All Forum Posts by: Sheryl Sitman

Lately a lot of people have reached out asking about how to get started in RE investing, what budget they need, where is "best" place to invest . . . I hate giving that annoying answer of "it depends", but it really does. The best way I know to explain to people how to start thinking about investing is to show them the possibilities - of which there are endless options, when you do it right. Take a look at what is happening on a block we own on. This is 5 years after our purchase and not coincidental. 

When i started investing 14 years ago while living overseas, here is what I imagined in my head. A PM will collect rent, have periodic friendly interactions with my tenants, handle maintenance issues the same way they would on their own home and manage getting the unit ready between tenants . . . end of story. I had no idea of the challenges and issues that could arise, of regulations and ordinances I would need to abide by, of paperwork . . . And I was so naive I was unaware of the high rate of non payment and major issues that can arise with a tenant.

Fast forward to today. I actually still work with the same PMs I started with 14 years ago -- in A neighborhoods in other states. It was my entrance into the Philadelphia market that was a rude awakening. The first two PMs that I hired in Philly did not just not meet my expectations. They caused me a lot of damage. 

So what did I learn from the experience and what do I suggest looking for when choosing a PM? 

Review the agreement in detail. If it does not explicitly include something, you can be sure, it is not included. For example, do you want periodic inspections of your asset with pictures? It needs to be in the agreement. Do you want owner draws by a certain date? It needs to be in there. 

Make sure that they define the policy regarding vacant property - will you be charged for months when your property is vacant?

Ask about how they handle correspondence. Do they guarantee response to emails within a certain time? Are they available for phone calls? 

Clarify in detail how maintenance is handled - from the system by which tenants are able to report an issue to how they choose if and who to dispatch and at what point if any, do they involve you in maintenance issues. I prefer a management company that will inform me immediately and allow me to be involved - to bring my own vendor, to ask for multiple estimates, to receive pictures . . . If they seem to be resistant to your involvement, keep in mind that you should be able to maintain records of everything going on in your property. Having repairs made without knowing the details or cost, is not a good idea. 

Many tenants pay late and eviction is something that most owners will need to eventually deal with. Clarify late fee policies, how late payments and evictions are managed. Some PMs are persistent and correspond with tenants. Others will do the minimum and may wait to start the process until you ask them . . .
Basically, a good management company has a defined process for most of the potential circumstances that arise. An example: I received a violation by mail for a property for trash and debris. I worried that I will end up needing to pay if it was not made abundantly clear to the tenant that they needed to handle it quickly. The PM then shared their process with me for managing what is a common occurrence in Philly. meaning that I did not need to ask, worry, check...
My conclusion is that big cities present big challenges for all landlords and management companies. It is a tough business and at the price point demanded by the market, PMs can struggle to provide the perfect service. Economies of scale, trained staff, well defined processes and responsiveness is the minimum that a PM must have in order to provide a good enough level of service.

I manage the Philadelphia Landlords Connect FB group and you are welcome to ask there as well. It took me several tries with PMs in Philly before I found the right one for me. It can make or break you :-) 

@Michael Simmonds  That has to be frustrating. Have you tried to call the city or to go down there for a reality check? The hurricane no doubt had a significant impact but you need to be sure it is not being used as a convenient excuse. I do not know to say whether the 3 bed + den v 4 bed makes a difference but hard for me to believe it does not, unless it is commonly known that families can use dens as bedrooms?  Check into that!  I am not familiar with who you are working with but always recommend vetting any company deeply before signing and paying -- those companies tend to have a lot of overhead they need to pay - out of your bottom line. Sometimes finding small, local partners to do your own thing and do it your way and under your control can be a great way to go that has more accountability built in. But yes, that requires learning a lot and taking initiative. So maybe you are "paying" for the PASSIVE experience with delays and changes that take you for a loop.

Quote from @Tim Delaney:

Quote from @Sheryl Sitman:

How can you make a BRRRR work in today's market and interest rates with hard money? Be careful.

Hard to envision anyone doing it with hard money let alone a new investor

 It is still possible. Much tougher than it used to be, but it can still be done.

How can you make a BRRRR work in today's market and interest rates with hard money? Be careful.

@Dzung Doan  Welcome to the Philly RE Market.  If you have a short list of markets you want to get invested in, I guarantee they are each very different and each have their plusses and minuses that will effect you very differently depending on what type of investor you will be, risk tolerance, your strategy and goals . . . If anyone tells you one market is better than another without knowing anything about you, take their advice with a grain of salt. I work a lot in Philadelphia (I run the Philadelphia Landlords Connect FB group and produce the only Philly Landlords podcast) but I am in many other markets as well. So I will not say any market I am in is the best. I am all about diversification, managing risk, ability to pivot fast to meet changing markets and changing life circumstances . . .  In Philly, if you want to be as passive as possible, I suggest  looking at better neighborhoods and housing stock or doing total gut rehab in up and coming areas because your challenges to reach headache free investments will be the condition of the older homes and tough tenants. Older properties, if not rehabbed properly usually will have major issues. Tenants in rougher areas will frequently have issues with paying rent, damaging the property and other issues. And if you only have 1-2 properties of this type, you are at high risk.  If you want to jump the learning curve rather than learning all this "on the job", feel free to reach out.

Quote from @Fe F.:

We are in the Philly metro area, Lehigh Valley, SW Fl and SC as well and maintain a network of trusted partners in multiple markets. We can assist investors to figure out where they should invest based on their resources and goals and to make solid decisions about how to get invested. Website will be updated soon :-)

I will chime in because you and I engaged on another post. Maybe I can add some insights. It sounds like you have the budget to get started and that is exciting! When choosing a region to invest, you may want to consider taking into consideration having the right teams to work with since almost every region has opportunities. But you're success will depend heavily on making good investments no matter if its Florida, Georgia, Arkansas or Texas... knowing how to get good tenants, good contractors, good management, understanding the unique circumstances of each market - regulations, maintenance challenges ( did you know that in parts of Texas foundation issues are highly common or that in parts of Florida many homes still need to be transitioned to city, sewer and water and that significant cost will be assessed to you eventually) etc etc. 

Quote from @Fe F.:

@Sheryl Sitman hey there! can you tell me a little bit more about what you meant by "We are now offering down to earth guidance for jumping the learning curve and setting investors up with our established teams in multiple markets (we invest in several regions and are dynamic in our approach as markets change and we change).".
Thanks!

 Many newer investors either take an expensive course to get started or jump in without much understanding and make costly mistakes or bad decisions. The courses can be good but the info is general, takes time to learn and apply, may be one size fits all approach and can not adapt to the quick changes in the market. And jumping in blind or with little understanding can be disastrous of course. So we are filling that gap for people who want to get started now and develop a strategy and make decisions that align with their unique circumstances. My approach 14 years ago looks nothing like my current investments today - we evolved, life circumstances changed and market conditions and opportunities of today are totally different. Basically we help people avoid becoming overwhelmed or falling for the hype so they can make smart decisions. And we offer working with the vetted teams we created over the years as well.  Hope that helps! Feel free to reach out :-)