All Forum Posts by: John Schmiesing

@Brad Glenn all of those areas work well, some more than others IMO. I am invested in West York and the North York Borough, these areas have inexpensive properties and a good rental market. You may also want to review the Dallastown and Red Lion areas, although they generally are more expensive to purchase. If you're in Dillsburg they are also farther away.

I think the city has some areas that are worthwhile. The high taxes of York City properties can drive many buy & hold investors away. Moreover, the school system is not known for excellence, and this may have an adverse affect on the tenant pool.

Let me know when you're around, we could get coffee. I could take a look at the properties you'll be reviewing and let you know my opinion.

-John

Section 8 tenants have been great for me, I have 2 now, and one in the past. The good: money is guaranteed and direct deposit. Very little effort on your part. The bad: i have not yet experienced a downside, just incidental stuff that happened mostly due to the neighborhood where the rental is located. Perhaps you can have issues if your tenant has friends who are less than upstanding. Must do: like with all tenants, there are good ones and bad ones. You need to screen carefully like anyone else.

IMO the right answer involves leverage, so B is out!

First I'd go with option A. The advantages are one location, using the power of multiple units for simplicity and to potentially get a 'one stop shop' discount with property managers and/or contractors. I would also think that because this is one financing transaction, the overall cost of the loan and associated fees would be lower than buying 5 individual properties w/ $20k down on each. Plus, the logistics of buying one building may be a bit easier: one loan, one appraisal, one insurance policy, etc.

With option C, you'd be going through the same process five times and it would take a lot of time for all of the deals to come to fruition, settle, and figure out the leases, etc etc. You'd be dealing with 5 different sellers, each presumably with their own challenges. One potential advantage to option C is that if you have not already hit your bank's maximum loan limit, you can get awesome amortization (30 yr. fixed), whereas the apartment complex would be a commercial loan.

@Steve Babiak , thanks for the info. I will be sure to review the link.

I've decided to 'standardize' the multi-families to split both electric and gas. I don't want the bill, the headache, the questions, or the added time involved with trying to parse it out to tenants. I'd rather not see the bills and therefore not have to think about it. It's expensive to set up, but I think worthwhile in the long-run.

This may be interesting for everyone; I had a tenant who stopped paying their gas bills. I called and verified with the utility that their non-payment can't somehow come back to me.

I am also in PA and support what David Krulac mentioned. I just split the gas and electric in a 2-unit. When I bought it, there were 2 meters both has and electric. What I came to find out fairly quickly is that the prior tenants (now gone) had in fact complained to the power company and now this burden was on me. Gas service; there was only one furnace, but 2 HW heaters. So we installed a new furnace to serve unit 1 and modified the ductwork for existing furnace to serve unit 2. We also properly split the gas supply lines. Electrically we installed an owners meter and wired all common areas to it. Common areas is anything used by both tenants. In this case it is basement lights, front porch, rear floodlight and common vestibule immediately inside front door. I put most of these on motion switches to hopefully reduce electric costs on my owners meter. All work has been completed and it has been inspected by the utility companies. This was a pricey exercise but is worth it for long term buy/hold, as I am not interested in paying for use of these utilities. Hope this helps

Jeremy, looks like you're ready to jump in. At this point I would hesitate to form the LLC as these are not commercial properties and you can gain liability protection through insurance. Your loan amortization will be better with personal purchases, allowing for more cash flow and greater ability to reinvest and have extra cushion. A negative to buying personally is the tenants will likely know your full name, whereas in an LLC it is easier to keep a higher level of privacy as the owner.

Everyone's situation is different so solicit as many opinions as you can. I would advise to make the decision prior to purchase as you don't want to transfer from one entity to another after the purchase; you will incur RE transfer taxes.

best of luck!

-John

@Tinotenda Arigurinu , thanks for resurrecting the topic. Basically I left the offer sit. I noted to my agent I am willing to go a bit higher, but not much when taking other factors into consideration. Looking at the history of the property, it was refinanced recently. Therefore to close on the property, the seller would likely need to bring money to the table. This is probably a wait and see approach that Kevin Perk noted in his podcast. The seller may not *need* to sell now, but eventually I estimate this will be the case.

I've since moved on to others; I closed on a 2-unit in September and is nearly rented out now, and have another 2-unit under contract for December. We'll see how it pans out for December!

-John

@Jon Klaus , yup I sure did close on the property. Nearly rented out now...details below.

Thanks for the follow-up; I have since closed on the 2-unit and proceeded as planned. I had a few unexpected repairs, but this is fairly typical. The furnace was installed without a hitch, and now the utilities are truly separate. I also replaced the carpeting with a nice floor paint in Unit 2, and took care of a few other minor items.

Unit 1 is rented and I have a cash-deposit from a great Section 8 tenant for Unit 2; if all goes well she and her family will move in before Thanksgiving. In summary, it took 1 month to fill Unit 1, and nearly 2 for Unit 2.

Regarding Sec8 tenantsI hear lots of horror stories, however I am sticking to my experience here when I say that there are good and bad Section 8 tenants; it is a matter of screening. I have now had 2 different section 8 tenants, about to be #3. Each have been good people and kept the units in very nice condition. The added bonus, of course, is that much of your rent is guaranteed.

@Darren Smith , welcome to York! I also plan to be at the meeting on 11/14; looking forward to meeting you there. There are opportunities around the area now. Would be happy to help you out!

I have the exact same situation right now in a rental. I would recommend exterior rated deck paint and a good primer. It is cheaper and probably easier & cheaper than carpet.

Originally posted by Matthew Mueller:

So I own a triplex in York City, but I am wondering for the crowd here, who do you recommend for a property manager? I am trying to determine if my property manager is proficient given the difficulties of tenancy within the city proper.

The triplex has only had all 3 units and the garage rented and paid for about 4 months of the 24 months held - that said it has almost always had 2 renters and the garage rented out - like most cities parking is at a premium. This year the unit has cashflowed reasonably well after learning a lot from buying cheap (almost 1/2 price what the seller paid) but paying a lot to renovate and modernize the interior.

Was also able to successfully appeal the tax burden down some 20% after going to court over the issue.

Look forward to hearing your insight about property management!

Matt

Matt,

I have not yet taken the plunge and gotten a PM although I think this will be necessary soon. We just picked up a 2-unit in West York and are actively pursuing applicants now. It is very challenging to manage the tenant screening along w/ my other full-time commitments.

I did have an introductory meeting with a PM who was recommended to me; I will PM you with their contact info.

What I will probably do initially is hire out the tenant screening process then self-manage once it is rented. I think this will work until we have enough units where it makes more sense to hire a PM.

-John