All Forum Posts by: Cody DeLong

Going to hopefully finally make one!

I went to one and like Amy said it was exactly that.  They talked more about wholesaling, lease options, etc.  Which honestly is great to know and great to have in your arsenal of tactics but not 100% my game.  Deff good for networking though.

Numbers attached. I used 7% across the board for Capex/Repairs/and Vacancy. I don't plan on spending any profits the first year and plan to reinvest anyways back into turning the units and some much needed outdoor maintenance. The major things like plumbing, electrical, and siding are all brand new in 2010 and the roof still has a good 10+ years left on it so my Capex will probably be put towards a new roof on the buildings come time. There isn't any high cost maintenance beyond that. Also Flood insurance will be going away if all goes well. The cost also should go down with the elevation certificate as well.

My loan is 4.75% for 5 years then variable after 5 years based on a 20 year amortization or I could do 7 years same deal at 5.35%.  I have a minute to decide what I want to do I was told but going to figure out what is best.  I plan on holding super long term as the area is outside of two different growing cities.  

I also forgot to add they put a Dollar General right next to the property last year.  The current residents have told me its a been great to literally walk next door for last minute groceries, etc.  Also I will probably be utilizing some payment system for rent so my tenants could pay rent by cash/card/money order there.

Pictures of one of the units currently being turned over. All walls were cleaned and being painted!  Also had a shower leak that showed on the inspection tat is being fixed.

Forgot to mention the property is currently fully rented and does have smokers who smoke in the buildings. I plan on putting down new rules and cleaning, painting, and buying an o zone machine for when people move out. One person did just move out and it’s already filled. The unit is being repainted and cleaned now and is being placed with a security deposit. All other tenants have no deposit or leases due to poor management/ current owner just being too nice. That is changing as people move out which I’m sure will happen. 

Also right now I pay for electrical but the apartments are already pulled separately to be metered and paid by the tenants so I will be having them submetered and having tenants pay electric which is $800 a month right now. It will cost $8,000 for the changeover. 

I’ve been wanting to start one of these from the start and just haven’t had a minute between my job and getting this deal done. The property is an 11 unit converted motel in Livermore, ME. Each unit is 1 Bedroom/1 Bath and sits on 7 acres of land. Purchase price is $275,000 and I will be financing 80% of the purchase price and the other 20% is all cash. 

I found this deal through a contractor that I’ve done a good amount of business with on my personal residence and in some of his other ventures. I had him come out to look at a property with me and that property ended up having really bad foundation issues so I passed. However he mentioned that he had a property he was looking to sell close by so he could invest into a new project at this old ski resort he just bought. 

We did not use real estate agents and are using my agent as a transactional agent only for a $1,000 flat fee. 

Since bing under contract we had an inspection that went really well and some minor things will be fixed before closing like painting some exterior and redoing a ground level entry deck. 

One big thing we ran into is one edge of one of the buildings is in a Flood Zone A bit with NO base elevation study done. Basically meaning FEMA has no big reason why the flood zone just skims one of the buildings. The owner never knew this due to a technicality with the mortgage. Essentially the land and one building is listed as one number and the building in the back is listed as another but the mortgage has the non flood zone number listed. We came to an agreement on splitting the cost of an elevation certificate and FEMA paper work and had the surveyors out yesterday. The company we used us a high % of success rate within FEMA on the flood plain changes for the ones they think they can appeal. This is one of those. I'll post an image in a future post.

The property currently cash flows $6500 a month and has the potential to cash flow more as the rents are under market. Also there is a laundry room that he currently doesn’t charge for, I’ll be adding coin op laundry and charging a small amount. 

I’ve already selected a property management company as well out of a few I’ve interviewed. They came back highly recommended and have already made a great plan. I had initially planned on 10% but they are giving me a 7% rate which is meant more for people with 50+ units. 

 In my next post I will lay out the numbers a little better and show what I’m dealing with now and where we plan to be by end of year. I’ll also post pictures as well. My plan is to update this as new things happen. 

To not tell them about the law.  Obviously is they're versed in it then thats fine but I wouldn't just tell them that.

Currently in the process of getting a commercial mortgage for a big multi unit property. I’ve had another solid deal come across my plate but it is all cash. I have about $100k in equity in my house. If I were to establish a HELOC right now, would that affect me getting the commercial mortgage? The commercial one is under my LLC I started but they are using my personal income and assets to evaluate as this is the first property for the LLC.

@Ray Harrell all valid points but im not raising the rents of people who smoke.  I'm raising them across the board in general.

@Patrick M. good advice. The building itself is actually in great shape and the units were all redone in 2010.  So really my big thing is just some outside cosmetics that are standard like painting and putting a nicer sign/hardscaping.  The rest though the apts all have tile kitchens, LVT floors, newer kitchen cabinets, and such.    The other big thing is just getting rid of some of these tenants as they leave.  The building is rural but 25 min away from the state capital and twin cities here in Maine.  It's also on a main road that heads into both so its a great location.  There are 4 units that wont need really any work.  Just paint and some new lights.  It's a C building in a B-  area that just needs some light upkeep that the current owner was lazy about.  Don't understand how someone can invest $200k into a property and get it all nice to then just not give a **** about smoking in a brand new drywalled apartment for the last 9-10 years.