All Forum Posts by: Eric D.

Hello BiggerPockets community. I've been a member now since 2015 and have always valued all of the information that most often I've gotten second hand from another member posting a question and a bunch of members jumping in to advise. Today, I am the one posting. 

Over the past 13 years I've purchased 3-two family buildings BRRRR strategy one at a time. I've been fortunate, had more or less good tenants with only a few hiccups. That being said I've become comfortable with 2 family buildings and how they operate. I haven't made a purchase in three years and the equity in these buildings as I feel need to be deployed. In one of my buildings I have around 264k to deploy and a typical 2 family is going for 650k.Our market here in eastern Massachusetts is pretty competitive as I bet most of the country is now. As I've gone to 2 or 3 family property open houses it appears 50 or more people are showing up to a 1 hour blocks, and then when the dust settles I am being out bid even after going 100k over asking. I get it, the cost to borrow money is cheap and many people are thinking the same as we are, Tangible/income producing assets. My latest thinking is I may just be looking at the wrong properties, that being the smaller Multi's of which cost of entry is lower with as little at 3.5% down. Instead of buying two 2 family buildings perhaps I should just be buying one larger building and that leads me to the advice request. One question being how much more difficult is it for run a 5 family building than a 2 family building. Has anyone felt that wished they kept their properties smaller. I know building / Fire codes get weird here once you get larger than a 3 Family. And the other question is that, I have found a decently built 5 Family building in my area that is in a great part of town and will probably need a little work. Currently it is fully rented. I did the math and it lists at a low 4% Cap rate. Am I crazy to consider this building? Currently I am in my early 30s and am mentioning that to say I plan on keeping any purchase I make for 25+ years. Below are the current numbers on the 5 Family. I could potential see improving that annual income to103k bring the CapRate to 6.5% once the eviction moratorium ends but that's an unknown. Thank you in advance.

(Potential Purchase Price: $1,150,000

(Total current annual income: $77,100)

(Total Current Expenses: $27,500)

(Current NOI: $49,600)

(Current Cap Rate: 4.313%

One of the facts I read today was that homeowners in Scotland celebrate paying off their house by painting the front door red. This sounds awesome and also possibly a version of the "bat signal" being displayed for people looking where to slip and fall. How can this work in Scotland? Also am I thinking of this right?

@Christian Nachtrieb Stand up shower sounds good! Only thing you have to worry about is to increase your drain size for the shower to 2". Mass plumbing code requires this for stand up showers where as regular tub/shower combo is 1 1/2". Also if you do change to a shower try and sneak a one piece that is not a corner unit. I've been making the mistake in installing "MAAX angle showers" in 3 of my places and the the door rollers take a beating and seem to be a weak point.

@Mike Dymski Thanks for the reply mike. I'm just thinking more into maximizing profits.

@Kevin Z. Hey Kevin, My suggestion may be different from some but I would say look into selling your SFR. Use that capital gains loop hole to your advantage and either pay down your 3 family or even better yet try and find another 3 family to purchase and move into. Reading your post reminded me of a blog article I read a while back. It may help you out. https://www.biggerpockets.com/renewsblog/2016/07/08/secret-building-wealth-real-estate-successful-understand-and-newbies/

@Adrian Smude I agree, actual gift card giving may not be scalable, but giving just a Christmas card certainly is. I personally give cards with a $50 gift card to all of my 6 tenants. I realize I am not a big operation and someday I may move to just cards but I think over the past year the mortgages were paid down by 15k, the houses cash flowed more that 20k and they appreciated by around 80k.. does a $300 expense really seem like too much? Also I think it demonstrates that I appreciate their business and it shows from low turn over.

In a time of rising interest rates what's the best strategy to access equity and buy the next property? I have a couple 2 family buildings that have appreciated quite a bit but have 4.25% 30 year loans. I dont think I want to mess with those. What's your strategy?

@Jess White Cozy.co is my vote. It takes about 5 days to deposit but it is free. They also have pretty good screening tools paid for by applicant.

@Ashlie Perry Hey Ashlie, I'm a Salem person as well. It's been 10 months since you posted so I bet you've made up your mind. Inventory in Salem still seems to be pretty tight and in the sellers favor. I'd maybe think to sell the condo and move into a 2 or 3 family with something that will give off more cash flow. Good luck

@Henry Thomas Austin Hey Henry, I hear many investors use the "identifying as property manager strategy" but I haven't done it yet and dont see the use. Especially because the tenant could just find out the buyers name in the city data base online. (Unless if you buy in LLC or trust, but I am not at that stage yet). I've been in your position with a recent 2 family I purchased. On the walkthrough the tenant had more questions for me than I for her. One of which was "are you going to raise my rent?" So be prepared for that one. I responded with "I'll have to look at the numbers but if your a good tenant I'll do my best to work with you." Turned out to be a bad tenant who thought she owned the place more than myself. But the priority would be to try and see how the tenant keeps the apartment and get a copy of their lease