All Forum Posts by: Kirk Olson

I received the same statement from indiana american water for my 8 units. So @Kevin Manz you're saying they will do it if you follow those two items?

@Kris Miller as far as cap rate goes, I just received the appraisal for an 8 unit deal I have under contract here in Warsaw.  The appraiser was from Fort Wayne and used a cap rate of 8.44%, just to give you some insight.

@Kenneth McKeown The first year I took the $1100/mo I rented the other side for and stashed it away in it's own bank account and when I separated from the Army and moved to Indiana I had $13,000 in a bank account which was used to buy three single family homes.  They are not doing as well as the duplex but they are on 15 year notes and the area is HOT right now, so I'll be looking to sell one at the end of this month and the other two over the next year.  A year later I purchased a 4 unit building and currently I'm trying to beat a seller of an 8 plex and a separate seller of a single family and a 4 plex down to a reasonable price.

Since your a veteran as well, you can see it below, but I'm working on building a resource for current and past service members to help them use their unique lifestyle and benefits to build wealth.  The first articles will be launching next Monday and it will mainly be focused on real estate but not exclusively.

@Kenneth McKeown congrats on your first investment! I did the exact same thing with my first investment. 1300 sq ft duplex (each side) with 0% down on a VA loan. I've had it for 5 years and have had only $1000 in repairs and the same tenants living in it since I moved out. Sounds like yours is well on its way to doing the same.

Age is only a small part of the classification for me.  I base it more off of the type of people likely to rent there, which takes into account rent price, amenities, size of units, location, etc...   For instance an apartment community that's typical renter is a young professional with a college degree in a relatively high paying job ($60k+) would be a class A with top of the amenities.  Where the typical renter is 50% college degree in a lesser paying job($40k+), perhaps a teacher, and 50% skilled trade worker like a welder or mechanic would be class B with amenities still but maybe not the newest or shiniest.  Class C would be basic apartments with maybe some amenities but in decent locations with just lower income residents.

Obviously not all of these numbers and types are set it stone but I just want to point out that, at least to me, the age of the property is not the sole judge of the class.  Think of WHO will live there and determine the class of resident.

@Jeffrey Price & @Daniel Walker,

Welcome to BP and Warsaw!  I've only been in Warsaw for 3 year's and I purchased a 4 unit in town last December.  Dan I also work at ZB, currently a supervisor in the packaging department on the west campus (which may change soon),  and Jeff my wife works at Depuy in logistics.  If there's anything I can help you guys with or if you just want to meet just let me know!

@Logan Hassinger You are correct that is the physical vacancy.  All units are occupied and paying, but there is a loss to lease of about 3-4k /yr like I mentioned but that is above and beyond the $46,800 current rent.  Good point on the occupants per well, I hadn't thought of that I will call the city to verify.  For your 6k per 4 unit capex what is the upgrade level and size of your property?  You also said you ramp it up for the first year so was it 6k for the first year then a separate amount in subsequent years?  These units are relatively basic, they have individual room baseboard heat systems and wall mount air conditioners (1 each), so not nearly as expensive to replace as a normal HVAC system.  

@Ken P. I will be walking the units Friday and get a better sense of the condition, from there I will refine my numbers.  I currently treat those capex figures as dollars spent and put in a separate account that is solely for the big ticket items.  

Thanks for the feedback guys.

I've done a couple deals with out asking for second opinions before and it's bit me, not bad, just didn't make as much as I thought so I'll ask you all once again for validation and opinions on a possible two building 8 unit deal.  They are both 4 units 2 1 bed, 2 2 bed units per building.  Asking price is $280,000 max price for me is $260,000.  The buildings are on separate parcels and lender is willing to do individual 30 year fixed on each one or portfolio loan with 3/1 Arm amoritized over 30 years, both interest rates are just below 4%.  I will manage these buildings, I currently manage another 4 unit building in the same area and know with updates the total rents could increase $3-4$k/yr.

Current Rents:  $3900/mo $46,800/year

Vacancy: 10% $4,680/yr (actual vacancy rate for area is below 5%)

Taxes: $3838/yr

Insurance: $2840/yr for cash value not replacement cost (getting more quotes)

Maintenance: $4500/yr

Utilities: $6,500 (owner currently pays common electric, sewer/trash, and buildings are on well so softener salt and electricity for water pumps.)

Budgeting $5k/yr for capex

Leaves: $19,442 for debt and cash flow

It's a loan that is made by a lending institution (bank, mortgage company, etc) just as any other but instead of the originating institution selling it to someone like Wells Fargo or Bank of America through Fannie or Freddie, they will keep it in their portfolio of loans, hence portfolio loan.  This helps investors because these lenders have the ability to make loans that don't conform to Freddie and Fannie guidelines and can work within their own corporate guidelines to make the loans.  There are quite a few forum threads and blogs on portfolio lenders here on BP.

If you can do it again! I moved just over a year after buying mine when I left the Army and wanted to buy another duplex with a second VA loan but my wife absolutely had to have her own house. So instead I veered off course and purchased 3 older single family homes with a portfolio loan. I've since made it back to small multi family and bought a 4 plex in December.