All Forum Posts by: Matthew T.

Thanks for the reply and I was thinking along those lines as well. He paid a prorated rent for February so his deposit will go to covering March. 

I immediately put it back up for rent after he told me that. 

He’s been trying to give me back the keys and meet me to collect his money, but I’m hesitant to take back the keys as a court might take that as I’m letting him out of his lease. 

Hi all. The title is pretty self explanatory. I have a renter who signed a lease last week. Paid deposit and first months rent. Didn’t move in. Now he wants out of the lease and wants their money back. According to him he is in a custody legal battle and his lawyer said he can’t move. He hasn’t proven this and I don’t think is entirely true. 

I did run background checks on him, and I found court records of child support, but according to those records it was dismissed. 
I didn’t know he was in a custody legal battle because he had specifically told me his ex-wife was out of the picture and didn’t want anything to do with their kids when I brought up those records. Now he is telling me the opposite. 
I’m located in Kansas. 
Thanks. 

The finances I showed are for 1 of the 3 buildings. The total price for all 3 buildings is $1.2 million. Unless I did my math wrong, which is a certain possibility, and one of the reasons I came here, the net is about $35K per building, so total net income is $105,000/lets say $1.3 million. Which comes to a cap rate of about 8%. I checked my area and thats about the typical cap rate. 6-8% is fairly normal...

My other problem is on top of those other expenses, I will also have about a $2750/month loan payment per building.

I'm trying to jump into larger multifamily and this will be my first real deal after mostly having SFHs and small multi-families. The seller has 3 buildings for sale, each with 10 units. He wants to sell all 3 at the same time, but has said he will entertain offers to buy 1 building a year for 3 years, which is what I offered as that is what I can afford to do. All 3 buildings are identical with 10 units. 6 one bedrooms and 4 two bedrooms. Asking price is $400K each or $1.2 million for all 3. They are not listed for sale anywhere and he contacted me to sell them. The seller bought them not long ago for about $750K and has performed renovations on the buildings. I will enter the finances for the first building, but the other 2 are very similar. 

The total income $68,000 (including rent, laundry, etc)

Vacancy: $5,440 (8%)

These expenses are the "real" numbers given to me. I know I can get pest control costs down substantially through who I use.

Water $3,000, Pest Control $2,600, Trash $540, Gas $3,500, Electricity $3,500, Insurance $3,600, Taxes $5,000.

I will have a loan to purchase the properties. So 20% down and about 5.5% interest over 20 years.

I will self manage and perform my own maintenance. That said, probably put $500/month maintenance per unit.

The buildings have been well maintained and maybe 1/3 of the units have been completely remodeled in the last 3 years. Roofs are all less than 5 years old. Maybe I can get some help on calculating Capex, that's something I struggle with calculating.

Buildings are in a mid-sized midwestern town that is growing. The buildings are in an excellent location on a main 4 lane street right behind a large grocery store in a nicer part of town.

What are your thoughts/concerns on the finances and price?

Thanks,

Wow, some very differing opinions. I did unlock the door for them as I had some of the same concerns mentioned, and I want them out as quick as possible so I can get it rented again. They actually had a moving van there, and I could potentially see them knocking down the door or busting a window to get in. Sorry, I'm actually in Kansas, not Chicago. I changed my location to hide a potential deal I was doing a while back as I've had people pry a little too much into deals, I just forgot to change it back...

I don't have anything about unlocking doors written into my leases, and that is a good idea to add a fee, not something I had considered before.

So, I have some problematic tenants. It's almost a comical story if they didn't owe me money. I gave them an eviction notice Monday for not paying rent and they have overstayed their lease. They texted me today asking me to come unlock their house as they lost their key (inside the house presumably). I'm probably going to go unlock it, but just curious what others would do. Just ignore the text? Tell them to call a locksmith? It's not the first time I have had to unlock their house for them and I have told them before to make a copy of the key. Anyway, other thoughts on how to handle this... Thanks. 

 Not Chicago, smaller midwestern city.

Thanks for the reply. My biggest concern is that it could be a money pit, but I can see potential in greatly increasing its value. The building has been for sale for quite some time and I'm guessing that is others concerns as well, it could take some time to get it fully rented. It's near a higher crime area, but the crime isn't too bad, and crime has been decreasing in recent years. There is a $10 million plaza being built 5 blocks away along with a handful of new restaurants and a new hotel downtown. The area directly around the building is mostly older buildings and hasn't seen much renovation in the last decade, but I could see a potential for change over the next decade. The adjacent building is a vacant retail store (which is also for sale), behind the building is older housing, mostly in the $30-40K range, and across the street are some retail, liquor store, and a bar and grill. The housing in the area has increased in value, despite still being very cheap. It used to be possible to pick up fixer uppers for $10-15K, and thats just about impossible now. Also, the city as a whole hasn't gained population in about a decade, its not decreasing, just staying the same, but we did just lose a big employer (not downtown however).

Hi, so I'm starting to do research on moving into smaller apartment buildings when this one caught my eye. I have a few SFH rentals, but no multi families.

It's a 30 unit row house building. Built in 1899. The exterior of the building is in good condition, all brick, wood in good condition. A small handful of windows that need to be replaced. Only 8 units currently rented and the rest need varying degrees of remodeling. At least 4 more could be ready in a week. All units are 2 bed 1 bath and can rent for $450/month, maybe a little more. The units are all large apartments, some may be able to convert to 3 bedrooms. Only street parking, but it does have an interior courtyard that could potentially be parking for 8-10 cars. It does have a central laundry area as well. 

Asking price is $250,000. So 20 units need remodeling, but a small handful only need paint jobs and some minor work, while 10 of them need completely remodeled.  I've done remodeling before, but for a project on this scale I'd likely contract out much of the work. Do you guys have rough estimates for remodeling 850 sq ft 2 bed 1 bath units. I plan on remodeling them toward the lower end, nothing fancy. 

Income $12,600. 28x$450. Not including laundry income. I could see us getting $495 for the completely remodeled units, especially if we add the additional parking. The location is downtown on a fairly busy main street about 3-4 blocks from major employers. 

Annual taxes $6,000

Insurance $7,000 ($250/unit)

Maintenance $28,000 ($1,000/unit)

Utilities $16,800. Water and trash. 

Vacancy $7,560 (5%)

Capex $15,120 (10%)

Contract services $4,000 (pest control)

Management $7,560. I will self manage, but saw that most people recommend calculating this anyway. 

I based my numbers on research done through bigger pockets. The taxes are based on the sales price. Due to the age of the building I put maintence at $1000/unit. 

I try to be fairly conservative, I hope to get higher rents and hopefully maintence will be lower. It will all be personally financed. I may have to take out an equity loan for the remodeling.