All Forum Posts by: Marc Izquierdo

@Pablo Flores Manager managed LLC sounds like exactly what you need based off of the article below: https://www.hunterbusinesslaw.com/limited-liability-company-member-managed-vs-manager-managed/

@Jason D. Yea I remember we talked a few months ago.  You were up in Fairless Hills right?  That's awesome that you made the move.  I wish you the best down there!

Interesting point, and I can understand it.  I've heard, and have seen it a bit first hand, that Section 8 tenants tend to be rougher on properties.  Of course, you can definitely prevent this (or minimize the risk as much as possible) by having appropriate screening in place.

So it sort of sounds like there would be no incentive to an owner to replace section 8 tenants.  Actually, it seems beneficial to get them, but get good ones with the proper screening.    

@Patti Robertson thanks for the input.  I agree that section 8 is sort of a better play in a certain neighborhood.  However, say I’m looking into an area that is in the path of progress like maybe an opportunity zone or something along those lines.  In that case, I’d want to transition section 8 out and get a better tenant base in there.  In that situation, it seems like my gross scheduled income may not change (as a section 8 tenant vs a “normal” tenant may pay the same rent).  However, what I’m gathering is that what makes it beneficial is that your expenses decrease by having less wear and tear?  So you may not be able to raise rents but you can lower expenses.

@Caleb Heimsoth Thanks for the info.  Yea I was thinking that it wouldn’t change (based on the numbers, why would it change) but it seems odd to me.  I figure you could come in, remove a section 8 tenant, maybe renovate the unit to attract better tenants, but still end up losing money.

It's known that section 8 tenants tend to be rough on a property. I wonder if the thought is that by replacing those tenants, my maintenance and repair expenses drop, thus increasing the NOI and value.

Hi Everyone.  

I was wondering what the effect is on the value of an apartment building when replacing Section 8 tenants.

For example, would two identical buildings be worth the same if their rents were the same (same NOI) but one had all section 8?

Awesome.  Thanks a lot @Gregory H.

Hey Everyone,

I’ve been searching for a siding contractor for the last week and can’t seem to find anyone who wants work!

Can anyone recommend one?  I would appreciate it!  My project is listed below.

https://www.thumbtack.com/request/qcpf7q8e/info/

Thanks for the help

@Sara Byerly Just to clarify, does each unit have its own gas and electrical meter? If so, the heat for example, figure out which units heater is supplying the heat to your common areas. You can then do a ratio based reimbursement every month to that units tenant. For example, maybe figure out how much common area sq footage there is, compare that to combined sq footage of the common area and their unit (find what that percentage is), then tell them that you reimburse XX% of their gas bill (assuming that the heater is the only gas appliance). Personally, I don’t have any direct heat to my common area in my duplex. There are two gas heaters for each unit. I rely on the residual heat from the units to warm the common area. Realistically, no one should be hanging in the common area and there are no water lines so keeping it comfortable at your expense seems like a waste of money to me. For electricity, assuming there are two meters, figure out which one is supplying the common areas. The ratio thing doesn’t really work here but you can look into submetering the meter that is supplying the common area. Just a random thought, I’m not sure of your specific situation but say your common area has two lights both of which are fed from the unit 1 breaker box (2 dIfferent circuits). You could move one of the circuits to the unit 2 breaker box and then just charge each tenant the full price by saying that both units share the cost of the common area since they are the ones using it after all. I feel like this idea would be a stretch though. Submetering is probably your best bet if it’s worth it financially.

Sounds like a cash for keys situation. Hopefully they accept. If not, move to an eviction if it’s that bad. I’m assuming you signed a lease for a year? I know I’ve heard people talk about doing month to month leases for a bit until you are comfortable with the tenant, then move to a year or more. I’m thinking about starting to implement this strategy myself. Might be worth considering in the future. Good luck!

How big of a multi family property are you looking to get into? If you’re looking at 5+ units, you’ll need to get a commercial loan. Little bit higher interest rates and amortized over 15-25 years or so. From what I’ve heard (I haven’t purchased commercial yet) the lenders look more at the property than your actual credit score. I would think 700 is fine despite the short time period. I would pick a few lenders and just ask them what info they can share about their commercial loans. Tell them your intentions and they should be able to give you round about numbers. From there you can window shop who your likely lender will be. Once you have it under contract, you can finalize your financing. It’ll actually be written in the contract as to what type of financing and at what interest rate your going to get, which is why it’s nice to have talked to some lenders beforehand. As far as how much you can afford, it’s going to come down to what your down payment is. If you have 100k to put down, and the lender on a commercial loan will want to see 25-30% down, you’ll likely be able to purchase something in the 400k range. If it’s a residential property, they’ll want to see about 20% on average so you’d be looking for a (at most) 500k 2-4 unit building. I was looking for months in NE philly and it was frustrating. Everything was overpriced and people were buying up properties that wouldn’t cash flow unless you bought all cash (but at that point your return is like 2%). So I know NE Philly is tough right now. Some of the most important things to ask the seller are to provide you with income statements/ profit and loss statements. You need to know what the property is producing and how much it costs to do it. The bank (if commercial) will especially be interested in this because this determines how much risk there is in the property. Once under contract, you can get estoppel agreements from each of the tenants to make sure that what the seller is telling you is true. Always ask them why they are selling. I’m about 30 min from Philly up in Bristol Borough where I’m DIY’ing a duplex I bought in December. Should be wrapping that up in the second half of this year. After that I’m looking to buy bigger multifamily 5-15 units. I’m starting to look for investors. Keep in touch if your still looking by the end of the year and/or if you want to go bigger than what you could do on your own.