All Forum Posts by: Tim Cooper

I assume you are working with an attorney.  This is a legal question, ask him/her.  

Eric,

Congratulations.  What your have described here is a great way to get started.  Before you know it you will have 100's of units all paid for and be financially independent.  

Without seeing the numbers, yes, I love cash flow.  

But remember you still have depreciation, and mortgage pay down even if it doesn't appreciate in value.  But if you can increase rents, it will appreciate.

I wish I did have a good way to gauge a property manager (PM).  I thought I had a good one at one time.  Here are some of the things he did that I can recall.  (This was about 18 years ago.)

• I found out he wasn't even going to show vacancy's, his secretary just gave them keys and they went to view apartment on their own.  
• He was "churning" tenants.  He got a whole months rent when he moved a new tenant in instead of 10% regular PM fee.  So the more often he moved tenants in and out the more income he made.
• He got bad tenants in that drove out the good ones I already had.
• He admitted he hadn't even driven by the property in nearly a year.  He said he was too large and didn't have time to drive by his 1,000's of units every month.
• I believe he was running it down thinking he was going to buy it from me really cheap when I had to sell.  He was very mad when I sold it out from under him and didn't give him a chance to buy it.  

The main thing you have to do is your due diligence.  Interview the PM and ask a lot of questions about how he will manage the tenants and property.  Just like tenants, no matter how careful you are you may get a bad PM.  

The instant you feel there is a problem, fire the PM and get a new one in there.  A good property can get run down very quickly.  That is what happened to me and discouraged me so much I pretty much got out of the rental income business for many years.  

Hi Blake,

My 1st thought is how are you going to manage the property when you leave town.  It can be very difficult to manage a property from a distance.  I can tell you from experience and hearing a lot of horror stories, finding a good property manager can be very difficult.  If you can't be near by to check up on a regular basis, the property can get run down very quickly.  

That being said, a 4-plex is a great way to get started.  I didn't have time to calculate the numbers, but by glancing through looks like this property might work.

As you mentioned, all rents etc. should be prorated, so based on this it shouldn't matter.  All of your future tenants should be notified ahead of time the next payments will be made out to you or your property manager.  

Make sure you know your state and local laws.  You don't want to get into a law suit based on age discrimination.  I think in IL you can set up a building or complex as a retirement community, but other than that you pretty much can't discriminate based on age.  

I'm not a lawyer and this is not legal advise.  

Hi @Ardijan Has

Welcome to BP.  If you haven't yet, it would be a great idea to go read http://www.biggerpockets.com/real-estate-investing before you go.  It's a great start with lots of great info.  Also, listen to as many http://www.biggerpockets.com/renewsblog/category/p... as you possibly can.  If you are going by car, listening to the podcast on a smart phone is a great way to pass the driving time and keep awake.  

Best of luck to you.

I think once you have made an offer at that price, it would be hard for them to accept a lower offer.  Just my opinion.  

Seems like an OK deal to me.  You aren't going to make a fortune on it, but you probably won't go broke either.

Good luck with it, keep us posted on the outcome.