All Forum Posts by: Chris Harrington

I have been looking at various options as well with Appfolio being one of them.  I am concerned about the complaints I hear about their accounting side.  Currently we use Quickbooks for accounting and basic tenant record keeping - very limited in this regard but works for us.  We use Bill.com to pay bills and it integrates directly with QB - a great way to keep QB up to date with little effort.  Cozy.co for online rent collections; I am trying to push all of our tenants to online rent payments but still get most of our rent in check or money orders.  I use Transunion Smartmove for tenant screening; excellent service and very happy with it.  We use Zillow and Craigslist to advertise vacancies.  I use Docusign for any lease (or other document) signings and finally we store (and scan ifi needed) all docs in Google Drive.

We have 70 units currently (MF) and just had an offer on 52 units accepted so I am thinking this hodgepodge system will be stretched to handle.  Recently I was asked for a historical rent roll and we can't produce it - I can reconstruct by hand but very painful.

@Albert D. Do you have replacement coverage or ACV - Actual Cash Value?  Most investors go with ACV and thats fine when the claim is small.  Lousy when its totaled.  How do I know? It happened to me about 5 years ago.  Collected one months rent on an 8 plex and then an electrical fire destroyed the property.  Fire dept didn't help either; there was 3 ft of standing water in the basement before they were  finished.  Learned the hard way that ACV is near worthless.  Paid $180k for the property and got a check for $80k. Replacement costs at the time were north of $600k. Ins also provided code coverage up to $50k but they  fought tooth and nail to not pay a dime above and beyond the area where the fire started even though they totaled the property.  

The business income replacement is typically 12 months based on whatever leases you had in place at the time of the damage.  My ins company sent me a check for 12 months for the rent. Don't accept anything less then what your policy provides.

Good luck and so sorry to hear about the fire.

I would like to attend if another meet up occurs.

@Michael H. What is the sq ft of the units and where is the property located?  Don't need the address - is it midtown, river market, downtown and so on?  The reason I ask is that in certain sub-markets in KC rents are heading towards $2/sq ft with $1.35+ for B class.  I am currently renting 375 sq ft studios in a solid C+/B- area for $500.  The closer we get to US-71 the lower the potential rent but he is selling a 15 unit at close to $47k/door which in some parts of KC is a steal.  While $40-$60k in maintenance may be low for 15 units, don't discount the amount you can rent the units for post rehab.  Depending on the area you might be surprised.

Money is coming into KC from the coasts and prices continue to rise as investors are chasing incredibly low returns.

 I am not too concerned about reputation; we pour money into our properties and the tenants notice.  Many have commented positively in other properties we acquired; We take care of our properties and subsequently our tenants.  They are the reason I am in business.

 Renewal is always the right time for increases, rather than Notice Of Change of Terms. As the new owner, you can clearly make the prior owner your scapegoat pointing to the lack of sufficient documentation,

1.  "we require you complete our application for our records to support your tenancy - - you are automatically approved when you submit the attached form with your renewal approval."

Great that you're following FMR, but don't go nuts with arbitrary numbers but make 10% changes for those you wish to keep, otherwise go nuts with the $150 to drive the others out.

I never change the terms of a lease, even ones I inherited -which is all of them in this case.   I will have any current tenants that decide to renew complete our application; the prior owners record keeping was terrible.  Oh well.

I appreciate all of the feedback I have received.  This why Bigger Pockets is such a great resource; so many experienced investors with a wealth of experience providing such a variety of viewpoints.

Since I am not planning on selling for at least 18 months, I believe I will accept her counter and move forward.  While the market is hot and vacancies rarely exceed a month, $50/month vs the loss of revenue is not large enough to cause a significant change in one year's numbers.

I think I know what I am going to do but would like to see what others think.

Closed on 14 units in late Sept fully leased.  Seller had a 4 pg lease for tenants with no other documentation, not even an application so I know next to nothing about the tenants.  Rents are under market in a popular area near downtown KC.  The rents for the 650 sq ft studios were averaging $625.  We have rented two now for $800 in the past several months.  One of our tenants recently responded to our Lease Renewal and Rent Increase letter and countered with $750 for the increase which is a $125 increase over her current rent.  She has lived there for 3 years and wants to stay.

Do I rent at $750 or stick with my number I know the market is currently supporting?  Our strategy has been locate and buy under performing assets, get the income up as high as the market allows, reduce expenses and then 1031 up.  Its worked really well and $50/month is $600/yr which roughly translates into $6000 value in a 10 cap.  If I set a precedent by acquiescing to her request, with 8 of these units I am potentially knocking $40k+ off the value of the property on the back end.

As I mentioned, I am pretty sure I know what I am going to do but curious as to what others think.  

Thanks

You know if you let a problem fester you can count on it getting worse!

Just evicted a tenant in a 6 plex we own.  He has been there for years and pretty much paid his rent on time.  Didn't cause any issues and no complaints from other tenants. I did have to threaten an eviction a year or so ago and he came through and got caught up and was pretty much on time each month after that.  

Recently though we learned he didn't have the electric on in his apt and it had been like this since April.  My manager called the local electric co and confirmed.  I sent my manager in and the apartment was a disaster!  Knee deep in crap, filthy and for all intents and purposes, ruined.  We filed immediately and the sheriff came today - carted truck loads to the curb.  Have a dumpster coming tomorrow to dispose of otherwise the city will hit me up for the junk on the boulevard.  

This was a gorgeous apartment when we rehabbed it and rented it to him and now we are looking at probably $5k to restore!  

Its all my fault -we regularly inspect our properties but this building is sort of outside our normal area; it sits in a great neighborhood but we just don't go by it that often.  Well no more but its a pretty expensive reminder to always, always inspect your units on a regular basis.

Chris

Melvin,

We paid nearly full price - in the mid $400's.  There were several other buyers scheduled to see it that day but our relationship with the selling agent got us in first.

 Hi John,

To be honest I don't know why the foundation was bad. The property was not in a flood plain and was in a long developed area of town.  Perhaps age, long term settling or build poorly.  

Appreciate your comments!