All Forum Posts by: Jason Maestas

@Jean Bolger

 Congratulations on your 29 unit! That is awesome and totally motivating! Also thank you for the great advice given. Good reality check about the timeframe, money, and expenses. I will definitely lock down some extra money with the ability to draw more if needed. What do you think is a safe and reasonable price to pay. I will definitely negotiate and see how motivated the seller really is. Any key points to definitely mention in a negotiating strategy? Thanks again for your help!

@Patrick L.

 Thanks for the feedback. It sounds like you are thinking of the same one and "junker" is putting it nice:) I am hoping all these negatives means the seller is very motivated and possibly desperate.

@Brandon Hall

 I will definitely ask for tax returns and bank statements once under contract as well as dig much deeper into how much is really needed to bring the property to proper operating conditions. Thanks for all your input and help!

@Henri Meli

 Sure is a hell of a project. You should see it:) What type of marketing strategies do you use. What do you feel is a reasonable marketing budget I should prepare for?

As far as value after repairs, If I use the $800 per unit with the 12.5% vacancy and expenses at $90k, that makes my NOI $111,600. With a 12%CAP it put the value at $930,000. (Let me know if I did that wrong)

@Colin G Murphy

 Thanks for your response and support! The good thing is that I do have the time and energy to see this through. I'm just really trying to get a better grasp on how I can make the transition as smooth as possible. I'm learning lots with everyone's input and advice.

@Robert Curls

 Thanks for the reply! I have not driven down by the area of the CL posting so not sure what the surrounding is like. The one I'm looking at is really close to a major Hospital and also really close the city's downtown. I will take a drive down to the CL post and check it out. Mine does not have the tennis, sand volleyball, racquetball, pond with fountain, and I may end up filling the pool in. Thanks for showing me that!

Oh and as far as funding, I have some money of my own, A partner with some cash, and can raise more from private funding. I really want to see how creative the seller will allow me to be with his seller financing but if he is set to his 35% down then I will use the other methods mentioned.

Thank you all so much for your input and advice! You have all brought up valuable points.

I am very determined to take my investing to the next step and learn lots along the way and I do feel this property will teach me a lot and get me to that next level. (also teach me a lot about managing stress:) )

@Account Closed You had many great points. Thanks for the help with my expense numbers. I would love to try and give you more info if that would help you give a better estimate. I wasn't sure if I should keep the pool or not but it sounds like I am much better off filling it and maybe making a patio area with landscape and tables for people to enjoy the outdoors that way. Also good point about the wifi. That is something that could definitely set my units apart from the ones on the area. Since I shouldn't worry about purchase cap rate, what do you feel a safe and reasonable purchase price should be? My plan is to buy, fix, stabilize, refinance, and hold. You also mentioned a healthy marketing budget. How much do you feel I should budget for? Also is this something you have your property manager do or separate?

@Jesse O. I'm not sure that they are causing problems but just paying very low rent. I want to know what a good rate at which to turn the units over. This is in Plant City, Forida. The buildings were built in 1985 and the roofs have been patched multiple times in multiple areas. In a couple units I was able to get in, I saw some decent water damage on the ceilings and walls. Listing agent says it does not leak to his knowledge but I would rather replace it then chance water damage in newly renovated units.

Hey everybody, I've been following a multifamily property in a city on the outskirts of Tampa, FL. I First saw it when it was priced at $950k. It has recently dropped  to $660k. It is 24 Units (2 buildings) which are all 2br 1ba apartments. 800sqft in size and all have their own washer dryer hookup. Each unit is separately metered for electric, water, and garbage billed from the city. It is wood frame with concrete slab for foundation. The seller has neglected lots and lots with this property. It needs a new roof on each building and there are lots of broken/plastic windows. The units are equipped with central heat and air with duct work but only about 6 are in use. The rest use window units. The property also has a pool which is locked and not in use at the time.

I have a had a couple contractors do a simple walk through of the grounds and 2 vacant units. They both estimate between $200k-$300k in repairs depending on what the other occupied units look like inside.

The seller has no leases in place (all month to month) and collects cash each month. He cannot provide any financial info as he does not keep records. He is willing to provide seller financing with 35% down. Tenants are currently paying $450/month. After some research and talking with a property manager and other landlords in the area, the units should support $800/month with basic amenities and nothing too fancy. This property seems to be in D class condition in a C+ maybe B- location. Typical Cap rate in the area is 12%.

Since I am starting from scratch I would like any and all help and advice with this deal. Here are the numbers I have so far in its current and future state:

Current situation / Potential stabilization

Asking price: $659,000

Gross rents @ $450 =$129,600   / @800 = $230,400

Vacancy @12.5% (3 units vacant now) =$16,200 / Still @12.5% = $28,800

Effective Gross Income = $113, 400  /   $201,600

Expenses

Property management quoted @ 10% = $11,340  /  @ 10% = $20,160

Property Taxes= $7,000  / (likely increase over time, how much? not sure) $9,000

Insurance quoted @ $14,000 w/ wind coverage or $8,000 w/out wind coverage (I would love to hear your thoughts about this and how you insure) This does include liability coverage with pool included.

Maintenance and Repair @ 10% =$12,960 /  $23,040

Pest control=$1,680  / Same

Reserves @ 7% =$9,072  /  $16,128

Total Expenses = $56,052   /  $67,880

NOI: $113,400- $56,052 = $57,348 / $201,600- $67,880= $133,720

Cap Rate= 8.7%  / (with the addition of the rehab of $300k to the ask price)= 13.9% cap

To buy at a 12% cap I would have to pay $477,900 is what it looks like.

My question is, ( well I have tons of questions but I will start with this) do you feel my projections are reasonable? What am I leaving out or over estimating?

I also am not sure of how much my expenses will actually increase as the rents are raised to market value. I could be way off on my second set of expenses listed above since it is no where near the 50% rule.

I also understand the rents will not go from $450 to $800 over night.  And I understand there will be more economic loss/vacancies. I would like to know how much I can expect in those losses. Also what should I estimate for eviction costs and other costs I am totally missing?

I hear of some people going full charge and kicking everyone out and doing full rehab and re lease ASAP. I also hear some say they plan to turn over 2 units per month to hold on to some monthly cashflow. I would love to hear your thoughts and advice about your value add strategies.

Sorry this is a bit long, I just really want to make sure I am covering all my bases to go into this the right way. I know you will probably have other questions for me and I probably left needed info out, so fire away with all questions, advice, criticism, insults, and jokes :)

Thanks so much, you guys are awesome! 

Private money is a great way to go like @George Sass said. Use the BP rental calculator to have something to show potential private lenders or partners.