Evaluating Rental Markets

[Lacerta]

Originally Posted by Electrician4you

Start interviewing. Ask for references you can call on. Speak to their subs who do the work. In fact go call some subcontractors and ask them who the good PMCs are. Some contractors advertise that they do PMC work.those guys will know who is good and who is crap

That's actually an excellent idea. Our carpet cleaner knows all the dirt (pun intended) on most of the PMCs in town. He knows who pays their bills, who maintains their properties, who are scam artists, etc.

[DTL3000]

Originally Posted by Electrician4you

Start interviewing. Ask for references you can call on. Speak to their subs who do the work. In fact go call some subcontractors and ask them who the good PMCs are. Some contractors advertise that they do PMC work.those guys will know who is good and who is crap

Good idea.

Originally Posted by Lacerta

The best way, by far, is to get a referral from someone. That is where most of our owners have come from. We are also a real estate office, so some of them came from buying a house through us, liked us, and brought their properties over, but most came from referrals from other owners, or referrals from people who have done real estate deals with us. By FAR the best way to find a PM. If the state you are buying in has a PM association, that might be a good resource (I think my state has one, but we aren't members). If your state regulates PMs, whoever does that might be a good resource. My state is totally unregulated, so you get the bad with the good.

Our preferred method of handling minor maintenance items is just to let us deal with them. By the time we have someone assess the problem, call us for authorization, contact you for approval, and then send the person back out (for a 2nd trip charge), we could have just fixed the problem in half the time for half the cost. For more major repairs (we just did a roof replacement last week actually, so good example), we get a bid for the owner and get their approval before doing anything. If they want another bid, they can do that, but we build as well, so we have a plumber, an electrician, a roofer, etc, and we are going to get a better deal than you will by getting 3 competing quotes. We've never had a "2nd opinion quote" that was lower than our guys. And if an owner insists on getting multiple bids, we tell them that is up to them to arrange, it is a waste of our time, since they are going to be more money.

We manage quite a few for people with only 1 house. As long as you are an investor with the understanding that things do break, require maintenance, etc, and don't fight when a repair is needed, we don't care how many properties you have. I have good owners with only 1 property, but they are investors, not involuntary landlords.



As I said, the best way is a referral. There isn't really another good way other than trial and error. BBB is pretty lame. We aren't even members. They charge you $600 a year for absolutely nothing. We've been a member in the past, and had an A+ rating. But they don't have any power to enforce anything, and no one ever posts "These are the best landlords ever" type posts, they only file complaints. Most of those complaints are going to be from "bad" tenants, who got evicted. So take BBB with a large grain of salt.

We actually own about 30 doors (houses and plexes) ourselves as well, and we try to treat every property we manage the exact same way we treat our own. Sometimes that gets us into trouble, when we fix a problem that a landlord didn't want to bother with. But our philosophy is that the better care you take of your rental properties, the better tenants you are going to get and keep, and the fewer problems you are going to have in the future. Spend a little money in the short run to avoid problems in the long run. If you let the property get in bad condition, you will only attract bad tenants, and that's when you end up with tenants who skip in the middle of the night and leave you no rent and a house with $20k in needed repairs. We've "fired" owners before for not letting us do needed work. We don't want to manage a run down house.

Even so, there are no guarantees. We've had tenants with 750+ credit scores who trashed a house. We have a lady right now we served an eviction notice on today who had excellent credit and 20 years on her job, who just can't make her rent payments on time, ever. And we've had people who look great on paper who are total jerks and are problems on everything except for rent. If you are in the rental business long enough with enough units, no matter how carefully you screen, you will eventually have a problem tenant.

Also, if you insist on having the rent too high, you will attract only those people who are desperate and who can't get approved anywhere. Most of our problem tenants over the years were because we had to settle for someone marginal, who we would have preferred not to approve, because the owner freaked that we hadn't found anyone yet, because they insisted on a rent amount that was too high for the property.

Thanks for all this great info Lacerta. It sounds like you run an honest business and give potential clients an honest rundown of what to expect as a landlord. It's a bit daunting having someone manage your six figure investment while you're on another continent but a lot of people in my line of work are property investors. I'm in the initial stages of getting pre-approved and contacting a realtor but I'm going to start researching property managers once I figure out how much I can borrow and what areas I'm most interested in.

I'd assume that property managers are pretty savvy about their particular markets. Do you guys usually suggest what range rent should be set for a particular house?

[WestIndies]

I own a rental property in TX but I recently relocate to NY. If I choose to keep my rental property in TX, and I maintain a physical mailing address, along with a driver license then I can show proof that I allegedly legally live in the state of TX. Since I relocate to NYC, tax laws does allow for at least one visit per year which is tax deductible as a business expense so you can vacation for free in the state where you own property.

My property is a 21 unit rental and I bought it from an investor who lived in CA back in 2010. The primary investor was in CA but he partner with his colleague in TX, don't know the details. The property was kept for approx 3 years by the same team, and it lost money because the partner in TX allegedly did a lot of illegal scams with funds.

When I bought the property I had 13 court evictions from Aug 2010 - Dec 2010, you can say I lived at the courthouse and I am not counting the tenants who lived for a few weeks on the property and then left. It was a revolving door of sorts, and the property was known in the neighborhood and by law enforcement for two things drugs and prostitution. Thankfully I didn't know about this prior to buying the property else I would have missed out on a great opportunity. Three years later, with two property managers who also stole and rip me off, yeah I do admit being a slacker of sorts as a property owner but it was a blessing in disguise because I learned a lot. Today the property is 100% full with a waiting list, the tenants who live there don't want to move and yes they all pay their rent without any hassle. If a tenant can't pay their rent on time, they always call me directly and let me know they will be late or a few weeks behind and i am okay with that because its a mutual relationship based on trust and respect for the tenants because I they know I absolutely care about their well being regardless of their circumstance.

While in TX I've looked at a few other multifamily property for investment, mostly CA investment properties which was managed by property management company. I was amazed at how the PM companies find ways to nickle and dime the property owner for money.

If you choose to invest in another state you need to find someone with whom you can have absolute trust and their needs to be absolute transparency on where your money is going, else it would be a losing proposition.

BTW, if anyone on this board currently lives in TX and they are bitten by an entrepreneurial bug, I often think of starting a property management company and I would love to chat with you. Here are a few things to consider before you reach out, I don't have lots of $$ and I am not interested in becoming the next millionaire, what I am interested in is providing for my family, and having a few $$ saved for rainy days. I strongly believe in KARMA, and I try to live in a manner where there is little discrepancy between my words and my actions. My primary interest in the property management business is to create a company which is based on a few principles (1) absolute transparency where the investor can account for every penny spent (2) treat employees/tenants with absolute love, respect and make them become our best advertisement (word of mouth) because they love the service we provide them, in turn they will shower us the same (3) charge a fair price for absolutely outstanding service (4) provide exceptional, responsive service and be accountable for our actions....