All Forum Posts by: Marcus Curtis

Hey All,

I am working on a deal right now with an absentee owner of a 4 unit building... well maybe it is a 5 unit building. I am not certain. There are two units on second floor but on first floor I am still trying to decide.

Take a look for yourself:

Clearly, there are two 1 bedroom units on this floor. On the front side of the building though there is an "office" that has two 1/2 baths but no kitchen or closet in the "bed". There is a passage door along the closest exterior wall leading into the common area hallways. 

The rental license shows it to be "4 dwelling units + office (low-rise)" but the county is showing it simply as a 4 unit residential. 

Seller is currently renting the space out to a chiropractor on a month-to-month lease. I really do not care either way because if I can pull this deal together I will be converting the space to an additional unit which zoning will in fact allow for. 

With that said, I am hoping to finance this via FHA. What I am unclear of is what will the FHA appraiser/inspection would consider this unit? A commercial unit? Maybe as additional rentable space much like parking or storage?

Someone has had to have run into this before. Thanks in advance for your input!

Hi Garrett, Welcome to BP! Get ready for an addictive and informative adventure with everyone here on the BiggerPockets Community. Whether you are looking for more knowledge or inspiration you'll find it all here. I too am in Minneapolis-Saint Paul. You have allot of resources here locally and allot of opportunities hiding behind all the things that glitter. Looking forward to seeing you grow your empire!

@Karen M.  I think it would be an interesting value proposition during the lease walk with your prospective tenants to inform them that you have installed energy efficient LED lighting throughout the rental unit. You could create a cost comparison table for the resident and show them how much they might* save by leasing with you versus the one across the street. 

As @Steve Babiak mentioned the true value of LED is to install them in common areas where you as owner are paying for the electrical. To add to the savings you might consider putting these lights on timers or photocells. I recently replaced some dated halogen fixtures in a 110 unit multifamily building. The material cost for the new fixtures was $12,000. After participating in a rebate program with Excel Energy (electric co.) we ended up getting a rebate of $6,000 for slowing down the meter. Of course, this was a large project that included hallway lighting and underground garage lighting.

More direct to what you are speaking of I personally think it would be a mention worthy benefit you might offer your renters. You can get LED in many different Kelvins and Lumens. This technology will be in place sooner or later so you will simply be ahead of the game. 

@Daniel Pena what is the heat source for the unit? Is it electrical baseboard heat? If so, there is your answer. 

When all else fails hire an electrician or contact the electrical provider- the meter may be reporting wrong.

Looks like your standard skip-trowel plaster application. In the mid 70's it became popular to start using acrylic plaster which is essentially acrylic paint with plaster mixed in as a thickener versus a bonding agent. You might try chipping/chiseling it in a inconspicuous area to see if it falls off. Otherwise, if it is generally good condition you should be able to prime it, skim coat it and finish it as you would with any drywall/plaster. 

My why is most certainly To break generational curses that have haunted my family for generations.

At a young age I decided I was going to be "successful". While real estate is just one facet of this life goal and purpose I do realize that through this avenue I am able to connect with people, form relationships and possibly help others along in their goals and dreams. 

If you help as many people get what they want soon you will have everything you need. 

As others mentioned the flooring- in this design- is so bold and busy. I would do away with the floors and back splash. 

The cabinets themselves do not look all that bad. However, being that they are such a rich red tone it might be helpful to "tone" it down a little by possibly making either the upper cabinets or the lower cabinets a different tone. Of course, this is an acquired taste but I have grown to love the look of two-toned kitchen cabinets.

@Account Closed I believe it depends on your personal situation and skillsets. For residential management it is just as easy to a couple of your own properties than it is to manage the manager. For Commercial real estate- which I am assuming office/retail- things get a little different.

The skills a qualified manager brings to the table is knowing the market. It is all they do so they should be able to do it well. They will also know what a good tenant mix is for, say a strip mall or office building. They also will be able to better negotiate leases and even lease-buyouts. There are a number of factors to consider especially in the commercial  real estate realm, in my opinion.

If you were to hire an administrative assistant to manage the properties for you and find you new tenants do they have the resources in marketing, leasing and financial operations of a property? If the don't then do you? Do you have the time or the willingness to do so at this point?

Allot of things to consider!

For financing purposes, 5+ units is considered commercial. 4 units or less is considered residential. 

For code requirements it is state specific in most cases and I am unfamiliar with code requirements for this asset class in California. You might consider reviewing this link: http://www.hcd.ca.gov/codes/mhp/CombinedPages4300t...

Here in Minnesota we have an issue with municipal (city) governments attempting to enforce stricter codes than that of the state fire code. The most recent case on this was Morris V. Sax in which the court determined that municipalities cannot make requirements more stringent than the state code. This has been battled in other states as well. 

In most every state Section 8 is a participatory program that landlords can chose whether or not they will participate in it (for now at least) So, although your state law says you cannot discriminate on the SOURCE of the income it does not say you must participate in the program or accept all government subsidies.

To my understanding in California the Dept of Agriculture regulates most of the landlord tenant laws for state specific. For the occupancy requirements doesn't it state that a unit can be occupied by two people per bedroom plus one? In a sense, a studio is a open one bedroom therefore you can have up to two people plus one? Most states allow for the Landlord to limit the total occupancy to say no more than four individuals may occupy a two bedroom apartment of which only two can be adults.

I have heard some horror stories about California's regulations. One such regulation I am aware of is that you cannot discriminate against a person for the "association" to or with gay, lesbian or transgender individuals. Not sure if that is state specific or on the municipality level.

I do not recall the case but there was recently a discrimination case in California that went a little something like this:

Tenants of a large apartment building complained of another tenant in the building who stood in his window, blind open masturbating while other tenants came home from work. The management terminated the lease on the grounds that the individual was violating the quiet enjoyment for other residents and was interfering with the companies ability to conduct business. During the eviction hearing, the tenant claimed he was being evicted because he was gay. Long story short the tenant lost after arbitration and HUD involvement.