All Forum Posts by: Christopher Reeder

Congrats Michael on the purchase.  Taking that first step is always the biggest challenge.

I had a similar situation with a property in Lakeland.  Tenant had been in property for 14 years at a considerable discount to the market rates.  6 months after purchase of the property, I presented a phased-in rent increase connected to a 1-year lease.  The lease stated rent increase would occur upon signing and again 6 months into the lease.  She accepted the stepped approach and continues to enjoy the property.

I will be taking this same approach on another property I'm closing on next week.

When analyzing a new acquisition, I've used 5% vacancy, 5% CAPEX and 5% R&M. As

@Mindy Jensen stated, the Real Estate Law is something that will happen post-close when reserves are too little.  My last acquisition had just this situation when I found the plumbing beneath the slab of the duplex had been broken for some time and required a re-pipe from the shared kitchen drain line.

To better support the initial cashflows to start-up after acquisition, I've set aside an additional 6-months debt service to fund post-closing operating expenses.  Budgeting for cash reserves can be just as important as the cashflow projections in a pro forma analysis.

I am beginning to scale up my multifamily portfolio.  Up to now, I've managed my own repairs and maintenance, but see this is not sustainable as I grow my unit base.  Does anyone in Polk County have a recommendation for a handyman they have had a great experience with?

Thanks,

Chris

I'm based in Auburndale and invest between Winter Haven, Auburndale and Lakeland.  The Greater Lakeland area has good opportunities.  As others have said, not all properties work out after putting financials together.

I have 10 doors and currently self-manage all my units.  I'm considering when to begin using property management.

Having said that, I find in my day job this same problem dealing with suppliers.  As a business, you have an expectation of the quality of service you expect for the price you are paying.  The supplier, in this case your property management company, is providing their expected value for the price they are receiving.  In your case, these 2 expectations are not aligned and will build resentment and frustration, likely on both ends.

My recommendation is to look for a new management company.  While screening alternatives, be clear with your expectations; time of response, repair solutions (new or repair), reasonableness of costs, how do they vet contractors/repair companies.  Ask for recommendations of other investors who are using them and their experience.  Be aware this normally means you get the investors that will provide the best review, but we all will have some concern over time that needed managing outside the normal monthly interactions.

Add another Cozy.co landlord. I am using them for 10 units (mix SF and duplexes). Have only had 1 tenant refuse because she doesn’t want her information out there. Other tenants like the easy of use and lack of fees for tenant and landlord. 

The waiting period is not the best (3-5 days). Having the notification when payment is initiated takes the worry out of collections. 

Investment Info:

Single-family residence buy & hold investment in Winter Haven.

Purchase price: $82,854
Cash invested: $16,000

3/2 block home needed updating near local municipal airport

What made you interested in investing in this type of deal?

Our cash holdings had grown with our last 5 homes and we needed to put our free cash to work. This property was our first auction purchase.

How did you find this deal and how did you negotiate it?

Auction.com. Being our first auction property, I didn't know what to expect. I watched the property for the first few days it was live and got in the last few hours. We had set a maximum value we would pay and after a few last minute bids, our maximum price was hit and secured.

How did you finance this deal?

Refinance of prior property

How did you add value to the deal?

The property had been vacant for several years but the layout was good. Kitchen was closed in so we took the opportunity to do some minor renovations. Kitchen was doubled in size, full paint inside and out, re-glazed bathrooms and new flooring throughout.

What was the outcome?

As our largest property (sq ft) and from our prior experience, we set a firm cost with our contractor. He was motivated now to complete on time and we minimized our change orders coming in at budget.

Investment Info:

Single-family residence buy & hold investment in Winter Haven.

Purchase price: $68,500
Cash invested: $20,000

3/2 block home in an established neighborhood. Prior owner had trashed the property. This was our first renovation project to get to rent-ready condition.

What made you interested in investing in this type of deal?

Market for property was very thin in 2016. This was a property that had potential, but needed work to present well.

How did you find this deal and how did you negotiate it?

MLS. The market was hot and negotiation with foreclosures was not easy. We were in a bidding war with another buyer but were able to secure the property slightly over asking price.

How did you add value to the deal?

Ask this was our first property requiring extensive renovation, I took the opportunity to open the floor plan up. We combined the kitchen, dining and living area into 1 shared, open space concept. Completely new kitchen, doors, flooring and paint for interior and exterior brought this back to life.

What was the outcome?

Renovation went well. Contractor did a good job, but took longer than I expected. The next door neighbor saw our work and came over several times during the renovation to inspect what we were doing. They new the prior condition of the property before we took ownership. In the end, the wife told her husband they should do the same work on their home which is the mirror layout as the one I bought. They loved the open layout we developed.

Lessons learned? Challenges?

Set a firm timetable with your contractor and incentivize him/her financially if they beat your agreed timeline. This will help your project stay on track and enable you to get a tenant in the property to begin your cashflows.

Investment Info:

Single-family residence buy & hold investment in Winter Haven.

Purchase price: $68,000

3/2 block home in a mature, rent-friendly neighborhood.

What made you interested in investing in this type of deal?

I had not purchased a property in 2 years and still lacked the experience of BiggerPockets real estate investing. Having saved up enough cash to make the downpayment, I found this home which fit our criteria. The area this home was in is in a neighborhood that our last purchase occurred so our familiarity brought comfort to the rental aspect.

How did you find this deal and how did you negotiate it?

MLS. Market was getting more aggressive by 2015 in our area so the seller wasn't willing to negotiate much. We got a slight decrease in the original asking price, but the financials still made sense and we got it under contract.

What was the outcome?

Closed on property and bundled it with our other 3 for a refinance to gain capital for a new deal in the new year.

Investment Info:

Single-family residence buy & hold investment in Winter Haven.

Purchase price: $57,000

3/2 SFR in a mature and rent-friendly section of Winter Haven, FL

What made you interested in investing in this type of deal?

Property value to asking price was very favorable. I had some comfort from my first 2 deals now that they were performing.

How did you find this deal and how did you negotiate it?

MLS

How did you add value to the deal?

Property was move-in ready. Property was held by an estate who did not want to manage an out-of-state property.

What was the outcome?

Closed without problems and quickly gained a tenant.