All Forum Posts by: Michael Hutchinson

Thanks all!  Great info.  As an update, I am likely going to get the properties and will be in due diligence this week.  I am happy to update the group.  However, here is what I have learned on it now:

• After speaking with Health Department and Soil Engineers, it looks like I can keep the septic issues to just maintenance.  I will have to simply invest in the property when rehabbing to low flow toilets, showers, dishwashers and it should be good.  I will monitor the progress and see if I can later add back in washer/dryer.  To do that, I might have to get an easement on a parcel across the street and/or change out the pumps at about $30k a unit (4 units) ... not sure it will be worth the cost, but we will see later as it is very profitable with washer/dryer it appears.
• Septic tank and pumps are under 7 years old, with a 25 year life.  The issue is really the design + land available for drain-field + inefficiencies in the units.  
• Because of issues, seller will move on the price.  This will put my debt service coverage ration at about 1.8, with a requirement of 1.2 by the bank.  It will also mean that my ROE should be greater than 28% with a B/E of under 5 years.

It is a project for sure, but assuming I get the load right with construction cost built in it looks like a good project.  Will post again in a few months with a status.

Great info 

Thanks Guys ... this helped a great deal.  Looks like the property can't do much to fix the septic.  The land is smaller and the local regulations changed where they had to move the septic from the back of the property to the front due to a creek.  They filled up the yard with the drain field and there is no room left.   

It is poorly managed, so it has upside in the numbers.  However the real dollars won't come until city sewer comes in which could be 5 years.  Debating the deal now ... thanks so much for the help!

Question ... has anyone any experience with septic issues with apartment buildings?  I am considering a property that has great numbers, but the 4 building complex has septic issues like:  drain-field, "bubbling" due to renters putting "6-7 people" in the apartments, etc.  I am going to see it this weekend, but would love to hear thoughts so I can prepare.

I am going to research if I can put on city water, but not sure if that is viable yet.  The current solution to the issues is pump a few times a year and remove the washer/dryers from all units it appears.

I managed about 15 Section 8 units in WV for about 18 months. I agree with comment above that it is all about screening the renters. Good renters were amazing for me, bad were terrible. I also had success with older renters in this classification. They wanted a nice place to live and stay for a long time. The younger ones created issues or moved out after lease. Second thing I would say is that I made a point to get to know the inspectors and managers at HUD. That made the inspection process much less challenging.

I would do it again with proper screening.

Thanks all. I did see your note in another thread Joseph and watched the video. Will use that as one of my references. I did request rent roll and vacancy rates, information from local HUD office and plan to talk to police in addition to crime research. I ran about 55 rentals in WV and had an issue with Heroin and Meth (my Dad's properties that I had to fix the situation) ... don't want to deal with drugs again.

This property is a small town (about an hour from CLT) and is under 8k in population.  Census data tells me median income is $40k with a median house/condo value of $131k.   Median gross rent is $720/month.  Crime looks to be about double the national averages, but stable so I don't see in the numbers a spike ... just bouncing around (some up, some down ... i.e. robberies/theft/assault down, rape up slightly). 

I am seeing the property next week and will tag back on this thread.  I looked at sale as an issue as the potential rent looked too high for the cost.  I am using ROE as the primary measurement and the numbers seem too good to be true.  Made me think I didn't understand it well (hence the post). 

All good comments/questions that I will write down to look for. 

All, I am looking at buying my first apartment building, assuming my research works out this weekend.  I would love to get general advice to look for, resources, etc. to help make sure I evaluate this correct.  Here is the overview:

• 12 unit property (3 singles, 6 two bedrooms, 3 three bedrooms)
• Being sold from investor (red flag for me)
• I am using rentometer.com to estimate rent prior to first meeting.  That tells me I should get:  $500, $700, $900 for the units approximately.
• Building is being sold for just over $400k (second red flag)

I feel like I have a reasonable understanding of single family, but this would be the first time that I have considered this type of investment.  I am curious on things like regulations to look for, normal required services (i.e. trash), security, etc.  Any help thinking this through would be appreciated as I don't know what I don't know.  :)  Thank you!

Hi all, first post in the forum.  I am selling my first and only rental this month as I have been reading and realized I didn't pick well.  I plan to buy 8 houses in the next 3 years as my goal and have a friend in the industry helping me buy/repair/manage the homes while I work.  I see this as a new stream of income and the thing I want to do full time after I get the Real Estate portfolio large enough.

Question ... I am looking for a portfolio management tool/process where I can start to analyze what my friend is doing to monitor our progress, learn more about key ratios and consideration, etc.  I want to use this tool long term for my portfolio management and decision process.  In the short term, I want another way to keep track of my investments and continual learning.  Thanks in advance.