging with defective outlets in the kitchen for 2 weeks when the townhouse was it was under warranty. Lied saying they contacted the warranty.

Managing it myself will save me 500+/ month which is a lot. But I'm somewhat scared. I have some web design skills (I'm an engineer, so easy to learn new programming languages) and I'm currently testing my new system to manage the tenants. Make sure ill share it here with others for testing when fully ready. Maybe one day I can sell this system, but right now is for my use and under testing.

Since the houses are occupied and the first is reaching its contract limit of a year, its time to renew, increase the rent and I don't even know how to.

I would appreciate any ideas on

1) do a smooth prop management transition with proper Tennant communications.

2) I don't want to move all properties all at once, so I can build experience and also allow time for my contract with this prop manager to expire. Is that dangerous?

3) how to manage the contract renewal and define the new rental value. As this was my first rental and was priced really low. I'm thinking a 3% increase is a fair number, knowing this is what companies are giving their employees yearly. Thoughts?

thank you all in advance!