Forum Replies Created
A couple of things:
I also understand the importance of property management. The only market I know is Atlanta.
MTR, I’m 100% with you on Management, but doesn’t having a good manager mitigate any risk you may have in “not knowing” a particular market? The US is so vast, there are performing pockets in just about any city/region, and for all price points. Perhaps you could consider looking at it “top-down”: i.e., qualify a Manager, then ask him where he would buy. I do this all the time in Kansas City.
… those who defaulted in 2008 can now get a mortgage. As a result, those people are now buying …
Ivan, this is also true, but what this potentially does for those who own property in the US is set them up for Vendor Finance. In other words (and this is simply put), sell the house to the tenant, who pays for all upkeep etc. and allows the investor to increase his ROI. It’s possible to transfer a property into a Land Trust, make the Tenant a beneficiary of that Trust, and then put him/her on a Commercial Lease allowing occupancy. This mitigates foreclosure if the tenant ends up not paying (it becomes an eviction process, which is quicker and cheaper).
… Americans will rarely tell you something cannot be done.
Quite true, Nigel – it’s a cultural thing, for them. For us, though, we need to make sure we’re prepared to understand that expertise costs money, which is something our culture has told us to ignore. We’re always trying to beat a price down / find a bargain, and while I guess that works with products, I think it’s a mistake to apply it to services.
Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
http://www.meetup.com/AUS-USA-IPSG/
Email MeBetter Management = Better ROI
It’s great to hear positive success stories, and it’s clear that good management is critical to the success of an investment. But what is the definition of “good management”? It’s something that has remained nebulous and vague, and can range from an emotional definition (“They really understand me”) to an analytical one (“They hit my ROI targets this year”).
This is what I’m trying to pin down. What works for John may not work for Sally – regardless of where or what they bought. So how do you set the criteria for “good management”? After all, once you’ve gone to all the seminars, done your homework, talked about it with your significant other and friends, and finally zeroed in on a property that you’re comfortable buying (usually sight-unseen), it seems incredibly foolish to not invest an equal amount of research and time into the person / company entrusted with managing that property, and making sure they’re “good managers” ..
Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
http://www.meetup.com/AUS-USA-IPSG/
Email MeBetter Management = Better ROI
Hi Ten, CL1706 .. You’re both absolutely right in saying that having the right people on the ground is paramount to a successful investment. Click here to see another article I wrote about Screening your Property Manager.
I appreciate your responses, and welcome any tips and tricks you may have that can assist others.
Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
http://www.meetup.com/AUS-USA-IPSG/
Email MeBetter Management = Better ROI
A lot of people like section 8 housing. However I have also heard my share of horror stories as well. Because this is Federal scheme they tend to be very pro tenent. States like texas and Florida end to be more pro landlord plus the nature of section 8 tenants mean they are often problematic.
A few tips about Section 8 tenants and the Housing Authority (specifically Kansas City, MO):
– Tenants are not screened by the Housing Authority for criminal or prior housing history – only the requirements for (lack of) income need to be satisfied. If your Manager is not undertaking additional screening, you’re likely to end up with a nightmare.
– Rents are determined by the Housing Authority, based on what they consider to be “market rates”. This means that even if you advertise a house for (say) $850 per month, the HA will do a survey of the area and determine what the reasonable rent should be. The HAP contract amount could end up being $700 per month, potentially destroying your ROI calculations
– Annual funding for the Housing Authority Program is finite, which limits intake of new Section 8 applicants and forces the Housing Authority to budget. This manifests as the HA reducing rents (per above), but also makes property qualification increasingly difficult. The idea is that properties that are offered to Section 8 tenants need to satisfy a number of criteria constituting “affordable housing”. Inspectors (employed by the Housing Authority) have to sign off on a particular property before it can qualify for the program. Landlords only get two chances at passing an inspection, and often small things (like a stairway banister that has not been repainted properly) will fail the Inspection. The more items that are identified by the Inspectors, the greater the cost of getting the house qualified.
– If a Section 8 tenant gets removed from the program (for whatever reason), the payments stop. The tenant, however, doesn’t necessarily move out, so an eviction process needs to be started. This takes time, which means months without rent, legal fees, (typically) an angry occupant completely damaging the property, and ultimately trying to recover this money from an individual that doesn’t have an income.
Oh yes, and let’s consider the whole paradigm of renting to someone without a job ..
Not a big fan of Section 8, myself.
Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
http://www.meetup.com/AUS-USA-IPSG/
Email MeBetter Management = Better ROI
Hi Judith .. try clicking here .. Would love to hear more!
Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
http://www.meetup.com/AUS-USA-IPSG/
Email MeBetter Management = Better ROI
As a seasoned US Property Investor and currently the owner of a mid-sized Property Management Company in the US, I’ve noticed through my business activities that many Australian Investors purchased investment properties a few years ago (when the exchange rate was more favourable) without being properly educated or truly informed of their investment risk.
Fast-forward to today, and bad product, bad management, and slick-seminar-syndrome has left these same Investors with significant capital loss. Many are looking to divest themselves of their purchase, unfortunately turning to the very same groups from whom they purchased the property in the first place. In my opinion, a big mistake. The current trend indicates that issues are escalating, since my company in Kansas City seems to be engaged more and more as an “asset recovery service” as opposed to a property management service.
The thing is, property investment in the U.S. can work, really well.
I’ve decided to start a National Forum through which Investors can not only have the opportunity to share their story, but also through which I can collate data from around the country and attempt to create a “best practices for management” policy, adding my own experience as a U.S. Property Investor and National Property Management Company owner.
My goal is to identify the core needs of Australian Investors, potentially form some kind of alliance with which I can seek better management terms and results in the U.S., and thereby achieve greater profitability and full transparency. I’m not trying to sell anything, nor am I advising on where to buy – rather, I’ve had enough of the way shady U.S. operators (and their Australian mouthpieces) continue to misrepresent or neglect to disclose data relevant to the product being bought, and have a somewhat bold plan to help straighten everything out and recover or increase asset performance.
I’m doing this through Meetup.com, and I’d like to ask interested Investors to join my Group. It’s called “AUS-USA Investment Property Support Group”, and our first meetups begin next week.
Please join, and please spread the word – ask any colleagues that have invested in the U.S., especially if you’re happy with the level of service you’re currently getting – it can always be better! I’d love to hear of your experience.
Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
http://www.meetup.com/AUS-USA-IPSG/
Email MeBetter Management = Better ROI
