All Forum Posts by: James Galla

@Ben Nitka

Welcome to Akron. Ranchplexes are my favorite type of unit.

You definitely want that mold taken care of. I can't tell whether the floor is wet/moist or whether that coloration is just from the concrete they poured when the waterproofing system was installed. You might have a bad surprise behind those $10 drywall sheets.

$180 net seems low, and I reckon you'll encounter the real cost of property management going forward - service and call fees and additional payments for any and all repairs.

Get ready for the minute you have to replace a month-to-month tenant, because that, by itself, will destroy all of your profit. Not only do you lose a full month of rent, but that's going to be turnover time where the property manager gets to go into the unit and do their 'repairs' and charge the service and call fees.

I'm not a fan of gradually raising the rent either, since it doesn't seem like the property can support that strategy.

Anyway, I hope the deal goes well.

Jim

@Koray Kilic

In addition to rentometer and consulting a realtor, I like to have a look at the similar available units presently listed on Zillow/Apartments.com. So, when you list your property, you'll have an idea about what units you are competing with along with the condition and price of those units.

I also like the Zillow Rent Manager portion because it will show you what similar properties rented for (although, I think looking at the present listings and seeing how long they have been listed may be more valuable.)

When you follow a marker enough, you'll start getting an idea of about how much your units can go for.

Good luck with your pricing,

Jim

@Juan Erick Rico Avalos

Congratulations on the property. I think it's a no brainer - go for the higher cash flow. I just picked up a multifamily where the tenants were paying $450/month as opposed to $700/month (over 50% increase). I am under contract for another multifamily for this year, and again, the rents are 50%+ lower than the market rates ($550 as opposed to $850). The issue on both of these deals was the former owners never kept up to date with market rates - it's an easy trap to fall into. Compounded over 20 years creates a lot of loss doing some simple math.

When you have background cost factors such as 5.8% - 7% inflation per latest consumer price index, your portfolio might not be able to afford rental rates from 15 years ago going forward. Anyways, good luck in your choice.

Jim

@Nicole Heasley

This sounds fun. When/where is it and who is hosting?

James

@Kenneth Rolfe

I've done multiple offers successfully before on a single family property (lease-option and seller financed mortgage), although I ended up pursuing and closing on an unrelated deal (cash).

I think the biggest factor in creative deals comes down to who the audience is. So, when I was looking bring about this type of proposal forward, I looked into who was selling the properties I liked. For the creative deal I proposed, the seller was another investor/realtor. It certainly wouldn't have worked for a regular seller, or it would have been certainly less likely to have been successful.

In terms of what value it brought, it brought me a deal to the table so I had the option to go with more than one property. You ought to funnel as many deals as you can to yourself when in an acquisition period so you can select what works best for your portfolio. For me, the cash deal was cash-flow intensive whereas the creative deals kept more money in my pocket.

@John C., no one said this yet, but you ought to contact a lawyer, and if you're looking for some additional material, maybe your state's regulatory agency that handles real estate licenses (in Ohio for example it's called Ohio Department of Commerce Division of Real Estate and Professional Licensing). Sometimes the regulatory agencies have neat FAQ sections or educational videos. I'll share a cool sample video below. Anyways, if you're going to invest your time into something, it doesn't hurt to invest in some time with an attorney.

https://youtu.be/9fi54S8nwUA

@Richard Pallarino, I assume you're looking into a publicly traded REIT, and those certainly aren't bad choices for investment portfolio diversity. But, for me, it comes down to the idea of control, and I feel like that's important for a lot of folks here as well. Additionally, there is a real sense of ownership over the asset with opportunities to participate in and learn the business. Having a physical asset-investment property certainly has a different character than shares on a screen.

@Bob Stevens

I see it as either check out different markets or wait a couple months for summertime to roll around where the markets/inventory will expand a bit, although it'll probably still be very competitive.

It's definitely a battle out there trying to get property, that's for sure!

@David Woz the $4k cash proposal is definitely suspicious and should raise a question on where that money originated.

In addition to tax returns, you might want to ask to see their financial statements (balance sheet, profit and loss statements, etc). It also doesn't hurt to check the business out or otherwise gather more information about it such as how long they've been around.

Anyways, good luck.

@Zach Olmstead I am assuming your client is new. I think they key to finding a seller finance deal depends on who the seller is, particularly with single family homes. If its an investor, they are typically much more open to the idea.

You also need to consider the market. Where I am located, there is a significant number of properties that are investor-owned as opposed to non-investor owned.