All Forum Posts by: Max Householder

There's a big difference between choosing the level/grade of materials and choosing whether or not to do quality work.

Which way you go should depend largely on your competition for the level of tenant you're after. Dogtown is a great area to live, I lived on Tamm for a year when I first moved to the city, but it's not high end per se, I'd call it functional for the most part, so you should be able to get away with cheaper-ish materials and average finishes. That said, IMO there is zero excuse for doing poor quality work whether you're laying Italian marble or cheap vinyl.

It's really not hard to make low-end materials look nice and fresh for long enough to satisfy a new tenant. Personally, I wouldn't want to rent out a unit that I wouldn't live in myself and if the workmanship was that shoddy, I would be concerned about what other corners are/will be cut. As far as tenant quality, someone who'll put up with living in a crappy-looking apartment is probably going to be a crappy tenant. 

I don't know the nature of your partnership, but it sounds like you have diverging views on how to operate this property. If you can't get them to see things your way and get on board 100%, I would look for another partner on the next one.

Taxation is theft, so I don't really blame the guy for not paying until the last minute, but that said the optics are certainly terrible for him and KMOV loves doing these class warfare hit pieces. I think maybe we should question why we fund our schools with property taxes such that they can be left waiting to get paid. Maybe we should get the government out of the education business? Just a thought...

I do wonder if this may be an indication of underlying weakness in some of these midwest markets that have gotten hot recently. This out of town investor claims to be underwater, or at least losing money, on hundreds of homes. I would guess that he isn't the only one. I have seen some worries about "shadow inventory" where people bought up these dirt cheap houses after the crash and have been holding on hoping for the prices to creep up enough to unload them. With so few houses on the market, prices have gone up steadily the past few years, but I wonder if there could be a large correction when these guys decide to unload and it floods the market with relatively cheap inventory. Something to watch if you're in the SFR game.

We rent the garage at our 4-family to our PM for $50/month. I've seen listings of garages for rent anywhere from $50-100 for storage or even $25-40 per side (2-car garage) for tenants to park. Ours has old wood doors that swing out IIRC, so I figure no one is going to park a car in there and it's basically just a self storage unit. We could probably put up dividers and rent it to tenants or list it on Craigslist as storage units and squeeze and extra $20-30/month out of it, but I'm fine renting to someone I trust and not having to deal with the hassle.

If your garage is that nice, seems like the highest and best use would be either 1) Convert it to a 4th unit would be the best return or 2) rent it out to a contractor or someone who needs a nice place to store supplies, tools, etc. and you could probably get above market rent for it and not have to put in any cash to remodel. Seems like you've got a win either way!

My Agent/PM @Peter MacKercher also has a roofing company. They did some repairs on the flat roof of our 4-family. I'd recommend getting in touch with him.

Great note, @Kyle Eckert. A similar thing happened to us on our 4-family. We purchased in November 2016 and our cash flow estimates were based on the 2016 tax bill which was ~$2010. For 2017, the property taxes jumped 13% to ~$2270. A difference of $20/month didn't change our outlook dramatically, but it was still a wakeup call that we should have done more DD with the assessors office. I now run my numbers assuming a 10% increase in property taxes, especially since the city's m/o has been to fleece property owners in order to make up for reduced tax revenue. Don't even get me started on their shameful occupancy permit extortion scheme.

I have to call on local government offices fairly regularly for my day job and the level of customer service is generally abysmal. If you don't have the stomach to kill them with kindness, playing really dumb and asking for help seems to work well. If you act like you know it all, they tend to shut down. Frankly I find it absurd that a customer should have to butter up an employee in order for them to perform the responsibilities of their job, but that's the public sector for you.

I second the Shelter Insurance recommendation.

@Peter MacKercher is our PM and we would definitely recommend his company. Good luck!

@Peter MacKercher has managed our 4-family for the last year and I would definitely recommend his company, especially for a newbie investor.

I agree with @Donald S.. IMO, the "St. Louis Market" i.e. the metro area as a whole, has really been thriving the past 2-3 years with prices going way up almost across the board. Now if you count north city and south city the same and then fold in the east side (it says MO/IL), but don't add St. Louis County as well, then I think that's the only way you get a negative number there for 2018. St. Louis political boundaries are so screwy though that these national statistical lists never seem to do us any favors. 

We have a PM. We bought our 4-family in November 2016 so the estimates I'm using now are based on the past 12 months of actual expenses on a south city (63109) property. That they net out to right around 50% leads me to believe they'll be typical over time, but I know from year to year it may be quite different.