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Erik

What did you wish you knew then, that you know now?

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OK, landlords.... part of this is learning stuff sometimes the hard and expensive way.  What did you learn along the way that is advice you would pass along to a newbie getting their start?

I'll get the conversation started.  When I started working as a property manager I already owned eleven units.  I thought I knew what I was doing.  Fast forward six years and boy did I get schooled.  The cool thing about being a property manager is that you get to see a wide variety of properties, people, and tactics.  You get to see what people tried that didn't work, and what did.

Here's a list I came up with the other day after I was asked the above question.  Please chime in and tell everyone what you learned the hard way.

  1. Don't buy a place you wouldn't want your kids living in when they're that age
  2. You can fix a lot of stuff, but you can't fix the location. Neighborhood matters.
  3. Never take the sellers word for it when it comes to rent price. Rents go up AND down. The numbers should work if either happens.
  4. "Move in ready" almost always means zero or negative equity for YEARS
  5. Over-budget for repairs and you won't be disappointed
  6. Walking on a deal, even if it means losing your earnest money is way cheaper than buying a money pit
  7. Stick with middle income working class neighborhoods. Low income "C" properties almost always look better on a spreadsheet than they do in real life
  8. As a property manager, I would tell you to NOT hire a property manager until you have managed the property for at least one year yourself. You will value what they do if you've already done it yourself. Budget for one when you run the numbers but wait on hiring. (Plan on around 15% averaged out over time, not 10%)
  9. It's not always a great time to buy but it doesn't mean you can't. You just have to take your time and be careful. It took Kassandraand I eight months to find our first 4 plex
  10. Pick an agent that's willing to tell you things you won't want to hear. I've seen Matthew Miller try to talk his clients OUT of buying a 4 plex and showed them horrible eviction pictures just to see how committed they were. If the person who stands to make a commission check if you buy, tells you to walk on a property.....walk.
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One thing I messed up once was that I didn't get a home inspection on an older building (70's).

Your list pretty much nailed it.

 

I also learned that there is a such thing as "too nice"  when remodeling an apartment.

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It is possible to over spend on the cost of a rehab cause it was made to nice for the area...but it isn't a bad thing to do at times because of other benefits can happen.  Such as: Tax Depreciation reasons or just simply to find a better tenant in a hard to rent area.  So I agree "to nice" isn't really possible because there are many benefits of some kind.

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1 hour ago, Kassandra said:

It is possible to over spend on the cost of a rehab cause it was made to nice for the area...but it isn't a bad thing to do at times because of other benefits can happen.  Such as: Tax Depreciation reasons or just simply to find a better tenant in a hard to rent area.  So I agree "to nice" isn't really possible because there are many benefits of some kind.

😁😌🏚️

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If a lender/underwriter is giving you a hard time, see them as warning/protecting you than being an adversary in the transaction. Ive found that clients try to prove a lender "wrong" than look at where the lender is coming from. If they are wary of lending on it, you should be cautious in proceeding.

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Do a "home inspection" at least once a year!  Give your tenant a warning in writing, in text and by phone call (can't have too many proofs of contact),  , at least 24 hours in advance, and then DO IT. Never let the tenant say "it's not a good time, can we do this next week?"   

Turn on all faucets; start the dishwasher/garbage disposal/washer/dryer; check for moisture issues in the bathroom particularly around the shower and toilet;

Turn on the oven and stove top; CLEAN the filter behind the fridge.. move it and do it!, look at light fixtures, outlets, ABOVE ALL CHECK THE SMOKE DETECTOR AND CARBON MONOXIDE DETECTOR!!!  

Fix the problems you find...don't wait!

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Maybe goes without saying but ALWAYS run your own numbers! Just because someone says it's a good deal doesn't mean it's a good deal or a good deal for you in particular.... Things like estimated rents after xyz rennovations may or may not pay off like someone says. 

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@Ben Persinger so true!  I had an investor that did not run his own numbers and he believed the agents numbers....they were 50k off on 3 rehabs!  Boy did that hurt because he had green eyes and thought he would make millions and then he just go upset at the vendors for "over charging" when he just didnt do his math right. Guess everyone cant learn this one.

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@Kassandra Unfortunately I have seen the same thing both with people trying to sell me deals and with some of my clients who have been sold a bad deal. Then I'm in the middle trying to explain why their renovation costs so much. No one wins in this deal....😞

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On paper and the real world are totally different.  I second this one:

7. Stick with middle income working class neighborhoods. Low income "C" properties almost always look better on a spreadsheet than they do in real life

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Unless you plan on working full time in the business what you may need most is a handyman with experience, people skills and not over priced. It’s imperative that they treat tenants professionally yet also be able to see through the BS and do what’s necessary rather than create additional expenses and issues.  Will they go over on a Sunday, a holiday if you aren’t able?   This is hard to find but if you can find it things can work in any neighborhood.  I don’t mind C neighborhoods, there are great tenants there you just have to find them and treat them right so just be ready to screen, screen, screen the tenants.  Also, budget for higher repairs and absolutely don’t overpay for the property in the first place.  

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