All Forum Posts by: David S.

The applicant is making $100K but only has a credit score of 600.

You do not seem to make a big deal of it but the 600 credit score would big red flag to me. It indicates to me that the applicant has a history of making late payments or stiffing a creditor.

If the property is not generating a lot of applications, I would definitely have the applicant address the 600 credit score, review credit reports to what has been going on and see if there has been any improvement in payment pattern. I would also confirm salary history and reason for the move (job transfer?). Get proof of salary and talk to prior landlords.

To sum up, all the usual due diligence. But a 600 credit score would not meet my credit criteria unless there were some extremely extenuating circumstances that can be verified.

Like a previous poster, I (or my property manager) also would want to meet with any applicants interested in my property and we would be very suspicious of any applicant who wants to rent sigh un-seen.

@Dylan Vargas. Thanks for your great input.

Your opening sentence begs the question, why do you feel Chico multifamily is overpriced for Chico?

I am thinking of investing in multi-res apartments/houses in Chico.

Can anyone share their opinion about the neighborhoods the following properties are in and what kind of tenants they would attract?

- 479 East 7th Street

- 1072 Chestnut Street

- 581 East 5th Avenue

- 1340 West 4th Street

If anyone can also advise where the A or B neighborhoods for apartment rentals are, that would also be greatly appreciated.

Thanks!

@Roland Brown Looks like it was updated 3 days ago...He just cruised through 6 months of collecting rents without any unanticipated expenses.

You could do this:

• You buy the property in your name;
• You and your girlfriend, by looking at comps, agree on what the market rent for the property would be;
• You both pay 50% (or other agreed split) of that agreed rental value as monthly rent. That goes towards covering the cost of ownership - mortgage payments, property taxes, HOA, repairs and whatever else a landlord in that market is responsible for. You as the landlord would be responsible for any shortfall against those "ownership" expenses. Any excess is the return on your investment plus you get all the equity appreciation;
• I am sure you and your girlfriend can figure out how to divvy up the other shared living expenses like groceries, cable, phone, hair shampoo, etc.

The important thing is you both talk it all out and you can then document into some sort of formal agreement it if you want.

@Keong Kam - Thanks for the link...Yet another one selling over list...Best wishes on your search.

Wow! There are 4 plexes selling for less than $2M in the South Bay?...Must be small units or fixer uppers.

I'll be following this thread to see if I can learn too.

Check your state laws or local apartment association to confirm the mandatory on site manager issue.

For example, In California, if there are 16 units or more a designated ‘responsible person’ is required to live on site. As the number of units increase so does the staffing requirements. In addition, the resident manager is an employee (not an independent contractor) and therefore must be paid to meet local minimum wage laws.

If you are going to start with commerical (>4 units), I recommend networking with commerical lenders and showing them marketing brochures of properties you are interested in to see how much they could lend on any given property and make your offer subject to obtaining that amount of financing and interest rate you can live with. Most commercial lenders look to the cash generating abilities of the property first but may be more conservative if they feel you have limited experience in commercial real estate management.

If I was a newbie, I’d consider continuing with the current PM since they know the property. During the due diligence period, I am sure the current PM will be very interested in showing you why they should keep them and you should take the opportunity to talk to them about their practices as much as you can. If you decide not to use them, make sure you have gotten all the documentation and information you need before closing the purchase. If you decide to go with another PM, you will not get any co-operation from the previous PM after the sale closes.  

@Chris Herbert - Thanks for your input...Lots of good info to consider.

Is the Klondike Court area that bad that property managers would actually refuse to manage properties in the area?

If I decided to pursue the college student market, which neighorhoods (street boundaries) would you recommend I keep an eye on? Which do you consider to be the “right areas”...I have also been hearing of institutions getting into developing college rentals in major metro areas. Do you know if there are any development plans in Chico which might add supply to college rentals in the forseeable future?

Which neighborhoods should I focus on if I wanted to pursue more traditional middle class or upwardly mobile renters? Or is that segment more into ownership?

Thanks in advance for your further advice.

@Dylan Vargas - Just noticed your second response to my query on Arcadian the other day... I hope I am not hi-jacking this thread but I noticed another recent listing come up....3-4 Klondike Court....and 5-6 Klondike...Seems also to be close to college and buildings look well maintained...also seems to be within a cluster of similar buildings...Any thoughts on these?....Are all these properties focused on the college student market....you mentioned that with renting to college kids, you get parents to sign and higher rents...However, would we have to deal with higher turnover, re-leasing expenses and units being empty when school is out for the summer or do college kids stay all year round?...Thanks in advance for your further advice.

Can I also get you e-mail to contact you via private message if necessary.

Thanks.