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Apartment building owners

Old 07-10-2013, 07:06 AM
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Default Apartment building owners

I've been toying with the idea of buying a 4-6 unit for ~150,000 to diversify some of my investment money. What can I expect when being a landlord? Is it worth hiring a management company to avoid headache? What is the going rate of return for a building? All impute will be helpful
Old 07-10-2013, 07:11 AM
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try not to take it personnlay but how can anyone give you "impute" whith so little detail and vague questions
Old 07-10-2013, 07:11 AM
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Been there, if I did it again would hire the management company.
Old 07-10-2013, 07:19 AM
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Joyglen?
Old 07-10-2013, 07:21 AM
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Originally Posted by thetowking View Post
I've been toying with the idea of buying a 4-6 unit for ~150,000 to diversify some of my investment money. What can I expect when being a landlord? Is it worth hiring a management company to avoid headache? What is the going rate of return for a building? All impute will be helpful
ROI should be in the 8% range - less in nicer buildings / more if you buy in the hood....

You probably wont be able to achieve those return with a manger running the place.... They fee you to death, charge for leasing and wont control expenses.....

If you have the time - do it yourself.... If I can do it - anyone can
Old 07-10-2013, 08:24 AM
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Originally Posted by triplenet View Post

You probably wont be able to achieve those return with a manger running the place.... They fee you to death, charge for leasing and wont control expenses.....
:
I have a percentage of a 3000+ unit complex. The guys that own the management company also are owners in the building. This is about the only way I would use a management company as their interests are aligned with mine.
Old 07-10-2013, 08:40 AM
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ABSOLUTELY HOLD OUT FOR GOOD TENANTS!!!! Keep in mind until you reach a certain number of units (at least here in GA) you are not required to comply with all the equal housing laws/ anti-discrimination laws etc. I have and will refuse to rent my properties to tenants who I don't get a warm and fuzzy feeling from. I'd rather a unit sit empty for a month than spend 2-3 months chasing rent, evicting bums, fixing the unit, and re-marketing it. You can always require a credit check and make sure you get deposit + first month's rent up front. If they can't come up with both, move on.

My strategy is also to look for property in a desirable area where I can be selective with my tenants. If the property is in da 'hood you may not have that luxury.

I manage my own properties. There isn't much to it day to day, although issues will pop up (repairs, unauthorized pets etc). When you have good tenants you don't have to chase down rent checks every month.
Old 07-10-2013, 08:53 AM
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Originally Posted by joe.giuliano View Post
I have a percentage of a 3000+ unit complex. The guys that own the management company also are owners in the building. This is about the only way I would use a management company as their interests are aligned with mine.
That's how we do it as well.... I am the managing member of the ownership entity & the property management company & the leasing firm ..

This way I get my preferred return "plus" leasing and management fees .

Old 07-10-2013, 09:02 AM
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Originally Posted by keithlinco View Post
Keep in mind until you reach a certain number of units (at least here in GA) you are not required to comply with all the equal housing laws/ anti-discrimination laws etc. .
I would check your States Fair Housing Act again.... You cant tell a person of a certain color that you wont rent to them .... You can tell them that you don't like them and wont rent the unit - but you cannot discriminate based on race, color, creed, etc, etc ..
Old 07-10-2013, 09:24 AM
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Originally Posted by keithlinco View Post
ABSOLUTELY HOLD OUT FOR GOOD TENANTS!!!! Keep in mind until you reach a certain number of units (at least here in GA) you are not required to comply with all the equal housing laws/ anti-discrimination laws etc. I have and will refuse to rent my properties to tenants who I don't get a warm and fuzzy feeling from. I'd rather a unit sit empty for a month than spend 2-3 months chasing rent, evicting bums, fixing the unit, and re-marketing it. You can always require a credit check and make sure you get deposit + first month's rent up front. If they can't come up with both, move on.

My strategy is also to look for property in a desirable area where I can be selective with my tenants. If the property is in da 'hood you may not have that luxury.

I manage my own properties. There isn't much to it day to day, although issues will pop up (repairs, unauthorized pets etc). When you have good tenants you don't have to chase down rent checks every month.

All good tips but ^^^^ is best...
Old 07-10-2013, 09:34 AM
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I heard that the JOY of ownership is outweighed by the problems... there are some good deals in the watkins GLEN area if you are interested.
Old 07-10-2013, 09:35 AM
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Sorry to hijack ...... how do you screen a possible tenant ?
Old 07-10-2013, 09:43 AM
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Originally Posted by Jughed View Post
I heard that the JOY of ownership is outweighed by the problems... .
Part time landlording is probably a PITA ...


Originally Posted by BW23 View Post
Sorry to hijack ...... how do you screen a possible tenant ?
There are credit reporting firms that will run eviction and criminal for around $20 a report

Dillard below has it right - especially "gut feeling".....
Old 07-10-2013, 09:43 AM
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Credit check, deposit, references, and gut feeling
Old 07-10-2013, 09:51 AM
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Thank you thus far for all advise. I think i'm going to schedule a meeting with a broker and look around at a few places and see if I feel comfortable. I'm looking at lower middle class but not the ghetto. As for management I have a receptionist/problem solver at my business office and I think ill pay her some overtime to deal with issues and see how that goes. I am looking at these properties so 15-20 years down the line when I retire I will still have a decent cash flow coming in.
Old 07-10-2013, 09:52 AM
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Fair Housing Laws are Federal!!!
Old 07-10-2013, 10:09 AM
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Originally Posted by thetowking View Post
Thank you thus far for all advise. I think i'm going to schedule a meeting with a broker and look around at a few places and see if I feel comfortable. I'm looking at lower middle class but not the ghetto. As for management I have a receptionist/problem solver at my business office and I think ill pay her some overtime to deal with issues and see how that goes. I am looking at these properties so 15-20 years down the line when I retire I will still have a decent cash flow coming in.
Not sure what part of the country you are in but here it's a fine line between the two. Keep a strong hold!
Old 07-10-2013, 10:27 AM
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The best advice you'll ever get:

Learn effective tenant screening that operate within any applicable laws.

I can't tell you how many times I've had friends and family reach out to me about a problematic tenant. I always ask to see the person's application and the applicable background check (we do credit, criminal, landlord/tenant). Each time there was a problem there wasn't any app or check.

Contrary to what you may be reading here (I didn't read it all) -- there *ARE* perfectly legal ways to protect yourself, your property, and most importantly, the happiness of your other tenants by knowing what you need to know BEFORE you offer a prospect a lease.
Old 07-10-2013, 10:36 AM
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Quality of tenants is certainly #1 on the list. #2 is hidden maintenance problems. #3 is location. Management companies, for the most part, are totally worthless because they don't have any skin in the game. There are exceptions, and I have one of those exceptions. My rental agent is a retired Captain from the Sherrif's Dept. He did all kinds of duty...drugs, murder, investigations etc.Seen it all. And who the judges going to believe??? Kenny, who knows all the judges, or the tenant??? He interviews the tenants one on one and requires in the lease a quarterly inspection!!! Sometimes credit reports and background checks are worthless.
Old 07-10-2013, 11:24 AM
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I work for a large, 20,000+ client CRA (Consumer Reporting Agency aka background check company) and one thing we offer is tenant screening, criminal and credit. If you are paying $20 for both are are not getting good information, FYI.

I own a rental property, tenants are college kids and I have had some issues over the past few years (ceiling fans ripped, walls punched, doors kicked) but have always had parents co-sign and keep a credit card on file...has worked out pretty good. ~15% return on a house that is still "underwater"...interesting how that works, eh? Rent it for 2x the mortgage but can't get a re-fi to a lower interest rate.

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