All Forum Posts by: Bill McCartney

I was wondering if anyone has had a bad experience with Brian Jordan, Lonestar Holdings, Hometown Property Solutions, BOSS Realty, 614 Capital Partners or Downing Properties. I would be very interested in hearing your story if so. Please PM me. Thanks, all!

After a very long process, our lawyers finally got the contract hammered out and I did a full inspection of all of the units. I had previously looked at 3 units that they said were representative of the building. As it turns out, there was a ton of deferred maintenance. I expected some, but was blown away by how they've managed the building. Some of the lower units had mold growing on the walls in the utility closests and bathroom ceilings from water leaks that were never addressed. There were furnaces without filters, sink bases that the bottomso had disintegrated from water damage, and ceiling tiles completely brown and falling apart from water. On Friday, I amended my offer to reflect the new conditions. The realtor said he'd take it to the seller but was not optimistic. They haven't done even basic preventative maintenance. They've taken every penny out of the building for a long time and are now trying to pass off the problems. I am still interested in the building but the deal has to be structured differently. It needs a lot of money put into it quickly. I own properties in the hood of Columbus but I'm not a slum lord and won't run my business like that. It's really unfortunate because it's in a good area and has a lot of potential.  

 I use Rachel Ford exclusively as well! She's without a doubt the best agent I've ever had.

I'm not sure I understand your question about demographics. I would think more important would be what market rents are in the area for a building such as the one you're looking at. If you know what to expect for rent, the current rents don't so much matter. At 125K, you probably only need two or maybe 3 units rented to cover your expenses. 

Based on their evasiveness, I wouldn't count on the current tenants. Make sure you have the cash reserves to pay expenses until you get a couple of units turned and leased up. If say 3 units are occupied with marginal tenants, they might cover half of your expenses. You can get your own quality paying tenants in the 2 vacant and slowly weed out the other 3. That's my normal course of action. 

 Trust me, I've thought that through 1000xs and is the real reason I posted on here.

The question boils down to.... I'm 30. My kids are young. RE is my full time gig now. The return is roughly half of what I've been getting, but I'll have more units in one place than all of my other rentals combined. 

This building will be the difference of my wife having to continue to manage our other business vs hiring that out and being able to live comfortably off of our rentals with her being able to devote 100% to our children. That business is a nightmare (kind of). My logic is that if either of us HAVE to work, I'd much be rather it be me working real estate where I have much control vs her working the business where we're dependant on contractors, clients and the market which are all notoriously unreliable, very stressful and very time consuming. 

I'm way under-leveraged right now. I'm thinking in 2 years, I can get rent up on the apt, refi the entire portfolio with a portfolio lender at roughly 50-60% LTV. Get a decent rate, stretch it all out on a 20 year amortization, cash flow and extra 35% over what in at now and hire it all out. Or keep working and bank more cash to keep investing. I'll be 32 making more on rentals than most professionals.

It would take me at least another 2 years to aquire 36 units at the unreasonably high rate of return I've been getting. And having all of those rentals spread out over 3 counties and more than doubling it seems like a LOT of work vs lower rate of return but them all being within 20 steps of each other. Am I thinking about this the wrong way?

 Got Letter of Intent with contract docs from attorney on Friday! Up to 5 days for contract review and up to 21 days for inspection and due diligence. Should be closed by the end of the month if all turns out as planned! 

 What I was thinking was to identify quality tenants and label them as keep, marginal, and problem. All newer tenants are month to month. The manager said this was to be able to evict them at will if they become problems. In this scenario, it works out well for me.

Then I'd evict as soon as possible (immediately or at first breach of lease) the problem pile. Upgrade these units during turn. Attract higher quality tenants and increased rents in the upgraded units. I'd allow the good (and maybe marginal) tenants to keep their current rates. If they chose to move to an upgraded until with an increased price, do that as units were available. 

Sound good? 

 That's awesome! Congrats!! Did the last 12 units make the cut or are you still in process? That was my thought and how I did it with my smaller multis and I know it works on a smaller scale but I have no experience in large buildings. How long did it take you to identify good v bad? Were you nosey? haha Would you mind posting or PMing your costs on upgrading the units during turns? Thanks and congrats, again.

 Drugs and Bugs, ha, I might use that. I'll be sure to credit you if I do :) I will probably take you up on your offer! Thanks! 

Is 2 years possible? Absolutely! 

How much cash are you starting with? 
How much real estate experience do you have?
Where do you plan to invest? 

Aside from good luck (or bad) and homeruns (or trainwrecks), those questions will probably have the biggest impact on how long it takes to grow to your target.