Managing Rehab For Out-of-Town Investor
I have a situation where an out-of-town investor wants me to do everthing from A-Z. He wants me to find the property, close, rehab, and lease the property. What type of fee is customary for a service like this?
Does your state require a license to manage an unrelated persons property? In CA, a realtor is needed for this (as a general rule).
I did a rehab in Indianapolis about 5 years ago. The property was selected by someone else. She managed the rehab and my contractor has been managing the property since. There was a licensed agent involved with the purchase. The seller was a bank (REO).[ Edited by edmeyer on Date 05/27/2008 ]
How much did you pay for the services?
I would do this as a partnership- since you would have an equity interest, legal issues of contracting and property management would disappear.
When I do a partnership like this, the investor provids the money and I do everything else in exchange for a 50-50 split. The investor gets interest on any actual money he puts in, although generally all the money is borrowed and the payments are taken out of the income. I get paid for any actual labor I put into the rehab- but not for time spent finding the property, arranging contractors, purchasing materials, and property management- that is what I contribute for my half.
This can work very well for both parties- ideally the investor puts in no money and has to do nothing except go to a couple of closings, you can even arrange the financing. You get half of the profits without having the ability to finance it yourself- this is your incentive to ensure that it is a really good deal. Of course it is better to get ALL of the profits, but if you are not able to do it on your own, "half a loaf is better than none".
Chris
I do the same kind of thing. I put together pkgs of 5 to 20 at a time for out of town investors. I find the properties, per form all due diligence, negotiate the contract(s), rehab the properties, then put in renters. Then I manage the properties myself, or I set them up with another management company here in town. One of these investors has me build a portfolio of about 100 properties, then he sells it off to hedge funds or whatever as performing portfolios.
What I do to get paid is I take a little here and there. The initial purchase of the property has between $1k to $5k added on to the sale price for my fee. Then I get a small management fee to rehab the property. This amount depends on the level of rehab needed. Then I get paid again for putting in renters. This is generally equal to the first months rent. If I am the property manager then I get paid $100 per unit per month for each property I manage.
I use drywall joint compound for everything interior that needs smoothed and will be painted- easy to work with and works well. Not sure how it would hold up in an exterior application, but if it is well protected from the elements and painted over with a few coats I suppose it would work there too.
Chris
Excellent!! Thanks for the suggestions! [ Edited by d_random on Date 05/29/2008 ]
The best way to repair an exterior metal door is Bondo (a two part puddy / expoxy). It is often found at your local auto supply store. It works quick, can sand and paint within a half hour or so.
NC