All Forum Posts by: Roi C.

Thank you all for your input, I will continue doing my research, and I guess my next step will be to talk directly with some PM's that are familiar with this area.

Hi all,

I own a double property (up and down units) in 44102, between Detroit & Lorain Ave, one of the tenants is moving out and I would like to figure out what the market value is now, to see if I can raise rents.

The property is managed by a PM, but I believe they are under pricing it.

This unit that will vacate is a unit at the bottom of the house (down unit) and has:

• 2 bed
• 1 bath
• approx 1000sqft

Our unit does not have central air, off street parking, and not much curb appeal, but I'm not sure how much weight these issues have on the final rent price. Compared to other similar properties in the market now, our PM wants to charge about 70% of the price that other properties are going for, and I'm having a difficult time understanding if this is justifiable.

I would really appreciate it if any Realtors, or PM's in this forum can help me understand the real rent price that can be charged. I do not have access to MLS comps other than sites like Zillow, and it would be great if you have access to these comps and can share them with me.

I'll be happy to provide more info as needed and discuss this further. Also, If you are a PM that services this area, please contact me in private and let's hop on a quick call, maybe I can give you some business...

Thanks a lot!

I know this post is a little outdated and the property has been sold, but I wanted to add.

I went to see a fourplex on that specific street a few years ago (I think it was for sale for around $120k-$150k), it seems like a VERY HIGH CRIME area. The moment I parked on the street everyone was looking at me giving that that vibe that they know I'm an "outsider". I went up to look at the property and one of the doors had gunshot holes in it.

After I finished inspecting the property I went back down to the street and was immediately approached by several people asking for money and cigarettes, there were plenty of females using Walmart carts as strollers for their babies, and finally when I went back into my car someone came up to me asking what I was doing there, I replied "I'm looking to buy a home here" to which he replied "Really?! Get out of here, you don't want to live here" (I removed all the NSFW words from his comment).

After that experience I decided that this street is not suitable for my investment goals. Not saying it can't be profitable, but I am almost 100% sure it will be a nightmare to maintain and/or collect rent. Also, I'm not trying to be judgmental or anything, that's just my observation.

Good luck!

So many good answers, I appreciate everyone's input.

As others have mentioned, being a remote investor does not allow me to inspect the property to a level where I can tell exactly if every line item on the PM's invoice is necessary, so I give them the benefit of the doubt due to our long relationship that was pretty good over the years. I do feel though that our PMs are taking my accounts for granted and don't necessarily feel like they need to work hard to earn my business anymore. They don't always act in my best interest because it would create more work for them.

We just recently finished a pretty large renovation in one of our other properties there, I managed the entire project by myself remotely and was able to get it done with higher grade materials and appliances at 70% of the cost that our PMs initially quoted, and I did all of that over the phone without physically being there at all, I would've probably get it down to 50% if I was actually there. I don't know if they add a markup to the invoices, because the invoices from the contractors are typically forwarded directly to us by the PM and we are billed for them back to back. Maybe the contractors and the PM have a side agreement where they get some type of commission, but there is no way for me to prove that...

We are going to get this project done, and after that we will have a serious conversation about how to handle future projects and maintenance calls.  I am trying to think of a system that can work good for both sides, maybe something like a system where the PM will do a walk-through and get a detailed description including pictures of the items that need to be repaired, and then post a bid online so we can get multiple contractors involved in a bidding war, and I will be able to see the price without any markup or hidden commissions. Or alternatively try to come up with a system that compensates the PM better if the profit from the property is higher, I'll need to run some mathematical models to see if that even make sense. If any of y'all have any suggestions or ideas I would love to hear them.

Thank you so much!

Thanks for the input.

These numbers look pretty good for the contractor that's doing the job, I doubt however that any investor would be willing to pay these prices. 
I understand that retail customers who are not willing to do any research or price comparison will pay more for a turnkey solution that will just get the issue fixed without any hassle. When you own properties that are leased for $1000-$1800 a month you simply cannot pay so much for these type of repairs.
All the best :)

Hi Matthew,

Thank you very much for your reply.

Of course I am aware that there is additional overhead such as going to the property to give an estimate, picking up supplies and more... my estimates were based on what I believe it would have taken me personally to fix the issue if I was there physically, now keep in mind that I am not a professional contractor and I don't have the professional tools for some of these jobs, but this is what it would have taken me personally to do it with the little experience and knowledge in construction that I do have. I personally fix stuff like that in my own house all the time.

Many contractors like to bid per job, which is understandable, because at the end of the day they do need to get the job completed, regardless of how many hours it takes them. However, from my experience contractors that only bid per job or per line item in the task list that I give them charge way too much, and they round up everything to the half an hour or more. So for an example replacing a few electric wall plates they will charge 1 hour of labor, when in fact it should take closer to 10 minutes with a manual screwdriver. Now when I give them a task list of 5 to 10 items these all add up very quickly. And that's exactly what I am trying to avoid.

Correct me if I'm wrong, you are saying that it is normal for a contractor/handyman to charge around $100/hr for simple repair jobs?

I am not calling them up to come and replace 1 fixture that takes 20 minutes and pay them $25, I'm talking about giving them enough work that should take 1 man around 1-1.5 days (8-12 hours of work), and they give me a quote of $1000 for labor. Maybe I'm in the wrong business :)

Hi,

We own a few single-family properties in the Phoenix area and they are all managed by the same property manager for many years now.

Since these houses aged a little bit and have normal wear and tear it's time to make some larger repairs, such as replacing rotted siding panels, fascia/soffit boards,  support columns in the patio, fixture replacements etc...

For years our property manager pretty much handled all of this, but it seems to me that the quotes we've been getting recently are overblown. I typically demand that the invoices that are forwarded to us by the PM's contractors are broken down into labor and materials, and based on my estimates they typically charge a labor price that would be equivalent to around $90-$100 an hour.

I would like to ask the people here who have experience with rehab or construction in Phoenix, what is a normal price to pay (per hour / per day) for a general handyman that is not necessarily specialized in anything structural or electric / plumbing. I'm mainly talking about routine maintenance and minor tasks like painting, replacing boards, caulking, replacing fixtures etc...

Also, I would like to get your opinion if you think that a licensed contractor is required for these smaller tasks, or should I  go with a cheaper contractor that is not necessarily licensed?

I do however want to point out that our PM only uses licensed contractors, which is understandable because she has to cover herself in case there is an issue. This creates some situations where a licensed roofing company will end up taking care of a fascia board replacement and painting, which can be done by someone else for probably much less.

Thank you very much in advance to anyone who is willing to share some of his/her experience or knowledge!

Hi,

I'm currently managing a rehab remotely in of my rentals (out of state). For years we've been using our Property Manager's contractors, but their prices just don't seem attractive anymore, and I'm pretty sure they're taking advantage of the fact that they know we're out of the state investors. 

I called dozens of contractors and handymen in the area and made a large spreadsheet with prices and notes next to each one. I was able to clearly see how all contractors who were either bonded, licensed and/or insured we at least 30% more expensive than the others.

The rehab we're doing in that property mainly consists of cosmetic repairs, painting, carpet replacement etc... I don't believe a licensed contractor is needed for most of these tasks.

I would like to ask you folks, what's your take on this?

Do you strictly work with licensed and insured contractors?

Are there some specific jobs where you would ONLY use licensed workers (such as roofing, plumbing, electrical)?

I would like to thank y'all in advance for any replies, and would also be grateful for any tips on successfully managing remote rehab projects.

Hi,

First of all I would like to say that I never purchased a property from New Western Acquisitions, but I have been to their office. I can't say if they are good or bad, but as other people mentioned DUE DILIGENCE is a MUST when purchasing real estate, no matter who is selling it to you.

@David Hines I don't necessarily agree with everything you said in your last comment. Assuming you're a seller and want to sell your property fairly quickly, and also assuming your property is not in a move-in ready condition and needs some repairs. Lets run some numbers:

• On a $150k home you will spend $9k on commissions for Real Estate agents
• If you as an inexperienced seller decide to fix the property to raise its value before the sale, consider this:
  • You will likely pay more on materials because you will either not know where to source the materials, or have any bulk discounts from distributors.
  • Managing and finding the right rehab crew will will likely cost you more than someone who does it on a regular basis

You are correct that the way wholesalers make their money is by either finding a seller that will sell below market value, or by finding a buyer that will pay more. However, from the sellers perspective he's not always losing, because paying real estate agents, fixing the property and paying closing costs can also add up and be quite costly.

From the buyer's perspective, if you find the right deal in the right area, at the right price you can renovate the property and add much more value. I'm not going to get into different strategies such as Buy And Hold or Flip because every situation is different, but there is sometimes an opportunity for wholesalers to create a win-win situation.

@Jimmy Le

Hey Jimmy, I'm not an expert and I am studying the tax deed sales rules and regulations myself now, so I suggest you speak with an expert. However from what I do know, If you purchased a property in the tax deed sale, you are allowed to make "some" upgrades and/or payment to safeguard, maintain and upkeep the property, so:

• Installing new locks - OK
• Stretching / replacing torn carpet - OK
• Insuring the property - OK
• Mowing the grass - OK (I guess?!)
• Adding crown molding and upgrading fixtures - NOT OK

Keep receipts of ALL expenses, because if the previous owner does want to redeem, they will have to pay you back EVERYTHING that you paid for (except upgrades that are not approved) + 25% interest.

If the property was a homestead, they will have up to 2 years to redeem, and after 1 year the interest rate for redemption jumps to 50%.

All this applies only if you actually bought the deed (which sounds like you did). If this was a trustee / bank auction, you might've just purchased a Judgement against the previous owner, and there might be other lien holders above you (with higher priority), so you won't get to foreclose or own the property until the other lien holders are paid first.

Everything I just wrote is based on my own research, I've never purchased a property at an auction before but I want to start doing that soon, so please consult with an expert and don't rely on my info, because I don't want you to get screwed :)