All Forum Posts by: Isaac J Mork

For those that don’t live near there properties, how do you know if you need to call the insurance agent if there was hail or another weather event

What’s everyone doing with their equity in their current rental houses and these high interest rates?

I have 2 rental houses has some appreciation.
if the banks would loan up to 70% of the current value I estimate I’d have atleast $60k we could draw out on each house. $120k total. Probably could buy 2 more single family homes or look into multifamily with that.

Seems the math doesn’t quite work yet to do that… one house likely would breakeven for the year and the other one would be at a loss if we cashed out refinanced which would raise the interest rate.

Are you doing more 1031s? 

or would you rather use that equity? Breakeven or operate at a loss til interest rates come back down. But have 4 houses or 2 houses and multifamily.

or just wait a few more years til rents could support the higher loan payment?

What resources do you use to determine replacement cost of a multi unit commercial building? 

Quote from @Nathan Gesner:

Quote from @Isaac J Mork:

Use the search bar and you'll see this question asked many times, every week, for the last 13+ years.

Everyone has different standards of what "good" is and different feelings about Section 8.

Guaranteed rent? No. Only the government portion is guaranteed, and even that isn't 100% guaranteed. I had a Tenant with $1,100 rent and she was only responsible for $25 a month. She was late every month! Meanwhile, she had a boyfriend living with her and was working two jobs with income that wasn't reported to Section 8. When I kicked her out, she left the place trashed and cost the owner about $4,000 to clean up.

In my experience, people that don't pay their own bills don't respect the rules or the property. They are more problematic and more likely to cost you money in the long run. I stopped taking new tenants with Section 8 vouchers. If one of my existing tenants applies for Section 8 after having a good history with me, then I'll accept it.

Your mileage may vary.

I had thought there was a search bar but I’ve been having trouble finding it since they updated the website. I’ll have to look a little closer 

Whats the story with Section 8 tenants?

Guaranteed rent but higher maintenance costs? 

Do you love section 8 or hate it?

This is a business. Evict and find a new tenant. They will always lead you on just a few more days and just a few more weeks. And now its almost April and You saw the signs starting back in July/August.

I recently saw a youtube video with Cody Davis talking about how he used investors to buy multi unit building

The math was like if he could raise the rents $83/mo per unit on a 6 unit building at a 6% cap rate it would add about $100,000 of equity.

He mentioned something like he needed 90k and the investor could double their money. That's kind of how he set it up.  I may be wrong but I am assuming if he missed a payment the investor would be entitled to that $100k in new equity.

Now I am wondering how are you structuring the deal with the investors? does that new $100k in equity get a cash out refi and payoff the investors? Are the investors a 30% partner on that property forever?

What resources are out there with how to structure deals like that?

Quote from @Lucia Rushton:

@Isaac J Mork we always encourage based on actuals not proforma. However the last few years brokers have been able to heavily sell based on proforma and those investors are going to seriously hurt with increased interest rates if they can’t raise the rents greater than the proforma.

As always just my opinion

This kind of goes exactly along the lines of what I was thinking... If the seller is selling As Is... Why am I not buying As Is or based on past performance. 

Proforma is probably a conservative best case scenerio 1-3 years away.

Quote from @Ash Patel:

I have been doing this for over 10 years.  You never speculate and hope for the best.  Thats what got a lot of Multifamily people in trouble.  If there is vacancy, you try to lease it up duing DD.  If rents are below market and the tenant is not locked into a long term lease, you do a tenant interview during DD and guage the likelihood of them accepting a rent increase.  Also look at surrounding vacancy and lease comps.

I appreciate it. 

is there some premium for updated or renovated buildings?

id say the deal I was looking at. At 7% cap rate would be worth about $850k

we offered $995k… seller said they wouldn’t take less than 1.1M. 

so I’m think it’s not worth chasing. If they wanted 1.1M why don’t they have the rents higher to begin with. 

When investing in commercial property? Would you pay based on what its producing today or what you think the current rents should be?

Like current NOI / 7% cap rate = offer?
Or are you taking on the risk of raising rents to get the property where you think it should be.