All Forum Posts by: Sam LLoyd

Sounds like you're over a barrel.  I will say this though.  Look at your books.  If the new rate is going to bleed you dry, move right now!  Assuming you can find another location for a decent rate, and your business won't belly up if you do move.

The only leverage I can think of is the cost for the new owner to get the building ready.  I would have to know a lot more about your market to know how much weight this carries.

Disclaimer:  Your market is different than mine!  If it was here, this is what I would do.

Are the seals in the windows still good?  Is there fog/dust in between the panes?  If so, then replace them because a buyer or their agent or their inspector should see this and it will be a down check when they are looking for properties. 

If, A: The seals are still good, leave them.  It sounds like you have the best house in the neighborhood... your competition is not the expensive house in another neighborhood... 

If, B: The seals are bad, replace them because this will then be a selling point, but go for the less expensive option because you have the nicer house on the street... putting more money into making it even more nicerer will be a waste... if that makes sense.

Another option would be to say that you're giving the buyer an 8k credit towards windows of their choice (or they can pocket the money if they don't want to change them).  I'm not sure how that would play in your market.

It sounds like you are on the right track. I would say the biggest factor is the commercial vacancy rate. I've been wanting to get into commercial, but the holding costs during that innitial rent up have been the variable that has kept me away. So, figure out your expected vacancy rate, the projected rents, and the expenses to create a proforma for the property that allows you to arrive at a CAP rate. Be conservative... that will be the price you sell at. Then figure out how much profit you want, how much your holding costs are going to be until it cash-flows, what the cost of getting it rent ready will be, put a healthy margin in there, and that's the buy price. It's a lot of numbers to gather.

My tip: Don't be an easy mark for the brokers.  Be very wary of a broker selling you his own deal, and be even more wary if the broker is going to sell you a property and then manage it for you.  Yeah, I know there are great deals that happen despite my tip, but I've lost money because I was new to it and didn't really know what I was doing, and don't want to see you do the same.  One way to purchase properties would be to work with someone who has done it before rather than jump out on your own.

My first thought about your idea is the headache.  If you've got enough damage to bring the price down that low, then it is a major job, and the permitting/paperwork/inspections needed to get it back up and running could be the biggest hurtle.  Again, everything has a value.... but be sure to put a big enough value on your time/effort when dealing with the city/legal/code side of things.

As far as multi being different that SFR as far as the BRRRR strategy is concerned. I don't see much difference. With a commercial purchase you need to be aware of the qualifications for borrowing money, and the same thing would apply when refinancing it. The sources of money a little different, but once you have access, they are the same weather buying or refinancing. I'm about to do my first commercial refinance for a BRRRR, and I'm pretty sure all my ducks are in a row.

Lastly:  25k for a commercial property?  Just the fact that the price is so low has me freaked out.  If it gets down to pocket change range for the local professionals and they aren't touching it, there's a reason why.

Simple problem, not so simple answer.  We manage a 5plex on a circle with 3 other 4plexes.  All different owners, different dumpster services.  Our dumpster is the closest to the main street and people from all the other buildings pile trash around our dumpster when theirs is full.  My first thought was to get a locking dumpster, but seeing how they throw trash bags at  the dumpster, I don't know if having a lock will make that big of a difference.  I've thought about putting signs on it, but I'm doubtful on that one as well.

Any ideas? 

Obviously, I could put a camera up, but if it's a real camera, and if I catch people dumping, following up on it will be an added job.

I'll chime in first.

The biggest spread I've done is a duplex where they were asking 169... which was actually a pretty fair price for the property and 2 extra lots.  I was unable to afford it with my current situation,  but the seller noticed me driving by slowly and came out to talk to me.  Told me to just make an offer.  I wasn't out to take money from anyone so I figured out that 124 would be the price I couldn't walk away from and they took it after a little back and forth with owner finance terms.... so that's 73% of list... and I still live in it..

Here's a question that I know is without a hard answer because it is location specific, but I'd like to hear what people think. We currently manage 17 doors. They range from SFR to a 5plex, and I'd like to say they are all about a class B or B+. While we are very selective in our screening process, we have been able to maintain very low vacancy rates. We have 2 units that take longer to rent, but that's partly because they are unique. Other than that, we usually have about 3 applications within the first 2 weeks, and one of those usually passes our screening. Our latest units to bring online, this hasn't been the case. I've had over a dozen applications over the last month, and only one applicant we really liked (and they haven't gotten back with me). I'm not panicking or anything. I'd rather have it empty than have a difficult tenant, it's just that this is the first time I've been turning down so many applications.

So, my questions for you go like this:  What's the ratio of good qualified/unqualified applicants for B class properties that you've run into?  If you're throwing out more applications does this experience tell you that the pricing is too high?  Too low?

We will be making an effort to develop our website more so that applicants can see what we're looking for and help streamline the communications back and forth, but this is the first time that that need has become apparent.

Thank you for your input and advice.

That is very frustrating.  As a landlord, I've been dealing with similar situations at least 3 times in the last year. In the end, a lease is a contract.  From what you said, I think they should keep the deposit.  I also think that I'm going to put better language in my lease for when this happens again.

Regarding rent, yes, you should get a refund on February rent.

Regarding damages.  Any damages that occurred other than wear and tear you are responsible for, weather it comes out of the deposit or you pay for it yourself.  Taking it out of rent may not be legal, but if you owe it, it should be paid.

I'm sorry to hear your story, it highlights how frustrating move in/move outs can be with poeple's possessions, homes, and money on the line.  Congratulations on your new house,  I hope you get some of that rent back and can move on and enjoy your new place.

I would need a bit more information.  Start with potential gross income using market rents.  Another piece that would determine weather this is doable is where your money is coming from.   Another couple things that would be helpful is knowing what the the permitting and licensing would cost to do the repairs and what the demand is for 1/1s in your area.