All Forum Posts by: Brad M.

@Drew Denham I'd make sure my inspection team had experience with that age property. As others mentioned, knob and tube, foundation issues, etc. In my market, if I limited property to post 1950, it would take a lot of properties out of consideration!

You can purchase in your name, but you can't transfer it to an LLC without the lender's knowledge. You can't get a 30-yr conventional mortgage in your name, then expect to keep that when it goes into an LLC. The lender will want a personal guaranty, and you'll be looking at a commercial loan with something like a 25-year amortization, 5 yr balloon, and only 75% LTV. (Obviously terms vary...point is it will be a more stringent loan since it is commercial).

Hard to add much to the great recommendations above, but one of my favorite places for jazz when in NO is Fritzel's. They have a great house jazz band. It is small, and set up with a few rows of bleachers so there is no bad seat in the house.

Hotel Monteleone is also one of my favorite places. This is where we always stay, and the Carousel Bar is not to be missed (the whole bar slowly spins around...sounds worse than it is!). Eddie and Marvin are great bartenders, and there is usually good live music.

@Peter Fokas I'm getting ready to close on a quad where the current owner's daughter has been acting as the super. I plan to keep her in that role, and she does receive a discounted rent. We will have a more formal agreement than she had with her father, but she will not be an employee. Here are my Do's and Don'ts.

Do:

• Assist with lockouts
• Receive tenant maintenance requests
• If an emergency, immediately contact owner
• If not emergency, notify owner of resolution or status within 24 hours.
• Mow grass
• Trim hedges
• Shovel snow off sidewalk
• Show vacant apartments
• Collect rental applications and deliver to owner within 24 hours

Don’t:

• Approve any vendor repairs without approval from owner
• Represent yourself as an employee of the owner
• Make any promises or representations to tenants or vendors without owner’s approval
• Receive rent

It is also understood the arrangement can be terminated by any party at any time, and rent resets to market rate if the agreement is terminated. Hope that helps.

@Michael Morris You beat me to it with the CCIM education. That is where you should start given your interest in the finance aspect of CRE. @Marcus Curtis is also correct that we have a great IREM presence in VA, and if you go the PM route that is an organization you need to get involved with.

The broker that you would be working with...what is his/her focus? Regardless, at the very least you will want to save them time if you want to add value. Anything that you can do to allow them the time to pursue new business, you should do. Put together marketing packages, do the property research, cold call, follow up on leads, set up appointments...you get the idea.

I'm with a large CRE firm in Richmond, and if you want to message me would be happy to talk to you offline in more detail.

@Patrick Britton most cities and counties have vastly improved their GIS sites in the past few years. Just Google "your county GIS" and that should point you in the right direction. Usually they will include an aerial overlay so you can be sure you are looking at the right property.

@Andrew Michael Congrats on pursuing this deal. Is the property listed with an agent? If so, they will likely pay a buyer's agent. No cost to you, the seller pays. If you know a good agent experienced in investment property, have them figure out if the seller will pay them. If not, I would probably just default to a real estate attorney to walk you through the process. That will cost you, of course.

Great comments from all. I really appreciate it. 

@Mark Whittlesey I appreciate you pointing out the difference between a contractor and employee. That's a great point. I'll do more research on that, but I think that makes sense. I don't set her hours. More of a contractor that receives a retainer fee.

@Yiv L. - Good point on the applications. Honestly, I'm not sure I'm comfortable with her having keys. The sellers (if telling the truth) said she helped with lockouts 3 times in the past couple months. I'm 25 minutes from the property, and I certainly don't want to be rolling down there at 2AM. But I don't feel like I know her well enough to allow her to have keys to all the units. Feels like that might open me up to some liability. Regardless, my leases will have a lockout fee.

Any thoughts on putting her duties in writing? Here is my list so far. Any additions, deletions?

Do:

• -Assist with lockouts
• -Receive tenant maintenance requests
  • If an emergency, immediately contact owner
  • If not emergency, notify owner of resolution or status within 24 hours.
• -Mow grass
• -Trim hedges
• -Shovel snow off sidewalk
• -Show vacant apartments

Don’t:

• -Approve any vendor repairs without approval from owner
• -Represent yourself as an employee of the owner
• -Make any promises or representations to tenants or vendors without owner’s approval
• -Receive rent

I've got a quad under contract. All units are currently leased. One of the tenants is the seller's daughter, and she was given a rental rate $100 less than market to "keep an eye on the place." I've met her, and her father (the seller), and she has been mowing, trimming bushes, letting locked out tenants in, accepting rental applications, receiving tenant maintenance requests, and showing units. 

Her day job is basically the same - she leases units for a local real estate firm that owns similar product to the one I have under contract. 

I've been going through the pros and cons of continuing this arrangement. The first issue is her rent. Rents have gone up, and she is now $195 under market. If this arrangement continues, I think some rent increase is warranted. I would also want a more formal written agreement that states what she can and can't do, and allows for the arrangement to end by either party and the rent re-sets to market. In her prior arrangement, she was working for her father. I don't want to hire her as an employee, but it seems like a fine line here, especially if we have a written agreement regarding job duties. 

My other thought, given it is more of an employee / employer relationship vs the family relationship she had before, is to charge market rent and pay her X amount to do the job. But then I'm into hiring an employee, taxes, etc. My gut is telling me that is the way I will need to go if she keeps doing this work.

Obviously, I can just raise the rent and do everything myself, which is fine. I'm just looking for a way to keep a good tenant that provides value to the property.

I think I'm leaning towards telling her the rent is going up, and I'm not interested in hiring a property manager right now. 

Anyone else had a similar experience? Anything I haven't thought of? Thanks,

Brad

Patience paid off. Tenant issues were resolved by current owner, rents were raised, and I've got it under contract under my original target purchase price. I do have some questions that I will pose in new threads.