All Forum Posts by: Tony Castronovo

Yes, it's a good point about the exit strategy.

I've been doing pretty good...heads down on stabilizing my MF property. Recently changed up my PM, which was stressful....but we've turned a corner.  Never any shortage of challenges though.  My latest is the property tax assessment I just got in the mail...on tax day no less....could they be a little more kind?!?  Let me know if you have a good property tax protester that works in Brazos county.

Great input everyone!  @Jeff Bridges I especially liked the link you provided on negotiating laundry room contracts.

So at this point I do not have a contract....just a proposal.  The proposal states new machines and is of the revenue agreement / remuneration variety (70% over the first $28 per machine per month).  This is for a 5-year term.

I am just looking for 4 machines (2 washers and 2 dryers)....only 20 tenants.  I don't expect a lot of revenue but looking at this as a tenant amenity and retention tool.  For some tenants, not having onsite laundry is a deal breaker.

The plan includes coin operated plus a mobile app.  They offer the card reader but cannot do that with coin operated.  A decent percentage of my tenants are not technology savvy so figured I needed to have coin operated as an option.  But maybe that is a big security risk and akin for break-ins?

I need some help on something I have virtually no experience...laundry.  We are building out a small laundry facility at our apartment complex and expect to complete a revenue share agreement with an equipment vendor.  They are offering 5,7, and 10-year terms...with the revenue to me increasing in proportion to the term.  I assume this is negotiable but not really sure what to push for.  Thoughts? 

@Vijaianand Thirunageswaram hey this is exciting! I haven't run the numbers on new construction but I got intrigued during one of my apartment shopping visits last year. I visited a 20-unit MF that consisted of 10 one-story buildings...some were 2 X 1-unit studios, others were 1BR + 2BR buildings, etc. Each building was 2 units and they were split in half with two parking lots and a nice courtyard in between. It was essentially a small community that a developer/investor stood up back in 2014 (so still new). The model was that he would build these communities, lease them up, then sell essentially as turnkey. It wasn't something I wanted to buy....but I liked the model as I am sure the land and development costs were not over the top and once he sold at NOI / Cap Rate he likely did pretty well. I am speculating...but it was in interesting model.

@Brad Larsen I really appreciate you posting your article/thread.  A great read!  I will admit that I am likely not a pure "A"....but I am definitely not a "B" or "C" landlord.

I do expect my PM to be my partner and we should be aligned on goals and objectives.  What I offer them is freedom and support on how to fill the property.  I gave in to reducing rents, offering free rent incentives, staging a model unit, and putting in an onsite laundromat....all based on their feedback.

What I expect in return is to manage our expenses like it was their own money.  A couple examples where they didn't perform....1) they hired a lawn service for $600 for 2 cuts/month...after I was floored by this I made one phone call and had a landscaper for $240 (he was reputable and insured)....2) tenant complained about hot water and rather than have a plumber come out to investigate, they authorized my contractor to replace the hot water heater (they were way beyond their authority limit).

I also expect my PM to show the property.  After only 3 visits they complained it was too far of a drive.  I had to start running my own open houses and showings.

I sent them leads daily from ads I took out and listings I created on various sites (beyond the standard ones).  Leads contacted me multiple times about not getting returned calls.  They denied it.

I do commend my PM for being available and responsive.  That was something I really liked....emails and texts all hours of the day and night.  I know that may sound obnoxious but we were both mutually agreeable to that.  Just wished they would have made it out to the property once in awhile (other than the 3 agent visits and one inspection upon takeover they NEVER went onsite).

My response to every tenant I came in contact with...."I work with the property management company".....never told them I was the owner and never gave out my number.  Always deferred all questions and concerns to my PM.

It's all a good retrospective.  I know PM's deal with alot of headaches and have high turnover.  I just felt like my PM wasn't the right PM for me.  I'm moving on from this experience and just applying what I learned.  I will not be posting on Yelp or Google.  But if anyone wants to discuss with me personally I will happily provide my feedback.

I think you misunderstood.  What I was saying was that we negotiated a flat fee that upon full occupancy would have equated to 4% of gross rents.

@Account Closed agreed.

So BIG thank you everyone! I realize this is a passionate topic for many. While part of me wants to fight for what I believe is right, I have also learned that removing stress from your life can have just as much value...if not more. I’ll likely just move on and put my energy into places where I can make a positive difference. 

I appreciate you allowing me to vent. And you all provided great perspectives. I’ll likely write a review and will share my feedback with other investors about this company. Beyond that, I’ll chalk it up to the price of tuition. 

@Charles Kao please understand that they were NOT doing their job...that is why they are no longer my PM. Refer to some of my earlier comments. Also remember that I was paying a flat fee. And I never said I didn’t want to pay them. I suggested 50% of the normal fee. They collected rents...yes. But I was doing all the marketing. They were too lazy to send their own agents to show the property. So they utilized local agents...which meant I always paid their commission as well as a co-broke...no matter what. The occupancy was so bad I was paying 20% fees on average. The whole point of the flat fee was that it would have been approximately 4% once fully occupied. They had no incentive to fill the property (probably my biggest lesson...our goals & rewards were not aligned).

@Patricia Steiner thank you for your comments.  I was offered some advice when I first started looking for property managers (I self-managed for a long time).  The advice was to do everything to make it work...like a marriage...that there will be highs and lows but you need to make it work.  If I am being honest...the stress was similar to being in a bad relationship.  Every topic seemed to be an argument.  

What threw me over the top was when they tried to justify to me that I should pay a commission to an agent they brought in to lease up our units...the "new" tenant was an existing tenant who lived in the unit next door.  We had been talking to her for months about moving into one of our newly renovated units.  The agent got her to fill out the application and then wanted a commission.  I could see paying a renewal fee....but seriously?  The PM claimed that we wanted to keep the agent happy.

Oh, and I was paying utilities for tenants who had moved in months prior when they were supposed to have switched them into their name.  We never billed them back.

And so many of the leads I generated kept telling me no one was calling them back.  I literally started showing the units and running open houses on my own as they got tired of the drive.

I could go on and on...but the biggest issue is that "they never accepted any blame or accountability for their mistakes".  It was frankly exhausting arguing over every point.

@Steve K. not nearly as bad as the issues you pointed out.  But I will say this...we were at 25% occupancy in January and we are now at 85%...we placed 4 new tenants in just 3 weeks after my new PM took over.

@Matthew Irish-Jones the contract includes a flat fee per month (not based on gross income).  It also states that upon termination that I owe "fees that would accrue over the remaining term of the lease".  But that language is really for management fees based on rental income.  It's really in the grey area.