Red Flags from a Phone Call
I took a phone call last week from a potential investor. From word 1, he was complaining about how much everything costs involving a rental unit. Cost of labor. Materials mark up.
He had tasked a new PM with posting a 3 day. It had been almost a week & it wasn't yet posted. My immediate question / comment is "Are you paying her to post the 3 day?" If not, she's busy with work that IS paying her for her time and that 3 day gets posted only when more pressing work (paying her time) is done.
In terms of vacants, I asked this investor if he takes the time to make sure they are rent ready with no lingering issues. Or is he rushing his crew to do next to nothing on the unit. Does his vacants look shabby to the possible renter? I explained to him that when my husband & I prep a vacant in the portfolio of rentals we own (that we've oved for over 10 yrs now), we make sure we are putting out a product we can be proud of. In a prior post, I commented simplicity is everything. And simplicity does NOT equate to cheap...it doesn't have to be high end either.
Part of the conversation with this investor was about my fees (and reserves required) for his City of Cleveland properties. I normally charge 8-10% mgmt fee with no reserves for the suburbs but I charge 20-25% mgmt fee & require a $5-25k reserve for City of Cleveland property due to the legal, physical, & financial responsibility I take on with the new Local Agent in Charge legislation. He mentioned no other PM (he was calling several of us) had said anything about the different rate structure. Buyer beware. If there is a management team NOT charging you extra for your property within the city of Cleveland, either 1) they know nothing of this legislation or 2) they're not concerned about losing everything for your refusal to do what's right to your property or 3) they're desparate for your business. At the end of the day, is THAT who you want representing you? As a PM, as much as I want to grow the # of units I manage, I'm not THAT desparate to take on City of Cleveland business knowing I'm taking on ALL the risk. Because, let's be honest...with the Local Agent in Charge, the City will casually contact you the owner. If you don't respond in the shortest time available, they WILL go after me. Guaranteed.
I had another owner recently buy a duplex. He's been in & out of investing the last 10 yrs. I've worked with him previously before he sold his last portfolio and again when he started back up again. An inspection was NOT done on this duplex. Oh boy! I'm NOT saying at all that an inspection report should automatically cause you to nix the deal...quite the contrary. It's worth every dollar you spend on it. Had he had the inspection done, we could have better addressed many of the issues we found once both units were occupied.
D & K Property Management Services
Karen Bostwick
(440) 590-5925
KarenMBostwick@yahoo.com
https://dkpropertymgmtsvcs.blogspot.com/
Broker License 2018002999
Bostwick Environmental Services, LLC
(216) 325-8505
Metro Pest Control
(216) 312-7702
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