All Forum Posts by: Account Closed

Hi,

I am starting my due diligence on a multi-family opportunity in Aliquippa, PA.  Just wondering if anyone has any on the ground info that could help.

Thanks in advance.

I'm getting the same warnings from my 1031 company.....

Mark is correct- the quality of tenant that you attract will be determined by the property address.  But, no matter what the address, there is strong demand.  Good things are happening in Allentown. There really aren't any "war zones" like there were 15-20 years ago.  I have a place that used to be considered dangerous back in the 90's.  Now it is squarely in the path of the billion dollar downtown renovation, and I have no problems finding quality tenants.

Take this as a lesson learned- they never get keys until they have taken legal responsibility for the meter.  Make sure they have actually been given an account number.  I got burned once when I called the power company to verify that the new tenant had called to take responsibility for the meter, and was told  "yes, they did call".  As it turns out, they were consequently denied for some reason, and the meter remained in my name (it all worked out in the end, but I learned my lesson).

Hi Brad- I can only give you my experience-but it's an answer you can take to the bank.  After watching my tenant water usage like a hawk (many units, taking a meter reading every week, for many years) I can tell you that for 1-bedroom units (i.e. no kids), normal usage is 500 gal per unit per week.  Your bill will of course vary according to local rates. 

The toilet, it's always the toilet.  I didn't see you mention anywhere that you addressed the toilet.  If the meter is in the house, and water use is constantly increasing, it's going down the toilet.

I also have a more personal relationship with my tenants.  I also pick rents up in person (gives me face time at least once a month to check for any issues they need addressed, and I also get to see the unit close up).  Besides the fact that these tenants aren't respecting the terms of the lease that they signed, they just don't sound like a good fit for you.  I don't think you like them.  I'm just reading your post, and I don't like them. Ride out the lease, give them their notice and cut them loose.  

Korie- what bank are you working with that penalizes your loyalty and increased business?  I'm also here in the L.V., and my banks are bugging me as to how  they can get more business from me.

Hi Nik,

I believe I can definitely be of help here, as I had (actually, still working thru) the same scenario as you have here. Trust your gut here- it senses an opportunity. You didn't mention what your actual expected day 1 monthly cash flow as is, and that would help. My building is half the size, but 320k RR makes it a similar enough scenario to compare. My building was older (1920), but in good shape overall. My issue was similar to yours in unit upgrades required, but as you pointed out, in good time, not on day one. I cash flowed nicely from the start, but was locked into all section 8 tenants (not my thing). My solution was to purchase, and upgrade slowly, one unit at a time as tenants vacated. I go in, spend about $1500 (floors, a specific attractive signature paint scheme and bathroom upgrades) and transition the unit from section 8, to retail rentals. Rents are raised from the HUD $650 to retail $750-775. I've done 6 units so far and have no trouble finding quality tenants who are attracted to my product (good bones- nice layout, high ceilings, crown moulding...) As theses units turn over a second time, I'll upgrade windows and some kitchen appointments. I strtched a bit on the purchase price, but the plan is working perfectly. I sense you have the same oportunity here. Hope that helps.

My friend, water usage is something that can get out of control quietly and quickly if you aren't paying attention, and most landlords do not. True story- I was in negotiations for a 23 unit apt bldg, all 1-bedrooms. Having already owned a 12-unit bldg, and watching the water meter diligently on a weekly basis, I knew that normal water consumption in a 1-bedroom apt was about 500 gal/wk.  When the due diligence on the 23-unit showed much higher water consumption than my "nomal", I questioned the current owner about his $1800 quarterly bills. His response- "I think the bills are fine".

Bottom line- when the purchase was complete, and I got into things at the bldg, I found water leaks everywhere (toilets that ran all the time, sinks with a pencil thin water dribble that wouldn't shut off...)

I quickly addressed these findings, and, like magic, the water bill for the bldg settled in at under 500 gal/wk per unit (anywhere from 9-11.000 gal/wk). Quarterly bills are now under $900.  Later, when I explained the findings to the previous owner, with whom I am still friendly, he was aghast.  He thought his property maintenance guy had been doing a crackerjack job (I heard a ton of complaints from the tenants to the contrary).  I read the meter weekly.  If there's a problem, it's always a toilet.  Hope that helps.