All Forum Posts by: Kyle Joseph

Yes, I would look at this deal. If the in-place rents generate don't generate enough cashflow to cover your debt service, you'll want to plan to bring additional equity to the deal to cover the shortfalls. And even if you have enough cashflow to cover debt service, you may not hit typical bank lender DSCR covenants. Check with your lender to make sure they are comfortable lending with this period of 3-6 months where your cashflow is light.

In terms of updates and tenants, it sounds like you may have time to complete them at the end of each lease expiration. So when lease 1 expires in August, ask the tenant to pay $1,500 (or whatever you would be satisfied with) or vacate. If they vacate, do your renos and have the unit rented by October. Once that unit is filled, do the next one. That way you have some rent coming in at all times. If it's a really tight rental market, these tenants may be willing to pay more in rent and you can defer when you need to do the updates.

Happy to look at some numbers with you if helpful, just let me know.

What is the third person doing, and how big is the deal? If it's not a large deal, don't overcomplicate it. If the third partner is contributing money, do pari-passu. If the third partner is not contributing money and is only operating the deal, have them charge the deal a management fee so their paid for their work. Probably them a small piece of equity to keep longer term incentives aligned. And potentially a kicker / extra payment when you sell or refinance if the property outperforms certain metrics. 

You need to provide a lot more information to evaluate this deal. Including, but not limited to:

- market

- capital required to renovate the four units that need renovation

- expected operating expenses

Feel free to provide here or message directly. Happy to help put some quick numbers together.

Alvin,

Sounds like you're targeting a buy-and-hold buyer, given the fact that the property is in reasonably good condition. To figure this out, we need to know the following:

- How much debt, if any, do you currently have on the property?

- What would be the terms of the seller financed note? Interest rate, duration, amortization

- When you say that the rental comps would bring in $1,200 - $1,500 profit, what do you mean? Ignore the debt for a minute. What is are the revenues and expenses? Then you can layer in the terms of your seller financed note to figure out what their cashflow is and what their return on cost would be.

Happy to work through some numbers with you, just let me know.

Agree with the other comments. It depends on what your goal is. I'm happy to put some numbers together with you on your different options to help inform your decision - just let me know.

Bruce, looks like you are already taking steps in the direction that I was going to suggest. What is the value / saleability of the property with this neighbor? How much does it differ from if the neighbor was not there? If it's a really competitive market, or maybe in this rural area it's more common to have outdoor equipment, does it impact your ability to get a good price? Sounds like you listed it quietly on some websites and are getting some market feedback. I was going to suggest reaching out to some trusted realtors to get opinions as well. 

Thank you @Joe Splitrock and @Scott M. I think my gut is probably right on this one

I am looking at a duplex in a vacation destination. One unit is currently rented on a 12-month lease and the other unit is vacant.  My ultimate plan is to do short-term rentals for both units. But with the current tenant in-place it got me thinking about doing one unit short-term and one unit long-term.  The units are side-by-side with their own entry and driveway.  In theory the idea seems great - diversified income streams with one tenant paying consistently while the other half ebbs and flows with short-term renters.  But in practice I can see the issues - short-term renters are too loud for long-term renters.  Or vice versa - the short-term renters are uncomfortable vacationing next to long-term renters in their day-to-day. Does anyone have any experience with this and if so, how did it turn out?

Thanks

Kyle

Hey @Don Libby Unfortunately I don't know Southbridge MA particularly well.  That said, I would recommend you do as much research on the market as possible, ignoring that it fits your criteria as a market with lower priced properties for a moment.  Make sure it has the metrics that make it a good market positioned to improve over time - population growth, job growth, access to employment, etc.  Don't get baited in simply because low prices - often there is a reason for that and you should figure out why pricing is low and if those are problems you want to solve / a bet you want to make. 

How are people staying productive at this time, particularly in terms of acquisitions?  I have been preparing my next round of direct mail letters and having conversations with lenders.  Not surprisingly, I'm not finding lenders overly eager for new business at the moment.  I'm curious what others are doing and focusing on?