All Forum Posts by: Terrence Smith

@David White I suppose its the same thing. Its just asking them out to lunch is how how you get to asking them to be your mentor. At least that's how I look at it right now. 

When a "guru" asks you to pay them $5-$15k to be your mentor, they usually sell it by saying that payment is a motivator that makes sure you take your commitment to them and your investing seriously. 

The question is how do you get someone to commit their time to you and your questions, without paying them a big fee up front? The answer is network and build relationships. Introduce yourself, tell them what you've been doing, where your stuck, ask them what they would do if they were you, ask them who else they think you should know? And how do you get the face time with them to have this conversation? Buy them some Chipotle, or Moes, or Starbucks, or whatever they have a taste for. 

Remember this - in so many places on BiggerPockets, successful investors preach time management. They always say to make sure you are spending your time doing the activities that put money in your pocket. So if a successful investor, is going "mentor" every newbie who walks up to them at a REIA meeting, when will they have time for their own business? They won't - so you have to find a way to make a successful investor, know you are worth their time. And until I learn a better way - to me that means, buy them lunch and spill your guts out while you have their attention.

Great question..I've decided to figure it out. As I am typing this I am sitting in the kitchen of one of my rentals that needs to be turned over. I got the keys back this past Monday. I was here all day yesterday, all day today and will likely be here again tomorrow. I am cleaning the house, making minor repairs, touch-up paint, cutting grass, trimming bushes etc. 

I figure I will spend 33 hours over these 3 days working on this house, after which it will be ready for showings. It took 1 hour to post pictures on Postlets and Craigslist which I did earlier this week. Prospects are already calling. 

I spent $35 on a few trips to the county dump to drop off trash, $10 on lunch yesterday (brought my lunch today), $15 bucks for garbage bags, bleach and a six pack of beer (gotta stay focused). Add $50 for the tank of gas I'll burn driving back and forth and another $50 for the trip to Home Depot I'll take when I'm done writing this post. Add it up and my turn around expenses total is $160. 

Now if I were paying a PM they would want:

- let's call is 8.5%  as an average management fee. This property rents for $925 /mos. So $78.62 /mos in a management fee. For a total of $943 over the last 12 month lease. 
- the full first months rent as their lease fee. ($925)
- house cleaning  (because property managers don't clean anything themselves) $400.
- drywall/painter for the minor repairs and touch-up. Call it $200.  
- landscaper to come out and trim/cut/edge and cleanup $80 

So - if a this unit was with a property manager, I could reasonably expect to pay them around $2500 to manage this property for me over the last 12 months, turn the unit around and place a new tenant. 

Let's go back to the 33 hours I spent doing the cleanup. Now lets factor in time on the phone with prospects, time replying to emails, time doing paperwork to process applications; and lets say I will spend another 15 hours placing a tenant in here when its all said and done. So a total of 48 hours of time spent to turn over and place a tenant. And how much time do I spend managing the property while its rented? None really - I go to the mail box and pick up the rent check; make a note in the tenants file on their payment history, and print of a form late notice if required. Takes all of 20 minutes a month. 

A few points to consider. 

- The new applications from prospects come with an application fee. That fee comes to me not the property manager. That's $45 per applicant over 18 years old. $25 of that goes to Smartmove for credit and background check. You may be able to charge a higher app fee, I know a lot of people who do.  

- The tenant who just left this unit was late on their rent payment 3 times over the course of the year. That's a $75 late fee each time. That's an extra $225 in rents that came to me and not the property manager. 

So..add it all up. I spent about 50 hours in all of 2014 "managing" this unit. I've spent $160 to turn it around, saved myself about $2500 in management fees and all the while I've been here working I've been listening to podcasts on BiggerPockets. 

1 last caveat and then I'll go - I am blessed to have a job that permits me the flexibility to work remotely when needed. So I'm here, checking email, taking phone calls and making sure my 9-5 is attended to. Not everyone can do that. You have to consider that in your decision. 

ok..1 more last caveat..all the cleaning supplies, lawnmower, trimmer, paint, brushes, ladders etc etc - I already own. The cost of which was paid for over time, and not factored into this scenario. 

So that is as real as its gets when you look at the question of self management vs. professional management. As I said earlier, when I have a lot more property, I probably won't do this - but for now, I know I'm saving myself money (and money saved is money earned) and I know I am making more money then if I handed these responsibilities to someone else. I've got plenty of other time to fake the funk on starting my yellow letters campaign :-/

@Juan Rodriguez I'm with @Mark Vieira on this. Property management is not rocket science. Like every other aspect of real estate investment their are plenty of resources available to get you up to speed. It is all about creating a system and sticking to that system. I paid 100 bucks for a Georgia Landlord Survival Guide written by a local real estate teacher (John Adams) and it gave me all I needed to get started. I also made friends with a property manager (lunch and drinks!) so I could call and ask questions when I had them. 

At the end of the day, all the fees a property manager charges a tenant for late payments and move in costs and holding fees etc, can all go in YOUR pocket in addition to the rent payments. After all, fees is how property managers get paid, and not just the fees they charge you to manage the property but fees paid for various violations by the tenant is the other revenue stream for property managers. 

I don't have 100 properties. So I'm not at the point where I am spending a lot of time managing them. When I get there, yes, I will hire a property manager. But when I do, because I have managed my properties myself, I will know exactly what I am looking for in a property manager, and know when I need to move on to another. 

1 last tidbit. Managing your own properties teaches you a bunch of stuff you will need as you continue your real estate investment journey. One of the biggest is tradesmen (plumbers, electricians, handymen etc). When you manage your own properties and you need help in these areas its you that is going out and finding them, and talking to them, and working with them. And those are valuable relationships to have in many other aspects of investing. 

Get a book or 2, print the landlord tenant law for your state/county off the internet, go to a few apartments near your home and ask for a copy of their lease (pretend you want to live there) and you will have the basic building blocks for all that you need to get started. 

hope that helps. good luck.  

@Guy Gimenez  care to share what kind of clause can be put in an assignment agreement that forces the end buyer to answer your calls and be responsive to your attempts to connect with them prior to closing?

@Jarrell Smith  Is lining up a backup buyer an option for you? If you explain to them your situation and let them know they will get the deal if buyer #1 falls through? I've never been in this situation, but I'm thinking that's what I would try next..while also hunting down buyer #1. 

How's it going @Chantal Moss ?

Honestly this deal looked like one to walk away from, but your getting some good advice here. Hope your taking it serious and protecting yourself. 

congrats and thanks for sharing. 

question about the Craigslist Ad - what were the contents of that ad? Was it just a "We buy houses as is" ad? 

@David White Don't let that "cliche" bias stop you from searching for a mentor. I'm in the same boat trying to find someone who will sit down with me on a regular basis and knowledgeably discuss real estate investing. Use the tools on BP to find investors in your area, ping them offer to have coffee or lunch. I just did the same with an investor I met through BP. We had lunch last week and talked investing over tacos. I paid. It was well worth the time and expense and now I have someone local to me with more experience who doesn't mind me pinging them with questions. Good luck. 

@Rosanna Gonzalez - What @Luis Montanez has written is very close to my view of the Cobb County market as well, read it over and over until you grasp it all because I agree with just about everything he is saying there. 

Also - might you be misinterpreting what "off market" means? To me that means homes for sale that are NOT listed on the Georgia MLS or FMLS services. Could it be you are open to 70k-80k purchases because those are the list prices you're seeing when looking up houses online?

If I'm right, you are doing exactly what I did with my first rental properties. Went to the MLS and picked out one I liked. Now that I've spent more time learning about investing I understand that many deals get done without ever seeing the MLS websites, and the keys to long term success include knowing how to find and close those types of deals.

I'm going to send you a PM with a book I recommend you and your husband read as you start your journey. It will help you get your minds right about what truly makes for a good long term real estate investment. Good luck! 

Did I get the date wrong - I have a BP Webinar in my calander for tonight at 8pm EST. I remember registering for it, but now can't find any confirmation emails. 

Anyone have the login details?

@Parker Stiles 

Pretty sure the answer to #2 is your mailing to the forwarding address of the owner on record as the property tax payer. So if I own the property as a rental, I have to tell the county where to send tax related mail, and that's the address you get in your list. 

As for question #1 - I can't clearly define it for you, but I can say that the pro's I've seen on BP all suggest to keep that setting. So when in Rome..

Good luck.