All Forum Posts by: William Murrell

That's a good question with a very long answer.  Some of the things I look for are vacancy rate, references, selection of vendors, reporting, and online presence/ marketing.  

-Vacancy rate is key because (at least for me) vacancy kills more cashflow than repairs or anything else. I just ditched a property manager that allowed a SFH to sit vacant for three months at market rent while everything else around it was rented with ease. If they can't place a tenant, why pay them?

-References are important because everyone of them will have marketing material telling you that they're awesome.  But who cares what they think of themselves?    What do other investors think?  Find out what other people who are actively investing think and recommend.  

-Selection of vendors is another key issue.  I had a local property manager send an unlicensed, uninsured vendor in to one of my rental houses to perform some work.  15k worth of damages later,  I was left with essentially no legal recourse other than suing the vendor who was a tiny one woman shop with no ability to pay for the repairs.  I would have won any legal action, but I never would have been able to collect on the judgment.  Total nightmare.  My current manager only sends licensed and insured vendors in and that translates to peace of mind.

-Reporting is nice because they'll send you an accounting of the profit and loss for each property as well as documentation of the repairs that are done.

-Online presence ties back into vacancy rate.  I have two property managers currently and one gets essentially no traffic to their site and they have a terrible time getting tenants into a house.  The other has a dominant position when it comes to SEO/SEM for local rentals so almost anyone searching for rental properties locally will end up at their site looking at (among others) my rentals.  The dominant marketer was able to place a tenant in 1.5 weeks in a house that the other couldn't fill up in 3 months!  

This is not an exhaustive list, but hopefully a good start.  Good luck!

Depreciation is a big one.  The house itself ages and things like kitchens and roofs have useful lives so you're allowed to deduct that from your taxable income.  Totally made up number example: you make 100k ordinary income at your job. You are taxed on all 100k.  If you have a rental and it depreciates at 10k, then you are taxed on only 90k (100k income- 10k depreciation= 90k taxable).  So you don't save 10k, but you save the taxes you'd pay on 10k worth of income. 

 There's also the expenses you save for repairs, mgmt, hoa fees, etc. They can be deducted and they can add up quickly.  

If you're an owner occupied duplex though, I think you only get to do it on half the property though.  I'm sure someone else can chime in on that part.  And don't be afraid to talk to a cpa!

I am not an attorney, but I have had plenty of experience with contractors.  In our case, if the contract specifically stated, as yours did, that the change order must be approved by the owner, then they didn't really have a leg to stand on when it came to demanding more money.  And as far as "we need this to pass code" then that should definitely have already been included in the scope!  No reasonable contractor should ever give a bid to build something at one price with extra fees to do it to code.  Either you build it to code or you don't.  They ought to know that by now.  I'd consult with an attorney and I would also find another contractor.  This is classic "got you over the barrel" unscrupulous contracting at its finest.  Unless of course your scope spec'ed out something not up to code and he refused to build it.  But that's not the case, right?

Good luck and be strong.  Don't feel bad about it.  They knowingly and willingly broke several aspects of the lease: no illegal activity, no additional roommates who aren't approved and on the lease, etc.  It's more unfair to not watch out for the other three great tenants.  You need to show them that you will take care of them when someone threatens their safety and also (of equal importance) that you can't just be pushed around in your own property.  They'll appreciate you cleaning up and they'll also remember that rules matter to you.  Sometimes you have to make tough decisions, but that's just part of it.  We have to run this like a business or else why do it, right?  Good luck!

Welcome to the area!  Let's connect.  You never know when you may get a chance to work together.

Congrats on the success!  Glad to hear it's working for you.  I also think your idea of using the net proceeds for additional investment is a great decision.  Who manages your property?  I've used Intracoastal, Network, and Century 21 Sweyer.  

Welcome to the area! 

Welcome to the site and to the area!  I do the same thing in the Wilmington area and have had good results.  Maybe we can work together in the future!

Wow.  Impressive.  Keep it up!

I agree!  I don't want to get to the point where I don't care.  I'll never forget how excited and nervous I was on my first and second deal and I want to keep that.  

-We have a kid, so we like to take a few days off or take a vacation whenever we close a deal.   Time well-deserved.

-Expensive bottle of scotch (or liquor of your choice).  I like that it sits there as a trophy for a while and over the next few months you can have a bunch of small celebrations.

-Find some charitable endeavor to pursue.  Perhaps you close a deal and then you make a donation of time or money to an organization of your choice.   That way your good news turns into a good deed.

-Fancy dinner.  

-I also like the idea of buying art when you close a deal.  You make a deal, you buy a piece from an artist whose work you admire.  Then you'll always have the art to admire and a commemoration of the achievement.  The drinks and the dinner will be long forgotten, but some nice artwork framed and on the wall will last for a very long time.