All Forum Posts by: Chris Bounds

Like Joe said tenants generally won't move over a small increase. Moving is a pain. Besides, most will probably expect rent increases.

Also, for good tenants we tie the increase to a small lease renewal perk like a free house / carpet cleaning. It's win/win.

I certainly do. If my insurance, taxes, and HOA fees go up so does their rent. Haven't had a problem yet. Good tenants get a nicely worded letter explaining why, but I only increase their rent to keep up with costs ( keep cash flow the same). Bad tenants will see a higher increase.

This may be on BP or Google somewhere, but if so I couldn't it.

Does anyone have a Microsoft Word template for a lined (notebook) Yellow Letter? I found a template for a white notebook template, but I haven't found a yellow one.

My current Yellow Letter is typed on plain yellow paper, but I'd like to test the "handwritten" font approach too. Any suggested fonts?

I do not have any notes at the moment, but I'm considering it for future exit strategies. Currently I'm just managing rentals.

Lisa Smyser, Thanks. I'll save Rentmatic in case I need them in the future. Right now I use ERentPayment.com and they have been great.

So you use Rentmatic for your owner's financing payments too?

I've personally inspected the property with my contractor. The vacant units (and the occupied units) are repairable. They just need a good facelift - every single one of them.

The seller is a wholesaler who picked it up at an auction. I haven't verified the competing apartment rents, but from a quick glance online the $500-600 range for a 1/1 is appropriate. That's why my first target post-rehab was $550, to give GOI a little boost without pushing the market limits.

Seller's expenses has holes in them. Obviously since it's already distressed and he isn't planning on holding he isnt paying for things like landscaping and pest control. It doesn't factor repair and reserve funds either. My 1 year numbers do.

I'm using 100% hard money with a lender I've worked with on many SF deals. PP and repairs wrapped in, the same way I buy my SF homes. My numbers show that filling only 5 vacant units makes it cash flow even with hard money. But that assumes 5 NEW tenants, not (in the case of termite fumigation) putting old tenants into new units because I have to consolidate them in one building.

I've contacted a bank that is willing to do a refi the hard money once vacancy is stabilized, even within 6 months. No cash out though. I'd have to wait 18+ months for that to be considered.

One year projected value at 8% CAP is $1.3 million.

Oh the property manager is on site. One unit manages. They are given free rent now. I'd switch that deal to reimbursed rent with extra incentives for on-time rent collection, leasing, etc. Of course, it would be on a trial basis based on performance. Once stabilized I'd look for a PM company to manage the onsite manager.

Jon Holdman This one is at 45 South and 610. Low-income area, but lots of big box stores and chain stores around. Definitely a good deal if can wait for the turnaround. I'm expecting 4-6mos interior repair work and marketing to start the upswing. But the whole termite thing might cramp my personal budget for it since it will require more upfront costs. Inspections and quotes are coming so I'll see soon.

Michael B., yes I meant 55%. The 16 vacant units is correct. Old owner didn't do any rehab. Even occupied units are not in livable condition. At least I'm sure the city inspectors would say so. There are other class C apartments in the area that seem to be doing well - from the outside at least.

Ok BPers. I said in a post a while back I'd post the numbers on a small apartment complex that I am pursuing. Here they are. Comments are welcome:

Purchase Price: $325,000
Units: 29
Mix: all one bed/bath (one efficiency)
Structure: 2 two-story buildings
Current rent: $500
Vacancy: 45% (16 vacant units)
GOI: $95k
NOI: $37k (seller's info)

My estimated repairs:
Interior (vacant units): $80,000 - mostly cosmetic with new appliances and window A/C units.
Exterior: TBD (new balcony railing $8000 + updated electrical (units have gas stove hookups currently), siding repair, and paint, possible dry wood termite treatment)

Potential 1 year outlook:
Vacancy: 11% (conservative)
Rent: $550 ($450 for efficiency)
NOI: $169k
GOI: $59.7k

The only two pending snags for me on this deal are: cost for termite treatment and cost for electrical upgrading. The termite issue is the big one for me. I hear fumigation is not cheap. Also, I'd have to vacate one building to treat it. That means either they have to move out or I have to renovate units for them to move into first - which means more upfront cost. The occupied units all need work ($60k estimated), but I had planned on doing them progressively after filling the vacant units. Even still this seems like a heck of a deal, but with my funds it could be a deal breaker - unless the seller is open to renegotiating.

Comments, suggestions, advice?

Thanks. You may be referring to Prime Loan Services. They do what you said, but their setup fees are pretty steep and I think they charge 3% when the buyers refinance.

A motivated seller that is against holding a note may be ok with a low-ball All Cash offer. Good luck!