All Forum Posts by: Sean Malone

I ended up switching to Fort Lowell Realty. Happy thus far, but only 10 days in.

Hello!

I'd much appreciate any recommendations for great property managers for 15-unit class C property in south Tucson by the airport.

I've owned this property for the last two years, and it's been managed by a local company for that time. However, the current manager seems to be optimized for SFR, and is not providing the level of optimization that I would expect. I've spoken to a few other firms, but it seems that the ones who look at an apartment building as an asset to be optimized aren't willing to take on something as small as 15 units.

Here's the type of optimization that I'm hoping to see, in addition to general management competency:

1) Turn time (between the tenant vacating and the unit showable, listed, and accepting applications) is viewed as a metric to be optimized

2) Lease-up time (after the unit is turned, how long before a tenant moves in)  is viewed as a metric to be optimized

3) Rent collection is pursued through all legal options

4) Expenses are minimized both programmatically ("Water bill is high. Here are a few ideas that we can implement to address.") and individually (such as coordination with a great independent handyman for all minor repairs, to minimize overhead).

5) No mark-up on expenses, and willing to coordinate directly with vendors of my choosing where applicable

Am I searching for a unicorn? Is it reasonable to expect this from a property manager for a 15-unit?

Thanks in advance for your feedback and recommendations.

Hello! I'm currently considering out of state investing in a portfolio of duplexes in Lima OH. The cap rate is far better than what I can find in Washington State, and the units are fully rented. I'd be using a local full service management company.

However, when researching this market, I see some signs that are concerning. Higher crime rates, some population shrinkage, etc. http://www.city-data.com/city/Lima-Ohio.html

How concerned should I be by this? Does it make sense to invest when I can make my money back in three years, even if the thirty year outlook doesn't look too bright? What other advice would you have for evaluating an investment in this region? Thanks for any insights!

Hello! First post on here ... I'd like to ask for your advice. I live in the Seattle area. I have a 15-unit in Tucson under contract, and need to make a call on this in the next few days. The property has lower-income tenants, and rents are just a bit below market, but not much. The inspection has been done and is generally in good condition.

To make this deal have great cash flow, I'm trying to find creative ways to actively manage expenses in three categories: management, maintenance, and utilities. At the current price, the default option (full-service management at 10%, maintenance done through independent vendors, and water + sewer + garbage paid by the owner), the cap rate works out to about 7.5%. Not horrible, but nothing to get too excited about.

Here's the "creative" approach that I'm considering:

1. Put in place an efficient property management system, and tune it over time:

• https://www.rentecdirect.com/ or similar, for ~ $50 / month. 
• That platform facilitates advertisements, online applications, background checks, leases, rent payments, utility billing, work orders, accounting, etc.
• I'm responsible for the business elements of management - making sure I have good screening criteria & lease agreements, contracting with vendors for larger repairs, and similar.

2. A local manager's assistant / handyman handles everything on-site:

• Clean, inspect, and maintain units between tenants
• Meet with tenants to show the units
• Manage paper documents for tenants who can't do it online for some reason
• Collect rent checks from any tenants who can't pay online; provide notice to and check up in person on tenants who are late
• Work orders go directly to the handyman via the software platform
• Handle any maintenance items expected to take less than two hours (bill me for actual material costs)
• Read sub-meters as applicable (see #3)
• Collect & deposit cash from laundry units and ensure they are in working order

3. Sub-meter the water, and bill water + sewer costs back to the tenants:

• New tenants pay 100% of actual usage
• Would likely have existing tenants (on MTM leases) gradually pay more over a year until they're paying 100% of their actual usage
• The property currently has a waiting list for vacancies, so I'm not too worried about a bit of turnover.

I've found someone local with experience handling the items in (2) above, who charges $33.33 per month per unit, when occupied. This works out to about 6% of gross rents. By my calculations, if this approach saves me 4% management, $2000 in maintenance labor, and reduces my utility bill by 75%, this takes me from 7.5% to just over 10% cap rate - now this is looking good.

Here are my questions:

1. What's wrong with this plan? Am I insane for thinking this could work well? 
   
2. For what the local "man on the ground" is doing, does this look like a fair price?
3. In this situation (assuming that all significant maintenance items are addressed before close), how much would you budget for supplies, repairs, and other contract services above and beyond labor provided by the handyman?

Thank you in advance for your advice!