All Forum Posts by: Christian Carson

Welcome to the forums.

I've heard of banks calling loans when they are transferred to a revocable living trust. I think these might have been apartment buildings of more than four units, for what it's worth, and those properties are not covered by Garn-St. Germain.

Overleveraging of overstated equity in part caused the 1929 crash and the 2007 crash. There's nothing wrong with investing for appreciation (if you're in the stock market, chances are good that it's your strategy), you just need to recognize when to get out and go to cash. If too many people believe that the Bay Area appreciation bet is like "betting on the sun coming up," you ought to recognize that as a sign of the market overheating. Your house is only worth as much as what someone else will pay for it.

My duplexes are sub-metered for water...so it's not unheard of in Northeast Ohio ;)

That said, it's a pain to collect from tenants. Most of them just pay an extra $100 every couple months to satisfy the water bill.

It is nice to have the submeter data to see if one unit is using an unusual amount of water -- helps put the kibosh on leaks and such.

 My computer ran out of battery about a second after I submitted my post last night, so I wasn't able to do anything about the corrupted tables (which shows up fine in the WYSIWYG, @Joshua Dorkin !!)

Let me do this in bullet-point format:

• $700 - rent
• ($70) - vacancy
• ($70) - PM
• ($72) - taxes
• ($50) - insurance
• ($41) - admin
• ($150) - capex/maint
• =247 - net monthly income

To address your point (1), Ben, there's $500 per year in the eviction budget. I don't assume you will have to evict someone every month, nor every year, so this should also account for tenant placement costs.

To point (2): the "replacement" cost is built into the capex budget. Maybe if you're out of state, your PM will bamboozle you into dumping a whole lot into maintenance, but frankly I don't do all that much to these houses other than replace the major systems when needed (which is usually when I buy).

Don't get me wrong, margins are thin. And I'm not one to pay sticker price for anything, so I buy these houses for $5000 and replace all the major systems up front for a maintenance-free house for a good long while. That's the way to do it. :)

Ben's right. There is a hard breakeven point that has to do with the cost of maintaining a structure over time. The economies of scale associated with multi-unit properties can mean substantial savings for the property owner.

That said, it's possible to get a return from the $30k, $700 property. See below.

This is how I would expect a Cleveland property to price out, using actual numbers from experience. The unlevered return (cap rate) is 10%, which fits my criteria. Capex allows for the following upgrades, plus a miscellaneous repair budget:

One would surmise that there aren't too many maintenance calls for items other than those listed above. At some point, yes, you will have to upgrade the kitchen, etc., but at the same time, you're not responding to a tenant request to make the doorbell work. Using cheap and durable materials for those turnover repairs will go a long way to keeping capex down.

And that's the name of the game in these low cost rental markets. Keep expenses as low as possible. Make your living spaces absolutely bulletproof. If you can get through a turnover with a mop job and a paint spray, you'll make a killing. If you install nice carpet and corian countertops, you'll lose your shirt. The $700 tenants aren't expecting all that much anyway.

Have you ever talked to the Collinwood Grape Company guy about real estate? My orthodontist says he owns something like 1000 units in Collinwood...

Count me in.

NEW - Tax delinquent property lists available for Cuyahoga County, Ohio, including the City of Cleveland its suburbs. 

Information is up to date at least as of 3/1/2015. Some data is newer still.

Lists deliver outstanding balance, net half-year taxes, market value, owner name and address, and property class. 

Per-name pricing available with bulk discounting. We can target certain areas by map number. See the map here.

Filters offered for:

- Property class
- Balance due
- Market value
- Ratio of balance due to half-year taxes

Contact me here at BP or email [email protected] for more details.

Still, you can't get blood from a stone. If the tenant doesn't have the money, you're not getting paid. This is an increasingly bifurcated market between wealthy and poor.