All Forum Posts by: Evan Tuuk

I recently purchased two duplexes with my dad (on the same property and under one loan) and we purchased with an LLC and commercial financing. We've only had it two months, but I'm looking at my goals for 2022 and I want to steadily build my portfolio through the next few years. We put 20% down on the loan so we have that in equity for sure, and we re-leased the empty unit at $750/month ($75 increase from the previous with only $200 to get it ready!).

I'm curious about the option of using a line of credit to fund more properties/rehabs in 2022. One unit is also way below market ($475/month) and will need some rehab when this tenant moves out so maybe it could be useful for that? How does a LOC work if the properties are under a commercial loan, but technically not a commercial property? Does it have to be a commercial line of credit? Where can I go to learn more? I know nothing about them or the process or requirements for getting them and I don't know how the commercial loan changes anything.

Thanks for any help!

Thanks for the responses! My understanding is that it is 10yrs of interest only payments, then converts to a 20 year mortgage after that (variable rate, though). The other option is to go with a 30-year fixed at about 4.625% interest rate. My goal is to hold these long-term, and the idea of having a fixed rate in this environment seems advantageous. Although the higher cashflow does sound pretty great... I'm also doing this with a partner who is very conservative and the concept of interest-only rings an alarm bell for him. 

I'm under contract on two duplexes (next to each other on the same property so I just call it a quadplex). We are set to close in 2 weeks and we've hit a little snag in the process! We are going with commercial lending because we couldn't get anyone to take it on the residential side. My plan has been to self-manage for the experience, and do a slow value add with two units that need some updating. Now lending wants to require that I hire out the management. That puts me at a negative cash flow and would require a much more aggressive approach to adding the value which I'm not sure I'm up for. 

We were working with a 30-year fixed loan at ~4.6%. Another loan option is a 10yr Interest Only at ~4.5%. Any thoughts or concerns with the Interest Only? The cashflow looks nice, of course, and the 10 year option gives lots of time to really improve the property and boost rents, etc. But I know I'm then not really building equity in the property either. So many things to consider. I'm trying to strike a balance of trying to tackle problems that arrive and not just back out because it's different or scary, and recognizing when it's not a deal I'm willing to do.

Any tips, advice or encouragement?! Thanks!

I will look at Yardi and Buildium. I'm thinking at this point Buildium may be a better option simply from the cost standpoint. @Drew Sygit At this point, we only manage this property and we are rehabbing another property that will only be 4 additional units. 

@Jai Reddy I'm curious to hear why you started using Excel instead of Yardi and any ideas or processes you have with Excel. Do you have tenants email maintenance requests or ways you prefer to manage those things?

I am looking for advice on updating some systems with a commercial building I help manage. Basic intro - I starting working for a local investor/property manager in my small town as a kind of personal assistant. We manage the biggest building in town (roughly 26,500 sqft and 20 tenants), but it's run in a pretty informal way. Our goal is for me to take over management of the building completely so that my boss doesn't have to bother with it. I'm brand new to real estate so still trying to figure out systems and everything else. 

One thing that is a little clunky are managing invoices and reimbursements for maintenance. Currently we just save the invoice in Dropbox and edit a Word document to add up the invoices, and send it all over to the accountant. We have multiple accounts that may be used to pay for maintenance/supplies, though, so we have to keep track of who/what account paid what invoice and reimburse appropriately.

Keeping track of rent roll is just done with an excel spreadsheet and updated as things change, which inevitably means something is missed or not updated correctly or in a timely fashion.

I know I can't explain everything that could use a good process re-make, so I thought I'd just ask how others are managing leases/rent roll, expenses/reimbursements, and anything else. Is there software people are using? We "use" Asana for some things, but that's also part of my role is to figure out how we can implement it better (there are three of us). Anyway, just looking for some tips and tricks for different systems and organization for management of a building like this.

I am trying to buy two duplexes that are on one parcel and really the only financing option I'm getting is for a 5-year ballon amortized over 15-20 years. With that schedule it knocks out the whole deal, but with a 30 year schedule the numbers run great. Is that just what I should expect to get? I've called 5-6 lenders in the area and that's what I'm getting. Maybe an in-house somewhere could possibly do it. Or maybe I just have to back out of the deal?

@Ronald Allen Barney Yes, true. I guess I also want to think of the risks of creating vacancies by trying to do too much at once. Again, I've never done any of this before.

@Theresa Harris Yes, I would like to do it in stages for sure. I wouldn't want to shoot myself in the foot by trying to increase rent too hard too fast and create vacancies right off the bat, but I need to make sure I get some return in the initial stages. 

I don't believe there are separate water meters because the owner mentioned he wanted to separate it for each tenant but just never got around to it. I was kind of thinking adding a portion of the water on top of the rent across the board to each tenant that's very reasonable (even just $25-30 extra) in the mean time? I know each person has their thresholds of what returns they need in a deal, but do you think the end result after bringing things to market value would be a good deal?

I am looking into buying a pair of duplexes in TN (I live in Texas) and would like some advice. This is a small town (about 11,000), and isn't the greatest cash flowing market, but I have grandparents and cousins there, and several other family members considering moving there in the next few of years. It would be my first property, and I'm looking for a base hit, and an asset close to family and in a cheaper market than where I live (no cash flow here). Here's some basic info on the property:

Asking price: $350k
Current Gross Rent: $2600
Landlord pays sewer/water at $150/month and trash at $64/month.

Current owner flipped it 2 years ago so it has a brand new roof and windows, plus new appliances, granite counters, plumbing fixtures, etc. One unit wasn't completely redone because the tenant has been there 20 years and preferred fewer repairs to keep his rent lower. 

Tenants are currently paying $500 (he's been there 20 years and takes care of all the landscaping for discounted rent), $650, $750, and $750 = $2650

Seller isn't too motivated unfortunately. He said he threw it up for sale by owner to feel out the market but doesn't have any need to sell it anytime soon.

With these numbers, with a 10% management fee, it runs at $42/month cash flow and a 0.74% CoC return. Definitely not worth it.

My dilema is this: according to a local property manager I could get $700-$800 per unit all day. Rental demand is definitely going up in the area and they haven't had an issue finding tenants. You couldn't really find a better part of town to be in either. 

If rents were all raised to $775 and I passed the water bill on to the tenants, and according to the property manager would definitely be reasonable, at asking price I'd be looking at $588/month cash flow and 7.5% CoC. I'm fine with a base hit, and I think even moving into the future I could still raise rents a little more and separate the water so tenants pay that directly. I like that it has a brand new roof, new windows, and recently updated because I'm not in a position to do any major upgrades to create more value.

Also, I don't want to be that greedy new landlord coming in and raising rents and things. Especially with the guy that's been there 20 years and the other that's been there 8.

Any thoughts from you guys would be appreciated! Obviously the lower the purchase price, the better the deal, which might be the way that it will have to work. I just know he isn't too motivated to sell. Thanks!

Great thoughts and definitely things I hadn't considered before. I will do some reading up on things like the subject to and owner financing side of things. Excellent reminder about finding out why they're selling and showing them how I can help them. 

I'm nervous about partnering up with someone because I haven't quite found the confidence that I will bring value. Especially with the STR's because they aren't quite as straightforward as a long-term rental. Any thoughts on structuring a partnership when considering a single-family home like this for STR?

Awesome! Looking forward to hearing your thoughts @Mason Moreland