All Forum Posts by: Brent Wiebe

Thank you for your replies.  Sounds like ultimately the buck stops with the property owner.

This hasn't happened to me yet, but what if the property management company I hire went bankrupt and could not give the tenants in my rentals their security deposit back?  Would I have to come up with that money?

Just a quick update before I get back to work.  I had 15k to rehab this duplex, but of course, expect the unexpected.  The new roof that was advertised in the listing, and that I did not have inspected, turned out to be a new layer of shingles over 4 existing layers, including the original wooden shakes!  $8,000 down the tubes to totally re-roof the 2nd story portion of the roof, and tar the 1 story portion.  With the substantial reduction in available funds, I have been doing almost all of the work myself to make the remaining funds stretch.  I did have to hire out a bit of carpeting and vinyl floor installation, as well as installing electric baseboard heat upstairs, though.  

Upstairs has been rented out by the management company I hired.  I was expecting at least $525/mo up there. However the unit had a living room and a dining room, plus a kitchen big enough for a dining area, so we put french doors up to turn the living room into a 2nd bedroom, and got $600/mo rent up there!

Downstairs unit is nearing completion.  I was hoping for 600/mo down there, but with the 10 foot ceilings, and large total square foot living area, this 2 bed apt is being advertised for $750/mo!  This time of year, though, we might not get that much.

Will wrap this up next year when the downstairs unit has been rented out.

Closing was on Monday. The tenants had moved out and not damaged the place, so that was good.  Yesterday my kids and I started working on the upstairs unit. My son got the 40 yr old carpet pulled up.  It was glued thoroughly to the hardwood floor. He will be sanding and refinishing that.  My daughter filled nail holes and removed contact paper from cupboards.  I painted ceilings, removed nails from the walls, and took off the light switch and plug-in covers.  My wife was eating lobster in Maine.

Can we post photos? If so, photos to come.

Thanks, Luke. I had no closing costs.  The Seller paid those for me, as per the offer to purchase.  My colleague wrote the offer for me, and it was his suggestion that we ask the Seller to cover Buyer closing costs. I had never done that before, and generally don't like the idea, because I am a seller sometimes also.  I'm glad, however, that the offer was written that way because I didn't get the property quite as low as I wanted.

Word is that the naughty tenants have moved on without trashing the apartment!

OK, I started in the middle of the story because of what was going on with the eviction, and how I avoided dealing with that myself. Someone requested the numbers, so here they are. :)

The property is in an improving neighborhood*, and was initially listed for $94,900. Advertised rents were $520 for the downstairs 2 bedroom unit, and $400 for the upstairs 1 bedroom unit. I know that in nice condition, rentals in that neighborhood should go for $600-$650 downstairs and $500-525 up. To bring them up to that standard, I would need new flooring, paint, and probably a new bathroom upstairs. Downstairs has the old woodwork that is in great condition, remodeled bathroom, new laundry room, and some new flooring.

After 60 days the price dropped to $79,900. I put in an offer for $72,000 and accepted a counter for $75,000. Repairs estimated at $14,200. I got a loan at 80% ltv for $71,360 (repair costs rolled into the loan). It is a 20 year business loan with a 3 year balloon @ 4.5%

• Purchase Price + Repairs $89,200
• My down payment is $17,840.
• Assuming rents of $1100
• 7% vacancy rate is $77
• Maint $100
• Water & Sewer $50
• Property tax $144
• Insurance $60
• P&I of $436
• Cash Flow $232

Cash on cash return of 16%

If I get the upper end of the rents, cash flow would be $302, for a coc of 21%. ;) I have my other rentals with a management company for 8% of the rents, but I think we will try our hand at managing this one ourselves. 

* The neighborhood was not a desirable place a few years ago. But investors have bought up properties and fixed them up. Home owners took heart and have also fixed up their houses, and most of the problems have moved out. 

Thank you, Jordan.  Rents on this deal were definitely below market as well.  

I’m brand new at using any type of forum, but felt maybe I’m ready to jump in.

My wife and I started investing in duplexes in 2012. Our first deal was a dilapidated old up and down duplex that was a foreclosure. I obtained it through a friend who wholesaled it to me. A summer of demolition, scraping, painting, and rebuilding, and we were the proud owners of a handsome property in a nice, quiet neighborhood. Since then we have acquired three more duplexes, including the one we are living in.

I got my real estate license in 2013, and have found that helpful. For my latest deal, I have an accepted offer on another old (1890's) up and down duplex that needs minor cosmetic work: painting, flooring and possibly one bathroom. The tenants were on a month to month lease , and since I wanted to work on the duplex right after closing, I wrote a contingency that the Seller was to give notice to the tenants, and the property was to be vacant before closing. The contingency also stated that if the tenants refused to leave, the Seller was to evict them at their own cost, also before closing. This has become standard procedure for me, but it has never been a problem removing the tenants.

I am extremely happy that I wrote the offer the way I did, because the tenants in one of the units have refused to leave. We have amended the closing date twice now to accommodate the Seller in giving proper notice and beginning the eviction process.

When I write offers for clients on rental properties (mostly duplexes), I always recommend receiving the property vacant if possible. That way you can get in right away to get repairs done, and you can start off on the right foot with tenants that have gone through your application and screening process.