All Forum Posts by: Joe Long

@Ray Reed

I have inherited a few units w older tenants. What I did was gave her a rent raise schedule basically saying what the increases were going to be 6 months , 12 months and 18 months down the road. It worked out, her and her family figured it out and are now up to market rate.

@Rick Oaks

If you have like a rent a center place or short term rental company in the area they will typically deliver and remove when needed.

@Austin Steed for sure:

When we purchased the property 2 of the units were vacant.  If you figure filling the unit the previous operator had a gross rent roll of $8,680 a/mo, 104,160 a year.  

Expenses:

Taxes: 22,000

Utilities: 7,000

Insurance: 4,300

Maintenance: 7,000

Other: 3,500

Totaling $43,800

Cap Rate 10.6% @ $565,000 Purchase

Year to Date numbers look like this :

Rent $10,080 a/mo $120,960 annual 

Utilities:7400

Taxes: 23400

Insurance: 3400

Maintenance: 6800

Other: 4000

Vacancy 2,500

Manage 6,000

Total expenses: $53,500

@ a 10% cap rate we value the property to be worth $675,000

3 of the units are not yet at market rate rents.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Corning.

Purchase price: $565,000
Cash invested: $115,000

15 unit with seven 1BR and eight 2BR apartments.

What made you interested in investing in this type of deal?

Wanted to get into larger properties.

How did you find this deal and how did you negotiate it?

Off market through a friend of a previous seller.

How did you finance this deal?

20% down bank loan.

How did you add value to the deal?

Raise rents, update the units.

What was the outcome?

Still in progress.

@Santos Collantes for our first deal we actually moved into an owner occupied duplex.  This kept down payments very low.  We then saved all the money that the property earned until we had the 20% down to afford another property and repeated this.  Most of our loans no are conventional, once in a while we may do some creative financing such as financing by owner or rehab loans.  If I was to do anything different it would've been to simplify my operation more.  Invest in properties within my city.  We branched out with some of the properties being 30 miles away..... we have a hard time keeping up on those properties than we do the ones within our city.

@Venkat B. we invest in upstate NY in the Elmira/ Corning/ Horseheads area.  I currently manage all of our properties but had to reverently hire a maintenance man for a few hours a week to keep up with the growing demand.

Five years ago I invested in my first 2 unit.  Despite hearing all the rumors on how much of a headache it is being a landlord I went for it anyways.

My model was to invest in a nice unit that cost a little more upfront to hopefully attract responsible tenants.  This worked out well for me as the unit was able to attract quality tenants that valued their living space and more importantly paying rent on time!  I've repeated this strategy over and over until my experience and confidence was high enough to take on more difficult projects.  I currently am trying to reposition properties and move up to larger multifamily properties while still focusing on quality!  Currently I am at 25 properties and 55 units!

Tom Mole,

I don't know what kind of apartments you rent, but I have none that would go for $300.  I'm not saying rent to anyone, I'm in a hot market and can turn down bad tenants.... That's why we do background checks.

I don't get the philosophy to budget for vacancies.   We have good tenants that give notice and let us show per their lease.  This gives us plenty of time to find the right tenant and also weed out the bad ones with pending evictions.   If we rent a unit for $800 a month and agree to settle for $775 on a 6 month lease, we are more than happy to do so.  

By doing anything to get a tenant in the unit I don't mean settle for a bad one that is late or won't pay.  I mean show often, get a crew in their to turn the unit over.

This has worked well for us.  We run over 50 units in the area.  We've never had a tenant not pay and have avoided vacancies.  We don't budget for failure or laziness Tom Mole.  We believe in the product we have to offer and have a great demand.

I agree on avoiding the wrong tenant.  I'm still able to find good tenants with out taking a vacancy.  My self or someone from my team sets up as many showings as possible at the prospective tenants convenience.  

I think it is laziness with some landlords.  Especially in hot markets.   

I have never understood why landlords would let their units sit vacant.  We do what it takes to turn units over in between tenants.  If the price is to high we would lower after a week or two of advertising.  Lower $25 a month is better than losing and entire month of rent. 

Hire out help if you need to make repairs, clean, touchups etc.  I can understand if a unit needs an entire renovation but other than that do what it takes to fill your apartments.  Think out side the box..... We have even turned to Airbnb to fill a month that didn't look promising.

Matthew Murphy,

Our cash flow was $3,773 a month in 2012.

Numbers for the first 10 months of 2012:

RENTAL INCOME: $70,000

Real Estate Taxes: 6,786

Insurance: 3,449

Utilities: 7,151

Repairs/ Maintenance 2,517

Supplies: 3,654

Miss: 1,078

Debt Services 7,602

Our cap rate was 15.67%