Precise Property Management, MO

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.

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.

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.

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.

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！

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

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

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