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Author Topic: RentalStarter - A Midwest Real Estate Investment Company  (Read 119033 times)
xaviarlol
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July 08, 2013, 10:37:22 AM
 #81

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
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Branny
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July 09, 2013, 02:20:50 AM
 #82

There should be a feature on bitfunder to allow stock and funds managers to e-mail newsletters to stockholders.

There will be soon enough which will resolve the contact issues we're having now.

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
It's off the top.
xaviarlol
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July 09, 2013, 03:09:12 AM
 #83

There should be a feature on bitfunder to allow stock and funds managers to e-mail newsletters to stockholders.

There will be soon enough which will resolve the contact issues we're having now.

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
It's off the top.

So after all expenses, you will then charge a 15% fee on the net profit?

If so, what if that month there are lots of expenses (say, repairs etc) and the investment makes a loss, will you be happy to not take a management fee?
physalis
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July 09, 2013, 01:50:48 PM
 #84

There should be a feature on bitfunder to allow stock and funds managers to e-mail newsletters to stockholders.

There will be soon enough which will resolve the contact issues we're having now.

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
It's off the top.

So after all expenses, you will then charge a 15% fee on the net profit?

If so, what if that month there are lots of expenses (say, repairs etc) and the investment makes a loss, will you be happy to not take a management fee?

I think by "off the top" he means he gets his 15% *before* expenses, something that I don't really like... I'd like that clarified too please.
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July 09, 2013, 03:01:48 PM
 #85

There should be a feature on bitfunder to allow stock and funds managers to e-mail newsletters to stockholders.

There will be soon enough which will resolve the contact issues we're having now.

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
It's off the top.

So after all expenses, you will then charge a 15% fee on the net profit?

If so, what if that month there are lots of expenses (say, repairs etc) and the investment makes a loss, will you be happy to not take a management fee?

I think by "off the top" he means he gets his 15% *before* expenses, something that I don't really like... I'd like that clarified too please.


It's off the top, if the month will be negative, i won't take any management fee.

The average in my area for rental management is 10% off the top, or $75 per door, whichever is higher (Plus a $350 tenant fee). The reasoning behind the 15% management fee is so that at some point, after getting say 25  rentals I can roll the management off to either a outside company or a company I build for the purpose of managing the rentals. If I were to charge a low fee or no fee, there would likely be shock to the investors as to how high the management costs would be. So, in this scenario the costs will roughly stay the same.
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July 09, 2013, 04:27:45 PM
 #86


It's off the top, if the month will be negative, i won't take any management fee.

The average in my area for rental management is 10% off the top, or $75 per door, whichever is higher (Plus a $350 tenant fee). The reasoning behind the 15% management fee is so that at some point, after getting say 25  rentals I can roll the management off to either a outside company or a company I build for the purpose of managing the rentals. If I were to charge a low fee or no fee, there would likely be shock to the investors as to how high the management costs would be. So, in this scenario the costs will roughly stay the same.

Perhaps it would be good to clarify what the management fee goes toward. This would cover taking care of the property, finding renters, etc. so it is not quite the same thing as a 5% "management fee" on a stock pass-through, right?

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Branny
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July 09, 2013, 05:10:37 PM
 #87


It's off the top, if the month will be negative, i won't take any management fee.

The average in my area for rental management is 10% off the top, or $75 per door, whichever is higher (Plus a $350 tenant fee). The reasoning behind the 15% management fee is so that at some point, after getting say 25  rentals I can roll the management off to either a outside company or a company I build for the purpose of managing the rentals. If I were to charge a low fee or no fee, there would likely be shock to the investors as to how high the management costs would be. So, in this scenario the costs will roughly stay the same.

Perhaps it would be good to clarify what the management fee goes toward. This would cover taking care of the property, finding renters, etc. so it is not quite the same thing as a 5% "management fee" on a stock pass-through, right?

Correct.

15% covers all work associated with 'managing' the process of rehab and renting. It includes buying ads in the paper/online to procure rentals, going to the property oversee the contractor work, dealing with evictions and the like.

xaviarlol
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July 11, 2013, 01:14:04 PM
 #88

There should be a feature on bitfunder to allow stock and funds managers to e-mail newsletters to stockholders.

There will be soon enough which will resolve the contact issues we're having now.

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
It's off the top.

So after all expenses, you will then charge a 15% fee on the net profit?

If so, what if that month there are lots of expenses (say, repairs etc) and the investment makes a loss, will you be happy to not take a management fee?

I think by "off the top" he means he gets his 15% *before* expenses, something that I don't really like... I'd like that clarified too please.


It's off the top, if the month will be negative, i won't take any management fee.

The average in my area for rental management is 10% off the top, or $75 per door, whichever is higher (Plus a $350 tenant fee). The reasoning behind the 15% management fee is so that at some point, after getting say 25  rentals I can roll the management off to either a outside company or a company I build for the purpose of managing the rentals. If I were to charge a low fee or no fee, there would likely be shock to the investors as to how high the management costs would be. So, in this scenario the costs will roughly stay the same.

Sorry, I need you to clarify what "off the top" means.

Does it mean you take the 15% from the income BEFORE expenses. Eg Income is $1000, you take $150, then its $850 left, then we minus expenses, say $300 and the rest ($550) goes back to shareholders
OR
Take 15% from the net profit (AFTER expenses). Eg. Income is $1000, expenses are $300, which leaves $700. Then you take 15% of the $700 left = $105 fee, leaving shareholders with $595.?
Benny1985
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July 11, 2013, 02:21:22 PM
 #89

Pretty sure its before expenses - just like every other REIT/property management company.
Branny
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July 11, 2013, 02:25:47 PM
 #90

There should be a feature on bitfunder to allow stock and funds managers to e-mail newsletters to stockholders.

There will be soon enough which will resolve the contact issues we're having now.

Hi Branny,

I have a question re the management fee of 15%. Is that management fee 15% of what exactly, the net profit, the gross profit or something else?
It's off the top.

So after all expenses, you will then charge a 15% fee on the net profit?

If so, what if that month there are lots of expenses (say, repairs etc) and the investment makes a loss, will you be happy to not take a management fee?

I think by "off the top" he means he gets his 15% *before* expenses, something that I don't really like... I'd like that clarified too please.


It's off the top, if the month will be negative, i won't take any management fee.

The average in my area for rental management is 10% off the top, or $75 per door, whichever is higher (Plus a $350 tenant fee). The reasoning behind the 15% management fee is so that at some point, after getting say 25  rentals I can roll the management off to either a outside company or a company I build for the purpose of managing the rentals. If I were to charge a low fee or no fee, there would likely be shock to the investors as to how high the management costs would be. So, in this scenario the costs will roughly stay the same.

Sorry, I need you to clarify what "off the top" means.

Does it mean you take the 15% from the income BEFORE expenses. Eg Income is $1000, you take $150, then its $850 left, then we minus expenses, say $300 and the rest ($550) goes back to shareholders
OR
Take 15% from the net profit (AFTER expenses). Eg. Income is $1000, expenses are $300, which leaves $700. Then you take 15% of the $700 left = $105 fee, leaving shareholders with $595.?

15% off the top before expenses. If income is $1,000 then my management fee is $150. Then expenses are deducted with the remainder being distributed to shareholders. If the management fee puts the dividend payment negative then I won't take a pay that month/period.
Branny
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July 15, 2013, 03:03:01 AM
 #91

HUD sent me a notice that all the paperwork on their end has been accepted and signed. Monday I'll be contacting the title company to see when we can close, may be as early as the end of the week, not sure really.

Gonna go get more interior pictures/video for the investors either Monday or Tuesday. Will also be getting interior repair stuff figured out a little more as far as measurements go so I can get some more repair lists going. Also buying a trailer on Monday which will save us a few thousand over the next few properties. Buying a roll-off container is $400/mo and the trailer will act as a rolloff that we get to keep (Additionally can be used to bring in materials I buy cheaper).
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July 17, 2013, 06:49:37 PM
 #92

Make sure we get all inspections done.  Do not rush the close Smiley

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Branny
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July 17, 2013, 08:50:57 PM
 #93

Here's a quick walkthrough video of the property

http://youtu.be/efC4CDEP3H0
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July 17, 2013, 09:00:28 PM
 #94

Here's a quick walkthrough video of the property

http://youtu.be/efC4CDEP3H0

Wow house like that really cost only 26k$ in US ? I wouldnt get 1 room flat in Czech republic for that
Branny
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July 17, 2013, 09:16:55 PM
 #95

Here's a quick walkthrough video of the property

http://youtu.be/efC4CDEP3H0

Wow house like that really cost only 26k$ in US ? I wouldnt get 1 room flat in Czech republic for that

Yes, $26,500 is what we're contracted for. To make all the repairs and enhance value (We figure repaired value should be $80k-$100k) it will cost us $18k-$20k in repairs.

Income should be in the area of $900/mo for this property, providing a simple ROI of 23.32%. However ROI will be infinite after we cash it out.
msm595
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July 18, 2013, 01:50:36 AM
 #96

Yes, $26,500 is what we're contracted for. To make all the repairs and enhance value (We figure repaired value should be $80k-$100k) it will cost us $18k-$20k in repairs.

Income should be in the area of $900/mo for this property, providing a simple ROI of 23.32%. However ROI will be infinite after we cash it out.


Any estimation on property tax and insurance rates? Theoretically these subtraction from that $900/mo income, right?

Benny1985
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July 18, 2013, 03:17:51 AM
 #97

Given the area, T&I shouldn't be over $30-40/mo on a house in that area...Very minimal.
Peter Lambert
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July 18, 2013, 02:15:33 PM
 #98

Given the area, T&I shouldn't be over $30-40/mo on a house in that area...Very minimal.

Whoa, are you sure you have that right? Taxes everywhere I have lived have been at least 10x that. I guess you just have very low property taxes in your area?

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Branny
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July 18, 2013, 02:16:05 PM
 #99

T&I is $125 or so per month.

Given the area, T&I shouldn't be over $30-40/mo on a house in that area...Very minimal.

Whoa, are you sure you have that right? Taxes everywhere I have lived have been at least 10x that. I guess you just have very low property taxes in your area?

Our taxes are pretty low. Not as low as kentucky, but still low.

This home is $1200-$1400/yr in taxes however I will apply for a tax reduction review because our purchase price is so much lower than the appraised value. The house is appraised by the county around $100k. If they accept the review/appraisal, it would go down to $500/yr for a term of 3 years.
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July 18, 2013, 04:49:35 PM
 #100

I see there was a dividend, 1428 sat/share yesterday. Have we already started making income? I thought we were still working on getting the first house purchased?

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