All Forum Posts by: AJ Hernandez

Thank you Michael. I will certainly start making some phone calls to get this information. It only makes sense that the tax man wants his cut. I only hope that the increase won't be too outrageous.

Thank you all for the input. The bids we received were not itemized as Michael mentioned. That is a good point. They were in writing and had a basic breakdown but not itemized. We are working with two town officials who have been very helpful in guiding us through the process. We recently listed it with a Realtor and I believe he listed it in the marketplace.

I didn't realize the taxes would go up after the rehab??? Is that common? How do I find out about that? Isn't there a formula for taxes in the county?

The building is in low income area so the type of tenants is always a concern, however all of our rentals are in low income areas and they have been very lucrative for us. There is always a percentage of nonsense but it goes with the territory.

Once the property hit the MLS our the responses increased quite a bit and we received two offers in one day. We are still going back and forth with both people which is why I am trying to do as much research asap before we decide what to do with the offers. I don't want to regret walking away from a good $100k as someone mentioned.

The advice given here has been very helpful and given me much to consider. I have a few investors who I am working with who recently contacted me through one of my ads and they are interested in funding the project. They are asking for a  financial statement.  I am working on getting that done. It certainly has been a learning experience!

Oh and I forgot to mention, we did NOT buy it from a tax sale. But we did buy it for $16,500....sure did! Life is good aint it!

Jamarcus, its very sad that you have come on this forum to show negativity toward me and my husband and our project simply because we did not accept your offer on this building. We considered your offer but as you know it was not a serious offer. Just because we did not accept your offer does not mean we  "refused to negotiate". You are certainly showing your lack of experience in this business and lack of professionalism. Our last two offers were $115,000 and $125,000 which is more than double what you offered. You were not willing to even put a deposit, provide any sort of proof of funds, and even stated in this forum that you did not have the financial means to pay for your real estate license. These were all things we took into serious consideration with your offer. Keep in mind you also gave us a verbal offer and then disappeared for a week and then said you changed your mind. So there was a lot of back forth which made us uncomfortable with working with you. How we left it with you was thanking you for your offer and wishing you the best on any future endeavors. So its very unbecoming of you to lash out so childishly because we did not accept your offer. 

 My husband I came here looking for  help and guidance as we have had many decent offers on the building since yours but are considering doing the rehab ourselves. This is also something we discussed with you when we spoke. In fact, you said you had private investors that could help us if we decided to rehab the building. So I am not sure what you have to gain by coming to BP attempting to discredit a property you so badly wanted. From what I have seen so far, most of the people on the BP community seem to be experienced, professional, honest, helpful and encouraging. Your post was the first post that I have seen that sounds like an angry ex girlfriend.

I have already given the stats/number on the property. Nothing I have stated was different than what you stated, unless you are trying to help me sell the building....if so, then thank you kindly. 

The bids I received included updating the sprinkler system, separating the meters, electrical, plumbing and cosmetics. We currently have a great Realtor that  has helped us tremendously with putting the bids together and working with town officials.  As I stated in a previous post, although the town borders a town that has historically been known as a "bad area", this building is in a section of that town that was recently listed as one of the most affluent areas in Arkansas.

Your post is certainly in poor taste and just goes to show there will always be a few bad apples in the mix.

My advice to you is, don't be a hater!

"The challenge of leadership is to be strong, but not rude; be kind, but not weak; be bold, but not a bully; be thoughtful, but not lazy; be humble, but not timid; be proud, but not arrogant; have humor, but without folly.” - Jim Rohn

I agree its a nice problem to have. My husband is very eager to take on the project but I am more skeptical. I don't want to get in over my head, but on the other hand I have to take a leap at some point. I have been very comfortable with the single family and duplexes I currently own but this is a huge undertaking. I believe it can yield us a healthy cash flow for life.

I am working on a pro forma as  Nick suggested. Its hard projecting the annual expenses. I know Nick gave me some numbers but I am trying to understand how that is accurate for this building. If the tenants are paying their own water and utilities, then my part would be the sewer and trash. Plus taxes of $2600 per year. I called to try to get insurance quotes but they would not even attempt to give an estimate since it was vacant. I asked if it would be more than $10,000 per year, they said no. So with $2600 in yearly taxes, and lets figure $10,000 annually for insurance, $20,000 for property management (at full occupancy) and trash and sewer, would my my annual expenses still be at 50% of my gross?

Also, the way the building is set up the one bedrooms would be easy to convert to two bedrooms. I was thinking that it might be good to convert at least 25% of the units to two bedrooms. Just a thought. 

Thanks for the numbers.

How did you come to the Annual Operating Expense numbers?

The deed is a Special Warranty Deed which is common for commercial properties. We have  Title insurance policy,

They will easily rent for $500 on the low end up to $650, perhaps more if we go the Section 8 route.  There is another building very near this one that is 16 unit studios and they are renting for $450 and $500. Plus they don't have central air, just window units.  Some investors from California bought that building for $280,000 in 2012 and did a complete rehab and now has it under new management. The manager said they never have more than 5 units vacant. So I know for sure these units will rent in the range that I mentioned. The bids that I received included putting in central air which will make the units even more desirable. 

Here are some more specifics on the property.

32 one bedroom units

Building is 100% vacant

Yearly taxes $2600

Rehab cost from contractors (actual bids) $336,000 includes plumbing, electrical, sprinkler system, cosmetics

Property is 30 miles outside of Little Rock

Not quite sure yet what the monthly expenses would be but tenants would pay their own utilities.

Hi Shane,

Thank you. I actually bought this property from the bank as a foreclosure. I bought it for less than the cost of a trip to Disney! I do have some duplexes and single family but this building is something I have never dealt with. Its got great potential. Its actually borders up against a town that is low income and had a bad reputation in the past and I think that is why many people passed on it. However, the legal description of the building is in the next town over, which makes a difference as far as school districts. And the next town over is one of the most affluent towns in the state. So this building has lots of potential. I am thinking I will just start contacting local lenders as someone here suggested. I live out of state so I can't be there but I am doing all that I can to find out about rehab lending on properties like this. In the grand scheme of things  $300,000 isn't that much for a property I own free and clear and with the income potential.

I hear people talking about private investors but I don't know how to find them. Also, has anyone ever used patchofland??? It seems interesting and maybe like the way to go.

Hi Everyone,

I am new to the forum. I currently own a 32 Unit apt complex free and clear that I picked up for a steal!

I have had many offers but at this point I am wondering if its better to keep it and rehab myself.  The income per month works out to be $14,000 per month (on the low end). I have bids for the rehab at $325,000.  I have a local Realtor in place to manage the property and the project if needed.  I can either make a quick $100,000 upfront for wholesaling it or make $170,000 per year. The issue is I have never owned a multi unit of this magnitude and don't know where to start. I am not sure even where to get the money to do the rehab. I would consider taking  a partner and going 50/50 but again I wouldn't know where to find someone.  I just don't want to sell myself short.  Owning the property would be ideal for me and my family's future. Please help!