All Forum Posts by: Dan Kelley

Also, Welcome to BP! I was recently in your shoes as I'd purchased a duplex in 2012 as my first home, but then was stuck in analysis paralysis until I finally purchased a 6-unit building at the beginning of this month for $108,000 (just to give you an idea of the difference in our markets.)

Whether you buy this deal or find another, keep up on the forums. There's no greater free resource that I've found for real estate investing.

What is included in your operating expenses? Do you have to pay any utilities? Also, I don't see any category for maintenance/repairs and Capital Expenditures. 

If you're planning on using a property manager down the road, you need to factor it in now. No sense in overpaying for a property that is unable to cash flow down the road with a manager.

I'm not sure what the market is like in Cali, but compared to what we get in Iowa, this would be a much lower return than what I would be looking for. But, like I said, I'm from Iowa, so our markets are entirely different and I don't know how your deal compares to others in the area.

Thanks for the input everyone. The bathroom does have a vent fan, although I need to remove the cover and verify whether it actually vents outside or not. For all I know, this guy could have just stuck the vent fan in the ceiling and it's blowing into empty space in the ceiling. I'll check on the and update when I get a chance.

I just made the mistake of not doing this right when closing on a 6-plex. My purchase agreement did not explicitly state how the rents would be handled. We closed on the 9th and AT THE CLOSING TABLE, the seller decided to inform us that he had not yet collected rent from 3 tenants, so he would not be giving us the rents for those tenants. The dollar amount for pro-rated rents was even listed on the closing statement that HIS realtor drafted, though he claims he never saw it before coming to closing. Myself, my banker, my realtor, and his realtor all seemed to be on the same page that he should have collected rents already by the 9th, so the loss of income should be on his side, not mine. He did not agree. We ended up meeting in the middle because it wan't worth it for me to walk away from the deal, but frustrating nonetheless.

All I can say on the subject is make sure the exact dollar amount you expect to get is explicitly stated on the closing statement and make sure the seller sees it BEFORE closing so that, if there are any discrepancies, you can iron them out before the closing table.

I started the remodel on a 6-plex I recently purchased. Last night I began tearing out the bathroom in vacant unit #6. Check out what I found behind the shower surround when I removed it...

.

So here's my dilemma... What do I do with this window?

My plans had been to simply install a new fiberglass bath/shower surround, however I don't feel right about just covering up the window like that. Not to mention it looked terrible from the outside. The previous owner had all the insulation covering the window. 

Below are the options I see available to me currently. Keep in mind this is probably a C property. Although, my goal is to make it nicer than you'd expect for this property and hopefully charge on the higher end of acceptable rents for the area. Currently, the property has some less than stellar tenants in place at well below market rents. My plan is to spruce up the property and attempt to attract nicer tenants and get rents up to market.

Option 1: The building is a brick exterior. Leave the window where it is but replace with a vinyl window. Install a corian slanted sill for water drainage and install a tub with tile surround. 

• My concerns with this option are that the window is REALLY low, so it will have more water exposure than a higher window would. To help remedy this, I could maybe move the shower head piping to the right side of the tub to hopefully reduce water on the window? Not sure that would really help though.
• My other concern is cost. I feel like going through all the effort of tiling a surround in a C property might be overkill.

Option 2: Leave window where it is but replace with glass blocks. My concerns are still the same- higher cost and effort to tile the surround.

Option 3: Cover it up again. Install a new shower surround that covers the window again.

• I feel like this is a ghetto way to do it, but maybe it's not as big of a deal as I'm making it? I feel that I would still want to replace the window though while I have the shower out since it would be much easier. I also don't want to have the look of insulation pressed up against the window, so not sure what to do there. Maybe I could install a faux outdoor A/C vent grill to cover up the window??

What do you all think? Any gems of wisdom for me? 

@Kevin Manz Thanks for the applicable experience. It's helpful to hear how others have handled situations to get an idea of what works and what doesn't. 

I'm starting to meet with some of the tenants today, so we'll see how that goes!

Thanks everyone for the input/advice.

Thanks for the replies everyone. I will look further into the laws to be sure I'm following them. I also have a duplex that I've managed myself since 2012- 1 Eviction when I first bought it and then I've retained the tenants that moved in since then.

Another question- Many of the units are significantly below market rent ($350 rent on a unit that averages $450-500.) If the tenants are on a Month-to-Month contract, what would you suggest? Part of me wants to let them maintain current rents and lock it in for a 6 month agreement just to guarantee income for a while until I sort everything out, but then again, part of me wants to start raising rents to get them where they need to be, but I also would rather not have a ton of turnover right away as I don't have enough other cash flowing properties to help sustain me during that transition. What are your thoughts on that situation?

I'm closing at 2:00 today on a 6 plex building with 4 occupied units. They are a mixture of leases. The one unit has been occupied for like 8 years and is currently on a month to month/verbal agreement. 1 unit is 4 months into a 1yr contract. I believe the other two are on m2m contracts.

What are your suggestions for starting communications with the tenants?

I'd like to meet all of the tenants and go in with a contact sheet of some sort and get updated phone numbers, names, email, etc. I'm planning on trying to get everyone to pay online through Buildium, or deposit rent directly at my bank. I want to eliminate the need to visit the property to collect rent. I'm wondering if I should also open a P.O. box though for those who still wish to mail checks? I'd almost rather just stick with Buildium and my bank though.

Any tips/pointers to make this as smooth a transition as possible? Should I send out a letter first to inform everyone of the change in ownership and to give them my info?

I own the property through an L.L.C., so my plan was to pitch it as if my LLC is a property management company who owns the building and I am simply the building manager. I'd like to avoid having them know that I am also the owner.

Give me some tips please! Thanks!

Dan

I started this thread to find out from you, the FULL TIME real estate investor, what does your day look like? Reason being is that I think it helps those of us who are starting out or are still part time to set goals and dreams.

So what's your day like? Do you spend more or less time than a 9-5 job? Do you take your kids on educational or fun vacations frequently? Or are you so swamped with real estate that you have difficulty making time for your family?

I'm sure we've all had the dream of investing full time, quitting our 9-5, and being able to spend our time investing in our children's lives, golfing, fishing, or traveling the world, but I'm wondering if anyone is actually living it.

@Dave Reeves Maybe I was a little unclear- The Cadet heaters are heaters only. No A/C built into them at all. They're just a little box unit that mounts in the wall and provides heat only- NO A/C. Just wanted to make sure I clarified.

I also was checking out the split-units but it seems to me that they would probably under-perform in the -20*F Iowa winters. That's what prompted me to check out the Cadet heaters. They're sold in most big box hardware stores.