All Forum Posts by: Marcelino Chua

Heh heh :) That sounds fun... :roll:

Actually, one of the main reasons I'm starting off with a PM for my first property is so that I can learn the ropes at my pace and not get overwhelmed...

Great info... I've at least verbally gotten the answers to the points you mentioned... but are they supposed to have all their policies and procedures documented such that I can ask for this... I know that the existing PM doesn't seem to have this info documented... all I have to go on are their verbals and the state of the existing property.

I suppose I can ask for an example of their monthly/annual financial report.

Well... neither PM mentioned the collected rents as being the basis of their Base fee... the current PM says it's $40 per unit (though I'm a little surprised that it doesn't matter whether the unit is a 3Br or a 1Br... I suppose the overhead of a 3Br vs 1Br isn't that much - so I guess that's ok) The new one just said $175 over the phone... didn't even ask about current rentals or anything like that...

Well... what both the PMs said is that for things that don't need a licensed plumber or electrician, they have "handymen" that do this "unlicensed" work... for "licensed" work, they'll have the local plumber/electrician do the work at their rates (they gave a ballpark of anywhere from $60 to $120 per hour) and they said I can use my own plumber/electrician...

Do the PMs generally give out examples of these types of reports? I suppose I can always ask... I can see the problems with abuse of the maintenance... though I've seen the last years bills from the current PM and they don't seem excessive (another track record thing). Though charging this out at $45 per hour does seem pricey to me for handyman work...

Anyway, thanks for the great info! I'll definitely ask both companies for references and then do what you said... check out the properties in person to see what the curb appeal looks like...

I don't seem to have much negotiating power as far as their fees go since I don't have too many other options for PMs in this area...

Sure! So, the way I got into this REI thing is that my wife and I have been talking for a while about finding another investment vehicle... Stocks have only been minimally successful especially after the crash and all that... Anyway, what got me started on this REI thing was the books by Kiyosaki... They all sounded so good!!!

But then (LUCKILY), after visiting and reading on this forum and other books, I got a good healthy dose of reality... add to this the fact that I live in a state that's extremely tenant-friendly/landlord-hostile... Then horror stories from some people... etc. etc.

Anyway, I decided that if I didn't do anything now, that I'd always be afraid to do something... so I started looking (Jan of 2007)... and it took me until now to get something that's workable...

My criteria for my first multi is that I wanted it to be near where I live so I could keep an eye on it... and I wanted it to cash flow... I was targeting a "cash on cash" return of 5%... and I plan on having a property manager handle the management...

So here's how the numbers looked (The building is a 6 family: 2x3Br, 4x1Br)...

Purchase Price: $290,000
Total Monthly Rents: $4275
Expenses (50% Of Rent): -$2138
Mortgage P&I: -$1558 (based on $217500 Loan at 7.75%)
Projected Monthly Cashflow: $579

I realize I'm pretty far from the 2% rule here, but situationally, it's one of the closest I could find in my area... I know I read somewhere that it's hard to cash-flow properties in certain areas of MA... unfortunately, this is close to some of those areas... but I believe I can still cash flow it... though the primary thing making this possible is the 25% down...

Of course, I'd prefer to be better leveraged, but I just can't make the numbers work because the interest rates for the 90% loans are outrageous - and I have no idea how to get a 100% loan anyway... I'm sure it's just because I don't know where to get the better rates for the loans amd stuff... maybe some of you gurus can point me in the right direction... :)

The building itself seems to be very well maintained... I had a home inspector look it over and he said it was in very good condition... It's in an "ok" section of the town that it's in... there are some bad areas (drugs/crime) in this town...

There are still a lot of unknowns for me at this point since I'm new to this... and I'm hoping that by reading here and heeding advice, that I can avoid the mistakes that have been made by other people... Top worries in my mind right now are:
- Which Property Management company should I use (if you guys have any recommendations in the leominster, MA area - that would be cool)
- One of the 6 units does not have a lead certificate and how much of a big deal this can be.

Marcelino

Hi All,

Been reading the forums for a while as a guest... just recently signed up...

Soon to be a new multi-family owner... Been getting some good info from this site!

Marcelino

Hi All,

New to this forum... And a new "potential" investor to boot...

I'm in the process of purchasing a 6 unit property (target closing date is in Jan2008). So I don't actually own the building yet... Right now, I'm in the process of selecting a property management company. But I've got some questions...

I've read that PM fees should be around 5% of the monthly rental revenue - but is that the high end? or the average? Here's why I'm wondering...

The current PM for the building is charging $240 a month base fee (rents total $4275/month) so they're at 5.6% of rent - and I've met with them in person and it seems that they've kept the property in good condition (the sellers say that this PM has been managing the property since they bought it about 7 years ago). In addition to this base fee, they charge a full month's rent to find a tenant and $40 per hour for non-licensed maintenance.

Now, I've spoken with another PM in the town... and (over the phone) they said they charge $175 per month base fee, and half a months rent to find a tenant and $20 per hour for non-licensed maintenance.

So, I'm wondering if that sounds too good to be true... My dilemma is obviously the difference in fees (i.e. cheaper) vs. the "proven track record" of the PM... Granted, "past performance is no guarantee of future behavior" but, it's there for what it's worth.

I have no idea if it's a "you get what you pay for" situation or not... But I'd be more inclined to believe the "it's too good to be true" saying if the price is really too good to be true...

What's your experiences out there for management fees? Is 5% the high end? or is that the average?

Also, if anyone could recommend or point me to property management companies that handles 6 unit buildings in the Leominster, MA area, I'd appreciate it... I've only been able to find these 2... the others seem to only want to handle the large complexes...

Thanks!
Marcelino