All Forum Posts by: Chuck Mak

I'm a newbie when it comes to D.C. Multi family. Have been evaluating 12 to 30-unit assets with rent control tenants. The goal is to convert as many units and as promptly as possible into HCVP/S8 tenants. Has anyone filed for rent increases on similar DC assets based on hardship or capital improvement? More specifically, can I apply for hardship rent increase the first day of my new ownership by using the last 12 of 15 months of operating expenses from seller? I understand I can raise rent so to make a 12% rate of return. Say I've invested $1M equity into this $3M asset and the returns would give me only a 6% rate of return. Can I on day 1 use financials from seller to apply for a rent increase? Enough said. Anyone has experience with seeking rent increase on capital improvement?

Never mind. Found the thread.

Next BWI meetup is jan 14?  Just show up or register first?  When and where?

Hi William,

I find your comments most valuable.

I have what is currently a parking lot behind this one building on which a 3-story 5-unit apartment can go up. My neighbor who happens to be my architect has put up a single family building on his in a similar manner.

So the land is 'free'.

I believe my NOI will be $60K a year and total project cost should be around $400K.

The cap rate may not look like a home run but keep in mind that these will be upscale apartments for this downtown area with a reasonable appreciation potential.

The gut rehab 3 years ago of the front building was a trip since I was hands on. Fired the GC, the electrician, plumber in the middle of the project. You know how there is nothing square in a 100+ year property. You maybe right but I can't imagine how a new build can be crazier.

I'd like to retain a good GC so to make this project less agonizing to me personally.

I have to cash-out refi to do more. Always looking out for a good project. This new build seems like a no-brainer.

I really appreciate everyone's advice.

Joel - You are of the opinion that some lenders would be interested in lending to my existing properties for the right Itv. If that's the case, do you agree with Ben that they will likely require that I pick up new CF with the money?

One of my buildings was a gut rehab. In my opinion, gut rehab of a historic property was tougher than new construction. Much tougher.

Just don't know how lenders would look at that.

Now let me reframe my need slightly differently. If I just do a cash-out refi of one my properties and use the money to either buy another existing apartment building, or simply blow the money on a new Bentley, then the lender wouldn't have much of a problem??

If I use it to put up a new apartment building, then I have all kinds of problems - oh he doesn't really have construction experience, or new construction doesn't have proven income....

What if I just cash-out refi and put the money in the bank and do whatever I want with it when the bank isn't looking??

I rehabbed, have owned free-and-clear two multifamily buildings: 8 and 5-unit for 3+ years.

Essentially zero vacancy and steady rent increase in this popular downtown location.

Annual NOI is $140K although I manage them myself. Roughly $70K from each building.

I am looking to take out $400 to 500K on one of them so I can put up a new 5-unit apartment building behind it.

Local banks not too keen in lending.

Any advice would be appreciated.

The law firm that amends my SD401K plan doc wants $600 to put in an in-plan Roth conversion provision. Pretty reasonable I think.

Will set up sub accounts to handle Roth money.

I think I am on my way. Only thing to clarify is if both regular and Roth 401K money can own rental units in the same property. Can't see why it should be a problem.

You guys who buy and hold cash flow properties should really evaluate if doing it with Roth money makes more sense.

In my case, projecting my asset and income forward to age 70 1/2 when I have to take RMD is downright scary. I may have to pay taxes on a six-figure distribution every year. OUCCHHH!

Hey Ned,

Please call me if you have dirt cheap rental properties in the better areas of Baltimore?

I have properties in Mt Vernon. I must have missed all the dirt cheap deals in this or better neighborhoods.

Don't you think property values are lower in Baltimore City than say Howard County because properties taxes are more than double in the city?

Found out I have to first file an amendment to my SD401K document to allow for an in-plan Roth conversion.

In respect to bookkeeping of Roth money, all I have to do is to segregate that into another bank account under the same LLC.