All Forum Posts by: Michael Craig

What do you expect interest rates to be in the next 3-6 months?

@Bill Goodland

The eviction would lure me in. More problems, more opportunity to make money. Calculate what it would cost to evict the tenant (attorney fees, loss rent, headaches, etc.) put in an additional buffer for profit and submit a new offer. Explain to the seller where you got that new offer amount.

Also, don't be so fast to throw money at the tenant (cash for keys). Figure out the underlying cause of why the tenant is being evicted and talk through a solution.

Speaking from personal experience, it is much easier to evict a tenant if it is your primary residence - there are many reasons for why this is.

@Mike Dymski

If you bought a building outright with cash and got all your money back in 7 years, that would be about a 14.3% cap rate. 

Assuming the $300-$500 is pure profit and repairs and vacancies are accounted for, that's not bad. 

Installing the tank less units will not justify a rent increase but will increase the property value and the residents will benefit from a lower utility bill. I installed two tank less units at my primary residence (a duplex), because of the rebate and the fact that I plan on living here for the next few years, reducing my utility bill. The life expectancy is also estimated to be 5-10 years longer than traditional units. I probably wouldn't install tank less units at a triplex though, especially if I wasn't going to live there for long.

The existing furnaces will likely run for a few more years if you have them serviced (get a skilled technicians opinion of course). A less expensive option would be to change out the water heaters now and phase out the furnaces (maybe do one per year). Otherwise, if you have the capital change them all out now for the peace of mind.

The best thing would be to get estimates for all the options and go from there (cost of converting to tank less units, cost to replace all units with traditional units, cost to change only the water heaters and service the furnaces, etc).

@Bjorn Ahlblad

Thanks for the input. I wan't sure if it would be unprofessional to keep salt out or if it would cause other problems. 

If children were living on premise I could see this being problematic but there aren't any children.

Thanks again.

I will be utilizing a snow remover for the units I do not live at this winter. The snow remover says after he blows the snow he wouldn't mind salting the premise if I provide the salt and it is easily accessible. My questions is:

Do you find it problematic if I leave snow salt out in a tote underneath the building awning? Keep in mind, two apartment entrances are under the same awning. The tenants are young adults.

The alternative would be to lock up the salt in the maintenance shed but that would require providing the snow remover a key and will add additional steps to his already busy snow removing route. Thoughts?

@Spencer Herrick

That is correct, you would be accounting for the taxes twice if you include it in the escrow and on its own - which is wrong. When tallying up your expenses be sure to only add taxes once. 

@Rob Cucugliello

What market class are you looking at? If it is a C-/D market, you are not accounting for the additional costs from headaches, turnover and non payment of rent. Also, finding a good PM will be very difficult if you decide you do not want to self manage.

If it is a C+/B market class you may be on to something. Evaluate it carefully and detach any emotions you may have.

@Spencer Herrick

Hi Spencer, either way you categorize it the property taxes are going to end up in the expense "square". The taxes have to get paid, whether you pay them direct or through escrow is up to you and makes no difference to your expense square.

@Spencer Herrick

The only requirement for an FHA loan is that the lendee must live in the dwelling for at least one year.

If there is a PMI on the FHA mortgage, it may be worth looking into refinancing into a conventional loan. Mortgage rates are close to all time low and you may be able to drop the PMI - depending on the LTV.