All Forum Posts by: Bob Collett

Lots of good locations here. Some not so good. Lived here all my life. Happy to help point you in the right direction. You will find a number of Investor friendly local real estate agents that hang out here.

Bob... Property Manager

Lots of agents hang out here. I would be happy to meet with you to talk possibilities.

Everyone has their own criteria. Here is my thought process:

When I am looking for a flip, first I look at the neighborhood. No sense spending time analyzing something that I am not going to do no matter what. So I consider anything on West Side or Northern Summit County. Since I am realtor and have investor clients... for them I will consider east side suburbs also.

Next as a flip, I have to see a 30% to 35% ROI potential. For me, I calculate the ROI (return on investment) as PRICE, the expected final net sale price (sale price less 6% commissions, less 2% closing costs) minus the COST which is the sum of total acquisition cost, plus holding cost (taxes & insurance), plus rehab cost. This gives me the PROFIT. Then divide PROFIT by PRICE. This gives a percentage with must be 30%. This percentage number is ROI. I do not use or even consier COC (Cash on Cash Return). This is used mostly to sell overpriced properties to newbies.

I am fairly conservative in my estimates, so when I target 30% ROI, the final result usually comes in closer to 40%.

When I am looking for a buy and hold; I open up the neighborhoods a bit, and then require 13% ROI. Similar type of calculation. For Income I look the total monthly rent times 11. Because there will always be vacancies. This gives me an annual Gross Income. I subtract annual taxes, annual insurance, expected annual maintenance cost, and an annual reserve to give me cover all repairs that will be needed over 10 years, expected annual inspection permits, and the 10% property management fee. I can explain how I calculate the reserve off line to anyone who is interested. I include the management fee, even if I, or the buyer is going to do their own management. It is still a cost. All of this results in my Net Income.

Then I divide the Net INCOME by my COST to come up with ROI. I require 13% true ROI. Cost in this case is acquisition cost plus renovation cost. With this process, when I do a thorough professional renovation, the annual contribution to the reserve fund is small because everything is already done. If I do a quick and dirty renovation just to get in and rented, then I save money on the renovation, but my reserve fund contribution will be higher because I am budgeting for that driveway, roof, furnace etc.

So to answer your question... this is probably a bit much for the typical bird dogger to calculate; but for someone who is serious about bringing me a deal, this is the way I will evaluate it.

In summary, if it looks like a deal and is in one of my target neighborhoods, I will always be interested in buying it for cash.

Who says it is legal to advertise a property that you do not own on Craigslist?

I have an accountant to whom I send my out of country clients... He is reasonable and experienced with real estate. Let me know if you want his contact info.

If it were me, I would do a little investigating. Neighbors often know quite a lot. Did other homes on street have sewer problems... did seller ever mention problem to neighbors... was there a call to the city? Any repair permits. Who is the go to plumber in the area... there may be a record of a service call. Who was the previous owner prior to your seller... maybe there was a disclosure. Any recent paint in basement? 

These are ideas that seek to discover if owner knew of problem

Matthew, I have a list of complaints filed against property managers with the divison of real estate in the state of Ohio during the past year. It's 150 pages long! Everything on it from practicing without a licence or failure to maintain a trust account to outright fraud. A few people here have offered to recommend a PM. That's a great place to start. Just be sure to ask what is their relationship to the PM they are recommending.

Good luck.

Jonathan. Hire an inspector! If you dont want to pay $400 per property, At the minimun, have your PM hire someone for a day, to walk through the propertues and note condition of the various systems, roofs, mechanicals, peeling paint, driveways, etc... if your pm was recommended by the seller, hire someone else for the walk through. Give them a check list.

Sure, an inspection is often used to renegotiate price... but it's real purpose is to identify problems so that you can make an intellegent decision. What will the 5 year or 10 year maintenance cost be? How much deferred maintenance are you buying? 

Welcome to Cleveland.

Meant to say NORMLS. Yes Ohio only. Most everywhere else allows Agents to use the MLS fee on their agent owned website.

I like all of your designs. Looking forward to meeting you at our local BP meetup. I could use a new website mysef!