All Forum Posts by: Chad Clark

Thanks so much for the answers.  That pretty much cleared up the majority of what I was wondering.  

Ok, I'm newish to the scene (4 single family, 1 multi) and have done the fix and flip to the point where I could build my own house at this point quite easily. I'd like to start branching off into the apartment building scene as it seems like the logical next step. I mainly have just been going the BRRR route so far.

So being new to this, I have a couple of questions since they fall into the commercial zone. 

1.   What's the top things to remember when buying one of these?   Square footage affecting price?  Utility that makes a huge difference when buying ie. sewer or something expensive if it's bad.     

2. Is there such a thing as DSCR loans or is that only smaller buildings. What type is usually used or do most people just cash buy these?

3.  Are sellers usually just trying to cash in or are they retiring?   I see no real good reason why anyone would want to sell one of these so I was curious mostly about that.   My area is a resort area so it's a concern.  

4.  Building vs buying existing?  Seems building would be pricey, but buying existing seems like it might land you in a position where the rents can't cover the new mortgage and costs due to what they want for them.  

5.  Can you 1031 duplexes into these or is it not enough of a "like" property?

6.  Better to just buy some storage units, RV park, or something like straight to pure commercial, strip mall etc.  

I'm pretty comfortable buying houses, but these fall under some different rules.  I'm just seeing what those rules are.   Any other thoughts are welcome.  

 The contract isn't complete obviously.   So I also wondered if it's just possible to re-write the contract despite the fact that it's recorded and make a new one.   Seems like that breaks some sort of law out there, but again, doesn't hurt to ask. 

 No, it's a single family home used as a rental.  Going from the sale of that to a Duplex.  

I was hoping that wasn't going to be the answer as I do not know any private investors or even where you'd look for that.   

I got a land contract during the COVID problem and the sales dried up making it so there's no compareables for an appraisal.   Of course, this in turn made it impossible to obtain a loan.   I wanted originally to use the property's income to be used via comparable rent schedule so my loan choices are limited.   I bought it as a giant fixer upper and have almost finished it, but now it's time to go get the loan, I can't do it due to the appraisal process being the stopper.   Any ideas?  I really don't want to walk away from it.    Especially when the profit margin is so high.     I'm considering selling another property to cover it, but I'll be hit hard with capitol gains since it will sell for almost exactly what I need.   Ugh....

I'm guessing the answer is no due to dissimilar properties and the land contract has been in place and recorded for almost a year as well, but doesn't hurt to ask.   Saves me ton of cash if I can. 

exactly what I'm going to end up doing.   I have a contractor now for another property so I'm going to bring them by this one as well. 

I've noticed a significant downturn in the quality of contractors as well.   It's hard for them to keep up with the prices of materials through the roof and even McDonalds is paying $21 an hour around here.  Finding people to work seems to be the largest problem in my area.  

As for the real estate, I live in pretty much a resort area. People flock here to retire since it's very pretty country. If you're the outdoorsy type, this is the place to be. Houses have doubled in price and seeing multiple bids way over the asking price are common now. Cash only deals listed straight up. The beat up cat pee ridden flea nests are gone. (which is a bummer for me as that is what I bought the most of). I'm one of those BRRR types. Tax sales and buying out other investors is my only recourse now. I can't profit in the least buying from an agent now. Rentals are super high demand. There are none. Even with that, I can't very well price a 3BR,1BA at $2000 for rent or higher easily. People will jump that ship fast if rents drop leaving me with a bad investment.

So I'm finding myself only buying places that need SERIOUS work and doing most of it myself to bump up the profits.   Cutting out labor makes a massive difference, but I'm not getting any younger.  

    I have 2 rentals (both houses) with driveways that have a negative grade.   Since I am in Michigan, we get a lot of snow.   So come spring, it makes a lake at the lowest point of the driveway.    One just floods, but at least it's concrete so it's workable till it dries.   The other is gravel and turns into a swampland making it a serious pain pulling in.  

The concrete one, I would just like to have it drain so it doesn't look so bad.   It's like 3 inches of water.  Plus, it's probably extending the life of my driveway.    Luckily, the low spot is next to the yard so digging isn't a big deal.   Problem is this town has no rain drainage so I'd end up getting ALL of the rain water from the road as well, most likely overloading some simple trench drain.  

The other that's dirt needs a serious fix.    Also, it has no nearby place to drain the water to.  I'm starting to think my only answer is to put in a concrete driveway higher than the water line gets.  It would be expensive though.  Adding gravel just wouldn't cut it I think.   It would just be underwater gravel.   Stupid town and the lack of rain drainage.  

Any idea welcome.  I'm kind of at a loss here.