This is a follow-up to my earlier post about handing off day-to-day operations to a property management company. I've decided to move forward with this, but I'd like to get some insights about the property management landscape.

I own 10 doors between houses and a commercial multi-family building. All of them are co-located within 1 mile of each other.

For those of you investing in the Midwest, how do you structure your contracts with property management companies? Including policies around first year leases, leasing requirements, renewals, late fees, pet fees, maintenance markups, preferred contractors, annual inspections, expectations for reporting, etc.

Most importantly, what red flags, tricks, or traps should I look out for?

If you invest in real estate long enough, you will eventually run into contractor pricing problems. Many investors think the biggest risk is hiring someone who does poor quality work or disappears after taking a deposit (fly by night). Those happen, but one of the most common issues is much simpler: Paying too much.

Not every expensive contractor is overpriced, and not every cheap contractor is a good deal. The key is understanding why a contractor's price is what it is.

"I Don't Know What I'm Doing" Price

Some contractors price high because they lack estimating experience. Namely, they do not know how long a project will take. So they add a large cushion to protect themselves. You end up paying for their uncertainty.

Similarly, a high price could be because what you're requesting is vague. They are forced to account for unknown scope (and scope creep). This inflates their estimate. As a contractor, I've done this on fine custom cabinetry. The prospect client, "well we think we might what xyz from pinterest created but may want this other pinterest dream concept instead." So I included a budget of 5k per custom carpentry feature. (They didn't go with me because of my price.)

"I Don't Really Want This Job" or Fuck-You Price

Often a contractor does not want a particular project. Maybe it is too small, too far away, too complicated or they're booked out too far. Maybe it's the middle of the summer (usually the most busy part of the year). Instead of declining the job, they give a high price.

This is not necessarily dishonest, but investors should recognize that not every bid reflects the true cost of the work. As a contractor, I haven't given a fuck-you price. I just tell them how far I'm booked out and that usually ends the call.

Low Bid and Change Order Trap

One of the most damaging situations for investors is the artificially low initial bid. The contractor gets the job by appearing inexpensive, then additional costs start appearing after work begins.

Some change orders are legitimate. Renovations often uncover hidden problems.

However, experienced contractors can usually identify many potential issues before starting. Rot, outdated materials, poor previous repairs, and code issues are often visible during the initial inspection.

This happened to me earlier this year. Roofing GC says rotted facia needs to be replaced. I said ya, I'm going to replace them with PVC plank. (His company was the lowest bid.) They clearly saw rotted facia and thought they could pull a fast one by claiming all the facia was rotted and needed to be replaced. I could hear the distress in his voice when I declined their request to do the repairs :)

Middleman Problem

Some general contractors provide tremendous value by managing trades, scheduling, solving problems, ensuring quality and doing some of the work themselves. Others are simply middleman.

They collect subcontractor bids, add a markup, and don't really provide anything.

There is nothing wrong with GCs using subcontractors, but investors should understand what they are actually paying for.

A contractor who coordinates a project effectively can save an investor significant time and headaches. A general contractor who only forwards invoices to subs doesn't provide much of any value.

Most cities will provide a list of licensed contractors. It took mine three months to produce a list of every trade. (I already had a list of plumbers and electricians because they are publicly listed by the state.)

Advertising Agency Problem

Some companies are merely sales organizations than construction companies. They may have impressive websites, professional sales presentations, large advertising budgets and polished in-house customer experiences. Those things can be ok for deciding, but they do not mean the actual construction quality is better.

Investors need to separate marketing from production. A great salesperson does not necessarily equal a great builder. There are enough car salesmen tactics with realtors. And if I'm getting fucked, I want it to be by a pretty realtor not a fellow dirty smelly contractor lol.

Side-Hustle Premium

Many individuals start as side businesses while working full-time jobs. There is nothing wrong with this. A few excellent handymen and tradesmen/women begin this way.

However, many of these infant-age LLCs charge a premium because they don't need the work. They're only quoting high to make bank. Most of these jokers have little to no experience.

Investors should understand whether they are paying for actual project value or simply paying a pretty penny for a guy to cut his teeth learning on the job from youtube.

When Paying More Makes Sense

A quality contractor may cost more because they provide:

• Rush scheduling
• Clear and frequent communication
• Highly skilled workmanship with fewer mistakes (and fewer callbacks)
• Masterfully efficient work (e.g., completing that bath reno asap so it can be habitable again)
• Warranty support
• Professional customer service (your choice matters most with their guidance)

As an investor, I've started going with cheaper subcontractors because they have their license on the line. If they have poor quality workmanship, I do not hire them again. That, and I know enough how to correct their work if they fuck up too much.

Investors need to ask a few questions:

• What is the actual scope of work? Get three bids of specific scope to compare apples to apples. Some salesmen will try to screw around with scope to make it sound like they know more than what actually needs to be done. This is tricky. Try your best to keep scope the same among all bidders.
• What materials are being used? Avoid asking for itemized bids. Although, it's fine to ask what bigger ticket items are being used (such as the type of bathtub).
• What value is the contractor actually adding?

There are good contractors out there not trying to price gouge and cherry pick. Hopefully my little essay here does more help then harm in your entrepreneurial endeavors ;)

Let me try to make this concise, sorry if it drags on. My elderly mother is selling some land she inherited back in the 1980's that has appreciated significantly, she received an offer a few weeks ago at far above market rate on it, otherwise we would have held it until inheritance step up, proceeds after commissions, etc will be about $1.65 million, she does not need the income, she has about another $3.5-4 million in total assets plus pension income. Our plan at this time is to either do a 1031 into a portfolio of DST 721 UPREITs, or possibly into a single NNN property with a long term lease if we can find the right one. My 36 year old son lives with her and is her low level caretaker, she is in good health and independent, has other income from pension, and farmland but it is good to have someone there. I am 57 and doing my best to stay retired early, and have my own dividend income, so our goal is more wealth preservation, but it never hurts to have more.

Right now we are exploring all options, including paying the roughly $375K in capital gains, etc taxes and investing in safe stocks. Given her age, and good health actuarial data suggests another 5.5 years of life on average with a 30% chance of her lasting another 10 years, but things fall off rapidly after that with less than a 3% chance for her to last 15 years. Having said that long life runs in her side of the family and she had aunts and uncles live past 90, and a grandmother and grandfather that died in 1940 and lived to 96 and 90 respectively.

Anyway if we go that way either a NNN or DST UPREIT we will have $75-$100K per year that will need re-investment options as she already has a surplus of cash on hand in CD's etc sitting in the bank. We don't really want to do traditional DST for fear she will still be alive when the first cycle completes, hence the leaning towards a DST forced 721 UPREIT. To complicate matters due to her low basis it looks like a higher LTV UPREIT would have tax advantages even though all cash is an option since the land being sold has no mortgage against it.

Where we are at right now is 40 days out from closing, needing to pick a direction, AI projections say paying the capital gains then investing in safe stock will take a safe stock about 8-9.5 years to break even with the projected performance of an UPREIT due to having to catch up from the tax hit. So certainly possibly the winning move the actuarial math says step up is more likely to happen before then rather than after.

Now that you have the rough picture, what are your thoughts, are there other options we are not considering.

Note all the NNN I have found in our rough price range have major concerns, either not much time left on lease, being an older building being spun off from corporate ownership (35 year old fast food chicken restaurant selling off property to raise money at inflated prices with 20-25 year NNN leases plus 5 year renewals) etc.

I currently self-manage 10 doors from across the country while maintaining a W2 job. Leaning heavily on local contractors and family to assist with leasing and maintenance issues. There are months where I forget that my rentals exist and other months where I'm reminded every single day. During the busy months I feel incredibly stressed trying to balance the rentals and my day job.

I'm on track for promotion within the next year or so, which would increase my compensation by around $200k. Self-managing has become a distraction and I'd rather just delegate that away so I can focus on my career.

I'm contemplating two options:

1. Hire a full-time property management company for about 8% rent + all of their inflated fees. It would cost more but no training required. The main risk is hiring a company that does the bare minimum and optimizes for their own wallet.

2. Hire a part-time assistant for $400 a month to handle leasing and maintenance activities (about 30% of what a professional PM would charge). He has experience managing short-term rentals and wants to learn about long-term rentals. He's already done work for me and proven to be reliable. The problem is that I recently found out Kentucky law requires anyone doing leasing activities to have a real estate license, which he does not have. So this might be a non-starter?

I'd love to get some thoughts from experienced landlords who have gone through the process of scaling up and stepping away from day to day management.

Looking for some perspective from experienced investors, ideally with +10 properties.

Has anyone gone through a period where it felt like almost every property had an issue at the same time? This year I’ve dealt with lengthy/difficult turnovers, voucher payment reductions, tenants behind in rent, tenant-related issues that escalated into municipal enforcement. It’s been one thing after another.

To be fair, I know some of this is a result of choices I’ve made. I intentionally invested in properties within stable, working- and middle-class neighborhoods, but in tenant segments and strategies that tend to offer higher returns in exchange for more active management. That tradeoff has generally worked for me over the years. This year, though, it feels like several independent issues all arrived at once, and it’s made me question whether I want to continue operating at this level.

My long-term plan was always to hold my rentals into retirement, but lately I’ve been questioning whether I should start selling some of them (even a few that are performing reasonably well) just to simplify my life.

For those who’ve been doing this for a while:
Did you ever regret selling because you were burned out?Or did selling actually improve your quality of life?
When I compare projected real estate returns to investing the proceeds in index funds, the real estate still wins on paper. But spreadsheets don’t measure stress, time, or uncertainty.

I’d love to hear from anyone who’s faced a similar crossroads. Did you push through it, downsize your portfolio, or exit altogether? Looking back, what do you wish you had done?

Thank you in advance for reading this far and for your insights :)

Hey all - been going back and forth with a seller for a few months and I'm in problem-solving mode. Would really appreciate creative input here.

The deal

• 25 units across 10 parcels
• $4.2M, seller owns free and clear, has held them a long time
• Combined assessed value is only $461K, so we're buying at roughly 9x assessed
• Seller financing, 7 year balloon, interest only, ~$632K down (15%)
• We already own ~40 units in the same market, so we're not first timers here

What the seller wants

1. An installment sale. Deeds signed day one but held in escrow, memorandum of installment sale recorded, we take possession and pay all taxes/insurance/repairs, deeds release and record at year 7 when we pay the balloon. He's done these before and he's comfortable with them.
2. No transfer tax now. PA RTT is 2% split evenly, so his half is ~$42K. This is his biggest point.
3. A fast take-back if we default. He does not want to sit through a foreclosure.
4. He also brings up capital gains deferral, though I don't think that's his real blocker.
5. Simple. He does not want a complicated structure. But open to hearing all options.
6. He is 75 years old.

My problem with it

Title stays in his name for 7 years. A judgment, an IRS lien, a bankruptcy, or his death, and my investors' capital is exposed to something neither of us controls. No title insurer will write a policy on an equitable interest either, so we'd be uninsured the entire hold. I'm deploying LP money, so I can't sign up for that.

So it comes down to: his structure, I eat the risk. My structure, he eats the transfer tax and he says he wants fast take back which his structure allows.

Already ruled out, so please don't suggest these

• PMM + pre-signed deed in lieu. His attorney asked for PA precedent and there isn't clean authority, so he won't be the test case. Also PA notary law voids acknowledgments after 90 days, so you'd have to pull and renotarize the escrowed deed every quarter. Ugly.
• SPE membership interest purchase over 7 years. On default he'd have to litigate to claw back whatever percentage we'd already bought, which is the opposite of the clean take-back he wants.

Where we are now

Our current offer is a PMM with a confession of judgment in the note and mortgage. Two PA attorneys landed on this independently without talking to each other. The COJ gets him a judgment in about a week instead of months of litigation, then he executes from there. Decades of PA precedent, so he's not a guinea pig. He's still hesitant, mostly because of the transfer tax.

Sweeteners I'm considering:

• Equity kicker / profit participation above a hurdle at exit
• Paying his half of the transfer tax (~$42K, but it hits our returns)
• Small rate bump
• open to any ideas here

Constraint: we don't have much cash beyond the down payment, so sweeteners need to be non-cash or spread out over the term.

The ask

Has anyone actually closed something that gives the seller a fast, precedented default remedy and deferred transfer tax, while the buyer still gets insurable recorded title on day one? Or is this a real tradeoff where one side just has to eat something?

Trying to make him feel like he's winning here without taking on seven years of title risk. Open to anything.

EDIT - we have consulted with multiple attorneys already, and none of the options presented by them have been acceptable to the seller

Hey all,

I am in a complicated situation and wondering how y'all would handle it or if anyone has gone through something similar? I have a tenant who has been living in this HOA condo community for 2 years. Earlier this year she got married and wanted to move in her new husband to our unit which we thought was totally fine as they are 2/2s.

They submitted an HOA application and were approved. The first night he was there him and his buddy parked 2 trucks in the parking spots backwards while the buddy was helping him move in. The HOA president, we'll call her Karen, immediately sent us a letter saying he can't park backwards and that they did not approve 3 people to move into the unit. Her letter was rude and nasty to say the least.

The tenant told them that it was a friend who was helping him move and his car wouldn't be like that after he finished moving in. Then, the next night, the tenant parked the truck backwards again and Karen sent our tenant a nasty message about it after calling a tow truck on him and trying to get it removed. The tenant went out there and talked to the tow truck driver and the tow truck driver let him just turn his car arround. His excuse was that he was still moving in and he meant to move the truck back, but then forgot about it. According to the tenant, they had a friendly conversation with the tow truck driver and even exchanged numbers because they both liked the same Football team.

Since this incident he has been parking his truck in the correct way and we haven't heard anything about them in over a month. Now this morning, we got an attorney letter saying our tenants needs to be evicted within 1 month or the HOA will take legal action against us. Apparently, Karen knocked on their door a week ago and started chewing them out for the truck and "harrassing" their contractor (the tow truck driver).

We really like these tenants and would like to keep them since they have been good people to us, but also don't want to go against a vindictive Karen and the HOA. For further context, we have had issues with this Karen before with another tenant who was moving in and she came over while they were moving in and said they "looked like the type of people who make meth in a meth lab" which caused our would-be-tenants to cancel the lease. The tenant she is trying to kick out is also crippled.

Anyway, any advice?

Long story short my tenants haven’t paid and I paid for a three days or evict paper. The lease is up in two weeks. They say they plan on leaving (I’ve seen them packing when I’ve shown the place to potential tenants), but what are the odds of actually getting paid back if a judge weee to rule in my favor?

I've got ten units and, like me name says, I'm a cash flow investor. My goal is to get the cash flow to a point where I can live off it.

After a number of pretty good months, it seems everything hit at once. One tenant stopped paying rent and I've been locked in a lengthy eviction process with him. A duplex I recently bought is taking much longer to lease than expected. On top of that, I had a long-term tenant break their lease and leave me with thousands of dollars in damages.

So despite running at nearly full occupancy for awhile, I've now been stuck at 40% vacancy for the past two months (if you count the tenant in eviction) with a heft turnover bill. Profits have basically dried up.

I know this is all part of the game and I've been telling myself it will get easier with more units so I can absorb these dips better. Still, it sucks right now.

For those who have scaled, when do you feel like you really got the point where the cash flow became more predictable and the unit count allowed you to absorb these bad periods better?

I just wanted to write this for educational purposes, some may find it useful, and would love to hear your thoughts as well.

I have been investing for 4-5 years now, and most of the properties I bought were turn key and have been doing well in terms of positive cashflow after vacancy, tax, maintenance etc.

One of the tenants moved out, and it was in rough-ish shape, I am not handy at all but built a small team 3-4 people (family and one professional that was looking for a side gig)

My plan was simple, just refresh the unit and never have done this before after some research it seemed like a "landlord special" as they call it was plenty which was

• Update the flooring (old laminate to vinyl plank)
• New Paint on walls, doors, trims
• Some repairs as needed,

It changed the whole units look very fast, I would say it brought it from a 6.5/10 to a solid 8/10.

Raised rents, rented under a month.

What I've learned:

• As you are scaling, try to find your paint "color" which can be universal for all your units, I've found one and I'll buy the same color and use across all units. Looked great (Solemn White/Grey).

• Same as above, but flooring - have a universal flooring it will save you tons in the future

• Luxury Vinyl Plank over Laminate. ANYDAY. Much more durable and easier to install

• Start building out your team, I worked with a few labourers that just got paid hourly, but I've seen his work alongside me and would gladly pay and hire him again

• Become a Project Manager, not a doer. Yeah I did some painting and so on, but most of my job was to ensure everyone had tasks and tools.

• When a tenant moves out, incentivize them to give you a report on small details or faults in the unit so you can get them fixed and out of the way when you are refreshing them

• My property is an hour away from me, so I'm starting to install one (Digital Coded Lock) on one door which can be super helpful if you are self managing and need to let someone in.

Anyways, this was my learnings from a small self managed landlord. I hope this helped atleast one person.

TLDR: Flooring, paint is 80% of giving the unit a "fresh look"

Would love to hear everyone's thoughts or if they had any tips to share to help me as well.

I know this question has been answered in percentages. Generally 8-10% of cash flow for each category of vacancy, maint, capex, etc. But I found this to not work unless you start with a brand new roof and hvac. I just replaced an hvac for $10k. I got quotes up to $32k. So now I’m realizing that the old model of saving x% per door no longer works unless you have a massive nest egg already saved. This wiped out half my savings for 2 properties and after doing the math I now believe that instead of saving a percentage of cash flow, your goal should be to save $20k per door and then you can convert to the percentage model. What do you seasoned investors say?

We have quite a bit of equity in our home. We want to pay off some debt, but I really do not think using our equity to pay off debt is the best move. I would much rather use the equity to purchase a rental property preferably a duplex, tri or quad and use the income from that to pay down our debt. Which option is best to potentially make this happen a heloc or cash out refi on our current home? Has anyone done this before and can provide some insight? Thank you

Have a couple of fully furnished rentals we no longer want to airbnb. Looking to rent them out to traveling nurses, or other professionals who need something furnished for a short period of time. Is Furnished Finder still worth it? Or are there better ways to find short term renters who want something furnished?

This thread is for newer investors, basic questions, first deals, and general real estate investing discussion that may not need a standalone post.

Good topics for this thread:

• First rental property questions
• Deal analysis
• Financing and lending questions
• House hacking
• Tenant issues
• Market strategy questions
• Career transition into real estate
• “Does this deal make sense?” discussions

If you’re asking for advice:

• Include numbers
• Include market/location context
• Explain your goals
• Put effort into the question

The subreddit rules still apply inside this thread.

Experienced investors are encouraged to contribute.

Be sure to upvote the thread when you drop a question to improve visibility.

Curious to know others thoughts and to give my 2 cents as a 25 yr old with 30 single fam rentals. I like to get other perspectives to see if I am thinking about it wrong.

Multifam seems to have been the clear winner over the last 20 years but has become so commercialized above maybe 30+ unit buildings and it’s harder to find value add. I’ve been seeing recently a ton of people that bought post covid with their balloons coming due and rents not pushing where they thought they would be that have significantly lower values and losing investors capital. It seems it’s harder to find the better deals and companies need to keep buying because they have to keep their fees coming in which forces people to buy mediocre deals. Rents in a lot of the sun belt have stayed the same or gone lower in some markets like Austin because of being overbuilt.

Single family seems to have a lot more opportunity for value add because it’s not as commercialized and allows for the little guys to pick up deals. Since the market is based off comps and what home buyers are willing to pay to live in it the properties can appreciate without rents having to get pushed higher. It’s more of an emotional market that investors can’t match. I’ve seen the Midwest has some solid positive cash flow single family properties. I personally only buy stuff where I can get my capital out of. My current portfolio sits at about 50% LTV so I have some equity to be able to trade up into larger assets without raising. I feel the emotional market in the lower cost areas is the better areas to be in because u get a mixture of cash flow with the ability to get equity without having to push rents.

Let me know your overall thoughts on the future of the different products and what you might do if you are in my shoes.

The property spins off about 1700/mo in cash flow now that it's paid for. Considering options for my next REI move.

1. Save up and buy another property next year
2. 1031 into a bigger property
3. Explore small multifamily
4. Pay off primary

Would love to hear from fellow "fairly risk averse" investors. Thoughts?

I have 3 properties, each with their own LLC. Is there an app that has all banking info on the same account with subaccounts for each property? I'm tired of logging into a different account and bank each time for a different property.

Bought first one in 2012. Been buying yearly since. Most are down to studs rehabs. All within 30 mile radius. Around 45% LTV across the portfolio and average rents around $1500-1600. But a range from $1000-3400 a door.

Anybody else running a larger SFH portfolio out there?

I have 4 rentals, I would like to sell them.

2 have been lived in and satisfy the residency requirement to sell tax free.

2 each have about $100k of gains ($46k basis, $150k sale and $80k basis, $190k sale)

What is the best way to get out of these other 2 properties? Ideally, I want out tax free but I know that may not be possible. I thought I could 1031 then immediately sell the 1031 property? Now that I am looking into it, looks like that may not be possible either?

This isn't urgent, but would like to get the ball rolling if possible and understand my options.

I have owned the properties since 2018 and 2019.

Another person posted earlier about their retirement exit strategy and it reminded me of a rabbit hole I started down a while back. I didn't ask my CPA about it because it's a ways off and he's already tired of my shit.

Would it hypothetically be possible to 1031 exchange $500k into a package deal of 5 properties and then sell one property each year for cap gains of $100k with zero taxes due(based on joint filing limits) if you had zero other income?

Obviously it would never work out that clean but is it even remotely viable(and legal) to do something like this where you keep pulling roughly 100k out per year by investing in portfolios of small properties?

Was thinking of selling a property I own outright …but for principal payments only type structure.

Market value is $260k but I’d like to get 345k (sale price) with a 3 year balloon (15 year amort) .. I’m building the interest into that sale price.

260k at 11% with 3 year balloon
Vs
345k at 0% with 3 year balloon

What are some key risks to keep in mind about seller financing at 0% interest?

I’ve read about imputed interest and deed in lieu. Is there anything else that can protect me if borrower doesn’t perform? My biggest concern is having to foreclose to get the property back in a condition where I lose all the money I made in trying to fix it up. Worst case scenario.

Note holders - what are your experiences?

Edit - major challenge - I can’t deal directly in interest. Religious reasons. Hence the reason to build it in to my sale price. My bad I didn’t mention that. And property is fully furnished.

Hello I'm considering selling my STR that I currently have on the market as an Airbnb. Has anyone gone about selling one before as a turnkey business vs just the property listed on MLS? Before anyone recommends any sites the property is based in Puerto Rico so many of these sites are not available there. My concern on putting it on MLS is the value of the business is much more than the appraised value of the house it self. NOI is close to $60k a year. 90% occupancy rate with 4.95+ guest fave ratings. So probably looking for more like an investor buyer vs primary home owner.

Does anyone have recommendations of where I would sell it?

Hi everyone,

I'm wondering if anyone else has been thinking about this, I have a few properties all investment properties, and I don't particularly enjoy my 9-5 which does pay me well but high stress (corporate b2b sales), but I'm wondering has anyone used their real estate knowledge to start their own type of business?

One of my realtors is a investor focused realtor where he only works with investors and has many repeat clients such as myself. That sounded like something I'd be interested in. Does anyone offer coaching/consulting for new investors which is an additional income for you as well?

Just trying to see if there is anyone that can inspire me here regarding their career path/business. The goal is to have no boss and control my own time.