All Forum Posts by: Jack Wang

Really appreciate all the answers! I'm just trying to get a sense at a high level things that I might need to be aware of going in (the big items that might mean significant upfront spending or stuff that might kill a deal). I have no background on construction, so warning signs that might be obvious to seasoned investors I might not even know existed.

There are a lot of properties in my area that are fairly old, especially multifamily properties. I wanted to create a checklist of potential major problems to look out for when considering older properties (pre-1960 build), especially regarding deferred capital expenditures. Basically stuff that could catch me by surprise down the line with a significant expense.

Here are some that I'm aware of:

- Galvanized pipes - typically 40-50 useful life, could rust from the inside out, could get eventual pipe failure

- Zinsco or Fed Pacific electric panels w/ aluminum wiring that could be a major fire hazard

- Wiring in general (e.g. knob and tube)

- Asbestos in the walls

- Lead paint

- Heating system - boiler?

- Sewer scope inspection?

- Foundation issues - should be more obvious

What else am I missing?

@Taylor L.

That's right - the plan is to ask them to call me if they're interested. At this point, I don't have enough credibility like you do to reach out to brokers and ask them to send me deals. Once I have a few multifamily deals under my belt, then that channel will be open for me.

@Chris Seveney

I have considered that option as well. However, I couldn't think of why they would bother telling me if it risks them potentially losing the door if the property gets taken out. That being said, there have been a number of properties for which I was unable to find the mailing address of the ultimate owner, so for those, I plan to either reach out to the property manager or the registered agent (typically an attorney).

Over the last couple of months, I spent a lot of time reading, watching, and listening to real estate content from BiggerPockets and elsewhere, and I decided to change my strategy. I'm targeting small commercial multifamily deals (5-20 units) with a bias for creative financing to try to capitalize on my personal expertise on finance and also try to mitigate the challenging environment for traditional bank financing. I wanted to solicit feedback and advice regarding my plan from the more experienced members of this community.

Next year, I intend to begin sending out direct mail to owners of targeted apartments in my area, and these will mostly be mom & pop landlords. I intend to offer to buy outright, buy with seller financing, or do a master lease agreement (with a buyout option) with them. The intended strategy is buy-and-hold.

Below is my plan:
1) Using my county's property search tool, pull a list of all 5-20 unit apartments built after 1960.
2) Comb through and validate the entries (ensure that mailing address is the owner's rather than the LLC's registered agent's. If the agent's then need to ask the agent to forward to the owner in the letter).
3) Use a direct mailing campaign vendor to print out letters to send to my curated list. The general value proposition would be to offer to cash out (purchase), partially cash out (purchase with seller-financing), or provide a consistent income stream for the current owner (master lease).
4) Stay consistent in sending out letters, once per month follow-up. If possible, also complement it with emails if I can find an email address from skip tracing or Secretary of State search on the LLCs.

5) Keep doing this until I get deals

Would love any feedback regarding this plan. Any specific advice like how best to find the owner would be greatly appreciated. Thanks so much in advance.

I'm quite new to real estate investing, and I have 0 experience with remodeling. In fact, I'm clueless when it comes to the ins and outs of construction, so I'm planning on relying on general contractors for my future projects. I'm perfectly fine with paying more than an investor who is super dialed in and babysits his contractors. I'd prefer to stick with what I'm good at, and that's the numbers and the financing.

I'm currently thinking through what my process would be when I identify a property that could make for an interesting BRRRR or flip. So far, this is what I'm thinking of doing after finding a lead:

1) run preliminary numbers to see if the deal could make sense and what rental strategy to pursue or a flip if BRRRR doesn't make sense

2) do a walkthrough with someone who knows construction (I'm considering paying a retired general contractor to accompany me on these walkthroughs to give me a rough sense of what I'd need done and costs)

3) make an offer

4) hire an inspector to do a formal inspection

5) negotiate further

6) offer accepted

7) get bids from general contractors

8) close

Does this seem like a reasonable approach? I'm just trying to visualize what the process could look like. What would you recommend a newbie with basically 0 knowledge of construction? Please do let me know if my above process is dumb and how I can improve it.

I'm having a ton of trouble finding a good general contractor. It seems like many contractors have large backlogs, too, which only further complicates the process. I've seen more dated recommendations for investors to ask 3 contractors to walk the property with them before even making an offer, and that just doesn't sound realistic at all from where I'm standing.

The standard washer warranty is 1 year, with the exception of Speedqueen, which comes with a manufacturer-backed 3-5 year warranty. To summarize, my relatively new Electrolux washer (1.5 years old, so it's off-warranty now) has already failed twice, one the drain pump failed and now the control board has failed. Now it's probably more cost effective and lower risk long-term to just get it replaced, which is probably going to cost me $900 or so. I didn't think I'd need a warranty when I bought it, but that was a mistake. Thankfully, the cash flows on this property is good enough that even with that replacement cost, I'll still earn very good cash flow this year.

Unless an experienced landlord tells me otherwise, I think I'll start buying warranties on all my appliances.

I'm very early on in my journey in buy-and-hold long-term rental real estate investing; I only have one unit that I purchased in late-2019 before having encountered biggerpockets and the other online resources on the topic. I bought the unit new, but there's just been nonstop occurrences of various issues in the unit, despite it being new construction (not the tenant's fault). This leads me to start pondering how I can best create a system for when I start scaling so I can make resolving repairs and issues as cost effectively and efficiently as possible. Any tips & tricks from seasoned landlords? I have a few specific questions as well:

1) Should I install keypad locks on my rental units' doors so that I don't have to rely on the tenant to let in the maintenance guy? This probably makes turning tenants easier, so I don't have to bother with keys, right?
2) Any recommendations for property managers in Richmond, VA?
3) Should I come up with a list of preferred plumber/electrician/handyman, etc for the property manager so that I know I'm getting good price/service?
4) Any recommendations with regards to brands/models of appliances (fridge, oven, washer/dryer, etc.) that are the most durable and cost efficient? Would it make sense to standardize the brands across my future rentals?
5) Would it ever make sense to have the tenant be responsible for getting the washer/dryer fixed if they break?

Any sort of tips & tricks for the rehab process or during the actual rental period to make things run smoother/more cost effective would be greatly appreciated! Thanks in advance.

Why are you paying 7.2% interest rate on your mortgage? I haven't checked recently, but is that right for 70% LTV? Also, I think the capex assumption may be too high given that you sunk $50K into rehab. Using 5.5% mortgage rate and refinancing for just the initial outlay ($125K) and $100 for capex, you'd be $195 positive cash flow after refi. I'd say that's pretty good. Though your insurance number might be too low. I'm fairly certain you can get at least $100 positive cash flow after BRRRR on that deal.

I'm pretty new to this as well, but are you sure that insurance number is right? That seems way too low. Note that normal residential property insurance is probably not applicable here. You'd also want liability insurance. What about property taxes? If you're passing back utilities to students, then that's fine on utilities, but those utilities numbers seem far too low.

I would also be careful of zoning. Worst case is if you're violating zoning and since you'd be housing 16 students, that's an unruly bunch, and there's no way you'd be able to keep a low profile here.

And like Terrell said, you definitely want to account for repair expenses and tenant turnover expenses - having 16 college students in a single building can prove quite damaging to the property. Furthermore, I'd strongly consider hiring a maid to clean the place once a week or two. I don't know if you've ever lived in student housing, but the tragedy of the commons applies so perfectly here, the bathrooms, kitchen, and common areas will become disgusting in very short order.

You may also run into issues with your mortgage if you're running the property as effectively a lodginghouse.

I don't mean to be a debbie downer, but these are the very issues I've ran into recently evaluating doing something like this myself.