All Forum Posts by: Joel Barrett

Established Rochester, NY developer, builder and manager is looking to acquire or partner with an existing property management company. The management company would take over management of my existing portfolio and all future developments. Must have existing management clients, office staff, cloud based management technology, quickbooks, and property management revenues of at least $150k annually.

Hi Everyone - 

I'm fairly new to BP, so I need some help connecting with those looking to sell real estate in Rochester, NY.  I'm not sure if there is a specific section of sellers, or a way to connect w/ Agents or Brokers.  Right now I'm looking for 1-4 family, small apartment building's or mixed use in Rochester, NY 14609. 

Please help or direct me to a forum or discussion that might be useful. 

Thanks!!
Joel

 just show up? 

After a long hard winter (typical in Rochester, NY)....ice fell from the roof of an apartment and damaged my tenant's car.  This was a very difficult situation for the tenant and I felt really bad, and tried to initially help her by saying I'd pay the deductible (which I was under no obligation to do).  Then after finding her auto insurance did not cover everything, and she let her renters insurance lapse (something that would be good to check on after having a tenant for a while) - she said she was taking me to court.  So it wasn't exactly "it's the law", but more like - you are responsible.

However, after a few google searches it was evident that I was only responsible for reasonable and necessary maintenance, such as clearing snow from a drive or walk way.  Shoveling a roof is not reasonable maintenance, additionally the "law" places part of the "onus" on the tenant asking - why would you park under a roof covered in ice. 

All in all it worked out, she moved out, and we still stay in touch. 

Thanks David. 

I've yet to go down the borrowing investor money route - so I'm definitely looking for information on the best way to structure this.  My understanding of those types of deals is very limited, essentially an investor provides cash, and I provide a rate.  As far as the mechanics behind the scenes (promissory notes / assurances on the obligation) - I don't know the specifics.  I've also heard interesting things about a "real estate hedge fund" - essentially raising money to acquire real estate and paying a fixed rate of interest. 

The other route that I've explored a bit more is to take on an investor as an equity partner.  An investor would commit x amount of capital (for a specific deal or for the purpose of acquiring properties), and then I would take a portion of the equity for finding, rehabbing, and managing the properties.  So what I'm wondering is what is the initial % of equity that is fair for this type of transaction.  For my first deal or so I'd envision contributing the due diligence on the acquisition, performing all project management of the rehab (while paying contractors at an arm's length), refinancing / financing the property and then performing the subsequent management.  This system will work until I get to full capacity with managing the properties, but I'd like to initially do this until I reach critical mass, and as a way of gaining additional equity in a transaction.  So if an investor provides 250k for me to buy 1-4 family properties, or small mixed use properties - is taking a 15% stake reasonable or excess to perform the described functions (assuming investor agreement).  I think 15% is reasonable if I am not charging property management fees, but is it also reasonable for finding the properties (working through multiple realtors), performing the due diligence, and project managing the rehab - or is 10% more appropriate, and then charge a fee for Management down the line. 

I've created a small portfolio of 1-4 family properties, where I've found, purchased, project managed a team of contractors through rehab, financed, refinanced, and managed the properties independently. 

I've now been approached by investors through my personal network, and I can see the opportunity associated with taking on investor capital; however, what is the best way and structure to take on the additional capital? 

My thoughts are - use the capital to gain an equity stake in the company without investing any of my own capital, use the capital and provide capital of my own and take a percentage equity stake, use the capital and pay a fixed rate of interest (approx. 10%). 

If I do go the equity route - such as taking 10% initially in additional capital for my services, should I also charge management fees down the road - or should these two activities be separate? 

It's a lot easier to figure out going the fixed interest rate route; but it would also depend on the requirements of the investor (whether they want equity, or a fixed rate of return). 

Here is a link: http://buyingafixerupper.com/calc.html

Also, flooring estimates are a bit easier to find online or as follows. It also depends on the quality of the product that you are using in addition to the installation costs. 

Carpet: PPSF + 1-2 per square foot installation. 

Tile: Materials cost (tile, grout, backer board, sealers) + 7 per square foot for demo, board, tile, grout and seal.  Or you can save a little money by doing the demo and backerboard yourself and pay about 5 per square foot for tile, grout, seal. 

Refinishing wood floors: 1-2 per square foot without staining, and 2-4 per square foot with staining. 

Painting: for a 2k square foot house - i'd image it's close to 1-2 per square foot for a normal job. 

Roofing is approximately 150 per square (square is 10 feet by 10 feet) for re-shingling, and if the roof requires redecking in addition to shingling it will be 2x that cost - this cost includes standard materials. 

Drywall costs can be split between hangers and finishers, assuming that you have studs in place to hang new drywall on and it's not a totally new wall.  Approximately $1.50-$1.75 per square foot to hang and another $1-$1.5 to finish. 

These prices are coming from Rochester, NY - so there may be differences regionally or in larger cities. 

All of the costs you inquired about can be found by doing individual google searches too.  Generally I've looked for the best and most reputable as my benchmark for costs - and usually they are worth the money - unless I have a side work guy that is willing to do it on nights and weekends for less (although you'd have to manage the person).