All Forum Posts by: Bill E.

I've recently reviewed an apartment complex that looks interesting however the current mortgage must be assumed. Also, the deal is requiring a downpayment of $1,175,000 (52% of the sale price - asking price is $2,250,000). The current mortgage balance is $1,075,000 fixed at 6.25% due in April 2016 and amortized over 25 years.

Here's my questions - any insights would be greatly appreciated

1. Why must it be assumed - is there a pre-payment penalty?
2. Why must there be a 52% down payment?
3. How is the mortgage factored into the purchase price?
4. Could this be refinanced somehow?
5. How do you see this making sense for a buyer? (i.e. would a buyer assume and then refi if possible? Offer a lower purchase price to make up for the higher mortgage interest rate?)

Seems to me you're not asking about whether or not your making the right strategic decision, but whether you have covered all the bases to prepare for a possible eviction and are handling the pay or quit notice properly.

Hopefully someone with more experience, preferably from GA, can chime in.

Thanks for the replies guys.

Went over today and one of my corporate tenants had the window AC unit on full blast AND the door to the deck wide open...

This is the type of thing that can quickly make a corporate rental turn very expensive. I firmly reminded him to close all doors and windows if he's using AC. But, I'm quickly learning that the old axiom is true - if a person ain't paying for it they don't care. I'm going to have to drive by everyday during the summer and check to make sure he's shutting it off before he goes to work.

I'm thinking in the future I'll buy AC units with a remote and keep the remote. That way I can drive by and shut it off at will...lol...

I just purchased a 12 unit bldg which has three corporate units. They pay between double and nearly three times market rent which is great - but LL pays for all utilities, furniture, etc.

I'm trying to brainstorm ideas for reducing costs in these units - any thoughts?

I'm considering things like: low flow faucets, energy efficient lighting, etc.

I'd love to find a way to reduce the cable and internet bills as those are the biggest expense in each unit.

Also, they just installed AC window units so any thoughts on keeping that under control as well would be appreciated.

Yep this is one of those rules that's counterintuitive and could definitely trip up a landlord.

But rest assured, you don't have to allow the tenant to drill holes. In fact, the FCC website expressly discusses this.

If the tenant's rented space doesn't include an area that would work for the dish then they are out of luck. For example, if they have no deck you don't have to allow them to attach it to the side of the building or roof. The landlord is simply prohibited from prohibiting dishes in the tenant's exclusive space.

Practically speaking this means they need a south facing deck, porch or yard, or possibly a window if that would work.

I know the original question was about a SFR, but this just came up with my multifamily bldg and I think the rule is pretty interesting for multifamilies:

My understanding of the rule is that in a multifamily bldg it only protects the tenant's right to install a dish within their own exclusive rented space. A landlord can forbid a tenant from installing dishes on the roof or attaching to exterior walls or any other common areas. This makes sense as the tenant has no exclusive right to use those areas so they can't install their own stuff there. Also, the rule goes on to say that a LL may prohibit a tenant from drilling holes through exterior walls.

Therefore, it seems like the only place a tenant in a multifamily has the absolute right to install a dish (that would actually be capable of reception) is on a south facing deck or porch since the dish must face south. If they don't have one then they really don't have anywhere to install a dish. And, even if they do have such a deck or porch the LL could prohibit them from drilling holes in the exterior walls to run the cable inside. So, unless there is already some sort of connection in place from the deck or porch to the interior of the apartment. They're out of luck.

Hi all-

I'm closing my first deal on Friday and am pretty excited! I know its going to be a challenge but I'm looking forward to it. I live right down the street from the bldg and grew up in the area, so I will be managing the property myself and know the area very well.

The bldg is 12 unit, all 2bd/1ba, constructed in 1985, wood frame, vinyl sides, laundry in unit, parking lot, outdoor decks and top floors have fireplaces. It's fully rented. I initially posted about this bldg in this thread: http://www.biggerpockets.com/forums/432/topics/71186-thoughts-on-this-12-unit

So, here are my initial questions as a new landlord taking over a building full of tenants - I'd be immensely thankful for any wisdom from the experienced members here:)

1. My introduction - so should I go around and introduce myself to the tenants as the new owner? as the property manager instead? I will be buying through an LLC which has a PO Box, so I could maintain a fairly formal corporate vibe if that's desirable, and I tend to think it is. I want the tenants to get the feeling that an experienced company is taking over and while things will be run very well no violations will be tolerated and rents will go up. My instinct is to introduce myself as the manager, an employee of the owner. Thoughts?

2. I plan to immediately have pro landscaping job done, replace exterior carpeting on stairwells and either replace wooden decks or have them repainted depending on cost. I also plan to illuminate the sign of the bldg. In short, I want exterior appearances to indicate that this bldg is now being run great.

3. The bldg is undermarket. The current owners have done little to no rent raising since they bought it in 2005. Current rents are between $550-595 for 2bd/1ba units. Nearby comparable properties rent for $750-800. Nicer renovated props nearby go for $1000. As of July 1 I will have 5 month to month tenants and one lease coming up for renewal. I know I can't raise rents with 10 days notice (nor would I try) so here are my thoughts - I will give notice to the m-to-m tenants that rents will be going to market rate in 60 days, i.e. $700-750. Is this too extreme? I'm ok with some vacancy as it will allow me to renovate and market to corporate tenants (more on that below). But, is there risk of some kind of large scale tenant revolt or something? Also, what should I do about the lease coming up for renewal - I can't raise the rent but I also don't want to lock in for another year below market. Should I have them to go m-to-m and then give them the same 60 day notice?

4. Corporate rentals - 3 units are rented by a large corporation in town. LL pays all expenses, furnishes and provides housewares. Rents are between $1100 and $1400 for these units. So, its a large premium over the market rents and enough to cover the costs and more. My goal is to get as many of these units as possible going forward (there are other potential corporate customers and little if any competition in corp housing market here) Any thoughts on the corporate market, strategies for efficient furnishing and marketing?

Thanks all for your help - it is greatly appreciated! This place is a wonderful resource.

Brian - thx for the response. If I have the ability should I always offer all cash assuming I can hold it through any seasoning period? I'm thinking yes in order to get the lowest purchase price.

David - thx very much for your input. To answer some of your questions:
Water and all utilities is sperately metered except for the corporate units.

Thanks Michael - Lots of good points to consider.

As I'm guessing you saw from my previous response, the property is not in Buffalo. So, I wonder how that affects CAP rate averages? Can I search by area code?

At the same time I can tell you that the neighborhood is not "c" . It's in a great area. I grew up there and know it well.

Brian - thank you for the response. And, for reference the property is not in Buffalo. it's in a much smaller, nearby western new york county.

So, to clarify for a newbie - why would a seller accept a lower all cash offer? is it only because you don't need a financing contingency? Or are there other reasons? In other words, say I could offer to buy with no financing contingency, is that the same as an all cash offer? Assuming I have the ability to buy all cash, should I base my offer on that and say "all cash" and do so and then seek financing afterward?

To answer your other questions:

1. A nearby 12 unit sold for $628,000 recently.
2. Building has been on market for atleast 6 mos, probably more.
3. Taxes are $14,539.
4. Rental demand is moderate. It's a small village. Not a metro area, but nice little village in western new york.