All Forum Posts by: Edward Liu

There is NO easy way to separate the utility, you need to rewire both electric and water.    Shared utility cost will be hard to predict depend on location, weather, # of tenant in each unit, age of tenants, etc.  Best just let tenant pay their own meters.  

If the house is old, it might be worthwhile to redo all the wire and pipes and add individual meters.  Not only saves you utilities cost, but avoids other issues.  Currently I am redoing water pipes completely in a building, with flexible pipes. It is much easier/cheaper to redo all the pipes.

I hate to ask, but is this a legal 4 units?  Typically legal 4 units have separate utilities.  I have seen a number of vacant 3-plex and 4-plex where some units are not legal. Although priced very well, but no way for you to maximize all the units.

Most cities have local vendors who offer much better prices vs. Home Depot, more tailored toward commercial apartment buildings. In some cities, we are able to get appliances less than $250 per piece from these type vendors if purchase in bulk. They can also repair and provide warranty. I am asking this question as my current property manager mostly manage SFH, thus quotes are from big box stores. I want to see what are alternatives to the big box stores in the area.

We are finishing up a building and need to fill about 30-40 appliances.   Local property manager has not been able to give me good quotes.   Any suggestion where to find reasonable prices appliances in the Cincinnati area?

This is special times and extremely difficult to evict anyone (almost impossible to evict in some cities), with no end in sight.   I heard eviction court dates constantly get pushed back.   

We are really at mercy of the tenants.  I have a tenant who works in the hospital (never lost his job) and refuse to pay since March.   Only thing the property manager can do is 'encourage' him to pay and be nice to him, but be a nuisance.  To get my property manager off his back, he is starting to pay half of the rent since June.  It is better than nothing.   The tenant currently owes me over $5k in back rent, which I treat as lost cause.   At least the property is cash positive even with his situation.

I hate to give you the bad news.  Likely you will lose more money by trying to evict him as eviction might not occur until next year.   Try the option of offering some cash (forgive previous rent) and get him out.   I know every state is different, so you have to judge based on your local court system and government.   

Drive by a few times at different times of the day (if possible), see if there are groups of young men hanging around the building (people you don't want to hang out with).   Usually it means trouble.

Talked to tenants without seller present, simply ask about problems related to the building.   In one of my deals, one tenant told me their neighbor is really laud around 1-3 AM in the morning with many people going in and out.   At that time, I did not think much of it.   About 1 yr later after I brought the building, the tenant (who always pays on time and good tenant is every measure) was shot in the arm somewhere and later arrested for drug dealing.  So even a small piece of info could mean something.

If you live in CA, then just do it yourself. It is very easy. Only reason I use other services in non-CA states is most states require the reg agent with in state address to register the LLC.

If zoning allows, from 4 to 8, likely you should try.   Check with local engineer and see what it takes.  Maybe you lucked out.

You can convert 2 to 3 or 3 to 4 as long as zoning allows - with little consequence. For 4 to 5, even okay with zoning, you should think twice and analyze closely before proceed. Once it is 5 unit, comp no longer matters, CAP is the king. Loans are also different as you no longer can borrow through conventional loans. Same treatment for the next buyers - so you need to think in their shoes. Understand the type of buyers who will invest in 5+ units and see if they will be interested in this 5 unit property based on CAP and location.

Reality is no body knows what the environment will look like in 6 months or a year from now.   Only thing we can really do as investors is to manage risk.   

Looking at your estimate, I would rule out your flip strategy as margin for error is so small.  Your $200k rehab likely will cost higher than your estimate - unless you really have a lot of experience in this;  Housing market has higher chance to lose 10% value vs. gain of 10% in the next 12 months due to the recession;  not sure if your profit included brokerage cost or other holding cost.

For units next to beach, I assume you plan to do STR. Based on recent info from Airbnb, most new bookings in May and June are for people who travel within 200 miles of their home. In addition, RV sales are up as new preferred method of vacationing. Both of these trends are not good for Hawaii. With all the travel restrictions both from Hawaii and internationally, there is high chance these units will NOT reach your goal of $10k per month.

Your numbers seems to be BEST scenarios in the current environment.  Have you thought about bad scenarios?  Hawaii has history of drastic real estate price swings.   I see more possible downsides to this deal, while upside are few.   Based on risks, I would not touch this investment at this time.   I would not even touch your flip strategy 12 months ago with such low margin.

For investment and return, 99% of time is to buy the smallest house in the neighborhood.  Your rent proportion to larger homes are better (larger homes usually don't double the rent if square footage is double). Other people's remodel/home appreciation will help your home value if you are smallest vs. you are the one who set the market if you are largest home in the neighborhood.

For homes over $2.5M+ would likely be the other 1%, buy the largest land in the neighborhood.   You can always rebuild whatever is on the land.  Cost of rebuild/rehab relative to overall purchase price is small.   People who can afford $2.5M+ home can also afford the one at $3.5M, so next buyers in the neighborhood will likely be looking for the best.   This scenario likely won't apply to most investors.