All Forum Posts by: Cale Delaney

Discounted universal guest tickets anyone?

How much?

@Paul Smetona sent you a DM

Looking for a discounted BPCon ticket.

@Kyle J. Thanks! Very helpful info.

Hi Everyone,

I wanted to share some creative strategies that have allowed me to increase the NOI on our first multi-family property by an amazing 105% in only 5 months of ownership using some creative strategies I learned from BP and various other webinars, etc. The property is a 4-plex located in South FL. We acquired it in July 2020, fully rented. So, here goes:

1. Reduced insurance by 26% by doing hurricane clip retrofit on trusses: Total Savings = $2047

    - For those in hurricane zones, you know that insurance is expensive! This property did not have all the hurricane clips to qualify for the best wind mitigation credits so we paid $1625 to have additional clips installed and in return got a credit of $2047. Can't beat that return! We also got the lender to immediately reduce the escrow to reflect the lower insurance and reduce the monthly payment.

2. Increased rents to market rates as leases turned over with 0% vacancy: Total Gain = $8100

    - We had all 4 leases turn over in these first 5 months and we rented each one out for top of the market range with 0% vacancy. Advertised on Craigslist, Facebook, Cozy, Zillow, and Zumper. Most came from FB.

3. Started charging non-refundable move-in fees: Total Gain = $1202

    - Learned this from a Jake & Gino webinar. Basically, instead of charging a full month of security deposit, we break it up so that a portion is non-refundable and goes straight to the bottom line. Still have the remainder as security deposit in case it's needed.

4. Passed on all water costs to tenants via Ratio Utility Billing System (RUBS): Total Savings = $3300

    - Learned this from a Brad Sumrock webinar. There is only one water meter so as the leases turned over, on the new leases we assign a percentage of the bill to that unit based on SF and # of occupants and bill them separately per unit.

5. Passed on pest control responsibility to tenants: Total Savings = $2784

    - The house was tented for termites prior to us purchasing and had no evidence of active termites and we put in the new leases as they turnover that tenants are responsible to pest control in their units (mainly for rats, roaches, ants, etc.). Granted, if there are any issues that do come up with termites or fleas, etc. outside than we may need to institute that, but that's not common here in S FL anyway.

Though this is on a small scale, all of these can be applied to any size property from SFH to large multi-family. This took us from a projected breakeven year 1 (including vacancy and maintenance allowances) to pro-forma year 1 of $280/unit net monthly cash flow after all expenses including debt service.

In addition to this we are doing a cost segregation report and anticipate additional tax savings year 1 of up to $24k by utilizing bonus depreciation.

I had an opportunity come my way with a couple fellow real estate investors are refinancing a short term rental property and the appraisal came in a bit low and they are looking for gap funding and are offering 15% interest amortized over 18 months with a 3 month extension option. This would obviously be in 2nd position to the refi lender. I've never done private lending, but know lots of people do so looking for advice on how to do due diligence and protect yourself, especially since it's in 2nd position. What documentation would you ask for? Do the terms seem fair? Do you get some type of insurance on the note? Who pays for the attorney fees to draw up the note or any other ancillary fees? 

Really looking for any advice from those are have experience in this realm. 

So, just wanted to share a bit of a testimonial and give praise to God and encouragement to others. For a brief background, I'm 36, have 3 kids, work as a Sr Project Manager for a large construction company and made a resolution to get active in RE again this year. We own a SFH that used to be a primary, but became a rental when we moved out last year, we house hack our current home by renting out an extra room (have always house-hacked, before it was a thing), and purchased a 4-plex in June of this year.

Without being too long-winded, it's been a trial in trying to get all the systems in place (still a long ways to go here!), get setup properly for asset protection and tax strategy, and deal with lease turnover for the first several months of ownership of the 4-plex. All this while juggling the 60+ hrs/week W2 job and family.

This past month was a bit of a perfect storm with several leases expiring and not renewing. We had 2 units at the 4-plex, the house hack room, and the SFH all coming up for rent. The interest was nonstop, but mainly tire kickers and I was getting a bit frustrated and stressed as we got closer to the leases expiring. On top of this was dealing with a problem tenant who had actually gotten arrested on the property and had someone break a window and was causing a bunch of issues. So, I was talking to my father while filling up at a gas station a couple weeks ago early in the morning and he asked me how I liked being a landlord. I said I felt like hiring a manager! I'd been praying on this a lot as well and asking for help in getting these places rented without any vacancy.

Well, later that day I hopped on Zumper and saw that we actually had 3 people apply over 2 of the units at the 4-plex. One of them we got signed up and leased out that week, the other two didn't work out, but we got that other unit rented out the following week. And then got the the house-hack room rented that same week too. The SFH home we thought we had rented as the tenant was going to extend his lease, but that didn't pan out so we still have that one on the list, but 3 out of 4 ain't bad! We also have (fingers-crossed) got things settled with the problem tenant.

So, through it all with the 4-plex through re-leasing all 4 units now at market rents and passing on the water bill via RUBS to the tenants and charging a non-refundable move-in fee we've increased the rental income by 12% and the gross revenue by 20% with zero vacancy. All this in the first 4 months!

It's been a PITA for sure, but a proof of concept to me that you can find and build value if you look for creative solutions, research, and learn from others. Being a landlord, RE investor, husband, father, and full time W2 employee does require sacrifices. I wake up at 4:45am every morning, meditate/relax to some Bible meditations for about 15 minutes while I shower, hit the gym by 5:30am, come back and get to work, then work after work, then dinner and bed and repeat. It's all for building a better future so we can meet our goal of replacing the W2 income for financial independence and move overseas to Colombia.

Now that things are (hopefully!) stabilized with the 4-plex it's on to the next! Actively looking for the next deal. Very interested in getting into residential assisted living and STRs to help boost the cash-flow and meet the goal sooner. I know this did end up a bit long-winded, but I hope this is encouragement to others.

The struggle is real, but God is good!

What's your why?

Wanted to share a little rental success: We had a tenant give proper notice that he was moving out and we listed it with a little over 30 days before his lease officially ended. There was a flurry of activity at first, but no bites then it died off for a couple weeks and then picked back up again, but still no bites. Less than a week before his lease was about to end, we were able to secure a new tenant who moved in the day it became available for an 8% higher rent plus we passed on the water bill via RUBS (ratio utility billing system - billing her based on her SF compared to the overall property SF since only one water meter) so that was essentially another 7% increase.

So by being patient and sticking it out we got a 15% rental increase translating to $1800 more annual cash flow and no vacancy.

I have my license and listed it on MLS, but also used Zillow, Zumper, Facebook, and Craigslist. Zumper got the most leads, but Craigslist got the tenant.

Awesome, I'll send you a PM!