All Forum Posts by: Calvin Graves

As a MF agent who spends a large amount of time calling apartment owners (or rather, numbers purporting to be apartment owners), please believe me that reaching out to random run down buildings owners is unlikely to get you any deals. Finding the correct contact info is hard enough, but if your pitch is that they should sell cheap now, you're misreading the market.

Multifamily properties are worth significantly less now than they were just a few years ago, and asking for a further discount due to property condition would probably result in a loss, maybe not even pay off the debt. Their clear incentive is to bet on falling interest rates between now and debt maturity.

A small handful of owners are forced to sell due to a looming balloon payment that a refi won't cover, but you're not going to find one of those by driving the market when any commercial broker can just look up properties on that basis and start making calls. 

I would also be careful talking to property managers - they may have no problem telling about "other" buildings, but change of ownership in their own building is a threat to their livelihood. Not to mention, they probably won't want to admit it if a building they manage is in really bad condition.

If you're serious about buying you should first talk to fellow investors and define your buy box. For commercial buildings, be very specific - price range, $/door max, unit count, unit mix, part of town. When you can communicate both your strategy and criteria (and are financially credible), you can leverage your network and get meetings with brokers who are willing to shop for you.

Is the assumption here that it's owner-managed and the owner is hiring help?

Otherwise, if you're assuming third party management, then maintenance is either baked into their fee or charged hourly like a vendor. 

Remember the purpose of a proforma is to determine if a deal pencils broadly, so getting extremely granular doesn't add anything useful. If hourly vendor vs salaried maintenance is what makes or breaks the deal...it's not a good deal.

Your best estimates are likely to be from managers/owners of buildings similar to your subject property. Ask if they had X, Y, or Z work done in the last 12 months, how much it cost, and who did the work. And if you're talking about very large properties, you can probably find $/SF stats by market.

I've used Tschetter-Sulzer-Muccio (THSLaw.com) for help. If you sign up as a client they provide legally vetted forms and can advise on the process at no charge. The only lawyer fees they'll charge are for actually filing the eviction.

But just FYI, in Colorado any you need to demand/notice a tenant, someone who is legally answerable (ie owner or manager) has to make two in-person service attempts on different days. You can post to the door only if they don't answer on the second attempt. 

For nonpayment, and assuming it's a market rate property, you can't post for nonpayment until 7 days after the due date. If they don't pay within 30 days, you can enforce. 

Once you decide to enforce, just leave it to the lawyers. Trying to do it yourself can result in months of delay, which will cost you way more than a few hundred bucks.

How many water heaters do you want to deal with?

Unless apartments are just not as marketable, then a multifamily building is likely the most efficient for construction expense, operating expense, and rent/SF.

With a building of only 12 units, I doubt you'll see any time-based advantage by phasing in duplexes. Just one stat, but: 2023 Apartment Construction Times. If this holds for your project, then you're looking at only a few months longer to get 12 units than 2. 

If the seller already countered higher, what are you hoping to get out of coming back even lower? Nothing in your revised offer would be new information that causes them to reevaluate the pricing.

The rent amounts should be in the leases, so there shouldn't be any question about GPR once you're under contract. IMO a bigger red flag would be poor record keeping on expenses and other documentation that would indicate property condition.

Anyway, you're ultimately purchasing the income stream that *you* can achieve, not what the seller achieved.

If the property manager attributes these to deferred maintenance, then either they're admitting fault or trying to pin it on you. Were issues with any of these items brought to your attention before the tenants put in maintenance requests?

The bidet thing is definitely on the tenants. No tenant-made upgrades allowed, unless they're professional quality. In which case, hire them to run the property instead.

I've been sorting out 24-1098 with existing leases at my job, where it's created some difficult knots to untangle with the timing of affordable housing tenant recertifications and the offer/notice timelines.

But that aside, the law just imposes more formality on lease enforcement, whether or not it comes to a forcible eviction. Do what your lawyers say and you should be fine.

Should be noted that the full 90 day nonrenewal requirement only attaches if the tenant has a lease more than a year long, has lived there more than a year, or has refused a reasonable renewal offer. Since most leases expire the day before their anniversary, they are less than one year long and the 28 day requirement would apply unless the lease is terminating for the tenant's refusal to renew. If you offer renewal 104 days before lease end, they'll have 14 days to consider renewal, and if they don't sign, the 90 day period will coincide with the lease end date.

As far as tenancy in perpetuity, I think it's legitimate to wonder why someone should lose their home if they haven't done anything that's incurred an enforcement action. Frankly, a landlord who can't be bothered to enforce their own lease gets the tenants they deserve. If there are expectations you want tenants to meet, put them in the lease so you can enforce them. Treating property management as "passive" income lowers the bar on professionalism and hurts both tenants and properties.

Termination/renewals conditions are usually spelled out in the lease itself. You should also ask an attorney to take a look at the lease and advise on the process to make sure you do it completely legally.

When you did the first cleaning attempt, did you clean more than the moldy window trim? Mold spreads, and if it's anywhere else nearby it's likely to come back over and over. There's pretty obvious mold/mildew between the tiles.

Would also recommend against a textured finish and extended sill on the window. The texture will hold water, and the more sill, the more water it catches.

It also looks like there wasn't any caulking around the trim pieces, which means water is going to collect in between them and behind the tile no matter what. This was not a proper installation.

The person I quoted had suggested charging damages "as rent", which is very different from simply invoicing them. In Colorado, the tagged location for this thread, only the actual rent can be charged and enforced "as rent", and thus used as basis for eviction. Colorado landlords do not get to consider all money owed the same as rent.

The issues on cost are matters of practicality. Assuming you aren't intentionally gouging the tenant, you certainly can charge exactly what it costs to replace something, but is it a good idea to go with an expensive option just because someone else is [probably] paying?

1) Is a $600 bill for a basic faucet going to drive away an otherwise good tenant? A month of vacancy in Denver costs a lot more than $600.

2) If it's pulled from the security deposit, that's money already spoken for if repairs are needed at move out. Have fun collecting from someone who peaced out a month ago.

3) A landlord/manager should have reasonably priced resources, because not every repair bill is paid by a tenant.

I would definitely not put basic faucet replacement in the same category of plumbing as soldering pipe joints behind a wall or installing pressurized systems. Every professional property management company in the world has maintenance techs doing simple fixture replacements perfectly competently without any special licenses. Whatever risks might come with an "amateur" faucet installation are outweighed by cost, and should already be covered by insurance anyway.