All Forum Posts by: Michael Garofalo

All, 

I am looking to sell an investment condo located in Washington, DC. I just made a larger acquisition and am looking to free up some capital to support the new acquisition. 

The property is currently occupied with a respectful tenant who pays on time (lease runs through the end of July 2025). I purchased this asset in 2018 and completed a full renovation, which included: new hot water heater; all new appliances (fridge-which was just replaced again in 2024), stove, dishwasher; all new flooring (mixture of tile in kitchen and laminate plank flooring in all other areas); HVAC tune up; new 100 amp electrical panel; new bathroom including all plumbing fixtures, wall tile, and floor tile. The entire apartment was also repainted in 2024. 

Monthly rent is $1,495 and the monthly HOA fee is $451 which includes water/sewer, trash, building maintenance, landscaping, and everything else pertaining to the building and common area upkeep. Electricity is separately metered and in tenant's name.

 Asking $125,000 - please message me directly for more info and if you have more specific questions. 

I purchased a 9-unit apartment complex in 2020 (closed on it in February weeks before Covid hit and everything shut down). All but 1 tenant had to be evicted, was arrested, or went missing due to mental illness. I got a very good price on the building (about $25k per door), but it was a ton of work as in addition to tenant issues, there was TONS of physical distress (foundation repairs, sewer line and water line repairs, electrical upgrades, new roof, and apartment renovations needed for all units). 

That being said, if I could do it all over again I wouldn't change anything because I learned more about real estate investing and property management over the past several years from that deal alone than most people will learn in a lifetime. I also wouldn't be where I am today in terms of my contacts and relationships with vendors, to be in a position to self-manage confidently out of state.

All that being said, if another deal with the same amount of hair on it presented itself to me today, I would pass simply because my risk profile has changed. My due diligence process was certainly tightened up after that deal and analyzing properties and understanding what things will cost is now 2nd nature to me. 

@Mike Sfera as I said originally, if it won't cash flow at 25% down, I would personally not buy it. That's just my criteria.

I agree with what everyone else has said, those figures seem extremely high. For what it's worth, I went through 5 different property managers in 2 different markets (one local, one out of state) over a period of 5 years, before deciding I would self-manage everything across both geographies beginning last year. I found similar patterns between all 5 companies: namely, they had taken on too many units, were over-charging me for things I didn't need, and weren't handling issues correctly (they would send out vendors who didn't know what they were doing, mis-diagnose issues etc.)

No disrespect to the PMs on this chain or BP in general, but any third-party manager won't perform exactly the way you would like them to simply because of the constraints they are faced with as far as having so many units and owners to keep tabs on. 

For me personally, it was worth making the switch because of how much money I stood to save and the flexibility to run things the way I saw best fit. Now if you have say 75+ doors and the economics make sense, you could hire someone on salary to be your dedicated property manager and specify exactly how you want things done, vendors to use etc. 

I 100% agree with everything JD said, as his approach is exactly how I handle clogged pipes for all of my rental properties. 

Welcome to BP David. I was in your boat and started my journey about 7 years ago! 

I would echo what others have said - 100% start locally because you need to gain an appreciation for what it means to be an investor, understand the lifecycle of a deal and be on the ground to observe what's going on with renovations etc. Personally, I think house-hacking is the best way to start. 

As far as investing out of state goes, I would pick something you can drive to in 4 hrs or less. I invest out of state in Pittsburgh from DC and self-manage everything, but it's taken me years to establish the right contacts, develop seamless processes etc. that allow me to handle everything remotely with confidence. I wouldn't recommend trying to do something like this right off the bat, I think you need to get into the game and really know what you are doing before taking on that level of risk.

Happy to chat more over a phone call or direct message if you want more insights or have more specific questions!

Everyone has different opinions on this and it really comes down to personal preference. For me personally, I would not take on a mortgage if it was going to cause the property to be cash flow negative. If it won't cash flow at 25% down or less, it's probably not worth your time. 

My strategy has been to grow aggressively (by using as little of my own money as possible) to secure good assets, and once stabilized, then work to pay down loans to own them free and clear sooner rather than later. 

A lot of people under-estimate how much work is involved with owning real estate, especially if you go the route of self-managing. For me, I'd rather have fewer doors owned outright that allow me to achieve my personal financial goals than having a large number of doors fully leveraged with less cash flow per door.

Mike, 

My recommendation would be during due diligence for a potential purchase, ask for past 12 months of all utility bills, property taxes, and any other municipal requirements like rental permits, occupancy inspections etc. 

Your insurance is going to be highly variable and I wouldn't use what an agent or the seller tells you as the cost of dwelling policies have increased substantially over the past few years due to rising new construction costs. 

Things like landscaping/snow removal and labor cost for repairs are going to be highly variable based on your market so you'd need to do your own research on the going rate by either talking to other local investors, running your own google search, or exploring basic services on thumbtack/angies list etc. 

I have several investment properties I've owned for 5+ years now. My total expense ratio on each property I own ranges anywhere from 40%-50% annually, but I also self-manage and am not a slumlord (I am pro-active with maintenance, not reactive). If there are any anomalies that occur which require more expensive repairs then that ratio can and will be higher, especially in your first year or 2 of owning a property as you work to get things stabilized. 

@Heather Rummel congrats on your new purchase! I would rent out by the room based on overall square footage of each room. You'll need to do some market analysis to see what things go for in your area, how you want to handle utilities etc. 

I would 100% NOT get a property manager involved. #1 because you will be living there yourself and can address issues as they come up. #2 because most property managers are too overwhelmed with the volume of units they manage to give you personalized, meaningful service. I've went through several over the years and last year just decided to self-manage everything because the fees were just not worth it for the low level of service I was receiving. People have mixed opinions on this, but in one market I invest in, I researched and interviewed dozens of companies and went through 3 before ultimately confirming that there really was nothing which would suit my needs. 

@Byram Heights I don't know your market but looking at your listing, I will provide some generic comments. 

If the house is priced properly, is in good condition, and is in a decent location, it should not take over a month to find someone qualified. For an upcoming turnover I have scheduled (current tenant moves out at end of June), I was able to identify, approve, and sign a new tenant within 1 week's time who will be taking over July 1st. 

I would suggest getting professional pictures taken, or at least using something a bit more high quality and ensuring there is sufficient light in all the rooms. For your listing, I would lead with the most desirable parts of the house first. I would also consider lowering the price. If you've been getting tons of applications and just rejecting everyone then that's one thing, but if you aren't receiving a healthy number leads, showings, and applications, you should really consider lowering it.