All Forum Posts by: Timothy Howdeshell

Are these just southern slang type of people? As in, "More shuga in ya coffee, hun?"

I find that endearing so wouldn't bother me at all! It comes down to the context in the moment and your personal preference. 

If it really bothers you, let them know more directly. If they still insist, you were probably right to be offended in the first place. 

I have worked with them on the sell side (aka JV wholesaling a deal to them). They have a massive buyers list and are a volume house. This means that they get a ton of properties under contract, but with less margin. Less margin = bad deal for the flipper.

As with anything, but especially real estate, caveat emptor (buyer beware). Run your own numbers. They are a legit company, but I've struggled to make many of their deals pencil with my specific strategy. 

I think the desire to want to deploy $1M fast is the biggest risk here. I could be wrong, but it sounds like you have limited real estate investing experience. 

If I were in your shoes I would put 50% down on a 3-500k property somewhere and use this as a learning experience. If you find that you like the process then jump in more fully. 

Having a lot of money can lead to purchasing something, anything to get in the game. But to make those awesome returns you've heard about, you need to focus more on the deal itself. 

Learn how to spot a good deal, underwrite it, leverage your money via mortgage, manage the property and/or hire people. 

Once you've got those basics down I'd say you're ready to go whole hog with the rest of your money. And if you put 50% down on a 300k house you'll still have 850k (most of your money) left to pursue the larger vision. 

@William Lu you don't need to actually live in the area to work with many credit unions. Just give them a call to see if they have options for you. 

My recommendation is to post in your local (local to the property) investment facebook groups posing this question. I have always found all of the vendors and contacts that I needed very quickly this way. 

I agree with @Mike Dymski. The incentives are not aligned well in most PM companies. One of my current PMs charges 8% of rents, + 1st month for lease up fee + 50% for lease renewal. When you add that together it is close to 16% for management. 

Seems like you're getting a good deal to me! 

I think that no one here will be able to answer your question ultimately as it is an emotional decision with constraints that only you fully comprehend. 

I disagree with one of your points however that your homes are only breaking even. Unless you're highly cash-flow negative, I think you're doing much better than you're feeling. 

They are breaking even on cash-flow, but what about loan paydown, appreciation, and tax advantages. Your tenants are paying off your assets for you and someday you'll have them all free and clear if you choose bringing in a full time income relatively passively. Whether that is worth the current hassle and frustration is a question that only you can answer! 

Good luck! 

@Adam York got it. Thanks for clarifying. I was reading into your post to guage the depth of management experience. But this makes a lot of sense. I've done this myself where I went over on a project, decided not to flip it and hold as a rental (crappy BRRRR), and then self-manage to increase cash-flow and re-coup overruns.

I hired a property manager 6 months later when I got to the point of evicting my tenant :-)

If you're concerned about lack of amenities, perhaps go to the local gym, eateries, etc. and work out a discount pricing (If I get a membership for every tenant in my apartment building can I have it for 50% off). Then you can throw the free gym membership onto your listings as amenities. Yes you'll have to come out of pocket, but maybe less than the price decreases. 

Whichever way you go, best of luck! 

Agreed with @Corby Goade. Given that you purchased a 12 unit downtown, higher end apartment building as your first property this tells me that real estate is not your full time gig. If it were, most investors start smaller and work their way up in my experience. Consider that there are full teams of staff that specialize in a specific area of the property management business. Property management is very nuanced and complex which is why there are companies that do this specifically. By trying to self-manage you're essentially telling yourself that you're more capable than entire PM companies. Perhaps its time for a different strategy and hire a professional. Sure they have margin for their services, but think of that as paying for peace of mind. 

And as all others have said, it's almost always price. We can't smell your units through the computer, but assuming no glaring issues like that, the market is telling you that people aren't willing to pay your asking prices for those units. 

As others have said, nothing in the information seems off. It seems to me that you may be getting hung up on the fact that the settlement estimate and final statement are differing by so much. This does happen and is important to have a trusted person (agent, lawyer, title closing agent) walk you through the process of purchasing a home, at least at first, so you don't get blindsided. 

Regarding the tenant issue, it doesn't matter what the seller says, it matters whats in your purchase contract. Everything in real estate is negotiable, including and especially current tenants. You don't have to purchase a tenanted property and can have the contract written that property must be delivered vacant at close. Inheriting tenants, especially ones below market, are a risky proposition. You'll likely incur costs and stress/hassle due to evicting the tenant, then costs to restore the unit to livable condition. It may be too late to back out now though. Check your purchase contract. If you're a week out, most likely all of you contingencies have expired and you'll need to forfeit your earnest money to walk away now. Your call, but arm yourself with knowledge on your options first. 

Good luck!

There's what you can control: checking your existing lease to see if terms regarding plumbing maintenance are spelled out, adding something specific if it isn't there, showing the tenants how to fix this themselves, removing the disposal (this is what I and my PMs always do; not worth the hassle), instructing the tenants that future clogs will be there responsibility personally and financially. There's a lot you can do to gain/maintain control over this situation! 

What you can't control: them repeating this issue (sounds like they will), the tenants entitlement around having a disposal that they're not responsible enough to use. Best not to worry about this stuff.