All Forum Posts by: Brian Morreale

@Austin Bozek

It depends. In most cases, if the units are separately metered, the tenants can and typically do pay for all their own utilities. In some multifamily situations you see water/ sewage and trash also paid for. From my experience, no hard fast rule or expectation exists that something has to be provided by the landlord.

It should be noted that in Akron, the owner will get a copy of the water and sewer bill and holds final responsibility to make sure it's paid, but the tenant can be sent the bill as well and can agree to pay it as part of the lease.

Hope that helps.

Just wanted to provide some closure to my question and all the great advice I received. I ended up lowering the rent by $100/month and was able to get a few applicants within a couple weeks and eventually a tenant in this week. I did learn a few things though.

First, the rent was not the issue. All the applicants stated it was the cheapest rent the found in the area for a 3 bedroom/2 bathroom rental, especially considering it was nicer than most at a higher price.

Second, I learned the enrollment and the local university was down about 10-15% over the last couple of years.

Finally, I learned that there has been a large increase in student housing in the last 2 years, leading to roughly a 30% vacancy rate in the city at the moment and a lot of major companies offering incentives (first month free, free preferred parking, reduced rate with multi-year contract, etc.) to pull tenants. 

These factors mixed with the time of year (after school year started), simply made applicants scarce. I decided to structure my lease to expire at the end of spring to put myself in a better market for when it comes vacant again.

Thank you so much to everyone for their advice and input. Look forward to talking with all of you more around the site!

Appreciate all the responses. The idea of reducing the first month's rent seems appealing vs. lowering my standards or lowering the monthly rate. I'll keep you posted on what happens after we advertise that. Thanks everyone!

I purchased a duplex last year in a university town, but not intending for it to be a college rental. The duplex had a vacant unit and another under lease till July of 2019. I was able to remodel a half bath and paint the unit and get it rented within a couple months after purchase. The second unit came vacant in July and was in slightly worse condition. Performed a more thorough rehab, remodelling all bathrooms (3), replacing carpet and flooring and fully repainted. 

The unit has been available for rent for about a 3 weeks now at the same rent as the other unit and is in much better condition, but struggling to find quality tenants. We posted through rentlinx which hits a bunch of other sites. We have lots of interest, but no one is submitting applications. It seems our criteria (the same as Brandon's tenant criteria) for tenants may be making tenants reluctant to submit applications. We do not charge for submitting applications either. I struggle with lowering the rent because it seems that rent is appropriate for the unit size and location. The rent is the same as the previous lease and the adjoining unit.

Any thoughts on what we can do attract more serious tenants?

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $180,500
Cash invested: $45,125

My second property purchase. Side by Side duplex purchase with one unit vacant and other unit under lease located on a dead end street close to a university. Performed slight renovation and rented the vacant unit within a few months of purchase. Other unit vacated at end of lease. Unit fully remodeled and rented.

What made you interested in investing in this type of deal?

Similar to my first duplex purchase, unit is larger than most and commands a higher rent/quality tenant.

How did you find this deal and how did you negotiate it?

Found through the MLS. In such a hot market, not much room to negotiate but managed to get a quality deal even at asking price.

How did you finance this deal?

Actually took a loan against my 401K to cover the down payment and financed 75% of it through Huntington Bank at 5.375% for 30 yr fixed. Huntington also has a program to help lower income areas grow and develop by covering all closing costs above $500. This unit fell within one of those areas even though it is probably considered a B area in my opinion.

How did you add value to the deal?

Units had been let go since the previous owner had purchased almost a decade ago, so a lot of deferred maintenance. We remodeled all the bathrooms, installed new carpet/flooring, replaced both furnaces and an AC unit, painted walls and trim, and updated landscaping. Plan on refinishing driveway and repainting outside in near future as well.

What was the outcome?

Both units rented and refinance in process. The refinance also applied for the closing costs being covered by Huntington so I am able to refinance and cash out for less then $1000 out of pocket

Lessons learned? Challenges?

Rents are inflated in the area due to the college. I assumed that but did not understand what that would mean. Had difficulty finding quality tenants due to this even though plenty of interest was shown.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes but I would not recommend them even though they were recommend to me as an investor agent. I actually felt my real estate agents fought me a bit during the negotiation. I felt I was negotiating with them more then the seller. I also had talked to one agent for months before I found the deal, only to be handed off to one of his agents with a lot less experience when we put in the initial offer.

@Justin Carter - Just curious if you reached out to any of these law firms, what you ended up learning, and who, if any, you worked with. Thanks!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $178,600

Cash invested: $6,160

First Investment Purchase. Bought as a house hack strategy on an FHA loan. Moved out after 3 years and now both sides are rented. Currently loan includes PMI but should be able to be removed by late 2020.

What made you interested in investing in this type of deal?

Grew up around real estate and intrigued by letting someone else pay for me to live in something I own.

How did you find this deal and how did you negotiate it?

MLS

How did you finance this deal?

FHA 30 year Fixed. With rents and deposits due on a 10/5 close date, i only needed to bring $2600 to closing.

How did you add value to the deal?

Required some cosmetic updates so i used that opportunity to put some higher quality products into the rentals.

What was the outcome?

Still own the property today

Lessons learned? Challenges?

Ended up using the listing agent as my agent. She was less than cooperative in my opinion and although she kept things by the book, I never felt like she was on my side.

If you are looking for as little money down as possible, I learned that scheduling your closing date as early in the month as possible on a property with rented units will translate those rents and deposits right to the bottom line of what dollar value is needed to bring to the close. In my case, i was owed around $3500 in rents and deposits for the remained of the month (close on the 5th of month) which reduced my closing costs from $6100 down to $2600.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No

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Getting ready to make this final offer on the property. Just want to make sure i'm looking at this correctly and analyzed it right. As stated, it includes $3500 in closing costs from the seller. Turn key ready and no owner paid utilities.