All Forum Posts by: Charles Price

Great points Thomas, thanks!

For the 7-unit, that's something I've considered - with about $5k into fixing up each unit we can squeeze out another $150/month per door.   

The break-even 5 unit is maxed out - no room to raise rents there.  It's not so much the rental income, it's the maintenance and taxes of an 8-acre property that kills it.  The pad is great for a live/work contractor, since there's lots of space, nice house, and big warehouse - but not really as a rental property.

What I'm actually leaning towards is unloading the break-even property, and transferring to something more suited to rentals.   If my long-term goal is to continue going bigger and bigger, perhaps doing a 1031 from that one into a better-performing one is the way to go.   Even with financing, if the numbers work. 

That 7-unit is on Main Street in Poughkeepsie. I actually wasn't accurate enough in my post above - it'll cashflow for us within the next year or two, it just needed lots of repairs over the last few years (bought as a fixer-upper, built in late 1800's). Last 12 months $75k gross rents. Slightly under-market, after another $5k/unit in improvements we'll see about $90k/year gross over the next 12 months. NOI should be about $28k/year right now and $40k after a couple of years simply because there's no mortgage payments.  But I've got to think, that $400k-$500k equity is worth at least $28k-$40k / year on a financed $2M property, probably more.  Especially one purchased as an under-performer.  That's where I get caught up - growth potential.  

The other property, the mixed-use 5-unit in Fishkill area, if you're familiar with that area.  Taxes kill it, it's an 8-acre property with a residential unit and 4 commercial/warehouse units.  Maxing out market rent right now and it just barely breaks even.

Looking for advice!  I own a few properties in the Hudson Valley, NY (Poughkeepsie, Fishkill area for those familiar - B&C areas):

7-unit apartment: $500,000 equity - free & clear
5-unit mixed use: $400,000 equity - 7 years left on a small mortgage held by prior owner
Single family (my personal home): $375,000 equity - free & clear
Single family: $80k equity - 22 years left on mortgage, worth about $300k

Other than my personal home, all properties are breaking even as rentals - not losing money, not making money.  The 7-unit I bought as a value-add property and added about $100k in equity over the last year, so I'm not opposed to doing similar projects in the future if profitable.

I know how to analyze a deal and calculate NOI when scouting properties (though admittedly these properties were acquired many years ago, before I knew much about RE investing). What I don't know enough about is how to GROW my portfolio from this point forward. My main focus is multi-unit apartment buildings & industrial/warehouse space. Given that they're not making any money, my inclination is to divest them (minus my personal home), and find more lucrative properties to 1031 into. Doing another fixer-upper isn't out of the question either.

So what would you do if you had about $1M equity in a few properties and wanted to grow?  Would you sell everything except the personal home and put $1M down on a $5M complex?  (this may not be possible since I may not be able to sell all properties in time to use the full $1M in a 1031 exchange at once).  Would you sell them and put $200k down on each of 5 $1M properties?   $100k down on 10 $500k properties each?  Would you keep them and try to get $700k in equity loans to purchase a $700k property?  Would you buy 25 mobile homes (half-joking)?     Could I even get financing for that many properties?  I assume commercial financing would apply for any 4+ unit buildings, which goes off of the building's finances and not my own.

I just know I'm sitting on a decent amount of equity and don't have much to show for it in terms of income or growth potential as it sits.  So I'm looking for ways to take advantage of my current position and move towards growing the portfolio into one that produces some income for myself and family, AND allows me to move towards bigger & bigger properties.

Thanks in advance for any insight!