All Forum Posts by: Max Balesteri

I'm a firm believer that the buyer should thoroughly do their own due diligence. This is their responsibility since it's their investment and no one else. The sellers can, and do, market your properties to sell them. Hopefully legally and morally too, but as a buyer I do what I can to find out for myself. Any buyer should expect the seller to tell them a lot about the good and brush right by the bad. That's my approach to buying, as for selling I personally would disclose anything I know. Keeping it to the basics though, I always feel that someone is trying too hard to sell me on something when I get too much info myself and that kind of sales pitch isn't my thing. Just give true hard facts and be open about variables for them to consider in any way they're comfortable with. It's important to me that everyone feels good about the deal and I'll try to be helpful, but make no promises. Once again, it is ultimately the buyers responsibility to handle their due diligence and I likely won't know everything myself. Acting as if you do is just asking for trouble.

I hear you there Mark, it just sounds like some aren't reading it all before commenting. To me when someone has a magic number like $300 they clearly have more figured in.  I mean you can't bank on getting that kind of "net" return, fully leverage at least. Now it might not be the same way you look at your deals, or maybe even the majority on here do, but it's "a way" and it could help others as long as the whole story remains in view. Remember that people use different methods to get to the same/similar results. 

I personally like what @AnishTolia mentioned using percentages looses something when you compare properties ranging from $700-$3000. An investor needs to know all the details about what they're evaluating. This also ties into why so many people determine a particular niche and become experts in it. When you know your particular model well enough you'll be able to adjust your percentages or $ amount to suit it.

I'm just saying that it's incredibly important to make sure people know that the $300 figure is part of what Joe's talking about. You can't make a comment about part of what was said and just ignore such a major component, as some have. New investors reading this might think that he's just using PITI and a small PM fee. That's where people go terribly wrong.

I'm having a really hard time reading all of the people here that are knocking @Joe Villeneuve for his method. I thought this was a group that wanted to help one another, not aggressively go after someone for seeing things in a different way.

He said that $300/mo is his magic number and if that makes sense for him why would anyone else think they can doubt him for something that's working for him. I understand questioning it and that could be helpful, it's the aggressive nature of some that I have trouble with.

I looked over some of my numbers, which are similar to what's been mentioned here (8.33% Vacancy, 4.17% PM leasing fee (1 every 2 years), and 10% maintenance/capex) and see that these "contingency" funds equal around this $300/month. Maybe I'm wrong, but it says to me that many of us are looking at things very similar, but through different glasses, I guess you could say.

Sorry for the rant, but I get really tired reading the close minded negative comments and felt like saying something today.

I see this posting was from a while back, so I'm wondering if you're still working with these PMs? I'm looking in the area and have spoken to one, with the other on my list to call. Would you still refer them today? Any information you could provide would be great.

Thanks, 

Thanks for the input Curt. I'd like to know your thoughts and/or experiences on the lease renewal fee. Of course I want to keep costs down and don't see much reason for paying someone this fee when the whole service isn't being provided. But I see the time and service of the PM being very important(especially to an out of area guy like myself) and there would be reason for them to receive some compensation for this. Is it common (from your experience/knowledge) to pay the full fee, no fee, or some other fee?

I guess I struck out with this post huh... I was really hoping to get a lot of peoples thoughts on this. 

Thanks,

Max

I'm trying to put together a list of questions to ask property managers in my initial search and would like to get some suggestions from others, in the attempt to make sure I cover as much as possible. 

My focus is out of state buy and hold investing, so it's crucial that I find a great PM...

Thanks,

Max Balesteri

@Eric Fernwood - I would definitely appreciate the tools you mentioned. Since I'm very new here I don't know how you'd send them, so let me know if I need to do something.

@Dawn Brenengen - I see a lot of sub $80k properties in Raleigh on the MLS saying they're in good condition, with some even dropping in price. Any knowledge of properties in this range?

I just wanted to say this is a great thread...

I think the turnkey thing can be a huge plus for everyone when done right. It can help provide a way out of a draining asset for whoever needs out (be it the city/county, bank, or private owner), quality investment for passive investors, good homes for renters, work for the community (construction, marketing, PM, handyman), profits for the initial investor/rehaber, and help to keep neighborhoods clean, with property taxes being paid too. With all these pluses how could it go so wrong so often?

I think a lot of it has to do with people not quite thinking it all the way through. Sometimes the turnkey company just thinks they're giving the customer what they want, but they're forgetting that people often don't really know what they want. While the customer gets wrapped up in profits and doesn't pay attention to the glaring expenses to come from a lipstick rehab. Use your expertise in the field to do things as you know they should be done and the clients will come around. Take the time to walk the new clients through the process and explain the reasons for the slightly higher cost of your product, if they end up having to be higher. If there's value in it the smart investors will see it. Plus over time your costs should be able to come down, so it may be best to expect slightly lower returns for yourself early on to help you grow. Just don't skimp on the foundation, making sure that the bones and guts are top priority.

As for any business, this would be a tough endeavor, but I really like the idea of it. I'll be looking for those of you that have posted here as I build my portfolio. 

Best of luck,

Max Balesteri

I just wanted to thank everyone for the great information and comments. Please keep them coming and feel free to reach out to me outside of this thread if you have information you'd rather not post here. I hope to build good working relationships with everyone I can. 

My ultimate goal here is to untether myself from the desk I'm so often stuck behind. And hopefully many of us will cross paths in the future making great deals together.

Hello everyone,

I recently found and signed up for this great site. So far I've been reading a lot of posts and figured it's time for me to get involved a little more.

I recently started my research for putting together a rental portfolio and since I live in the SF Bay Area, doing this locally isn't going to work too well for a person with my starting capital. So I will be doing what many here say is very risky (which I can certainly understand) buying out of state. 

To minimize the risk, my first step is to find a stable market with EXCELLENT property management in place. Recommendations on buy and hold markets for SFR or MFR's and property managers are appreciated. So far I'm liking Charlotte NC, Raleigh NC, Indianapolis IN, K.C. MO, Marietta GA, Nashville TN, Memphis TN and the surrounding areas of these. I'm open to other areas too, so please feel free to throw anything out there. Just please offer some real info for why you're suggesting the area.

I'll be traveling to the 2 or 3 that end up topping my list and I figure I'll only have 7 to 10 days for this trip. So I really need to get the most out of the time I'll have to see the areas in person in order to make the best decision and make A LOT of offers. Now the offers part is if I don't choose the route of a turn-key provider, which opens up a whole different debate that's been covered extensively in MANY past posts. So if you're going to go into anything regarding these companies in this thread, please keep it to your particular experiences and share the turn-key company you used. I believe there are some good ones out there that will provide a good service for fair compensation. It's just finding these ones is tough since there are a lot out there with questionable values.

A little about what I'm looking for... My top priority for starting out is cash flow to reinvest in more properties. I'm thinking 3/2's or larger with around 1.2% rent to purchase, depending on other numbers for the location of course. This is because I'm looking for the more conservative entry into this and also because I'll be financing a good portion without funds for extensive renovations. I don't care to get into this to be a slumlord by any means. I believe that there are a lot of good tenants out there that can't or don't want to buy for various reasons and this is my target renter. I think you would call it C+++ or better.

I'd also like to ask for any websites or other ways to get concrete data for researching markets. I look mostly at government data such as census information and some I get from things like Forbe's magazine. But I've also seen a lot of data on Sperling's Best Places, I just haven't found anything telling me if it's accurate.

On a final note, as I am very new to this particular area RE investing. Please let me know your opinion of what I've stated above. I fully welcome others thoughts as I create my plan and realize that there are a lot of very knowledgeable and experienced people here, that I look forward to learning from.

Thanks to everyone in advance for your thoughts, stories, and information.

Sincerely,

Max Balesteri