All Forum Posts by: Greg W.

Thank you all for your responses. The property is priced as a "value add" which is being marketed as having below market rents, you convert to market rents and enjoy a greater return. Updates are required in kitchens and baths as well.

I did find this document and on page 11, section C, it states, as an owner, you can't choose to not renew a lease because the term has expired. That would make it very hard to turn these units into market rent in any reasonable amount of time.

http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_35654.pdf

I'm looking at a property in the City of Baltimore that currently has section 8 tenants in it. For those of you experienced with section 8, what is the process for converting the units from section 8 to traditional tenants? How complicated and time consuming is it?

I own a town home in the Twin Cities and the property insurance is approximately $1300/yr., which seems high to me. I would like to find something less expensive and wonder if anyone has suggestions? We are using Bearence Insurance now.

Maybe try looking for something in the $200k range to start with. Go with the SBA financing and find a bank that wants to lend on storage facilities with SBA in the interim.

Otherwise, partner with someone to purchase this one. See what the numbers actually bear out, my guess is it's a bit lower than $600k.

I know of a few military people who have purchased houses wherever they have been stationed and then rent them when they move. They use a PM, of course. You can always purchase one house, then move to a bigger house to get more space and rent out the other one and continue that.

The market in Alexandria was white hot until May. Since then, due to the tremendous increase in prices and increase in interest rates, things have slowed. Also, a ton of apartments came or will come on line in DC this year and next year slowing the increase in rental rates and increasing vacancy.

Overall, it's a strong rental market and I wouldn't hesitate to purchase, for the right price, in desirable areas.

I use Quickbooks. I send out an invoice and they can choose to pay online by inputting their bank account and routing number. It gets directly deposited into my bank account and it shows who the payment was from, in the banks online system. It costs me $0.50 per transaction no matter the amount.

Using Quickbooks for other things is a whole another topic for discussion.

Other sites you may want to considerm, from Brandon's list:

You will want three-years of taxes.
-Verifiy occupancy, including economic occupancy (who is actually paying).
-Verify how many people are behind on payments.
-Make sure all late payers are paid up by closing or lien saled.
-Require all "empty" units be cleaned out and truly empty. No trash/junk left on premises.
-Verify who has paid security deposits and get those when transaction takes place.
-Verify how much each customer is actually paying. Many times the amounts are different than the listed price.
-Note deferred maintenance (roofs, doors, springs, latches, seal coating, etc.)
-Get phone, email, website, social media passwords and account information transferred to you in the transaction.
-Get all equipment, locks, keys, brooms, codes, etc. transferred to you.
-Implement new leases with customers ASAP and make sure the terms are up-to-date. Your state storage association may have a sample lease for you to use.
-Base your desired cap rate on other comparible properties, size and location.

I got an SBA loan for mine and had to put 20% down. It took a while but worked out well.

Good luck!

Joel, good point about the lease rates and what they are today versus what they were. Taking less in rent could cause hardship for me. The spaces are rented to a chiropractor, two yogo instructors, a psychiatrist and lawyer. The only one that seems the least likely to move would be the chiropractor, unless he needed more space.

Your comments do make me think about the risk associated with these and needing a lot of spread between rents and costs, if I decide to proceed forward. Thank you.

That's good information and a higher cap rate than I would have thought, so thank you, Jon.

What about the math on it? How best to value it and do these values look attractive?