All Forum Posts by: Doug Bloes

What are the best options for collecting balances from past tenants who were evicted? I'm looking at contacting a Credit Bureau. Any advice when calling them? Do you negotiate with them? Not sure what to expect. Thanks!

We purchased an 8 plex in 2019 in a small town with a population of 2,000 that my business partner happened to live there. Most were seniors paying $350 when market rent was $650. We had the same dilemma. All of them were MTM. We gave out a 60-day notice that rent would increase $50. Pet fees would be added, also at $50/pet per month. We had 2 Apts give us notice they would be moving out at the end of those 60 days. That allowed us to rent at market. We continued over the next few years raising rents $50/month every 6 months. We were able to get most to market with in 2 years and avoid upsetting the tenants. Hope this helps!

Thanks for the response! Do you personally guarantee the loans or have someone else?

What's the best way to structure your LLC?

I have 6 equity investors, whom I'm all friends with, bringing in 25% of the 1.5 million, which comes to $375k. The rest will be bank financed. First 2 or 3 years will be a ramp up stage with little or no cash flow. I'm not investing any of my own money. Do I offer Preferred Returns? Do I eventually try to pay off the original investments and take back the equity? Is it too greedy to take an acquisition fee of 1% ? Asset Management fee? 

I want everyone to win, so any advice is much appreciated! 

Thanks

Could you go into more detail? I've used seller financing before but how would this help me cashflow better? 

I've been looking at 24-150 unit apartments and the asking prices in my area seem high where the numbers don't work. What are some financing techniques that work where the seller can get their asking price and I still cash flow? 

Thanks for all the replies guys, much appreciated. I made some rookie mistakes on my first commercial property. My cap rate is not as good as I first thought. I asked for the actual rent roll but what I got was not accurate. The seller did not provide much but it was hard to push him for more info with multiple offers coming in on the first day it was listed. There's still back up offers to ours.

Another thing I overlooked was the Reserves/replacements expense and repair/maintenance. I estimated these at $500/unit/year and $300/unit/year. I got that info off bigger pockets. Not sure it that's realistic? The property just had a new steel roof added and no major issues with the inspection. The gross rent is $42,000. I didn't have much to go off of with expenses, estimated at $17,000, meaning NOI at $25,000. Cap rate of 7.57%. Not near as good as what I first thought but what I like is expenses in the near future should be really low and rents are really low compared to market rate and no pets currently allowed.

Any more advice is greatly appreciated. Thanks! 

I just tied up my first apartment building in a nice small town. It has 8 units and the inspection came back in great shape. Its the best in town! Owner is retiring. Rents are $100/unit less then the market rate. Expenses are extremely low and the tenant base is great. Would like to increase rents over the next 2 years to market rate and allow pets to also increase income. I'd like to then refinance and pull the increased equity out. How do I know what cap rate to use when determining the value? I purchased the property at $330,000, NOI is $37,000. That means I bought it at 11%. Is that the same cap rate I use when I calculate my future refinance? Am I missing something? Any help is appreciated, thanks!