All Forum Posts by: Jake Hart

@Ken Naim I’ll keep you posted. I think this is really something that’s repeatable in any area. I know the company I work for gets residential land and rezones to commercial and increases the value. I try and see property differently than most and see value where others don’t. This leads to better deals, especially when you are already getting a good deal as is. 

@Wayne Brooks there aren’t many comps to go off for other like kind 4-plex. These 2 properties are running us $350k, but we are purchasing an 18unit for $550k. Same rental rates and tenant pool, just different areas of town.. there is a lot of value add by reducing expense and increasing appeal of units and rent. If the P&L is really good after a years time, the value will go up! I’m trying to get as creative as possible so we can cashflow great and force appreciate the property. 

@Matt Devincenzo I’m getting financed as they currently sit, which is two separate parcels, but they are both under 1 commercial loan. I know the lending has nothing to do with putting them under 1 parcel, as they don’t care how it’s structured. I view them as a single property and will do the accounting as such. I’m solely focused on appreciation by combining the parcels. 

@Ken Naim thanks! I’ll definitely reach out to them. If this actually works, it’ll be a game changer for me!!

We don't need these parcels merged in order to get lending. My overall goal of merging these parcels is to increase the property value. As they sit, they are each separate buildings and valued based off the comps like any normal SFH would be. If we do merge these into 1 parcel, I would assume we could get a property value based on the revenue (ie. NOI / cap rate = Property Value). If this is the case, I believe I can force the property value by reducing the property expenses and increasing rental rates. Any thoughts on this?

Hi, I'm purchasing 2 4-unit properties that are sitting right beside each other but are on separate parcels of land. I called the zoning and planning department and they advised me that these parcels are currently zoned as commercial. My plan is to combine these parcels into 1 parcel. My question is, after these separate 4-unit buildings are technically on one parcel, would appraisers then be able to use the income valuation approach vs the market value approach? I would assume the answer is yes, but wanted to make sure. 

Wanting to get some ideas on splitting utilities between tenants. I’m purchasing an 18-unit mixed used property which consist of 12 residential and 6 commercial (industrial) units. This property is unique as it was originally separate buildings that were eventually combined and then slowly converted some of the space into residential living space. I’ve looked into splitting the meters, but it would cost a significant amount of money and time and really wouldn’t make sense financially right now. We always have the tenants’ pay utilities at our properties and switch into their name, if at all possible, but for this one it won’t work. Here is my idea that I’ve seen work for a very well know shopping center management company that purchased the utilities then billed back their commercial tenants. My thought is to try and come up with some kind of formula based on sqft, bedroom, bathroom, and # of tenants to get an average percentage of consumption per unit, then bill back based on that math. It won’t be exact, but I assume I could get close within reason. I would then just bill them back on a professional looking invoice detailing the amounts. The good thing about this property is its insulated so well that everyone gets some benefit of the others heating/cooling. I have thought about including the amount in rent, but for my area, I don’t want to scare someone away over $1,000 rent w/ utilities included vs $775 rent w/ tenant paying utilities. They both would be $1,000 a month but I have seen individuals stray away just on how its advertised. Also if utilities are included then it would be more or less a budgeted monthly utility billing and I would definitely want a true-up at the end of their lease year. I could just see this getting a little messy. Just looking to get some more ideas or thoughts on this before I decide. Thanks in advance everyone!!

Hi Yashira and congrats on your first property! I remember mine very well as I was really excited and scared at the same time. Whenever I have a situation like this, I always try to focus on some positives first. The positive thing here is that there isn't a poorly written lease that you have to adhere to for months down the road. I would first draft up a very professional letter introducing yourself and instructing the tenants of a 30 day notice that a lease would need to be signed or they would have to vacate. I would also state what the new rent rate would be and what the security deposit amount that would need to be paid would be. Also include when this will need collected and how you will be collecting. The more info the better. I'm not up to date with any Massachusetts laws, but I would also vet the tenant in the next day or so and see if they are even an individual I would want to keep at the property. A few months of vacancy is way better than a really bad tenant. Also another word of advice. Your tenants don't need to know that this is your first property and that you are new to the game. For all they know, you have an empire you are running and this is just another task of your many for the day. This will help you look and feel professional which always helps with situations like this. 

@Ethan Brown, My first rental property and my most profitable is my student rental. I have a 5 bed/ 2 bad that has 2 kitchens and 2 living rooms. Its an old 1900's house that was turned into a duplex, but we opened it back up. I purchased that house 6 years ago and it has stayed rented every day since with a short 24 hour period where we turn the property over. In those 6 years, I have only had to list it 1x as I seem to always get other individuals that want to rent it for the following year. The other awesome part with student rentals is the fact most renters are looking months in advance for housing, so I normally have the lease signed 5+ months in advance for the following year. I do rent the house out per bedroom, however every individual in the house is on 1 single lease. So if one person doesn't pay, its on everyone. There are several rental property management platforms that can split rent between tenants, so everyone can pay their portion but its ultimately everyone's responsibility at the end of the day. With utilities, out of all my other properties, this is the only property where I keep the utilities in my name. I do have a clause in the lease that says Landlord pays utilities up to $300/month, so anything over that I bill back. This keeps people from running the AC and leaving the window open or it saves me in the event of a bad winter. Since this home is a student rental, I also have a clause that states if we find a Keg on the property, they will be charged a $200 fee per day. I have never had to use this but I definitely don't want parties here.... It's the perfect party house and being one that has been to many, I know how those can go. The only downside, and its not really a downside to student rentals in my eyes, is that students are dirty. In my 6 years of owning the property, I have never given back a security deposit. I am a very proactive landlord in letting the tenants know that I don't want their security deposit and that I want to give that back, however they must return the property back in the condition they received it. So if you go into student housing, I would highly suggest that your deposit is enough to cover hiring 4-5 people to come in and do slight repairs and cleaning. We turn this property within 24 hours, and I've never had to charge the tenants more or pay any addition outside the deposit. 

Overall though, my property has provided excellent returns 20%+ ROI annually, is pretty hands off for most of the year, and has increased in value quite a bit over time. I would highly recommend any investor to add student housing to their portfolio. We are actually looking to purchase more in our area after our next few deals are completed. If you do have any questions I'm always happy to help!

@Grant Hilliard read Brandon Turners book (1) the book on rental property investing and (2) the book on managing rental properties. I read those and applied them like gospel to my investing/managing and can say that $50 I spent was the best investment ever!!!!