How to manage 20 residential apartments
If he can't manage, best is he sells it off. Its easier to manage cash. Not sure what tax you are talking about. He should have already paid tax on fair market value of the 20 flats. If the intention of Mr X is to gift to son by way of death, then yes the tax will be less. Else whenever Mr X sells there will be tax.  how to manage these 20 apartments? Hire a broker. He may front run quite a few things like showing the place etc. There is a risk if he is given a free hand, he may not get good quality tenant. There are quite a few shark brokers [its unregulated] who may arm twist seeing the opportunity of an old man with 20 flats. See if you can do long term lease with companies looking for guest house etc, or certain companies who run guest house. They would like the scale, generally 3-5 years contracts are done. The rent is good and overall less hassle. The risk is most would ask to invest more in furnishing and contracts can be terminated in months notice. If the property is in large metro [Delhi/Bangalore/Chennai/etc] These places have good property management companies. Ensure that you have independent lawyer; there are certain aspects of law that may need to be studied. I have no idea about India, but in many countries there are companies that specialize in property management. This means they will take on the business of maintaining the properties, finding tenants, doing paperwork and background checks, collecting rents and evicting tenants if necessary. Obviously for this they require a fee, but essentially the owner gets to sit back and do nothing except collect a cheque every month. In my country some real estate agents are in this business as well, though for 20 apartments I would be looking for a specialized firm. There are many property management companies are available in India. You can easily find trusted companies just searching on the google. They manage all these things legally. You just try this
My basic rule of thumb is that if the the bill come from a government office of taxation, and that if you fail to pay the amount they can put a tax lien on the property it is a tax. for you the complication is in Pub530: Assessments for local benefits.    You cannot deduct amounts you pay for local benefits that tend to increase the value of your property.   Local benefits include the construction of streets, sidewalks, or   water and sewer systems. You must add these amounts to the basis of   your property.  You can, however, deduct assessments (or taxes) for   local benefits if they are for maintenance, repair, or interest   charges related to those benefits. An example is a charge to repair an   existing sidewalk and any interest included in that charge.  If only a   part of the assessment is for maintenance, repair, or interest   charges, you must be able to show the amount of that part to claim the   deduction. If you cannot show what part of the assessment is for   maintenance, repair, or interest charges, you cannot deduct any of it. An assessment for a local benefit may be listed as an item in your   real estate tax bill. If so, use the rules in this section to find how   much of it, if any, you can deduct. I have never seen a tax bill that said this amount is for new streets, and the rest i for things the IRS says you can deduct. The issue is that if the Center City tax bill is a separate line or a separate bill then does it count. I would go back to the first line of the quote from Pub 530: You cannot deduct amounts you pay for local benefits that tend to   increase the value of your property. Then I would look at the quote from the CCD web site: The Center City District (CCD) is a business improvement district. Our   mission is to keep Philadelphia's downtown, called Center City, clean,   safe, beautiful and fun. We provide security, cleaning and promotional   services that supplement, but do not replace, basic services provided   by the City of Philadelphia and the fundamental responsibilities of   property owners. CCD also makes physical improvements to the downtown, installing and maintaining lighting, > signs, banners, trees and landscape elements.  and later on the same page: CCD directly bills and collects mandatory payments from properties in   the district. CCD also receives voluntary contributions from the   owners of tax-exempt properties that benefit from our services. The issues is that it is a business improvement district (BID), and you aren't a business: I did find this document from the city of Philadelphia explain how to establish a BID: If the nature of the BID is such that organizers wish to include   residential properties within the district and make these properties   subject to the assessment, it may make sense to assess these   properties at a lower level than a commercial property, both because   BID services and benefits are business-focused, and because   owner-occupants often cannot treat NID assessments as tax-deductible   business expenses, like commercial owners do. Care must be taken to   ensure that the difference in commercial and residential assessment   rates is equitable, and complies with the requirements of the CEIA. from the same document: Funds for BID programs and services are generated from a special   assessment paid by the benefited property owners directly to the   organization that manages the BID’s activities. (Note: many leases   have a clause that allows property owners to pass the BID assessment   on to their tenants.) Because they are authorized by the City of   Philadelphia, the assessment levied by the BID becomes a legal   obligation of the property owner and failure to pay can result in the   filing of a lien. I have seen discussion that some BIDS can accept tax deductible donations. This means if a person itemizes they can deduct the donation. I would then feel comfortable deducting the tax because: If you can't deduct it that would mean the only people who can't deduct it are home owners.  So deduct it. (keep in mind I am not a tax professional) Security guards usually come in handy for safeguarding a commercial or residential mansion or simply managing the crowd at a private or corporate event. Robuck Security can provide security guards in Melbourne for short-term as well as long-term requirements. Our security guards are trained in their duties to perform mobile patrolling, taking up concierge desk or customer service and much more. Give us a call to hire our diligent security guards right away! The 2 and 20 rule is a premium arrangement that hedge funds offer and venture capital funds offer, and they also offer different variations of it. The 2 is the management fee as percent of assets under management, the 20 is the profit cut, which they only get if they are profitable. There are 0/20, 1/15, and many variations. You're assuming that nobody offers this arrangement because it isn't offered to you, but that's because nobody offers it to people that aren't wealthy enough to legally qualify for their fund. When you park 6 or 7 figure amounts in bank accounts, they'll send your information out to the funds that operate the way you wish they operated. Valuations are literally 100% driven by retail investors who 20 years ago were literally peasants and are not grounded in reality. I'm working at a small IB in China over the summer. The IPO I'm working on is a small cnc machining company. Some of its competitors are literally trading at 100x EBITDA, growing sales at literally 5%. Nobody who is in a management position has any inkling of how finance works(not to say they're not smart, just that they have no experience). At twenty-two, you can have anywhere between 100%-70% of your securities portfolio in equities. It is reasonable to start at 100% and reduce over time.  The one thing that I would mention with that is that your target at retirement should be 70% stocks/30% bonds.  You should NEVER have more than 30% bonds.  Why?  Because a 70/30 mix is both safer than 100% bonds and will give a higher return.  Absent some market timing strategy (which as an amateur investor, you should absolutely avoid) or some complicated balancing scheme, there is never a reason to be at more than 30% bonds.   A 50/50 mix of stocks and bonds or a 100% bonds ratio not only returns less than the 70/30 mix, it is actually riskier.  Why?  Because sometimes bonds fall.  And when they do, stocks generally gain.  And vice versa.  Because of this behavior, the 70/30 mix is less likely to fall than 50% or 100% bonds.   Does that mean that your stock percentage should never drop below 70%?  No.  If your portfolio contains things other than stocks and bonds, it is reasonable for stocks to fall below 70%.  The problem is that when you drop stocks below 70%, you should drop bonds below 30% as well.  So you keep the stock to bond ratio at 7:3.   If you want to get a lower risk than a 70/30 mix, then you should move into cash equivalents.  Cash equivalents are actually safer than stocks and bonds either individually or in combination.  But at twenty-two, you don't really need more safety.   At twenty-two, the first thing to do is to build your emergency fund.  This should be able to handle six months of expenses without income.  I recommend making it equal to six months of your income.  The reason being that it is easy to calculate your income and difficult to be sure of expenses.  Also, you can save six months of income at twenty-two.   Are you going to stay where you are for the next five years?  At twenty-two, the answer is almost certainly no.  But the standard is the five year time frame.  If you want a bigger place or one that is closer to work, then no.  If you stay somewhere at least five years, then it is likely that the advantages to owning rather than renting will outweigh the costs of switching houses.  Less than five years, the reverse is true.  So you should probably rent now.   You can max out your 401k and IRA now.  Doing so even with a conservative strategy will produce big returns by sixty-seven.  And perhaps more importantly, it helps keep your spending down.  The less you do spend, the less you will feel that you need to spend.   Once you fill your emergency fund, start building savings for a house.  I would consider putting them in a Real Estate Investment Trust (REIT).  A REIT will tend to track real estate.  Since you want to buy real estate with the results, this is its own kind of safety.  It fell in value?  Houses are probably cheap.  Houses increasing in price rapidly?  A REIT is probably growing by leaps and bounds.  You do this outside your retirement accounts, as you want to be able to access it without penalty. "So your whole approach, and the attempt to scale this is flawed.  You will alienate roomates, provoke arguments, and make everyone's life more difficult.  There are too many variables and unforeseen possibilities.  For instance: ""Why should I have to pay for Joe to go buy the expensive organic milk when I'm fine with the cheap stuff?"" ""I planned on being here for 20 days, but was gone that long weekend, recalculate everything please."" ""I already paid for this month, but now you're asking for more because James wanted to recalculate for a long weekend?"" The right way to do this is to set up loose, reasonable agreement among the participants and treat that as a contract, but with some flexibility/mercy on small dollar amount items. For instance: There are 5 of us, so everyone provides food (and shops/cooks) one night a week.  We're solo on Friday and Saturday (people eat out more then anyway), and everyone puts in $10/week (or whatever) for breakfast cereal, snacks, etc.  If you can't be here on your night, work out to trade with someone.  If you miss out on a meal... oh well. As long as people feel like they have a say in the discussion generating this and it's not dictated to them, then most of the time this is far superior.  If people need this level of detail, then perhaps those people should live alone or move in with Sheldon Cooper from ""The Big Bang Theory""." "I agree with Joe Taxpayer that a lot of details are missing to really evaluate it as an investment... for context, I own a few investment properties including a 'small'  10+ unit apartment complex. My answer might be more than you really want/need, (it kind of turned into Real Estate Investing 101), but to be fair you're really asking 3 different questions here: your headline asks ""how effective are Condo/Hotel developments as investments?"" An answer to that is... sometimes, very. These are a way for you-the investor-to get higher rents per sq. ft. as an owner, and for the hotel to limit its risks and access additional development funding. By your description, it sounds like this particular company is taking a substantial cut of rents. I don't know this property segment specifically, but I can give you my insight for longer-term apartment rentals... the numbers are the same at heart. The other two questions you're implying are ""How effective is THIS condo/hotel development?"" and ""Should you buy into it?"" If you have the funds and the financial wherewithal to honestly consider this, then I am sure that you don't need your hand held for the investment pros/cons warnings of the last question.  But let me give you some of my insight as far as the way to evaluate an investment property, and a few other questions you might ask yourself before you make the decision to buy or perhaps to invest somewhere else.  The finance side of real estate can be simple, or complicated. It sounds like you have a good start evaluating it, but here's what I would do: Start with figuring out how much revenue you will actually 'see': Gross Potential Income: 365 days x Average Rent for the Room = GPI (minus) Vacancy... you'll have to figure this out... you'll actually do the math as (Vacancy Rate %) x GPI (equals) Effective Potential Income = EPI Then find out how much you will actually pocket at the end of the day as operating income: Take EPI (minus) Operating expenses ... Utilities ... Maintenace ... HOA ... Marketing if you do this yourself (minus) Management Expenses ... 40% of EPI ... any other 'fees' they may charge if you manage it yourself. ... Extra tax help? (minus) Debt Service ... Mortgage payment ... include Insurances (property, PMI, etc) == Net Operating Income (NOI) Now NOI (minus) Taxes == Net Income Net Income (add back) Depreciation (add back) sometimes Mortgage Interest == After-tax Cash Flows There are two ""quickie"" numbers real estate investors can spout off. One is the NOI, the other is the Cap Rate.  In order to answer ""How effective is THIS development?"" you'll have to run the numbers yourself and decide. The NOI will be based on any assumptions you choose to make for vacancy rates, actual revenue from hotel room bookings, etc. But it will show you how much you should bring in before taxes each year. If you divide the NOI by the asking price of your unit (and then multiply by 100), you'll get the ""Cap Rate"". This is a rough estimate of the rate of return you can expect for your unit... if you buy in.  If you come back and say ""well I found out it has a XX% cap rate"", we won't really be qualified to help you out. Well established mega investment properties (think shopping centers, office buildings, etc.) can be as low as 3-5 cap rates, and as high as 10-12. The more risky the property, the higher your return should be. But if it's something you like, and the chance to make a 6% return feels right, then that's your choice. Or if you have something like a 15% cap rate... that's not necessarily outstanding given the level of risk (uncertain vacancies) involved in a hotel.  Some other questions you should ask yourself include:  How much competition is there in the area for short-term lodging? This could drive vacancies up or down... and rents up or down as well How 'liquid' will the property (room) be as an asset? If you can just break even on operating expense, then it might still make sense as an investment if you think that it might appreciate in value AND you would be able to sell the unit to someone else.  How much experience does this property management company have... (a) in general, (b) running hotels, and (c) running these kinds of condo-hotel combination projects? I would be especially interested in what exactly you're getting in return for paying them 40% of every booking. Seasonality? This will play into Joe Taxpayer's question about Vacancy Rates. Your profile says you're from TX... which hints that you probably aren't looking at a condo on ski slopes or anything, but if you're looking at something that's a spring break-esque destination, then you might still have a great run of high o during March/April/May/June, but be nearly empty during October/November/December.  I hope that helps. There is plenty of room to make a more ""exact"" model of what your cash flows might look like, but that will be based on assumptions and research you're probably not making at this time." Sounds like you have a nice rental on your hands, honestly, if it's blue-collar-ish material.  Not too expensive for a rental. Is the rental market fairly strong there?  You're probably looking at $400-$500 per month income after you pay everybody.  (My property manager takes 10% of gross rents and she would inspect the property quarterly for me.) I'd take as many of those as I can get, though if I had ten of them I could be set for the rest of my life. :) That way you can offset any losses you might incur by selling now.