Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Joseph Dzwiniarski

Joseph Dzwiniarski has started 4 posts and replied 18 times.

@Jay Hinrichs

I 100% agree with you. With the lease renewal fees any increase in rents are pretty much blown out the window. It's a dammed if you do dammed if you don't type of mentality . Would you only raise rents to market if the tenant is less than sub-optimal and take the initial hit in hopes of a better tenant in the future?

@Matt R.

Where they get you is the lease renewals especially some companies that take a % of first month's rent for successful lease renewals [I've seen up to 75% for some PMs]. Finding a flat 10% PM fee in a perfect world is like finding a unicorn.

@Jay Hinrichs

Hi Jay - I'm including the leasing fee of one month's rent within the property management number. The management agreement has two fees that are charged -  1) 10% of gross rents and 2) one months rent assuming a 50% attrition rate per year. So I'm not sure am I missing something else?

@Account Closed

Hi Mackalyee, I won't be running this property out of an LLC (will be using umbrella insurance to cover personal liabilities) so i assumed that lenders would be more willing to lend at 20%, but i re-ran the numbers at $25k down which makes the deal appear to be closer to a 10% cash return in Y1.

@Rob Beardsley

Thanks rob for the compliment. It's one of the perks of being in finance/accounting, we work with spreadsheets 24/7.

I 100% agree with you. I almost wish that the apartment was fully vacant so my PM could vet the tenants better. That's why i included an incidental line item in my numbers. I'm guessing that no matter what in a Class C property that a tenant will most likely put a lot of wear and tear on each unit that will not be covered by a security deposit alone.

I could look at spreadsheets all day, but there are some things such as bad tenants that you just can't account for in your numbers. Unfortunately, I wish I had a crystal ball and I could!

My girlfriend and I visited Kansas City last month and have been on the hunt for potential properties in the area. I've been in negotiation with an owner of a C-class duplex in Independance. We finally settled on a price of $100k for the property and all that I need to do now is sign the purchase and sale. Surprisingly, the property is in very good shape and the majority of the big ticket renovations have been updated within the last year. Tenants pay all utilities and one of the units is rented for $750. The other unit I'm going to have my PM put on the market ASAP and will hopefully have leased before closing. I've included that placement fee in the management line item. Market rents are around $800 during the summer months, but I've been using conservative estimates in my numbers. Anything bigger is only upside potential.  I've been crunching numbers and came up with the following. Please feel free to critique my numbers. The only thing that scares me about this property is that margins are thin about 3k per year so anything that I missed may make this deal less desirable. Also, I'm a CPA, so luckily I can do my own taxes and don't have to worry about bookkeeping costs.

Post: 1031 exchange on an inherited property

Joseph DzwiniarskiPosted
  • Investor
  • Woburn, MA
  • Posts 18
  • Votes 9

@Kevin Carrington

No problem. If you do have to go through the 1031 process I advise you to really learn the identification process. There are numerous rules around how many properties you can identify in your 45 day window. 

Post: 1031 exchange on an inherited property

Joseph DzwiniarskiPosted
  • Investor
  • Woburn, MA
  • Posts 18
  • Votes 9

CPA here (not a tax accountant though) that just went through this working on trust documents.

If you inherited the property the tax basis of the property will step up to the fair value of the property upon the owners death. So you will likely owe 0 taxes.

 If the property is still in a living trust the basis won't step up upon death and 1031 of the proceeds is advised if you sell the property.

@Troy Luster

There should be no short-term needs now. The building is newly built from the ground up and only two years old. Water heaters should last between 8-12 years. Roofing is a flat rubber substance. Assuming I have 8 years before my water heaters break down and over 20+ for my roof i think 80k in reserves over 20 years with 4-5k in maintenance fees a year should cover?  

@Jim D.

Hi James - Good to know I'm in the normal investor window. The units are really new so I don't see any replacement costs besides the normal wear on the property and upkeep (paint every 3-5 years and caulking). So I'm accounting for around 3-4k a year in my forecasts for reserves for CAP ex relating to waterheaters, centeral air, siding, roofing etc. I know every property is a case by case basis, but assuming things were properly built I feel like I'm taking the conservative approach here.

I just closed on a newly built 6 unit multi-family apartment. Everything was built and installed 2 years ago and is immaculate condition. Now here in lies the problem. The HVAC systems are all high-efficiency  and need proper maintenance once a year for flushing of the systems. Additionally, the fire suppression system will need to be maintained and signed off every two years. That costs $ (hoping to learn how to maintain most of the HVAC systems in the future).  If any of these systems breaks down that will cost some $$ too. Since I'm viewing this property as a long-term hold, I built in a pretty hefty maintenance and reserve budget of $8k (about 7% gross rents) assuming in 10 years i will need to replace/maintain these high efficiency systems. 


Are there any good tips on how to better estimate reserve costs for new apartments? Do you think I'm going a bit overboard/underboard in my estimates?

Post: 1% Rule in Massachusetts?

Joseph DzwiniarskiPosted
  • Investor
  • Woburn, MA
  • Posts 18
  • Votes 9

@Taylor Lydon

Hi Taylor,

I've been doing a lot of hunting for multi-family units over the last 3-4 months in the northern parts of the Boston suburban areas . I haven't seen anything hitting the 1% rule. The average I'm seeing is closer to .7% in the nicer suburban areas. You can get closer to .8% and 1% in Brockton, Dorchester, Worcester, Lynn, Revere, and Lowell. However, these areas are more class B,C (maybe a warzone or two) areas and may not suite your criteria for evaluations of neighborhoods. 

The problem with the Boston market is while the area is considered "hot" the supply can't keep up with the demand. Additionally, there are lots of restrictions on the land in the area. Said differently, you can't build anymore until there is strong re-zoning reforms put in place. This will probably keep the area hot for a while as there is continued strong job growth in finance and tech. Even if there is a down turn most areas around the Boston will be impacted less than the nation average. We saw this in 07 - Areas closer to Boston were less volatile than the average market (excluding some class B/C areas with tougher neighborhoods like revere,lynn, etc.). This strong attribute is being reflected in the current Cap rates around the Boston metro areas.