All Forum Posts by: Ross Denman

@Roy C. They did the same thing to my Generation (Gen X.) Every Generation is shape by the recent moves of the culture providing different mindsets and different opportunities. By studying the up and coming Social Movements & Trends, a business man can better cater to the marketplace. If the next generation prefers to pay high rents for conveniences, then we may never see the Real Estate Market Rebound as anticipated, but the Long-term hold market may perform like never before (Cheaper than we are used to homes providing great Rent.) I see one of our competitors at the local sheriff sale every few weeks spending over 1 million dollars of Private Money... and they are almost always buying Less than 20 year old Vinyls in the Suburbs. That was not even considered rental option 20 years ago. The landscape has certainly changed...

I am very familiar with the current rental trends locally and even wrote an article about this on linkedin about 5 months ago. How the New Rental Market is Changing Opportunities for Investors

I see a broad array of renters. I have a home that rents for over 4X the median income for my area that is being rented by a Real Estate Attorney and a Commercial Realtor. They are both divorced and decided to get a place together and signed a 2 year lease. I actually have several doctors, attorneys, and even one nationally syndicated radio personality that rents from us... but I don't expect most of these to be long term tenants.

The biggest trend that I see today is the Millennial Generation. Our society has trained them to get a new smart phone every year, a new car every two years, etc. We have become a society interested in flexibility and convenience, even if it costs more. I have met some moderately educated and successful young people who rent higher end properties for the convenience. They are not interested in a 20+ year obligation, don't want to worry about maintenance, and may plan on relocating in the future. If the home quits meeting their needs, then they can move as soon as the lease is up. The American Dream of home ownership doesn't apply the way it used to. It's not about money... it's about conveniences.

After a recent survey of our tenants who have been on our lease for at least 6 months we received positive feedback from the majority of them... (it also helped us identify ways to offer better service as well)

Unfortunately, only the unhappy tenants (about 5-10%) are the ones ready to review the company online. I know that this tends to be a natural thing, we always complain and rarely appreciate. Does anyone have any tips on encouraging positive tenants to offer their input on a public platform?

I work for a Property Management company in Indianapolis. We do have a few tenants with Owner info, but not many. The only problem that I have known is when a tenant tries to play the Owners and us against each other. We recently experienced that with one of our tenants. We were trying to schedule a periodic inspection (they have changed the locks and we don't have a current key) and they cancelled our inspection twice and stood us up on another occasion. We charged them a fee of $75 for the last one (missed contractor appointment fee set up in their lease) and they called the owner and complained. We then notified the tenants that we were going to schedule our locksmith to go out and re-key the house since they would not get us a key or work with us to inspect. They called the owner again to complain. They finally allowed us to inspect the property, but we still did not get a key... Unfortunately, it makes us look somewhat unprofessional in front of the owner in this specific instance and the owner doesn't want us to re-key the home because she's worried about losing the tenants. (They actually take very good care of the home and pay on time all of the time.) The biggest fear is that we use the keys if we need emergency access to the home and the tenants aren't there. It doesn't happen very often, but it does happen.

If the owner wasn't involved... we would have already re-keyed the locks and charged it back to the tenants for changing the locks without permission (against our lease agreement) and not providing us a key.

Be advised... occasionally tenants can be like children of divorced parents trying to pit one against the other.

@Jay Hinrichs

The company that I work for only manages properties (we will recondition homes (Paint, carpet, mechanical/appliance repair & install, etc), but not usually full gut/rebuild/rehab jobs. For instance, we almost never move or remove a wall or build a garage, etc.) We have a few local owners who also wholesale & rehab. We only recommend properties that we would manage (based on rent range, desirability of area, etc) and makes sense financially... if a deal doesn't make since, we won't pass it along. Everyone in my office is tired of seeing wholesalers hyping up bad deals. I'm not sure how it is in other parts of the countries, but I wouldn't touch 85% of the wholesale deals I see (and I'm on most every list in the city.)

Personally, I'm looking to do another rehab early next year and we have some current out of state owners that are looking to expand their portfolios so I will probably rehab it and sell to one of our current owners (although it will probably be for less than market value.) It's a time vs. money trade off.

@Tom Suvansri I work for a Property Management company in Indianapolis. We deal with a lot of out of state and even out of country investors. I think that the most important thing to consider is having professional boots-on-the-ground people to help you make decisions. With that being said, don't just hand over your money without asking questions and understanding your options. I will give 2 Scenarios.

• We started representing a new owner, an attorney from Hawaii, about 3 months ago. He bought the property from another wholesaler/rehabber/properly management company. We started managing the home with a Tenant already in place. I did the initial inspection & documentation process. The tenants had only lived there for 4 months and the home was in quite a bit of disrepair. As soon as we started managing the home, the downstairs bedroom ceiling had caved in, there were several safety/code violations, and even problems with the home that could cause problems in the future (like missing gutter downspouts). Unfortunately, these tenants were already behind in rent and we had to evict. When I did my vacancy inspection created the project, we quoted the owner $6,500 to get the home back to rent ready condition. (The entire home needed repainted, tubs glazed, install new garage door, rebuild basement stairs, etc) He had a fit. He sent us over an invoice showing that he had spent $29k on rehab 12 months earlier. He paid $40 for the home and it was only valued at $62k. We reviewed that invoice and were stunned. While we didn't know the extent of the original condition of the home... our best figures were about $16-20k for the complete rehab. The home itself is not in a very desirable neighborhood and doesn't even have central air (out of several hundred homes we manage, we only have 4 w/out C/A and we are pressing to get these installed.) Basically, he used a single investor for acquisition, rehab, & property management. He would have done much better to use a realtor in the beginning to help him buy a home in the right area with the right amenities. He also should have got another bid himself on the rehab. As far as tenant screening goes, it varies from Property Manager to Property Manager, and it's difficult to be sure that they are doing a proper job. Find a company that offers an Eviction Protection Plan... we do because we stand by our Tenant Screening and have a very low eviction rate from our placement.
• Early this year, we had a newbie investor from Illinois who was referred to us by one of our other clients. He hooked him up with a local wholesaler and our office helped him with the due diligence process (comps, neighborhood assessments, etc) Before he closed on the property, we were allowed to walk through it and give him an idea of the level of rehab and what his options were. He closed on the property and we gave him an official estimate. Before he sent funds, he got 2 more estimates... one was considerably higher and the other one was considerably lower. We let him know that our crews work quickly and know exactly how we like our homes so they can rent quickly. He let us rehab the home and we had a signed lease about 5 days after hitting the market. These tenants have been there for 9 months and the only hiccup that they had was accidentally paying rent twice (the check in the mail was going to be late, so they paid online and had to void the original check.)

The point of the matter is this... use professionals who value your investment. Do as much due diligence as you can (Crime maps, school research, tour the streets w/ Google Earth, etc.) Don't be afraid to validate everything with licensed professionals (RE Brokers, Inspectors, Appraisers, GC's, etc.) As an established Property Manager, our office has the pulse of the local market. I can comp most rents in the city with just an address, bed/bath, sq ft, and year of the home and be no more than 5% off of the mark. I can also generally tell you how long it will sit vacant and what kind of tenants will be interested in the home. We get homes from other PM Companies all of the time. Many of them we turn down because the home is not one that is worth the hassle of managing (nobody likes having tenants break their lease because the house keeps getting broken in to.) Not every Property Manager is going to be as efficient as we try to be, but they are out there.

Hope this helps

Thanks

I work for a local Property Management Company and we use Peters and Steel. They may be a little pricier than you are looking for, but they are very experienced in all aspects of Real Estate.

I agree with the cash for keys idea though. Be sure not to let people string you along too far though... I have personally seen this go both ways for investors. One of our owners bought a home (it was either an REO or they bought the note and foreclosed themselves, not sure) and the previous owner was still staying there. Our investor negotiated for weeks to get the man out of the home and even offered $1000 to give us possession. Unfortunately, the previous owner kept dragging his feet and stalling in every manner possible. We finally had to file eviction. The day before court, the man finally came in to our office and turned in the keys. He actually asked us if the owner was still willing to give him $1000 to move and we told him no, that the owner spent money on eviction instead. The owner lost about 2 months of time by allowing the negotiations to last so long.

Hello! My name is Robert Ross Denman. I typically go by "Ross", but my office calls me Robert (we actually have another Ross there, so it's less confusing. If we talk on the phone I may answer as Robert or Ross.) 

I am currently living in Indianapolis and have had an interest in Real Estate for most of my life. After my divorce (about 4 years ago) I decided to try and dive in to real estate investment... I spent my life savings (what little was left after the divorce) on education and decided to give it a whirl. I wholesaled a couple of houses (daisy chaining off of some other local investors buyers lists.) Shortly after that I moved to managing the business and marketing end with a local contractor who was interested in investing. I worked with him for almost a year creating opportunities for his company. He ended up being scandalous and I ended up losing most of the money that I had made.

Determined not to give up, I stepped away to regroup. About a year ago, I started with a local franchise of a national Property Management company in Indianapolis. I was hired in leasing (that was the only position that they had available at the time) and I am currently the most successful leasing agent that our office has have ever had. (We actually hit top 10 a couple of times nationally out of over 200 offices during my tenure.) I did that until I was burnt out. The phones never stop ringing... It was mind wrenching. I took a lateral move a few months back and took over the project management portion of the business. Currently I am inspecting vacant homes, building projects, and overseeing contractors to ensure that our homes are rent ready and desirable in an affordable and timely manner.

I love the position that I'm in, the work that I do, and the company that I work for, but it's still just a 9-5 that allows me to live paycheck to paycheck. I'm not convinced that I want to become a huge, full-time investor anytime soon though, I am really just looking to do some investments on the side. I see deals come across our table fairly frequently and would love to find a financing partner available to help take advantage of those deals.

To give you an idea, my manager just got a purchase offer today on a deal that came through less than 90 days ago. He purchased and closed the home for around $34k, spent about $1500 in closing/holding costs and $6k in rehab. He accepted a commitment to close at $53.5k today. He should walk away with around $11k net when it closes. He literally purchased the home 9 weeks ago and just rehabs a few homes like this on the side each year.

As far as my goal at BP, I love learning and I am looking to Network wherever possible, especially in my local area and hope to find some good people to partner with to get the ball rolling. I have actually listened to about 25 hours of BP Podcasts in my car over the last month and love the show. I look forward to finding some great people here as well. Please feel free to send me a colleague request.

One last note, just because I find it amazing. My personal cell phone number is literally the easiest one in the city to remember and looks amazing on signs. Hit me up, ask me what it is, and I'll let you know... and no... I didn't buy it and it's not for sale!

Robert Ross Denman