All Forum Posts by: Amy Webber

Jason,

The PM profession is different because the majority of it's participants did not earn a law degree.  If each of the properties you manage are having as many problems as you suggest then you need to work at finding better properties to manage.  If it isn't the properties then you need to work on the tenants for you clients.

The $90 a month is all you should ask for.  The majority of you properties should be smooth sailing and collecting an easy fee.  Now, lets stop hijacking this thread and help the original poster find a handyman.

I would suggest going to a local real estate investors meeting and network there.  They will know who does good work at reasonable prices and who to avoid like the plague.

Have a great day!

Ideal 1: Dishwasher and double sink even in a small space.  You can always have a cutting board that fits over the sink to extend prep space.  Options are good and these amenities keep good tenants for longer ... I have much less turnover in these units.

Second choice: Dishwasher and single sink

Third choice: double sink only

Last choice: single sink only

Best of luck!

Amy

Dishwasher - hands down - No dishwasher eliminates a lot of potential tenants or buyers. There are a number of things that you can do to make more of the remaining storage or extend it if you are replacing cabinets anyway.

Example:  We rehabbed one rental that was a 1100 sqft 3 bedroom/2 bath house with a small U shaped kitchen. Since we were putting in new cabinets, we put lazy susan cabinets in the two corners.  Then we replaced one of the existing lower cabinets with a dishwasher.  The end result was more usable cabinet space and a new dishwasher though fewer drawers. The theory here was not letting the perfect be the enemy of the good.  All the prospective tenants loved the kitchen and our property was easy to rent.   See below for the dishwasher picture.  Best of luck

Our late fee is $50 if not received by the due date.  A flat fee is much easier to manage in my opinion.

@Charlie Price

Thank you for the detailed response!  

1) I'm leaning that way too but we are going to do a more detailed estimate on the rehab before we make our final decision.  Our property manager is going to take a look as well to make his recommendation on rent.

2) I agree - there are several duplexes on the street that are renting for $795 but I do not want to count on getting that level of rent so I ran the numbers lower.  All of the units under 700 are under market rent.

3) Wish me luck - I've been able to get the taxes on some properties lowered but not all that I have attempted.

4) I would have thought closer to 1500 but I'm using the current owners insurance rate for the duplexes.  I'll post the actual numbers after I get the insurance set up for the closing date.

5) It is aggressive but we should be able to start work on them right after we close so that is lined up.  I think we will have them ready within two weeks of closing and we will start advertising as soon as we have one ready to show.  We will aim for 4/1 but if it takes a bit longer to get a good tenant, that is fine too.

The rental market is tight on anything under $1000.  However, if we don't have a suitable tenant, we wait until we do.  I am not a fan of the  "get someone in there" method.

6) The payments on the owner financed 145k are interest only payments of just over $400 per month and are included in the "All Monthly Payments" number as well as the payment on the refinanced lump sum.

We are planing on paying off the owner financed balloon at the end of the 14 months by refinancing one or two of the duplexes.   We have already talked with our banker on this and plan to start the process at month 11 so that we can make sure we are done before the 14 months.  It is an additional expense though as you stated.

7) I appreciate the comments and additional information to think about.  It is always good to get additional insights and opinions (sunny and rainy!).  Thank you for the time you spent on your post. 

On my "day" job, I have a client down in Niceville, Florida.  I do enjoy the Apalachicola oysters when I am down that way!

Best of luck in your real estate adventures!

Thanks,

Amy

I've got them all under contract but will let you know if we decide to sell the SFR. We are planning keeping the duplexes though. Thanks!

Thank you in advance for comments and advice. Sorry for the long post but wanted to make sure I had all the information in there for review - Thanks!

Package Purchase Price - $385k

SFR Brick Ranch @ 40k

Duplexes 3 (6 units) @ 345k

Will be using funds from refinancing other properties at 4.15% to provide 240k at closing, owner is financing the rest at 4.15% for 14 months so that we can refinance these at a year. No penalty for early payoff.

Basically, to get the duplexes that are in really good shape, the SFR in rougher shape is part of the package. My thought is to proceed with the duplexes for a long term play. We are undecided on what to do with the SFR this spring. Opinions and questions welcome!

Properties:

A) Brick SFR - 3/1 - 1100 sq ft -  Price 40k, needs 25-35k of work, market value is about 70k fixed up , would rent for $750 - $795. 

Options: 

1) Resell the SFR as is - maybe make a few thousand, break even, or lose a little

2) Fix the subfloor and prep the bathroom and kitchen to be finished for about 2500 and sell it to someone else to finish the kitchen and bathroom to their specs. Should be able to make a few thousand more

3) Rehab it, rent it, keep it till I can refinance it to get most of our money out of it. It would be worth what we have in it.  Could be worse but this is not ideal.

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B) 3 Duplexes - two story, 1990's construction with roofs less than 2 years old, HVACs less than 5 years old,, each side is a 1000 square feet 2 bedroom, 1.5 bath unit - $345,000 (or $115,000 each).  Comps are hard to come by - there is a sale for 60k, & another for 90k in 2014 for identical units on the same street, and a 2016 sale for same type of duplex at 130k on the same street so the price is reasonable especially for the market in 2017 for the area. 

Each duplex has one side rented at an average of $630 and one side is vacant as the current owner was rehabbing these to raise the rent. These units need some paint, some carpet cleaning, and the top boards of their decks replaced.  Each unit will take less than a $1000 to have rent ready.  

Market rents would be between $725 and $795 per my property manager (has another duplex in the same neighborhood that he manages).  The below market rental units would be raised gradually to market or raised when the units turned.

Duplex Numbers (All three together)

All Monthly Payments: $1600 (Repairs for empty units will be on an LOC and payment on that is included here)

Taxes: $500 per month ($6000 per year) - I think I can get these lowered

Insurance: $1200 per year

Monthly Income (($630 + 725) * 3) = $4065 when fully rented - Should be feasible by April 1

$4065 -1600(pmts)-500(tax set aside)-100(ins set aside) = 1865 remaining

$1865 - 325.20 (PM) - 600 (reserves) = $940 remaining

Thanks for reading this far!

Amy

Like Joe, I would put in the offer with an expiration date where you can make the numbers work on the current rental income. If it expires like you expect, let the agent know to call you if they decide to negotiate but that you will continue to search for the right property.  

Personally, I find it preferable to put in an offer like this where the agent knows I'm seriously interested at the right price, I'm still shopping, and I'm not locked in.  IF I really like the property, I'd rather make the offer and lose it to someone who overpays than to never make the offer at all.

Good Luck

Thank you !  One additional clarification - the commercial loan is a 5 year loan on a 20 year am so we will have to pay off the balloon at that time or redo the loan at that time at the going interest rate. The payment listed is just the loan payment. Taxes and Insurance add another $500 per month. 

Still very happy with it though !

Paul,

Thank you for the reply! We took the plunge and bought the property a couple of days after the original post as our time to decide was limited.   Fortunately, our long time real estate attorney was able to help connect us with a commercial lender and it worked out.  We put 20% down and have 4.12% rate on a 20yr am. I have no complaints for our first and totally unplanned commercial deal.  Unfortunately, I did not get to squeeze the asking price due another offer but I was glad the owner called to see if I wanted to extend my lease before she signed the contract to sell.  If she had not called, I would not have even known it was for sale until it was too late.   I actually ended up paying $250k instead of $245k but we beat out the other offer on the table.  

I am very happy with my office and the other tenants are thrilled as the other buyer wanted everyone out as soon as their lease was up.  I think it will be a good solid long term property and it is a great location for me personally (5 minutes from my house, 15 minutes from where my kids attend school, and walking distance to my favorite Mexican restaurant).

I have been able to trim operating expenses over $250 per month so far and think I'll potentially be able to trim them another $200 or so per month within the next month or so. That makes things run pretty well.  The rent comes in, I pay the payment and leave the rest in the account to build up for payment coverage, those future repairs, and the day when one of the other tenants decides to retire!  So right now we collect monthly rent of $2800 and have a payment of $1235.00, which gives me a buffer for the unexpected.

Part of the summer rent increase from the prior owner was splitting the utilities among the tenants and there are rent increases built into the new lease for the next two years.  I'll have to revisit those numbers when it is time to renew the leases in 2019.  I was able to cut the monthly alarm bill from $85 per month to $25  (with more features too!) and reduce the the monthly yard and interior cleaning costs from $450 per month to $200.  

I am contemplating getting rid of the $200 per month as well as the yard is tiny and the only cleaning is the small common area and two single bathrooms. I have been watching, and it just doesn't seem to take that long so I thinking about getting rid of that as well. My kids can do as good job of raking leaves, taking out the trash, and cleaning the bathroom. Then they can have some spending money and start contributing to a Roth IRA to build some good habits.

Thanks again for the encouragement and have a great 2017!

Amy