All Forum Posts by: Donald S.

so real quick....1.2 Mil all in, what's the place worth after you rehab it? You said you're putting your time and money to achieve a 5 cap, but that means based on your numbers that the place will only be worth 1.2mil after rehab.  

Is this a long term loan you'd be using that has a construction loan tied to it, or are you putting 150k down to purchase and 350k cash to rehab to get to 500k cash? 

Is the 25k expenses including 5% vacancy? 

As for the "feel like I am buying a safe investment but not achieving a high yielding asset", well that's kind of how investments work, more risk=higher potential return (higher yield) the lower the risk generally = the lower return. 

As for 1.6% COC ROI, I see 84k-25k-50k=9k/500k=1.8%. Which seems really low to me. Is it worth 9k a year to you to invest 500k? IDK that's a personal decision.

Who have you interviewed? Looking at those terms they sound fairly reasonable, 8% is actually lower than the standard in St. Louis for smaller clients, most charge 10% until you hit a threshold of properties. Not sure if the renewal fee is standard or if the vacancy fee is standard, since I assume they also charge a lease up fee after they fill it, probably 1 full month. I would offer to do it for you, but MO has that pesky law that a PM has to be a broker to work for anyone other than themselves (or work for a specific client). 

I suggest talking to 4 or 5 other companies, there's a ton of PM's in Stl. @Peter MacKercher runs a good one, so I'm told, and then I know Deca Realty is another one I see all the time. You can always call the big boys like Renter's Warehouse but I've heard big PM companies give you bad service, IDK I PM my own. 

Adam send me a PM I'd love to talk more in depth on this than the forums provide. I could probably call you tonight or tomorrow afternoon to discuss in depth. 

@Christopher V. Let the numbers do the negotiating for you. Show him, hey this might be worth 300k after its ready to go, but it'll take me 100k to get it ready, add on my holding costs, closings, and a little profit for my effort and this (insert $$) is what I can offer. If he doesn't take it, remember no doesn't always mean no forever, just no for now. He may come back to you after it sits for 6 months

If you're familiar with Dutchtown, and have the reserves to cover unexpected repairs, and the guts to deal with tenants while you clean the place up, I'd say go for it. I will say how is the owner getting 2770/mo in rent for dutchtown though? That's avg 692, when dutchtown 1/1 goes for 500ish. Are these 3/1? 

I will also note that your garbage will be 14 per unit per month, so 56. And the city requires water and sewer in the landlord name for multi, I doubt you'd be able to bill back as no one else does. You're probably looking at 160/mo for that. Still looks good though, just will require verification of revenue and proper management. If you want to get together and have coffee to discuss more shoot me a pm.

@Ryan James, without getting too deep into the numbers, these look closer to realistic. And not a bad deal on the surface. You'll have to determine how accurate these numbers are though, and I still don't see any utilities (unless that's billed back 100% or 100% paid by the tenants) or lawn care/snow, unless you don't have to worry about that based on the landscape of the building or built that into the repairs. It's getting closer. I'd feel better about this if there was room to raise rents a little, but I don't know that area. 

Good luck if you pursue it, come back and let everyone know how it went. 

Cheers!

I'll add to @Anton Ivanov comments, I see you put financing at 30yr 4.5%, is that a number you be spoken with a bank on, because that's what an owner occupied would be close to. You'll need a commercial loan, which is usually 1% higher at least, and generally 20 or 25yr am with balloons between 3 and 10 yrs out.

@Thomas S. I love you...lol. always a business man.

Thanks Bob, I'll look into that. What do you think about one contractors opinion to just frame the window in and be done with it like that? There's no fan in the bathroom so I'd have to install one then. 

hey @Bob Jaeger I'm rehabbing a unit the old owner had bandaids.l on things. bathroom window ledge is about 18"wide x 13"deep at the deepest, almost isocelse triangle kind. on the ledge he had put wood covered by drywall. So that's completely rotted out, I want see suggestions for waterproofing the ledge? also the tub surround is wood on 2 sides covered by a plastic insert, is that ok? we tore out the old insert and don't know if I should spring for hardie board or if the wood is ok if it's sealed behind a plastic insert. Thanks.