All Forum Posts by: Masroor Ahmed

Hey Jerry, I'm not an expert on how this is calculated, but that bottom right market valuation of $35K is what Champaign County has your assessed market value at.  If you buy it at anywhere near the list price, it seems there would be a true up much like you experienced before. I actually own an apartment building in Champaign county and experienced the reverse.  The person before me had overpaid years before and that market value/assessment was $100K over my purchase price.  I contested right after I bought my place and taxes & assessed value decreased and reflected my purchase price. Hope that helps. 

Super helpful responses, thank you.

@Amber Gonion – I can see how you may find it inappropriate that people assume they can do a better job PM'ing when that's not their business. I get it. But to say, let property managers do their work and we should focus on investing isn't exactly consistent. Most people aren't trained investors either. (Believe me, not a lot of people can properly explain IRR). But investors find a niche and focus on it, otherwise we'd all be sending out checks to Grant Cardone types all day (nothing wrong with that btw).

@Levi T. – Your story is great. And as Amber said as well, I understand you wouldn’t just flat hire an in house PM one day, the reality is the PM companies are doing a variety of functions (leasing, collections, repair oversight, and so much more), so I wanted to see how people gradually move into that as they scale vs. continuing with 3rd party PM companies. 

Hi there.  Looking for recommendations for agents that cover Dyer/Lowell (Lake County)  and Portage (Porter County).  Unfortunately these areas are overshadowed by bigger cities in those counties so I'd love to chat with agents experienced in these specific areas.  Thanks!

I think the general consensus is that if you’re looking to scale up and build a large buy/hold portfolio, to hire out professional property managers from day 1. I get it, no one wants to get caught up fixing toilets and dealing with midnight calls regarding the heater going out, etc. I’ve hired out property management for my 7-units and as of now, I “manage the managers” and during the period where I only wanted to spend a few hours a month on my existing portfolio, this worked fine.

More recently, I've decided to dedicate much more time to expand my real estate investment business and as I’m spending more time on “managing the managers” I find myself wanting to hustle more, do more faster, be more creative, etc., but they can’t move as fast as I want to and feel like my hands are tied.

Couple that with the idea that once I get to some scale (say > 40 units) I figured I'd have to revisit the math and it could make sense to self-manage with the right systems in place. E.g., not in the DIY sense, but rather that I run the property management system for my portfolio and ultimately I may be able to run it more efficiently than a 3rd party manager. So then, why not try to act like a professional property manager for my own units from the get go?

Put another way, it was a no brainer for me to hire out 3rd party management and now I’m reconsidering. Just curious if others have grappled with this.

Masroor

@Joel Florek. Totally makes sense.  I'm earlier in my process (own a 7-unit building right now).  I plan to get to 20-40 nits with my own capital, then raising funds.  What you're saying makes a lot of sense, though I'm not sure how much hedging you get from being in such close proximity. Meaning, for some of these places, the economies are tied together due to overlapping industries or metro centers like chicago or detroit, etc. That said, I think it makes a ton of sense. thanks for the insight!

Thanks for the insight Joel. Agreed on all fronts, the trouble is 4-5 years ago (the great recession) was, I believe a once-in-a-generation opportunity...one that I missed from a real estate perspective unfortunately (though I did invest heavily in the stock market at that time).  I'm starting to look at neighboring markets like Indiana in which I can find very similar characteristics to places I invest (central IL), but with a different cost composition.  Sort of starting anew with a fresh market, but it'll be fun.

Hey guys - I'd love to be there, but I'm live in Wrigleyville and a little thing called the world series will be going on by me! Joking aside, i do want to come and I'm typically in C-U at least 1x/month.  I own a MF in SE Urbana and crime there is getting out of control.  Would have love to chat w/ folks about ideas to improve that part of town.  Till next time. 

Hey folks. I current own in IL - 2nd highest property tax rates in the country. Like any business, in MF real estate, not all costs are the same. Meaning all else people equal, if you're looking at 2 deals, both 8% caps, in IL vs IN.  The IL property naturally has a higher portion of its costs dedicated to property taxes.  So, as I think about protecting on the downside, if vacancy increases, there's simply less levers to pull if my property taxes are fixed (Yes, i understand they can be contested, but even if successful, its not moving much).  The hypothetical IN property would likely have more variable costs to adjust, providing more downside protection.  I haven't seen much discussion about this and given my state and my neighboring state are so different, this can potentially change my strategy. 

I know I'm late to this party, but spent some time researching and thinking about this today.  I invest in central IL, and a big challenge has been property taxes.  First, thought you all may benefit from seeing this break down by state. Yikes! From a cost stand point in measuring returns, it does matter (all costs are not equal).  IL is nearly the highest property tax rate in the nation AND those are fixed costs. If we had the highest water costs for example, those are variable and you can manage that better. In distressed situations, if you're turning around a building, or are managing through some higher vacancies (as I'm now dealing with), this fixed cost is devastating.  I'm certainly going to give more thought to investing in Indiana.