All Forum Posts by: Jeremiah H.

@Jeremy Pace@Russell Brazil

I was thinking that most tenants won't see the value in water being built into the rent but the value would be easily explainable if I could show they a water fee of less than the city's cost. Rolling it into the rent is obviously much easier, I worried about perceived value from the tenant.

I got into a discussion today with a local property owner that manages most of his properties in house. He loves the fact that his tenants typically pay late and he collects late fees. It got me thinking about the variable cost of collecting that money and if it's worth it. I realize there are many factors to this, but in general, would you rather your tenants pay on time or pay late and you collect the late rent fee?

I looked at a 10 unit today, 5 duplexes on the same property. While viewing the property I noticed there is a well. After receiving the P+L statement and financial analysis I've determined the property owner is giving water to the renters at no additional charge. He is below market rent on average, without factoring in that he's giving water away. He's paying $450/year to have the water tested and $40/month for the electric on the pumps, for a total of just under $1,000 a year with no return.

Has anyone had experience before with buying a property and including a water charge moving forward? I realize this will be difficult with current tenants and I'll honor any existing leases, but I'd prefer to move out most of the existing tenants anyway. I believe cleaning up the property and getting out some of these tenants will allow me to get $50/month on average more per unit as well as start charging for water. The minimum water bill in this town is $63. I believe $50/month would be an acceptable rate for future tenants and they would be happy with that compared to having their own water bill. 

Charging $50/month per door would result in $6,000 additional revenue per year not factoring in vacancy. Using a 10% vacancy and a 8.5% cap rate (the going rate and price of this property), wouldn't that add an additional $65,529 worth of value? 

$50 x 10 units X 12 months = $6000 X 90% occupancy = $5,400 X 11.76 (8.5% cap rate) = $65,529

Is my thinking flawed?

Something like this is what I envisioned people potentially using

http://www.amazon.com/NeatDesk-Desktop-Macintosh--Certified-Refurbished/dp/B00ECDUYDO/ref=sr_1_1?s=office-electronics&ie=UTF8&qid=1456337693&sr=1-1-spons&keywords=desktop+scanner&psc=1

It's possible, sure. There's a ton of questions to be asked and answered in this post. 

Where are you getting the money between now and then? Are you going to be reinvesting the cash flow for the next 7 years? If so, you should be buying more properties later in process not a flat line of investing. What's your lifestyle like and are you willing to sacrifice in the beginning to live off less? Why stop working at 30? Keeping a source of income going that will allow you to reinvest your real estate profits will only get you to a wealthy state sooner. You don't have to stay at the job your at now, but I wouldn't consider not having any source of income other than the properties you acquire between now and 30. 

The problem with counting debt pay down is it isn't realized yet. Cash on Cash is there to measure how much actual money out of pocket will be put back into your pocket that year. The other tools like NOI, ROI, ROE, etc are all there to incorporate things like debt pay down, appreciation, equity, and so on. Those things need to be factored into each deal, but aren't part of CoC.

Proof you don't need a ton of money to get started. Very well done, hustle pays off yet again

@Ryan A.

That's exactly what I said we already do. Trying to eliminate the need for the fax machine, potentially replacing it with a scanner of some sorts. The fax machine often messes up mid fax and always messes up when loading documents with 5 or more pages.

Trying to get more organized with a paperless systems. We currently have an efax that goes to our email address so we can fax ourselves documents, open the email, then save the document as a PDF in its proper location in our Dropbox. 

The main problem with this system is the fax machine part is awful. Looking for a desktop scanner or something to eliminate the need for the fax machine. 

Thank you, 

Jeremiah