All Forum Posts by: Neil Schoepp

@Account Closed That's good to know. See I learned something tonight also. Thanks for asking the question. Hope it all works out for you. 

I would definitely have your attorney look it over especially if you are investing in CA. CA is not known to be the friendliest towards owners.

Search Real Estate Attorney's Use a real estate one not just any attorney

Each attorney is different. If you have the bulk of it done already and you just need him to look it over it shouldn't be to much. Call a few let them know exactly what you need and ask how they bill. Make sure they know you are looking to build a long term relationship with them. That this is the first of many. 

@Account Closed I missed that you already own it. I believe the 203K is a loan you can only take at the initial purchase. I would go to 5 separate community (not national ones ie: bank of america, wells fargo) lenders and ask them. Who knows they may even let you and it may be worth it to Refi it into a 203K.

Tim, I only have experience in MF and in syndications. Syndications may be a good passive strategy for you. It's pretty much hands off, but you have to get to really know the syndicator. Lots of people out there will form syndications but have no real experience. In the syndications I have invested in it was much more about the operator then the deal. One of the first questions I like to have answered is How many properties have you taken full cycle? That's buying the property managing the property and selling the property. Another good question is of those that you have successfully taken full cycle how many hit or exceeded your projected returns? There are plenty of others, but the point being you need to vet them real good and you want experience  very experienced operators. Think-- you need someone to navigate through the next Covid.  

Great to see you didn't let 2020 derail you. I agree being around like minded individuals that are going to constantly hold you accountable and push you is a huge benefit. I know it has helped me. Here's to crushing 2021.

I would turn the main off then drain the lines as best I could that may be just opening the facets. Then leave the facets open. This may not prevent the pipes from freezing but it may give the water and air a place to be push when they do. Should keep you from having more splits in the piping. 

Look into 203K loans. I've never done one so you will have to do your research on them but the short of it is You live in the property have a contractor (who is familiar with 203K work) perform the work. There are specifics to it but the lender (bank) will fund both the property and the rehab. 

Kaden never be embarrassed to ask for clarity. It's the only way to learn. 

I tip my hat to your father in-law. I was the first class hired after the 11th. I still remember my very first day, October 28th. Some really big shoes to fill. God Bless him.

Caps can get complicated but the real "simple" explanation is this.

Commercial property whether it is office space, storage, Multifamily, mixed used, etc. they all produce income. They all have cost to run them which is your operating expenses (OPEX).

You minus your expenses from your income and you are left with your Net Operating Income (NOI) Now here is where cap rates come in. Depending on your market and your asset type there will be cap rate that specific asset type in that market trades at. So a Multifamily in Virginia Beach may trade at a 7 cap where as in NYC it may be a 5 cap.

The formula to find the cap rate is NOI / Value = cap rate. If you know two you can always find the third.

NOI / Value = Cap Rate

Cap Rate * Value = NOI

NOI / Cap Rate = Value

So on your property they are receiving 169,200 in annual rent (14,100*12) from that you subtract expenses for this example we will say they have 50% expenses or 84,600. This leaves us with an NOI of 84,600 ( remember noi=income-expenses)

Now we take that 84,660 / 995,000 = 8.5% or an eight and a half cap.

The cap rate is never really determined until you and the seller agree on a sales price. When using it in conversation it will go something like "Class B properties are trading at a 6 cap". It gives you a reference point.

Lastly if you were to purchase this property all cash for 995,000 and that property returned to you 84,600 annually then the property would return 8.5% annually to you. Is the risk you are taking in investing in the property worth an 8.5% return? 

Have you spoken to near by neighbors? It sounds like the newer tenant is in the "wrong" but I never like making assumptions.

My next thought is how long is the family there? How many clients have they lived next to? How new is a "newer tenant". If they have been getting along for a few months then I would try and talk with the newer tenant and find out the real reason they are unhappy. Are they trying to make a fuss to get out of the lease? That's an easy solve! Did they just get bad news and they are just "off" a bit. Maybe the family parked in his spot once or blocked his entrance and made it even more difficult for him to get to his door even just once. Most of the time it's something serious to them that sets them off but easily fixed if you knew what it was.

I don't believe splitting the yard is 1. appropriate 2. will solve anything. There are numerous complaints and none of them sound like they will be solved by a fence. I am in favor of allowing them to break the least and walk away. I would rather have an empty unit for a couple of weeks then the drama you are dealing with right now.

If I were to split the yard I would certainly do it 95 to 5 in favor of the family and I would do it not to enforce the no contact order but to protect the family from an order violation I would also advise the tenant he would have to bare the expense of the fence install. 

Bring in a broker to give you a Brokers Opinion. That will give you a decent idea of the value. Next do some market research and see what income it would produce if rented. Now run your numbers and see which fits you better. Don't forget to include property management when doing your underwriting, even if you intend to manage it yourself. You 1. deserve to be compensated for your time 2. you May in the future decide you do not want to manage anymore and farm it out. You will be able to BECAUSE you included it in the underwriting. 

If it truly is worth 390 Will your underwriting support BRRRR-ing it?