All Forum Posts by: Ryan K.

Looking at a local 6-unit apartment building.  Buy for $580k.  100% rented to long-term tenants below market, demand is very high, low vacancy forecast.  Rents range from $775-900/mo, grosses $59,100.  Could probably be raised to $1000-$1300, gross $82,000.

Redevelopment would be very difficult because the lot is very small and there is no on-site parking.  Highest and best use is likely patching up this 100-year old building and maximizing cash flow (add on-site laundry?), maybe sell in 5-10 years, maybe hold for my baby's college fund.

I'd likely do traditional commercial lending, 25% down.  I self-manage 3 res units in town now, would likely self-manage this and hire out any bigger job.

The building is at least 100 years old.  Kinda crappy.  New roof, stucco looks good, some units have been renovated in the past 15? years.  There is upside in rents.  There is possibility for new cash flow with on-site laundry (maybe even from the local neighborhood).  The downside is it could be a maintenance nightmare.

Anyone have a solid estimate for expenses on an old 6-plex, before financing?  50% of potential gross income?  I've ran scenarios, ranging from 65% PGI to 80% PGI (best case).  Trying to decide if this is legit or if I should run away.

It's definitely not in Vail.  I'm thinking more like the Hoza's in Eagle?  In Town of Eagle and for county zoned, I believe 2+ acres in the minimum lot size for MHP by right.  So you'll also have a long and expensive entitlement process, and I'm sure you know the NIMBY mindset around these parts.

I'm sure you also know that housing, especially something relatively affordable like mobile homes, is in high demand and, as stabilized, it'd be printing money.  Good luck and do your due diligence.

Do you ever get down to Eagle?  It'd be cool to meet another investor (and I'm an appraiser, you're a broker?), let me know if you want to grab coffee, sandwich or a beer sometime.

Quick update:

Listed the 1 bedroom carriage house on craigslist.  Overwhelming demand.  Held an "open house" and over 25 people showed.  Signed lease and 1st,last,security deposit put down.  Rent increased to $1750/mo, including all utilities and 2-car garage.  I did notice that this price brought mostly couples - the market has outpaced single occupancy.  With the extremely high demand, I wondered if we were leaving money on the table and my wife got mad at me for being greedy instead of providing a community housing benefit...

Between the front house and carriage house, rents increased 12% from prior tenants about a year ago.

That said, prices to buy have gone way up too.  Now we've got $ ready to invest but don't think it's viable around here anymore.

I live and work in the shadow of Vail and this isn't true at all.  I think you're thinking of what people like you or I would do, but, at least Vail, is a totally different customer.  Prices did drop in the recession, hotel numbers pulled back a bit, but the uber wealthy were still uber wealthy.  The "down valley" markets, where working locals had $1M homes, got hit really hard, Vail hardly dropped.  Vail is unique, the people that fly their private jets in still came and still dropped $10k/week for a ski vacation.  They became more aware of "value," but their concept of money is beyond what we comprehend and they still had plenty of it in the recession.

 Delayed gratification.  Save up now, make the sacrifices, pay your future self.  Stick to a plan and you'll be there soon!

former tenants signed a 10-month lease. First, last, security deposit paid. For rent sign pulled out of the front yard. Got about 2 weeks to do some minor maintenance and cleaning, which is actually a relief to not feel rushed! They were chatting with all their old neighbors and the little girls are excited to be back in their old rooms and neighborhood! Win win. Hardly any marketing, big rent increase, helping a happy local family. Sometimes this landlording biz really is too good to be true! Sometimes you also gotta spend a Sunday night fixing a fence gate. But my day job doesn’t let me have a beer while I work!

Hey Austin,

I'm open to leads.  What you got?

I grew up in the Midwest and had been looking in my hometown.  Much lower barriers to entry, but I just heard another major employer is pulling out thousands of jobs.

This one is in my town so easy to self-manage.  This area has a lot of positive things going for it, more similar to SF than Cleveland.  Wish I could have bought 10 of these 5 years ago.  Its appreciated 175% since purchase; since 2013, rents have increased 145%.  I agree its not the best cashflow, but I wouldn't call it a terrible return.

I also didn't mention the property is directly next door to my in-laws and nephews.  We're planning to start a family soon so there may be a long-term babysitting synergy play here too!

I guess I didn't mention there's a 1-bedroom apartment above the garage, also rented, for $1600.  So, the property would gross $4150 or $4500.  It was also bought from the bank in 2013 for $405.  The house on the corner that sold for $710 also has the "carriage house," so its a decent comp.

I have offered it to the previous tenants at $2900, should hear back this afternoon if they're ready to sign a lease.  In the meantime, there have been 2 other yard sign calls, so either way, I believe it will rent soon.

If they pre-pay last month's rent and a security deposit equal to another month's rent, I think they have strong incentive to not bail in 6 months.  Well, actually they said they probably would buy before the end of May, but would commit to signing a lease and paying thru May.  Like I said, we have a previous relationship as neighbors and tenant/landlord and its a tiny town...so "friends" as well.  I don't think they'd have any trouble paying even if they bought a $1M house somewhere else.

@Walt Dockery - you've got a good point about being under market.  That has usually been my approach, price it slightly under with a huge up front cost (first, last, security deposit), get a ton of applicants, select the best ones.  Below market rent keeps em there, huge $ up front shows they're probably not bums.  That said, I've also had 4 tenants in 5 years so maybe its not really keeping anyone there.

But my wife just emailed me back, and again said she thinks a 2-yr stability would be best.

Great opinions, thanks to all.

My wife thinks we should go w the 2-yr lease because my stress levels always increase when I have to actually do work for this $$$.