Replies to post #2572 on Real Estate Bubble (RUBBLE)

[dickmilde]

"10% net pretax with 1 or 2 months vacancy cushion to boot."

That's a great return if you can get it, the properties that I own don't do that well... more in the 7-9% range after all expenses but pre-tax. The property management in my area is between 10-20% of the gross rental each month.. For that they call the repair people for you and do the showing for new tenants etc. I think it's too high given what they provide. I don't mind showing and I can call the plumber as well as they can.

I have first hand knowledge of a property "manager" that charged the owner for a complete paint job and in reality her husband did some paint touch up... another reason I don't use them.

The most important thing in this market is to be sure that what ever you get into that you can survive difficult times. Don't put yourself into a position so that you have to have the rent to stay afloat. If you can survive with no rental income then you should be OK no matter what.

[swampboots]

Yikes I would not know how to address your question, as I would not try that model if potential profits were double your projected figures.
Maybe I can offer some insights just looking at yesterday when a neighbor who paid 15000 for a cabinet and 10 feet of wardrobe doors with no back and a new safe (the main cost 10K).
The Co. which was contracted to do this work is considered high end, working for wealthy clients.
When I got to the apt. I met the surly worker with his helper who spoke no english. The wood for the shelving was the cheapest wood one can find, a quality slightly lower than IKEA. The doors all had imperfections, laminated coats were sprayed on to wood without proper sanding ( they had to be replaced). The safe door was marred and had to be replaced. Through out the day the workman left tools on bed and borrowed our dustpan which we later located in our neighboor's sink.
I cannot say more as I only use people I know and still do not let out of sight unless I am willing to accept excess do overers at my expense as some work must be caught early.
This model works best when you get a property for almost nothing and people are content to live with many imperfections, the way I do when I go to a cheap motel , never focusing on the decor. The model also works when you buy a property which is rapidly rising in price so that just keeping it for calander spans will result in great profit as new buyers will pay more and gut your place to match their new needs.
Now if I were in a position to own 30 buildings I would need a different model, I would have to have a supervisor I trusted to be my eyes and the cash flow would pay for such a business model.