All Forum Posts by: Jason Bilbrey

@Mitch Kennedy

Welcome to the area! I invest in Stevens Point and Fox Valley area. Primarily in multifamily rentals.

Do you currently have any investments or looking to get started? Where are you located? Do you have a particular area you’re interested in investing in (e.g., single family rentals, student rentals, multifamily, 5+ unit apartments, lease options, etc)?

@Johnny Hastings - Did you ever end up reaching an agreement and buying the 52 units? If so, would you mind sharing how your negotiations went and how the property is doing now?

@Israel Haugen - Welcome to the Stevens Point investment community! I'm a local investor in Point as well and love talking to other investors in the area. Let me know if you need help with anything. Good luck with your investing!

P.S. It's hard to find quad-plexes in town, they very rarely come up for sale!

@Aric Vannier I'm estimating about $20k in closing costs so that would drive CoC down. Adding that $20k would bring CoC down to 8.06%... Wish it was 33%!

I do try to get 10% CoC as a typical target...

@Jaysen Medhurst - Thanks for taking a look. The water numbers are actual, I confirmed with the local muncipality and the seller provided the financial accounting from their property management company.

Vacancy for the area is around 3%, but I used the 5% to be a little conservative. I own the property management company so feel comfortable with 5% but wanted to see what others are using...8-10% is pretty common as a conservative.

I'm definitely pushing the CapEx & Maintenance down (I do use the 5% typically for Maint and for SFR use 7.5% for, but at 16 units I've seen people say to use $250-350 per unit per year which is how I came to the $250 or 2.5%...Might be too risky, was pushing it down because the property is basically new and from my walkthrough very well maintained...I actually couldn't identify deferred maintenance or issues...definitely appreciate the feedback here.) I was thinking 2.5% might be OK as I'd have some ability to fall back on cash reserves accumulated from other properties if needed as extra shock absorbant. From a per unit perspective, each unit has it's own heating/cooling/water heater so there wouldn't be a single boiler/etc that could go and cause a huge need for cash...)

NOI is around $96k a year unless I start to touch some of those reserve amounts you suggested. The $96k /year doesn't include what my own property management LLC charges (and there are no lease up fees) so that itself would add another $9-10k in cash flow that I'm paying myself...

Purchase cap rate is 6.8% which is a little lower than the area (older properties are in the 7-7.7% range)... Seller seems very focused on their ask price and knows its practically new so I was running my numbers worst case if they don't budge.

Regarding raising rents... There is a little room to push rents but not as much as I'd like to get some real value add. No real maintenance issues so no real value add their either. I found some savings at the contracted services level which gives some minor value add, and switching from another property management company to my own brings value add. Given that it's a smaller property I can't think of other higher/best use value adds, but maybe I lack creativity there...

@Jason Bilbrey To clarify, loan terms are a 3 year arm at 4% (25 year amort) with max increase/decrease of 1% per year at 3 year mark...

So what if the contractor filed a “notice of intent to file lien” but then never actually filed the lien? How do I clear the notice of intent to file lien so that my property is free and clear?

Hi everyone - Looking for some advice on a property I'm considering purchasing.

Offer price is 1.425m - Financing available is 4% with 20% down required. Monthly rent income is $13,760.

Monthly Expenses are:

Insurance: $593 / month (estimated)
Property Tax: $2127 / month (based on 2019)
Garage: $127.50 / month (actual)
Water: $343 /month (estimated)
Snow Removal: $80 / month (actual averaged over year)
Lawn Care: $108 / month (actual averaged over year)
PM Fees: $915.04 / month (7%)

Reserves Estimated:
Vacancy: $688 / month (5%)
Maintenance: $413 / month (3%)
CapEx: $344 / month ($250 per unit per year)

Tenants Pay their own electric/heat/cooling (owner pays water/sewer/trash/snow/lawn)

Additional comments: Property is 2 years old, 16 units, 2 bed/2 bath in each unit, with separate detached garage for each unit. Zero rehab needed.

What do people think of this deal and my analysis?

Normally I'd use 5% maintenance reserves but this property is brand new, so I went with 3%. Vacancy is about 3-5% in this area but I used 5% to be conservative.

I'd actually be self-managing and have my own property management company but paying myself the 7% self-management to compensate for my time.

What am I missing (other expenses, etc)? How do my reserves look?

I currently own 12 rental units across 3 properties, so this would be adding 16 more units.

Thanks in advance!

I have heard from others who indicated that because sole proprietorships are listed as an option you can list yourself as the business and trade name for those properties in your personal name. 

If rentals are not in an LLC and are owned directly by me, what should I put in the "Business Legal Name" and "Trade Name" fields of the SBA EIDL loan application?