All Forum Posts by: John Public

Well I was thinking of being the off-site manager and having an on-site one. But I have no illusions that I would be quitting one job for another. Besides, I don't really wanna sit around and do nothing all day, that would be really boring. I just think I would enjoy it more if I were working for myself. Oh well that's a decision thats years away anyway.

Well thanks for the tips.

"The agent who's focus is residential sales"... That sounds like a realtor to me. Aren't PM's and realtors different? Or are many realtors also PM's.

Also, can you point me to some of these companies that "cultivate" small investors.

Wheatie,

What you said about buying properties at a price that allows for profit while paying nominal operating expenses seems to suggest that it is LESS risky to buy a distressed property from someone at bottom dollar and turn it around than to buy a profiting property at a market rate. Am I understanding this correctly? Also I am correct in the assumption that one who is selling a profiting property (even if not profiting that well) isn't really a "motivated seller" since they aren't cash flowing negatively, and can afford to be "tire kicker sellers"? Or maybe it's just the deals I have been exposed to, which admittedly mainly consists of loopnet.com

On loopnet I see a bunch of motivated sellers. Motivated to sell you their property if your willing to pay their WAY overinflated price that is. And based on proforma, never actual numbers of course. Maybe I am going about looking for deals the wrong way but shmoozing brokers for "pocket listings" seems to produce nothing but more of the same bad deals. There HAS to be a secret to finding a halfway acceptable deal somewhere. Or rather, finding that motivated seller and MAKING the deal through negotiation.

Beachbum,

So I can find a PM before I buy a property? How does that work, do I have to pay to retain him or is he helping me for free on the hopes that he gets to be the PM of the property after closing? Please excuse my ignorance on the subject I am learning all this for the first time and we all have to start somewhere.

I'm actually thinking about becoming a property manager myself after I quit my job in the corporate world (which will probably be at least 3 years off) but I would rather not "learn" on the first property I own. Especially if I have to quit my job to do it, thus making it my sole source of income. So I need to learn all I can about this business. Are there people who become PM's so they can run their own properties? Do they make better PM's because they own the property? Or do they make worse PM's because of the emotional attachment perhaps?

Thanks for the response. I'm not sure I know what WRT means though.

Here's another question, Why does it seem that experienced owners seem to know who to hire and how to train them correctly while those who aren't long (or profitable) in the business repeatedly make the mistake of hiring management that makes the property suffer from chronic high vacancy, high expenses, etc... and ultimately have to sell the property themselves at sometimes huge losses? What secret do these people have that the newbies don't? Apparently some of the newbies figure it out and become pro's while others don't.

Hey guys, I'm about to enter a partnership with a group of investors to purchase a 100+ unit apartment building. We haven't yet finalized what property we want to buy (were still in the finding a deal stage), but I want to know how much vacancy rates can be affected long term by conditions that are completely outside the control of the investor.

I guess what I am asking is this:
Can an investor do everything right in a B or C class neighborhood in a moderately growing market and expect occupancy rates to stay at or above 90% for many years. Or do properties that large generally have inevitable periods where they dip below the 90% occupancy mark, or some other unfortunate thing befall them, due to things completely outside the investors control, like massive job cuts, shifting economies, the neighborhood slowly declining, etc... (or anything else I can't think of)? Despite having a good management co (or resident manager) well kept property, low expense ratio (45% of GSI or less), etc...

The reason I ask this is because I am ultimately trying to decide which is safer for the commercial RE newbie entering the game.
Is it safer to buy a property at a lower cap (8 - 10 cap) that is already high occupancy, no differed maintenance, expenses at or below 45%, good management in place, all the niceties, etc... Or is it better to buy a rundown, high expense, lower than 85% occupancy, differed maintenance, etc... at a higher cap (12 - 14 cap) from a desperate Californian who got in not knowing what he was getting into (yeah yeah, I know their not all from Cali, sorry... it just seems like a large portion of burnout landlords of this type are). And try to turn this property around.

Thanks in advanced for your experienced answers.

Alright thanks for the info.

Thanks Wheatie for all the info. This is very helpful and informative.

What if the LLC is owned 33% by me and 33% by a sibling. Does that mean that it's 66% owned by disqualified persons? Even if the 3rd member is unrelated in any way? Or is a sibling not considered a disqualified person?

So a checkbook control company is and entity that lets me buy shares in an LLC? Because that seems to be the most flexible option for me where the LLC can be operating in whatever capacity it does and my IRA simply makes a portion of the profits.

Obviously I'm looking for the most flexible option here, which is the whole reason to go to an SDIRA for me.

If the termination fee is also several hundred dollars too then I can swallow that if I have to. However if it's in the thousands, then thats another story.

I assume that even when this is a self directed IRA I will still be able to invest in the traditional things like stocks, bonds, etc... Or can I only then invest in RE and the other stuff? Sorry if this sounds like a stupid question but I have never seen it specifically answered on any of their sites. And the more I can get answered before I decide who to go with, the better off I am. Also how do they handle the buying of stocks/bonds on my behalf, if I so choose to go back to that type of investing?

Well its not like I can't go back and change who my IRA custodian is right? Not that I would want the hassle but it is possible right? I don't wanna be locked into using one company for the rest of my life.

I have never had that limit placed on my non self directing IRA. I don't see why it should change now.