All Topics / Overseas Deals / Precise Property Management, MO

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  • Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
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    Thanks for your comment Jay.

    I have minimum to add as you summed it all up very well.

    Any property management that does everything by the book in these areas is a recipe for disaster. To be able to collect rent in these areas the property manager has to ba an aplha male and have a very aggressive and active approach. When the tenant call  and says the rent is ready. You better get your self there within 30min.

    If you snooze you loose.

    I am not sure where Rosa bought but anything North of 40th Street is almost impossible to collect rent and make it work.

    Our property manager refuses to manage in that part of town and that says a lot as I genuinely believe there is not better than him in KC.

    Thanks for reading and have a great day.

    EngeloRumora | Ohio Cashflow
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    Profile photo of jayhinrichsjayhinrichs
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    Engelo,,, I appologize if I put words in your mouth,, my intent was to impress upon folks that these properties can be bought and managed successfully however as you state they are not really appropriate investments for out of area investors whether they are investors from AU or California..The risk of not collecting rent is real and the norm… NOt the property managers fault its the quality of the property that these investors buy… Thinking that a 30 to 50k house in the USwill have the same tenant pool as ones that are 80 to 150k is just wishful thinking and fraught with disaster for most folks…. 

    To follow up on What Engelo said not only do property mangers not want to go into these areas if they do they go armed with a Glock in their holster…

    I know its hard for someone in AU to understand how this can be in the US  but it is. Be it african american sec 8 or good old White Trash  this is what you have to deal with… Now if you step up and buy nicer properties you will have generally the kind of success you where thinking you would have when you bought… YOu will have tenants that actually work for a living  ( not on Welfare)  Stable home life  ( not a single mother with 4 kids and 4 baby daddies programed into their I phone). They will actually have a bank account.. Most renters in these low end areas do not have bank accounts and can't get them ( bounced to many checques). And the better tenant will show some respect for your property.. I would venture to guess that Rosa's rental now being vacant will have a high probility of being vandized and potentially stripped of its appliances heating system Aircondionging copper wire if any etc etc…. And Remember what I have said many times in the past… Check your insurance if a property sites vacant for more than 30 to 60 days YOU ARE NOW UNINSURED>  If you have a fire you have lost your investment insurance company will not cover you.  This why communication from someone PM or someone else is critial when  your dealing with a situation like Rosa has been dealing with.

    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
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    No problem at all Jay.

    Thanks for the post.

    I must say that I do know of areas that are solid B class, within close proximity to good schools and employment for $40,000 – $50,000.

    Thank.

    EngeloRumora | Ohio Cashflow
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    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
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    No problem at all Jay.

    Thanks for the post.

    I must say that I do know of areas that are solid B class, within close proximity to good schools and employment for $40,000 – $50,000.

    Thank.

    EngeloRumora | Ohio Cashflow
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    Jayman
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    Hi Rosa,

    I understand the problems your having, with so many overseas buyers trying to find good quality service providers in the US, and of course, they will all try and convince you that they are the best managers.

    I don't know who you brought through in KC, as i would imagine that they should be responsible for providing good management, and even have a backup or two, as like anywhere else, sometimes a particular management just doesn't work out for whatever reason, it could be that you and they just don't get along, and another management works out better.

    Of course, there are still many really bad ones, and I have had my fair share over time.

    I have been working for quite a while with who i consider some of the very best management in KC, where I specialize, and although I don't normally get involved in cheaper properties under $30,000, I have successfully sold a number of them recently, and I have some very happy clients, both locally in Oz, and also overseas They are very pleased with the management, rehab, tenants, etc. and some are now looking at buying more.

    So there are some very good people over there, who actually do care. Unfortunately, many find out to late and get involved with the wrong people / service providers.

    It should be a good experience for you, whether buying a cheaper house or expensive one.

    I hope it works out for you.

    Jeff

    Profile photo of jayhinrichsjayhinrichs
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    Jayman,

    I think the idea of out of area buyers buying sub 30k houses in any large metro market in the US is EXTREMELY risky and fraught with potential disaster… It may work now because your in the honeymoon period  ( fresh rehab fresh tenant)  where it goes wonky is down the track.. those same clients I will be  very dissappointed in the future.. YOu just cannot get quality tenants in the US that will live in areas of major metro cities were properties cost 30k.. And thats with contractors, middlemen like yourself, and others all making a profit out of that 30k house.. that 30k house probably sold wholesale for 5k or less.. And no matter what anyone says here on the forum those are Ghetto slum lord properties that are only appropriate for those that live and work in the area… Like englo said you need to pound on doors to collect rent and no PM is going to do that period.  The PM's are not the issue its the quality of the tenant pool… One can get lucky…

    And or if you have the time and engergy you can seek out smaller mid western towns and you can buy these low end rentals. but they will be smaller towns 50k > population. NO major crime no big demograpic population issues.  I invest in a few cities like this in the mid west.. Properties will never go any where but there is no crime and rents are stable but not high..

    Engeo needs to add to his salutation  " sweeping floors to owning and POUNDING on doors"  :)  he is doing it right if you want to work the low end.. You either move there and work it as a business or partner with someone who is there everyday working it.. You will not succeed over time buy just buying it turn key and hoping a PM is going to love cherrish and honor your 30k Ghetto house… Make sense????  Even in OZ?

    As a Data point I have 20 plus years in this space.. a couple thousand hard money loans under my belt have owned more than 350 rentals at one time from the kind being described here to 300k houses… There is a difference in the US in the renter pool of one living in the lowest priced SFR in America and one living in a  neighborhood that meets the Average sales price for the entire market.. I would venture to guess Average sales price in KC is probably 120 to 140kk with half homes going below half going above.. You want average tenants not sub average and or the worse of the worse other wise you can just take Rosa's story and repeat it thousands of times.

    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
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    Jay,

    My name is ENGELO haha

    E N G E L O

    Thanks.

    Also, no more door pounding. Very much liking the B class where the tenants personally go to the bank and deposit monthly rents. Much more sustainable way moving forward.

    Thanks and have a great day.

    EngeloRumora | Ohio Cashflow
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    Profile photo of Rosa TongRosa Tong
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    @rosa-tong
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    Engelo and Jay I am truly amazed that tenants still deal in cheques and cash. In australia BPay and direct debits are the norm, so no pavement pounding needed or required,

    I have recently discovered that US varies greatly in what they call an acceptable commute.  in Australia 30 minutes is normal, where is in US 30 minutes in very long. some here even commute up to an hour or more.

    And as far as i know in Australia if there is any government subsided rent – equivalent of your section 8…it goes straight to the property managers account and if there is any difference the tenants then pays it. not sure to whom the section 8 gets paid to in the US

    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
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    Hi Rosa,

    It sure is a different world here.

    Section 8 rent goes straight to the property manager. Property managers in KC don't have to be licensed to my understanding.

    They could have the shadiest operation going around and pinch money left right and center. Not much regulation like in Australia.

    Thanks.

    EngeloRumora | Ohio Cashflow
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    Profile photo of jayhinrichsjayhinrichs
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    @jayhinrichs
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    Rosa,

    Many AU investors are shocked and amazed that so many US tenants deal in cash and Cheques.. The reason is very simple.. these people have written to many cheques that bounced or were just frauds to start with.. ONce they have track record of this their Social Security number and name is entered into a national data base that all banks subscribe to. And from then on these people CANNOT open any type of bank account.. They are forever in the realm of paying bills with cash or Money orders that they have to purchase with Cash… This is the whole reason CHEQUE cashing stores are in business. They cash these peoples pay cheques if they work that is.  Then they take the cash and buy Money orders then bring the money orders to the PM office… So paying bills for this tenant pool is time consuming and never happens on the same day of the month ever.

    So there you go tenants that have no ability to set up Bpay or direct debits and never will…

    Engelo  this website is unstable for me here and I get spelling errors all over the place plus my spell check does not work…..

    Glad your moving up in the property class's  you will be far better off for doing so.

    Profile photo of jayhinrichsjayhinrichs
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    @jayhinrichs
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    Rosa,

    Commutes vary to area of the US.. a 30 minute communte in Las Angeles would be a very small one.. Same with Seattle, Atlanta New York, Chicago, San Francisco Bay Area etc.  smaller cities that could be different but in the major metro areas 30 minute plus is the norm and up to 2 hours one way is not uncommon at all.

    Section 8 rent goes to who ever the owner of the property directs it to go to.. So it can go directly into an owners account if so directed or it can go to the PM.. Most PM's want it to go to their account so they can take their management fee out before paying the Investor…  Rosa, if your having an issue all you need to do is contact the HUD department that handles your tenants payments send them a copy of your deed showing you own it.. And then instruct them to Direct deposit into your US bank account..

    I always have my sec 8 go direct to my personal account never the PM.. then I pay the PM their fee each month.   Now many PM' will not work this way becasue they are afraid of not getting paid.. But again you can have sec 8 go to you it is your choice..When you set up management you probably signed a document allowing the SEc 8 rent to go to the PM and maybe you did not realize it at the time.

    Profile photo of hllbkkhllbkk
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    Hello, everyone, I am new to this forum. Thanks for all the interesting post.

    Hi, Jay, does TWH mainly sell to investors SFRs at the low end of the rental market as well, like. 30k-50k range? Do you face the same tenant issue?

    I am keen to know how TWH does it differently so that an armchair investor can have the better protection to the downside.

    Cheers!

    Profile photo of jayhinrichsjayhinrichs
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    @jayhinrichs
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    hllbkk

    I am no longer and owner of TWH…I created the TWH model,  My partner's bought me out 6 months ago.  I am currently consulting in what I call a TWH Light program of which we have far more demand from US investors that we could possibly provide.. If your interested in learning more you can send me a PM. 

    You can see many previous posts of mine detailing the TWH model.. However in all candor it was not very well received at the time by AU investors. However US investors loved it and we did quite well and especially well for our investors as we sold our portfolios in  specific markets. For the average investor I suspect we did much better for them than they could have possibly done on their own. One basic reason is 100% of their funds went to buy the investment.. No up front fee's No travel no closing cost etc.  When you add all those things up its another 7 to 15k for the AU investor before they have even bought anything.. In my investments that I currently do that would buy almost half of the investment and you would be getting returns on them day one and each and every month after that with no surprises.. We could not compete with those that touted returns that, on paper were unrealistic to those in the know. Ours was fixed and REAL.

    What I am working on now post TWH is a debt model, which is again very successful with the US investors especially Retirement accounts, however we have gotten some inquiries and I have made a few introductions  to overseas companies and are looking at creating relationships on a Peer to Peer basis.. IE establishing relationships  with very reputable off shore companies that wish to present an alternate investment to their clients that in my personal experience is more predictable than the ups and downs of land lording whilst still enjoying the high returns that the US markets create.  So we will see if that gets any traction.. I do enjoy helping the OFF shore investor and trying my best to help them steer clear of the areas they should not invest ( at least in my Humble opinion) .  But hey "I don't know it all"  However I have  pretty good grasp on what is safe and secure an what is super risky and not appropriate for out of area investors whether they are half way around the world or just 2 states away in he US>  Same applies to US investors.

     

    Profile photo of BoughtWithEquityBoughtWithEquity
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    Property management in the US is nothing at all like you would expect in OZ…same with the tenants.  Any house in any major american city under $30k is a ghetto or hood property by very definition.  There's money to be made in those areas….even complete cesspools like Detroit & Flint BUT in order to do so you MUST have someone boots on the ground in that market.  I ran mostly in the hood market in metro atlanta for many years and LIVED there for 5 years…and yes…we pounded on doors and worse to collect the rents or evict tenants.  At this level of rental, there are very, very VERY few good tenants.  Many will prefer to buy a new widescreen tv or rims over paying rent on time…..and most know how to work the system to be able to live as close to free as possible.  I owned or controlled over 300 homes at one point and it became such a headache for little return that I gradually sold off and exited the lower end markets.  Today, I am gradually going back into some lower end areas with a completely different model that gives us control over the property with higher rents and less vacancy.  Remember  the Siren's song and be very cautious about going into ghetto neighborhoods without a solid & reliable partner.  Realize that what you are thinking about doing is very risky and the return had better be huge in order to even consider it…..and you'd be better advised to stay away from anything in the US advertised as rent-ready!  Heed this or become the next Rosa.  The best managers in the hood are unlicensed street level operators…but pay them well…at least 10% and a bonus based on successful collection at 6 months or 12 months……I see some pro formas touting 6% management fees….best of luck with that…no one will do much for $40 US a month.  And….if you fire your PM and your new rep tells you the tenant paid months of rent in cash…or better yet paid in advance…ask for a receipt!  You'll never see one because the payments were never made…..but you'll be thinking the old PM stole your money.  If you paid rent in cash wouldn't you ask for a receipt?

    As to class actions or any legal action in the US for that matter….once you get with the lawyers, you've pretty much already lost.  Lawyers win….owners lose!  Our new model is shared housing as you may have seen me write elsewhere.  We avoid costly evictions, we avoid vacancy and major repairs or retrofits and we maximize rents and returns.  Anything we sell off comes with a 10% net guaranty for 18 months….strongest offer in the states.  It's a great time to own in the US just look to partner with operators boots on the ground and a reason for you to succeed.  The model has to make sense not just promises or stay away from it.  You can make great money with low-end stuff…it just has to be the right stuff and it might be in Fort Edward NY or Fort Wayne, indiana but it probably won't be major US inner city…at least not unless you catch a transitioning part of town.  If jay and I couldn't do it with very large operations…how do you expect to?  Happy Investing

    Profile photo of Rosa TongRosa Tong
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    @rosa-tong
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    Okay it has been a while since my last update…and things are going along great.

    THANK YOU SO MUCH ENGELO RUMORA!!!! You and you team are Gold…

    So good news, the area i bought is was decent enough and the property was great shape YAY! Engelo and his team put me in touch with another property manager, who has a tenant signed on…now only to wait until the first rents come.

    So in my mind i am not totally out of the woods yet, but it has been great working with people who want to make the investing experience in the USA a positive one.

    After all repeat business account for the majority of your custom in all businesses and word of mouth especially on the internet goes a long way.

    I have luckily been able to recoup the rents from Precise which some people have no been able to do. another bullet dodge.

    Some people have said to me that I should have done all the ground work myself and then this sort of stuff wouldn't have happened to me…uh wrong stuff like this can happen to anybody and it pays to let people who have done the hard yards help you and receive a bit in return and yes i have done the math with regards to this. And it is more worth my while to to use a buyers agent..if they are good they get good reviews, and repeat business.

    So awaiting the next litmus test..dum dumdaaaahhhh the rental deposit…Stay tuned

    Profile photo of Rosa TongRosa Tong
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    @rosa-tong
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    Dude seriously don't hold me up like that I don't appreciate it…I myself realise that these things as you have admitted happen to seasoned investors…and what works for one person may not work for another…different people are comfortable with different styles of investing…My thing is that despite my griping and negativity, I am always looking for options and when one presents, try it as frustrating as it is and as depressed as I would have gotten to me at least I only lost money…hard earned yes especially at the time of only earning 35K/year gross, but at least i am willing to take chances and i will take them again as i have done and keep learning.

    As for Class action and lawyers, when people's backs are almost to the wall just the mention of something can get them to pay up to tray to keep things quiet for a little longer till they scarper, in which i was lucky to be able to get something from Precise before they did.

    Heck in Oz buying a house with other people as tenants in common is starting to be the way people can beat the rental racket and lenders are tightening up in oz, just this lat week i saw at least 4 houses that were previously under contract back on the market due to contract crash.

    Interesting times and really it is a who dares wins.. i don't dare as much as others, but to some I dare a lot.

    Again don't hold me up as a example as I am sure that there are plenty out there with the same sort of story,I just happen to voice mine on a forum hoping that some people will find useful information and possibly find the courage to take a risk for a better life even if they don't earn over 50K/ year gross.

    Profile photo of Rosa TongRosa Tong
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    @rosa-tong
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    Despite any bad debt anyone here can open up a savings account and it is required by the federal government if they want their Welfare, not paid any other way as far as i know.

    Profile photo of BoughtWithEquityBoughtWithEquity
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    @boughtwithequity
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    Sorry Rosa, some of us here are experts when it comes to inner city investing….we've been doing it for years…sometimes successfully and sometimes not.  Like you, my goal is to share and also learn in the process.  Whether you make your $35k/yr or $1 million, no one wants to go through what you went through.  I'm glad Precise paid you something but if they didn't, your threat of a lawsuit or an actual one is just a waste of time & money.  Even if you somehow get a judgment which you probably won't, you would never collect on it.  I am a lawyer and I've got a small box of paper judgments in my office that are worthless.  The advice provided isn't just for you, as you aren't likely to listen to it anyway, but for others who read these posts.  If we can somehow save some other unsuspecting investor from losing their shirts then our time and efforts are well spent.  Jay has 1,000s of deals under his belt and so do I…..engelo is very active in the market you got burned in.  My intent isn't to throw stones at you at all.  You probably have funds to try again at least and hopefully will make the right connect here to do so.  Some other sucker will probably buy the gem you are now dumping.  Others have not been so lucky as i have seen people lose their life savings investing in places like Detroit, memphis, philly, st louis…..some of these people bought packages of 5 or 10 homes at a time all based on pro-formas of what the place would rent for…some marketers pre-paid the 1st years mortgages in advance to boost the returns…..and the property crashed the following year when rents never came in but payments came due.  Glad you shared your experience and good for you for sticking with it.  i bought my first two properties with no money down and no real income as a college student and made $80k flipping them out.  The rules have changed some but the fundamentals remain the same…know your market & your model and/or partner with people boots on the ground who do……happy Investing

    Profile photo of jayhinrichsjayhinrichs
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    @jayhinrichs
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    Rosa, is what we are

    reading over here in the US about a potential RE bubble in AU  starting to happen in your mind?

    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
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    Thanks for your kind words Rosa.

    You have a great house in a great area.

    Also, you now have a great property manager in Matt and he will not steal your rent or lie to you.

    I take my hat off to you for biting the bullet and buying property although it has not been much of success in the last few years.

    Due to this tho you have gained extensive knowledge on US property and the market here. Much more than anyone else.

    I believe that every experience is a good experience and I have seen that you have learnt from your mistakes and will move forward more wisely.

    It was a pleasure being able to assist you.

    Thanks ;)

    EngeloRumora | Ohio Cashflow
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