All Forum Posts by: Karen P.

@Johnny KangI honestly wouldn't feel comfortable giving you that kind of advice with the amount of information given. We are in very different markets.  But I can say,  I think part of your answer depends on what your goals are? The great thing about multifamily is the ability to raise the value of a building by raising rents.   So my suggestion would be to make sure what you are adding will result in raised rents that will result in increased value in the building.  What are other 5 plexes and similar buildings selling for etc.? We had a team of people helping us.  A fantastic multifamily broker that understood our market. We looked at a lot of distressed properties that just didn't work for us.  I was specifically looking for properties that were mismanaged or undermanaged. Being our first multifamily deal, I wasn't looking for a complete value add, but more of a hybrid of a value add and yield play. Again, this goes into what your goals are. There is so much that goes into it.  So definitely gather a knowledgeable team around you to help you. 

To answer your question about our buildings: Our buildings are all brick. We only had to do inside rehab, plumbing, electrical, countertops, flooring and paint and replace the roof on one building and repair the TPO on the flat roof on the apartment building. So nothing huge. 

With that amount of capital you might consider looking at larger properties? Just a thought.

We use Buildium for our property management software. It's easy to use and I love it! My tenants also have mentioned how they like the online epay. I found it to be one of the most affordable for smaller operations.

@Blake NormanWhen we took over it was a whirlwind of activity with contractors and workers all over the place. The existing tenants either got very excited and happy or scared and left!  And yes, once we had a completed unit, an existing tenant would move out of their old apartment. We would end their old lease and start a new lease with my terms etc. It worked out really well, especially since the existing leases were awful handwritten ones.  And then we would start the rehab on their old unit.  It was musical tenants for awhile.  The whole atmosphere on the property is completely different now. The residents seem to really take pride in the building now and they all help keep it looking great. I stop in weekly and chat with people and keep my presence known.

But these distressed properties are the best deals to be looking for! Look for the sad properties that need an infusion of capital.  On our deal, the land lord didn't even have a rent roll.  She just wrote down on a piece of paper what she was getting for each unit. At that point, since I had done extensive market research, I knew we could really do great things with the property. Repositioning is a great way to add value.  I say all this to encourage you all. :) Don't be intimidated by a bit of hard work. It's worth it.  But like the others have said, there are many ways to achieve it.

First off, you definitely have to find out your state rules. If there leases in place, those must be honored. Even the month to month ones. 

 In our situation, we bought a 13 unit building that was in distress and  20% under market on rents.  But since the condition of the units were in such bad shape, I honestly couldn't in good conscience raise the rents to market rent right away.

Upon take-over, two tenants abandoned ship. We started by rehabbing those 2 empty units.  When our current residents saw how nice these new units were, they willingly paid the $115 rent increase to get a nicer apartment. These were long time residents and very good renters.  This pattern continued in the good tenants wanted to stay and move into the new units and the others left, either by eviction or on their own accord. 

The whole process took us a year.  We usually had two empty units at a time that we were rehabbing.  And by doing this unit by unit, we had positive cash flow on the deal at all times.  It took planning, diligence and perseverance, but when I start this process again, I plan on trying the same plan of action.  Good luck and keep us updated!

 @Cheryl Daniels Well, it's definitely work to get good tenants.  Since we are a small property,  we will naturally attract the interesting people.  But I put application criteria in our ads, on our website and do phone interviews. I also use SmartMove,  which is great.  And I get people talking when showing an apartment.  It's amazing what you learn when you just let them talk.

@Account ClosedThe property is local. Since we are self managing for the time being, I'd like the properties to be within an hours drive from my home.

Thank you! One exciting thing I forgot to share is we raised the rents on this property on average $100-115 per unit! On the duplex we raised the rents by $175! We are really happy with that improved cash flow and all our new tenants. And the tenants really love the place. Win win all the way around.

We had this happen once. We had the termination in writing and also charged the tenant per day she stayed over. Just a little incentive....It worked.

Do you hear my sigh of relief? We purchased our first ever properties last March. An 11-unit apartment complex and a duplex sitting on the same property.  The apartment had been what I call "ATM'd" to death. Almost run into the ground.  We are self managing the property.

So after what feels like an eternity of rehabs, contractor woes, and evictions I can now say we are a fully occupied and stabilized property!!!

I can't say enough on how thankful I am for BiggerPockets and all the knowledge and help I have received. Thank you thank you thank you!

What a year! Now onto the next deal!

Another update: I ended up evicting the scary tenant. She was so offended about being asked to clean up the animal filth, she decided she would not pay rent. That didn't work out so good for her....

So now we are in rehab "hades!" My contractor and his crew wouldn't even step foot into the apartment until I got someone to clean it! Well after multiple attempts of every cleaner known to mankind, it still smells like a giant litter box.  The floors are linoleum and tile with grout.

She housed her overflowing litter box under the kitchen sink. Umm gross. The contractor is basically talking about completely gutting the unit and starting over. After 6 rehabs in a row, my budget is begging for another alternative.

I'm going to the unit tonight and trying out one more enzyme cleaner called Terminator by Bubba's Rowdy Friends., using a high powered steamer. Praying this works.

If anyone else has any miracle helps, please let me know. :)