All Forum Posts by: Peter Albanese

Here's how I look at this deal: 

Rent Revenues                           16,200
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Vacancy Allowance                      1,296
Prop Mgmt.                                 1,620
Utilities                                      1,200
Landscaping/Snow                      1,000
Total Expenses                            5,116
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NOI 11,084
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LESS Morgage (P&I)                    6,020
LESS Taxes & Insurance              2,828
==================================
Cash Flow                               $2,264

Cash on Cash Return: $2,264 / $20,840 down payment = 10.86% Cash on Cash Return
Synopsis: Not a ton of money, but also, its only a 104K property. You can probably raise rents if they haven't been raised in a while and get even better returns. 

Wait for now, stockpile cash and wait for a major correction. I'm not saying you'll have the steak and lobster buffet buying opportunities of 2008, but there will be much better deal available if you wait. I haven't bought a SFH for two years for a reason.

I’m going to offer another option. Refinance the house 135k at new rates and push loan out to 20-25 year amortization, albeit higher than your current rate. This would lower your payments and probably allow this to cash flow. This would mostly solve the issue with carrying the house and turn it into cash flow generator, although I don’t feel like it would be a great return on investment. Generally speaking a house should be able to get 1% of cost via rent in order to work out, so if you paid 400k for this house, you’d want to collect 4k/month in rent, but I don’t know your cost basis. It’s up to you to choose the option that works best for you. 

Quote from @Mitch Conrad:

Yes. You can definitely make better returns through residential assisted living. My wife and I have 21 residential homes and one commercial community. We converted two single-family homes to start our journey but the rest of our homes had already been operating as assisted living. This is a highly regulated industry; and it should be. The reason the returns are higher is because it is a full-blown active business and there are many risks. Almost all our acquisitions were from distressed or completely closed businesses. One group of homes was also from a distressed landlord whose operator completely failed and left the landlord with vacant buildings, a poor reputation, and a need for full renovations.

There are two ways to enter this business. Either roll up your sleeves and learn every aspect of senior care or bet on someone you can trust to run the operations. In my opinion, your success will be directly tied to the operator. 

There are those who will gloss things over and tell you only the positive side. There aren't many businesses that can do such social good as assisted living but if you enter, you must have your eyes wide open. There are many great companies who take good care of seniors but there are also many that do poorly and fail.

 Where do you focus your marketing to get new residents? I wouldn’t think The traditional means of advertising a rental property on one of the major websites would be the best route. Seems like you would need to network with medical professionals and try to get referrals? Can you advertise online like any other rental? 

Quote from @Ronald Rohde:

Yep, its a solid business with a real estate component. Be prepared to be on site multiple times in the beginning. You'll always needs reliable boots on the ground nearby for emergencies though.

We use Easy Storage, it even has gate code integration if you're springing for that technology. Its very pricey though!

If you don’t use the gate code entry I would anticipate you’re running over there every time you have a new tenant moving in ?? Any other solutions you can share ? Also on average how long do self storage tenants stay for 6 months..12 months … ? Thanks 

Quote from @Diana Costta:

Dear BP investors,

I have a duplex in Ohio and I put an 1/1 unit on the market for rent. It has been on the market for more than a month, my PM told me to consider decreasing the rent, but I see competitors in the area charging the same amount for the same type of unit. My question is: what strategies do you usually employ to get tenants in situations like this? and how long do you wait to see if a strategy is working or not (2 weeks)? Thank you.

 If you know someone who works at a large employer in the area, you can reach out to them to post something on their internal message boards. I’ve done this with success. Sometimes they have new employees relocating to your city for a large company and the new people don’t know where to live so the company can refer them to you. Consider calling the HR department and they may bounce you over to another department for relocating employees. 

Quote from @Patrick Drury:

@Diana Costta
Where is your PM advertising the property for rent? Please let us know where it is being advertised that might play a role in why it's not getting traction. It should be up on Zillow, aparements.com, Trulia and hot pads. If no traction, try the Facebook marketplace. Did the leasing agent have any feedback from the other showings as to why they didn't apply? In regard to the price, if all other items have been addressed, it most likely could be the price I would recommend lowering every 2 weeks or week depending on the traction you get after lowering it. 

 I agree with all of these advertising site but Facebook marketplace. Facebook leads are usually unqualified tire kickers dreaming of a place they can’t afford . 

Quote from @Katelyn Andrews:

@Taylor L. yes, I am interested in learning about purchasing an undermanaged facility and adding technology to increase efficiency and allow for remote management. If anyone has done this, I would love to know what technology they use, and about how long the process took. 

Electronic gates, Easy Storage Solutions software, call center to walk people through online renting process and Google AdWords. That’s the hands off formula I’ve been told. Usually the software companies also handle the website so customers can reserve, rent and make payments online. They get a code and use that code to enter the electronic gates. Of course you need a 6 foot tall fence around the facility to make this all work plus you need it for security. 

I’ve recently been researching residential assisted living whereby you purchase a large home and move elderly tenants into each room but then also provide home health aides 24 hours a day. Has anyone here had experience with this type of real estate play and was experience positive or negative as far as cash flow and return on investment. My preliminary information is showing that I could get a lot better return on cash flow monthly by renting a house in this manner rather than just to a regular tenant. Any feedback is appreciated.

I would NEVER do a rental deal based solely on appreciation. Its all about cash FLOW. You will have monthly expenses, vacancies, and need to be compensated for your time, as well as make money on your investment. 20% down is typical in todays environment. 35% down payment is terrible, don't call that lender back. Banks that trust you will finance 100% of renovation costs. 8.5% is a pretty steep interest rate. Have you asked about FHA loans for rental properties from a local community bank? If not, that's where I would start. I'll send you a message.