All Forum Posts by: Tariq B.

Thanks @Yvonne H. the pervious owner mentioned something about them being on the waitlist so I'll have to check up with them on that. But I do like the idea of the 6 month increments. 

Greetings All,

I recently acquired a 4-plex and all of the rents are drastically under market. One unit in particular have tenants that have been there for 14 years. They are an older couple on a fixed income. They currently pay $500 for a 2 bed house, the market rent is around 700-750 being conservative. 

Since the purchase I have fixed all items the last landlord failed to fix from rehanging cabinet doors to fixing a caved in floor (happened a week after purchase, go figure, it was from years of not being attended to). 

The tenants are great they keep the place clean and seem genuine. My problem is, this is a business and I am trying to get the most return, but I will feel bad if they can't pay the rent increase and they have to leave their home of 14 years. 

My plan was ro raise the rent 100 bucks (they are as of right now on month-to-month) then 50 the next year. Or ask them to move out all toether so I can get in there and rehab it increasing market rent to $800+

For people that have been in this situation, how did you handle it? Thank you!

you are fairly close to Baltimore buy 6 homes for less than 50k and boom there you go. A 3 bed 2 bath will rent for roughly 1200 or more. Investing there definitely help me get to your number and then some. But it takes a minute to learn the game there, it can get frustrating. Same returns can be had in philly too. Or buy better class property's that will net you at least 300 a door refinance rinse and repeat. 

Thanks for the responses everyone I like hearing all your experiences. To the best of my knowledge the contractor is not related to anyone in the company, after all this is a nationwide property manager so I'm not sure how they choose their contractors. I have 3 different property managers spread over 3 states and manage some of my own. While I would like to not have to deal with any PM's in my situation, it's just not feasible. I don't really emphasize much blame on the PM as I mentioned I think it was more or less an unethical contractor. But I do think there should be some accountability on the PM, which judging by some of the responses others feel the same way too. As some mentioned they should have an idea of what prices should be. They did do a pre inspection and that's when they found all of the issues (some non existent) but the leaking toilet. I am leaning on the side of that fact that their inspector is either inexperienced or lazy. Which will also need to be addressed. I have yet to get to bringing it with them but I will sure to. Right now I am taking care of one eviction and then a tenant who fell out bed and broke her hip, who needs a ramp when she gets out of the hospital. But I'll let you all know how the conversation goes.  

@Christina Tate After 5 years I have only really had this issue pop up twice, two different PM's. Both times were when the relationship was new. It's almost like they test you to see what they can get away with. The last time it happened I had a very heated phone call with the PM, and I never had another issue with it  since and we have been steady for 4 years. This PM that I am now running into issue, is a very big corporate company of which I will not name, this may be a thing for them. They probably don't deal with a professional landlord to often they mostly deal with the "I have to relocate so I will rent my house landlord."

@Matt K. Definetaly will be doing that at the least.

Last week we had a tenant move into a new property, now I think we can agree as fellow landlords that it's pretty standard that when someone moves into a new place there is always something that needs fixing. So I was prepared or so I thought....

Prior to the tenant moving in they did an inspection on the place. They listed items such as:

1. Kitchen light not functioning.

2. Bedroom light only stays on when holding switch.

3. Trash in yard.

4. Fix counter (there was a blemish in the counter they wanted to fix)

4. One tile in drop ceiling in kitchen fell down due to leak in bathroom (uh oh)

* Number 4 I was very familiar with as I had an issue with a pipe before right where they were saying it was leaking (which also is right next to the toilet, this matters)

Anyways so tenant proceeds to move in and the first day or two I get a call, "Hello Mr. Bahay the tenant has called stating the toilet is leaking. Do you want to send your guys or we can send our own?" I was super busy that day and didn't want to deal with it so I said "send your guys."   

Next day rolls around I get another call from the PM. "Hey Mr. Bahay we sent our guy out there and keep in mind this is a guy that can do it ALL he will take care of all the issues that we found in the inspection and the toilet." My response, "Uh...yeah ok sure (I had forgot about the other issues my focus was the toilet) what's the price to do it all." She replies, "It's only going to be 1260, that's a very good price."

I will skip out on the remainder of the back and forth to keep this short but you can imagine I was taken back here I was thinking at most 300 bucks to fix the toilet and BAM hit with almost 1300 in fixes.

I asked her what was each price for the work, as in I wanted a itemized quote. She didn't have one and had to get back to me.          

She got back to me an hour or so later with the breakdown.      

1. Kitchen light not functioning. - $180

2. Bedroom light only stays on when holding switch. -130

3. Trash in yard. (by passers throwing their trash on the floor) - $150 

4. Fix counter (there was a blemish in the counter they wanted to fix) -220

5. Fix 1 1/2 bathtub pipe and Fix toilet - 580 (these items were grouped together which was kind of suspicious to me as I never saw proof of leaking bathtub, they even mentioned having to possibly replace the toilet lol)

Needless to say my BS radar started going off. As no one could tell me how these numbers were accurate and what were the actual problems. Both electrical issues were more than likely just two switches needing to be replaced....which would of equated to $310 just to replace two light switches.

For anyone that has been a landlord long enough knows 90% of the time a toilet leak at the base is either it is loose or the was ring is bad. His quote included just changing out the wax ring....the material cost....$87....that's one expensive wax ring.

So I told them I will send my guy don't worry about it. I had my guy call them up and schedule a time to go out there. Couple hours later he calls me up says there is no leak from the bath tub, the toilet it's self is fine but there is a leak and he was going to replace the wax ring. The kitchen lights are working fine and the tenants said they would take care of the trash outside. So right off the bat this is 500 bucks in bogus charges (kitchen light, leaking pipe and trash)

So if you are still following along I'm pretty certain the PM was taking advantage of an out of state landlord. I don't honestly think it was the PM personally I think it was their contactor, they told them what were potential issues and the contractor saw $$$ signs and went with it, after all who is going to question them. The PM took their word and passed it on, because after all they are only PM's not contractors.

This is why I think it is so important for landlords to take the time to learn the basics of every trade. I by no means am a amateur I'm pretty advanced in construction but even knowing just the basics would of made most peoples BS radar go off, saving them money. I also think it's important to know what the average prices per trade are, but that comes with experience.

So what was the final cost?

My guy charged me $203 dollars including materials. (he also fixed something else that wasn't on the list) which I don't know about you but that sure as heck beats $1260

Now what to do with the PM? would you address this or let it be? I am on the side of sending a stern email letting them know their numbers didn't add up and there was false information provided. How would you proceed?

Tariq

@Mathew Zorn 

Good Luck! 

PM is not all that difficult.

1. Know the laws

2. Get PM software

3. Get connects I.e. Subcontractors 

4. Market yourself/go to meet ups

5. Start managing 

Having properties free and clear is a good feeling. I already have a couple paid off myself ;)

Recently I have bounced around the idea of bumping up to the next bracket...apartment complex investing. I am seeing quite a few do this practice of what seems "padding the numbers". I have noticed that in order to justify their asking price they are using numbers of what the property could "potentially" bring in, as in fix it up here and there, raise rents, and fill in occupancy.

It was my understanding that when you figure out the cost on commercial property using a cap rate you don't do the math with what it COULD be making you do the math on what it is making now. Am I wrong? I see a lot quite a few 50% occupancy, listing price as if it was 90-100% occupancy.

Has anyone noticed that or gone into negotiations with an inflated sell price? Thanks!

Tariq

I do just about all the work myself and at first it was me learning how to do it for the first time a couple years ago, now I'm much more experienced and have learned the lesson on where to spend and where not to spend. I probably spent maybe 1 to 2k over 5 rehabs in getting people to come fix my mistakes. Such as loose pipes, wrongly installed plumbing, doors installed incorrectly etc etc. Yeah I made mistakes and still do but it's all a learning process and I'm glad I made thoes mistakes trying instead of just blowing money on contractors. 

Doing the work myself has exposed me to how everything works and allows my bs detector to go off when a high quote comes in or an outrageous explanation on how something needs to be fixed is explained to me. That alone has saved me thousands. 

No kidding tho when you scale up the fixes become much easier. I had to drop 2k on a property to fix a few things and get a sump pump installed that would of crippled me a few years ago. No it's just cost of doing business. 

Don't get cheap toilets

Don't get cheap outlets and switches 

Don't get cheap pvc down spouts if you can get mental of that route 

Don't get cheap paint

And I tend to wrap all my exposed sewage plumbing joints now in the plumbers wrap, never a call for a leak. 

Always get the right tools, learned that one the hard way.  I would make do with what i had and it would take 3 times as long then if I had just bought the right tools in the first place. 

Just my two cents 

@Sandy Blanton Thank you, I'm sure there was a lot that went on behind the scenes that I was unaware of, I think because of how many deals had fell through on this place before caused a lot of tension. Uncertainty on my end and I'm sure uncertainty and frustration on the sellers end. It definitely was not easy and extremely frustrating at times, but will hopefully pay off in the long run, as you mentioned. 

Likewise, if you see a smashing deal come your way don't forget about me.