All Forum Posts by: Jack Macioce

@Jessica Mayo, we did not run into any issues, but you are correct, the maximum amount of monthly assistance is $750.00 per tenant.  Our one tenant struggling to pay had a monthly rent of $650, so it was below the $750 cap.

Not sure of your situation, but it might be beneficial to take advantage of this program unless you think your tenant will pay for all past due rent with 99% certainty.  If they are behind one month, than maybe that risk isn't as much, but if they are six months behind, I'd say try to collect a sure thing (depending on the cooperation of your tenant and their eligibility).  It's an easy process, but you do need your tenant's signature and input.

@Jared McCullough - I have applied for the CARES RRP for one of our tenants.  She was not paying since March.  We applied for March - August.  We received a check for March - July rent.  For August, our RRP "processor" indicated that our tenant would need to be provide proof of income to receive the last month's rent requested.  With that said, our tenant explained to us that they got a new job and would start paying in September.  Emailed them today about payment and guess what they said... "my car may have died, and I may need a new car."  Funny that there was just an announcement about halting evictions through end of year.

I've been causally looking for a property management company that services Beaver and Butler counties.  I've been creating a list of property management companies that I find on Zillow.  When you look at a property listed for rent, refer to the contact information and you will be able to tell whether or not a property management company is listing the property or the actual landlord.  

I have not started to contact any companies on my list because I really have no reason to move forward on one with the couple units that I own.

@Andrew Mercer - Yes, those would be included in the list. If we don't get a response from Pittsburgh REIA, and if there is enough interest, I wouldn't mind attempting to form a group that meets every so often.

I am interested in joining a meetup with investors that primarily invest in the counties north of Pittsburgh (Beaver, Butler, etc.).

I have done some research into the Pittsburgh REIA, and discovered at one point there was a subgroup - "Pittsburgh Northern Counties"; however, I have not seen anything scheduled for quite some time.

Anyone interested or have recommendations?

Thanks @Jeremy Taggart.  I currently own a 3-unit in Butler, which I manage myself.  I'm happy with what I have been able to do in the last two years, so I am looking to acquire more in the area.  In regards to the subject of the forum, I am interested in reputable property managers because I'm not sure that I want to continue to manage, especially if I acquire additional units.

To jump in of this thread - small multi-family properties in Butler?

You should learn enough now to not a buy a bad property, but realize that your intentions with the first property may not (and will not) meet your financial goals.

Have you talked with local credit unions?  Would you savings significantly decrease after a down payment on a property?  As a personal objective, I determined that three month's worth of living expenses is a good "reserve" to have.  Obviously, as your progress through life, you need to increase your reserve to match additional living expenses.  The idea behind this reserve is that you should be saving for it anyway, and potential lenders will see that you are sitting on a stockpile of cash not needed for a down payment.

I agree with @David Krulac , do not wait to buy property. To determine what numbers and percentages to use for your projections, here are some useful methods that I've used: go look at properties for sale, network with local investors, and manage a property yourself. When looking for my first deal, I stuck with the MLS to find potential "deals". I would request financials from the sellers and tried to find commonalities, or trends. Applying my own knowledge and common sense, I began to develop my own numbers.

Once I ended up with a property, I wanted to manage it myself.  Not only did it force me to setup my accounting system, and other property management systems, it forced me into the weeds.  After a year of managing the property, I know exactly how to manage a property in market and I know exactly what my operating expenses will be.

Your first deal is where you will learn, so expect to take some calculated risk.

When calculating DSCR, we know that the formula is NOI / Debt Service. My question focuses on NOI, specifically rent. In DSCR calculations, has anyone ever "straight-lined" revenue?

Projecting revenue is easy.  For example, a building has one tenant that pays $100,000 for the first five years.  In year 5, rent bumps up to $200,000.  In years 1 - 4, our gross revenue would be $100,000 for each year and in year 5 -10, our gross revenue would be $200,000 a year. 

Utilizing the example above, let's assume we are looking refi in year 3 and the lender is requiring a 1.2x DSCR. Let's further assume that our DSCR is 1.18x. We have a problem.

What are our solutions?  Assuming there is nothing we can do with expenses, can we adjust revenue?  Utilizing the example above, our gross revenue in year 3 is $100,000 because the tenant's lease dictates that their rent is $100,000.  Basically our revenue matches our cash inflow.  However, what if we were to "straight-line" our rent? 

Total rent Years 1 - 4 = $500,000

Total rent Years 5 - 10 = $1,000,000

Total Rent = 1,500,000

Spread Total Rent over the life of the lease (10 year) and it's $150,000 per year.

If we straight-line our rent, then our DSCR jumps up to 1.2x. Problem solved.

Straight-line adjustments are required if your financials statements are audited, as GAAP requires it. However, will lenders allow this "adjustment" in calculating DSCR?

I understand that the credit agreement, loan doc, etc. will have defined terms that would most likely answer this question, but for now, let's ignore any comments about reviewing the loan docs.

Has anyone ever tried this approach?  Lenders - do you see a problem with this approach?