All Forum Posts by: Jimmy S.

Hello,

I'm looking for private financing outlets for my clients to be referred to. This would be for vacant properties that are not able to be financed by conventional means.

Other items to note:

• Loan Amounts
• Loan Terms (Down Payment Needed / LTVs / Origination / Exit Points and Fees)
• Application
• Testimonials of Clients In Indiana
• Contact Information

Again, I personally am not looking for funds but I want a resource I can readily refer my clients to. 

Best,

Jimmy

@Ivan Barratt thank you and appreciate the additional input.

I'm glad you brought up the property management too on how that's going to correspond to communication to both the owner and PM as well as the tenants. 

As more and more clients ask me to recommend property managers for their SFH, Duplex and Fourplex properties, I'm updating my due diligence checklist when comes to what to ask a property management provider:

Here are some of the questions I have:

1. Preliminary (Time in business):
2. Operations (Geographical Footprint Of Properties Managed)
3. Preliminary (Credentials / Associations Involved In)
4. Operations (Number Of Rental Properties Managed)
5. Operations (Property Type Managed and Percentage Breakdown Of Each)
6. Preliminary (Personally Invest In Properties Managed)
7. Legal Compliance With Fair Housing
8. Legal (Insurance Carried)
9. Legal (Contract Terms and Cancellation Policy)
10. Legal (Company Sample)
11. Operations (Managers / Staff Employed)
12. Sales (Rental Price Determination)
13. Sales (Vacancy Fees)
14. Sales (Management Monthly Fees)
15. Sales (Company Cancellation Fees)
16. Sales (Miscellaneous Fees - Marketing, Cleaning etc)
17. Operations Specific (Marketing To Good Tenant Base)
18. Operations Specific (Tenant Income Requirements)
19. Legal (Eviction Timeline - When Does It Start?)
20. Operations (Rental Insurance Requirement)
21. Operations Specific (Position Of Tenant Selection - Owner or PM)
22. Communication (Owner/Tenant Response Time)
23. Communication (Tenant Access To Owners)
24. Communication (Property Updates/Owner Online Portal For Information Access)
25. Service (Service Offerings To Owner)
26. Service (Marketing Capabilities and Strategy)
27. Service (Collection Protocol “Owner Direct Deposit” and Ways To Pay Rent)
28. Service (Occupancy Guarantees / Average Occupancy Rates)
29. Lease Up (Average Owner Retention Rate)
30. Lease Up (Average Occupancy Length)
31. Lease Up (Average Vacancy Rate)
32. Lease Up (% Of Tenant Lease Renewal / Lease Renewal Strategy)
33. Lease Up (Average Eviction Rate)
34. Lease Up (% Of Security Deposit Refunded)
35. Maintenance (Tenant Request Process & Tenant Portal Availability)
36. Maintenance (Reserve Requirements With Owner Notification)
37. Maintenance (Discounts With Established Contractor Relationships)
38. Maintenance (Repair Markup)
39. Maintenance (Exterior Landscaping Maintenance)
40. Tenant Move In / Move Out (Documented Process)
41. Additional Resources To Grow Investments

Any other feedback would be helpful as well as great property managers that would be willing to review the list with me that serve the Greater Indianapolis market.

Looking at properties, I'm updating my due diligence checklist when comes to putting offers in.

My question is to you investors is:

Other than property condition and market value comps, what questions do you have to associate parties when doing this step in investing?

I'm thinking along the lines of title and code violation questions.

Any items you have that you do would be much appreciated!

Looking at properties, I'm updating my due diligence checklist when comes to putting offers in.

My question is to you investors is:

Other than property condition and market value comps, what questions do you have to associate parties when doing this step in investing?

I'm thinking along the lines of title and code violation questions.

Any items you have that you do would be much appreciated!

@Santosh P. thanks for the comment! As for vacancy, absolutely needs to be in there! I know something looked a little light on the analysis. 

@Sanjeev Advani thank you and I agree with your statement. Definitely some room in there to increase those returns with who you use at your property manager and other vendors. 

Hello Bali,

First congratulations on getting into REI and starting out in multifamily!

I was a property manager a few years back in C neighborhoods in the Midwest with a great value add components to them when looking at a purchase.

As far as your numbers are concerned, here are several things you should take into account with the run up to the closing:

• Deferred Maintenance: are these all sub-metered (water/electric/gas)? Other than the roof, what is the estimated life of the other major capital expenditures (CAPEX) you'll need to complete [HVAC, water heaters/boilers, appliances etc]?
• Ongoing Maintenance: Some property management companies will bill out for their maintenance techs when they go out to your property when a tenant calls. You should be able to set how much they can spend on given repairs (ie. Up to $50 to repair a leaky shower head, don't call you, the owner, but if exceeds $50, call me for approval). Go back to your inspector and talk through what they saw and see what needs to be immediately addressed to lessen the chance of tenant complaints from the beginning of your building takeover. 
• Reserves: For the CAPEX items mentioned, I would say you should be taking out at least 5 to 10% of your monthly payments to set aside when these items will go out on you.
• Property Management/Leasing: With the amount of units, I wouldn't be surprised you're getting charged from 8-10+% per month with some type of leasing fee when a unit goes vacant. Also what is included (making payments to the bank, negotiating rates when vendors, etc)
• Repairs: When taking over a property, your inspection should have uncovered alot for you to estimate what type of unit turns / renovations / repairs you'll need to do. I'm not familiar with the California market but I would say for a 700-800 sq ft unit, estimate around $1500/2000 per unit for a very light rehab (paint/flooring/appliances) to $10,000+ for a very heavy rehab (drywall/fire/water damage/counter-tops etc). 
• ROI: With the total cash invested for the closing at $108,932 and your monthly rent at $3600, lets break it down adding some of the costs we mentioned.

1. (- 10%) Property Management - $360
   
2.  (- 10%) Maintenance - $360
3.  (- 5%)  CAPEX - $180
4. (- TBD) Utilities (who's paying what when it comes to Gas/Electric/Water)?

Add these above expenses with your PITI and minus them from your monthly cash flow you get: $469 x 12 Months = $5628 / Cash Invested = 5.17%. These are assumptions and could change with the companies and vendors you would be using.

Also, not knowing the area for the potential upside in rent increases and property appreciation, you could get in to reposition it and then resell. 

Bali, congratulations and I wish the best to you. If you would like to reach out to me, I would be more than glad to discuss this deal in more detail!

Best,

Jimmy

Hello Dante, maybe we can work together. Let's connect!

Hello everyone!

I'm looking to expand my home insurance network in Indianapolis that specialize in vacant homes there being worked on for rehab and resale. Any mentions would be appreciated.

Best,

Jimmy

Hello Michael, welcome to the community!

I work with my group as well as investors when it comes to representing buyers on the Realtor side for fix and flips, but my background is in multifamily.

Any questions about purchasing properties as well as looking for unique opportunities, feel free to shoot me a message.

Best,

Jimmy