**JUST BOUGHT A 10 UNIT APARTMENT BUILDING NOW WHAT???

[Mil Sanghvi]

Hi BP,

I JUST BOUGHT A 10 UNIT APARTMENT BUILDING!! NOW WHAT DO I DO TO TRANSITION??

I am closing on my biggest property yet (10 units) on October 15th. I am uncertain as to the exact steps to follow when you transition. My LLC will own the property and another of my LLC will manage the property. It cash flows well with the numbers below. Expenses are verified. 6 of 10 units are on section 8 with long term tenants and is 100% occupied. I only accept direct deposit, pay online or pay through pay pal. No mailed check or pick ups.

Purchase price 300k and owner is giving 20k towards upgrades/repairs etc Plan is to install surveillance cameras, lights, paint doors and shutters, 2 water heaters and new signage and minor fixes etc. Pocket the rest ;) :P

What are the steps to follow to transition into new management.

What should I expect from the tenants?

Are my numbers realistic?

Step by step guide would be very helpful.

What do you wish you would have known when you were in my place?

Property Management software recommendations? I'll have 15 units total.

.................................................Monthly         Annual          % of Income

Gross Income                          5250               63000           100

Vacancy 5%                            262.50            3150             5

Gross Scheduled Income        4987.50          59850          95

Expenses

Property Taxes                         275                3300              5

Property Insurance                  275                3300              5

Electricity                                 150                1800              2.85

Water                                       150                1800              2.85

Waste Management                100                1200              1.9

Lawn Care                               250                3000              4.76

Repairs/Maintenance              250                3000              4.76

Property Software                   200                2400              3.8

Property Management            262.50           3150              5

Total Expenses                      1862.50        22350            35.5%

NOI                                         3125              37500            64.5%

Debt Service                         1466              17596            27.9%

Cash Flow Before Taxes      1659              19904            31.59%

Debt Service Ratio 2.13, Cash on Cash return 26.5%

At 10% cap the property is worth 375k

Thank you in advance.        

[Rob Beland]

@Mil Sanghviyou should probably slow down a bit. One step at at a time. Keep things as they are for a while. Research online payment systems. You may find (as many people do) it's more of a hassle and its much easier to have tenants mail you a check or money order. You may have tenants that don't own a computer or aren't very  computer savvy. You don't want to come in and disrupt everyone's routines or you may find you are losing tenants. Start with some of the minor upgrades. Make sure you have sufficient cash reserves before you spend all of your cash on cosmetic improvements that may not result in any increased rental income. Good luck. Way too much information for a comment. You should be doing research here on BP. Check the Learn tab and use the search function at the top of the page.