All Forum Posts by: Frank Manning

I am looking at buying my shop (It is a building and a barn on a .4 acre property with a fence surrounding). I am one of the 3 renters (I have a landscaping business).  Total rents are 2050, taxes are roughly 3300, and the Landlord wants 190k for it. Other than that we (as renters) are responsible for all utilities, snow removal and lawn care. So the landlord is resposible for upkeep on the buildings (maintenance and cap ex) and the taxes.  The shop is also located in a tif district.  I am having trouble running a report on this property as I do not know what assumption I should put in (for vacancy and maintenance) and I only have experience with multi family buildings. I have a few questions:  How do you value a commercial property based off sqft?  What do I need to know if I am planning on buying this property?

I have a 14 unit under contract and was planning on self managing. Some complications came up and I am not going to be able to self manage. I’m looking to hire a property manager but am unfamiliar with the market. Can you help me out with a lead? Thanks

I am looking at a piece of land that I want to develop 8,000 sqft of self storage units. I'm early in the due diligence process  but I have identified an off market property and have let the seller know I am interested in buying. He is waiting for my offer before he lists the property.

In my feasibility study, I am using a model that assumes there's a demand for 7-8 sqft per person in the area. I am using radius's of 5-7 miles to get the population. 

There is a small population (6,900 w/in 5 miles) around the property. The problem is that there is a large 120,000 sqft facility 3 miles away and about 28k in other facilities near by. The odd thing is that the large facility is charging only $50/ month for a 10x20 unit, whereas the 28k in other facilities are charging closer to industry norms at $140/month. 

All the units in the area are full, which indicates there is some demand at least during the busy season. 

I am struggling figure out how I should think about this property. The smaller units are obviously able to get fair prices and stay full, but my model shows there is a surplus of 49K in sqft right now. 

Anyone have advice on this? Or on developing self storage in small towns?

Thanks

Whenever I see “real estate investor” on a LinkedIn or social account, it does more to discredit a person than anything else. Real estate investing is just like any other form of investing. You don’t see people putting “stock market investor” in bios. In my opinion, real estate should be left out as well. If you’re a part timer, I’d keep it off. That being said... talk to people about re and the deals you’ve done. Share your passion and connect with other likeminded individuals.

Thanks for your response Russell. Also, really liked your episode! So cool to see you active on here.

The condo is owned outright. I believe the policy covers short term rentals but I am not sure. The agent is a friend and is aware of how we use the property. 

Interesting on the Airbnb rulings in your experience. I figured that would be the case but just thought I would check it out.

Hey I have a condo in Milwaukee that I have been using as an airbnb investment property. I recently received a letter from the HOA stating that AirBNB is now not allowed and will face a $500/ day fine.

I was wondering if anyone else has come across this issue. The property was a cash cow for us but does not make sense as a traditional rental. Is there any legal action we can take to argue this? I see the loss of income as damages.

Also, what legal grounds would an HOA have to enforce a penalty?

Thanks for your responses. Hope none of you are going through this.

Looking for a property manager in Milwaukee WI to manage my family's 12 unit building. Would like someone with experience and knowledge of the area. Thanks

Hey Anna, I think having a goal of $1M within 5 years may not be the best approach. I don’t know if you’re looking in Seattle or elsewhere but it seems like a goal of tripling your money in 5 years may lead you to force something. Also, that kind of return will need to be made on appreciation. If I were you, I’d set a goal based on cash flow. That’s something you can impact directly. Seattle is a really tough market right now as cap rates are 3-4. I’d recommend looking south of Seattle in Kent or Olympia or even down by Centralia for better rates. In Seattle, anything purchased in the last couple of years has exploded in price. There’s no telling what will happen in the next couple of years. If you can find good, cash flowing properties, you’ll be able to get a more consistent, albeit lower return. That stable investment may or may not appreciate, but at least you will have consistency. I always look at appreciation as icing on the cake. Don’t calculate it into your purchase decision. If it happens it happens. Going out there and trying to force 650k in appreciation in 5 years when the market is already at all time highs is a recipe for disaster. Hope that helps.

Hey William, My family and I own condos in Milwaukee and are looking to buy a multi on the east side of the state. Have looked at some in MKE and Northern WI. Not much inventory in Racine but definitely interested in the area, especially with Foxcon.

It really depends on your risk tolerance. I think with the current market cycle, it’s important to remember where we are. The economy is at all time highs, propped up by unsustainable money creation from the FED. Eventually it has to come to an end. That will likely have a huge impact on real estate prices. Rent will also fluctuate, but maybe less. If you were to take on leverage, your main risk is vacancy increases and/or rent decreases. Depending on the deal you get and the financing terms, a decrease of rent and or vacancy increase could take a property from positive cash flow to negative cash flow in a hurry. The nice thing about owning outright is that you don’t have to worry about those swings as much. You will cover expenses and will be able to ride out the storm. If it’s leveraged, you may have to sell at a bad time or be foreclosed on. Depending on your risk tolerance, it may be wise to put half into a property you own outright and half into a leveraged property.