All Forum Posts by: John Pflederer

@Twana Rasoul I sent you a private message.  Look forward to hearing back.  thank you

Does anyone have any good recommendations for a property manager in Springfield, IL for a multifamily? 

Thank you! 

@Taylor Chiu - I like the idea of having a handyman on retainer.  Would you recommend then having a leasing agent deal with leasing up the units?  I am assuming my property manager would not want to "only" do the lease up and rent collection.  

I have thought about selling, but I believe that if I could get expenses under control it would cash flow pretty well.  

Maybe it would be helpful for the group to get some numbers on the property.

Purchase price: $430K

Debt service: $2,265

Utilities: $550-700

Insurance: $488

Taxes: $1,000/month

Revenue this year:   Jan-$7884 / Feb- 7360 / March- 8692 / April - 7628 --- Ave $7891 or $94,692 

Laundry - $50-100 / month

7% PM fee / 8% if 2 or less units vacant

Additional details: 

-1/2 of units flooring and appliances upgraded

-  performed ~ 30-40K cap ex after purchase.  (Bought from an elderly lady that did her own PM and repairs so it needed some professional attention)

- Raised about 50% of the rents from $430 - $495 when units turned

- There is an opportunity to update and complete a 2 bd unit in basement for 3-5K. and should rent 495-550

Look forward to hearing everyone's thoughts on these numbers.

thank you!

@Jeff Kehl - Thanks for responding.  Couple questions on your post.  

1. The type of jobs these type of tenants have are low level positions that don't seem to be as impacted by downward market trends.  Also, Illinois typically doesn't see the big swings like most of the country when the market shifts.  My hope is that it wont crush me when the market DOES pull back, because it will.  

2. I completely agree with your thoughts on cash flow doesn't count until its all rehabbed.  My BIGGEST mistake was not capitalizing this property appropriately.  I should have brought more capital to the table and just did a complete remodel of the units and appliances.  Instead, I have been trying to pay for this out of cash flow.  Maybe over the long haul it will work, but definitely causes a lot of anxiety in the meantime.    Do you typically just suck it up and put the money in to the rehab or pay for some out of cash flow?  

Thanks man!

@Jim Biggs - I agree creating a group is something i need to do.  However, I am about an hour away from the property.  Struggling on time with current job to do this, but you make time for what is important... 

That said, I dont know of any mastermind in the area and there is most likely a big opportunity to do one.  Really appreciate the input.

Thank you all for the time everyone took to provide feedback!  I am going to use alot of the feedback provided!   Specifically I plan to  Raise long term tenants rents, biweekly calls with PM, Create a cap ex budget.  

I do have a few more questions:  

• Has anyone had any experience with bed bugs?  I had one building get them and that was costly.  Hard to prevent or pinpoint who brought them to building, but any suggestions on minimizing that from happening again?  
• Property manager sent me an email that one of the long term tenants wanted to paint their apartment if i purchased the paint.  I approved.  I then was billed $750 for the PM company to paint the place.  This happened a couple days ago and after I texted her about it, I resent my email with no reply back yet.  It did need painted, but I was under the assumption I would only be paying for paint...$100 tops.  Thoughts?
• Anyone have any experience trying to read PM statements with AppFolio?  I feel like they are very confusing and wonder if there is a better way to have the PM format? 

Again, I can't thank you all enough for your help!   

@Edward Liu, Thanks for reply.  I might have gotten some forced appreciation, but in general not much appreciation in this market.  

I think if I could lower the expenses from maintenance this could cash flow well.  However, I don't know if I am just trying to force this deal to work or if I should cut my losses and sell.  

Does anyone have any experience with such a property as this that could cash flow, but similar expense problems?  Everywhere i read it says that this is common with property managers.  If that is the case how does anyone make money unless they get the property for next to nothing?

@Brian Metz, I agree that i could outsource some of the things like salt, but i don't live near the property.   I have outsourced the mowing since they started charging me $20 more per time than last year.   thanks for the reply.

@Larry Turowski  Thanks for the reply.  

Hello All!

I purchased a 18 unit building 2 1/2 years ago in Central Illinois.   Prior to purchasing, I did as much research as possible and did my best as a new investor on the due diligence.   I am struggling to see cash flow and any profitability.  Definitely made some mistakes in my first deal, but chalk those up as learning.  At this point the property is doing pretty well, but the property manager is killing me with expenses.  For example last month i was charged $250 to put salt on the steps and sidewalks.  It just seems like there is always some big expenses that kill my profitability.  I feel stuck with the property manager because there are not many options in this area and they have been able to keep it leased up (with some turnover) Some details about the property:

• 18 Unit / 12- 1bd and 6 - studio 
• C+ property in C ish area
• Safe area 500ft away from largest employer in area (hospital)
• Hospital owns the land in front of my building and behind the building.  Possible exit strategy is the hospital will purchase.  However, i am not counting on that as my goal is to build my business / cash flow. 
• When purchased rents where in the $430-$445 Range on the 1 bedroom.   Rents on the studios were $395 and have remained at that price.  I have raised half of the units to market value of $495.  The ones that have are still at the lower range are long term tenants that my property manager doesn't think we should raise. (10+ years)
  • The units that have turned get new vinyl plank flooring and paint.  I think this has helped rent and justify higher price as they show well.   
• I have put about 30 - 40K in improvements and structural improvements in over the last couple years.  
  • New ceiling in carport
  • Inspector suggested some vapor barrier in the crawlspace of one building.
  • new railing on balconies
  • some new appliances and water heaters
  • New laundry machines

At the end of the day, I am still learning, but I am struggling to see what to do to make this thing profitable.  This year was better than last year because most of the repairs and things came out of cash flow.  I should have just enough for taxes.  Which i was able to get reduced 2k after purchase.  I have to be missing something here and would love to get some experienced advice in this space and size of building.  I can provide owners statements and any other info for anyone that might be willing to help me analyze this property.  

I believe in this way of investing, but simply not seeing the fruits of my labor in terms of returns.  

Thank you all in advance!