All Forum Posts by: Michael King

@Patrick Hill Awesome Patrick thank you!

No contingencies other than outs for finding stuff I don't like on the inspection or financing falling through. 

What I could see of the foundation was that there were about half a dozen cracks, 2 of which were moist. While that's a concern, there's plenty of crack repairers around. I did note that the owner had erected 2 jacks to support two sets of joists, so some apparent sagging going on there. 

Thanks for the update on Romex. I didn't want to pull a screwdriver and start disassembling the panels in the presence of the owner's dad. But then what if the wires were tinned copper? Are they tinned throughout the entire length of the cable or just where exposed? And a bigger question....why the heck did they think that was a good idea???

I think the Romex looks like it's in good condition. Seems undisturbed where I could see it, no fraying and hardly even any scuffing of the painted (?) surface of it. But I wonder if they've tapped into it in any of the apartments....that's where it would be worrying to me.

Thanks again Patrick! What part of St. Louis are you in?

@Account Closed wow Jack that is awesome information, thank you!

Your point about knocking on the doors is in line with how I felt about it; but I've just about finished reading Landlording on Autopilot...and Mike Butler mentioned doing this. I'm thrilled you put it the way you did!

To clarify with the wiring, how do you tell it's not aluminum? I did zoom in and get partial information off the actual wire and was about 75% sure it was not aluminum, but I'm not an expert in the US. In Australia, however, I'm a licensed electrician and have seen similar stuff before; I've rewired several houses with this (never seen aluminum over there). Of course, now I've replanted and I'm a card carrying member of the USA. 

Further, the top of the switch panels is in a basement, inside the house. Is it just Romex that must be in a conduit, even though inside the basement, or does that apply to all branches in the basement? All the houses I own here are 26 years old or younger, and have the wires exposed in the basements, just like this picture. Which is why that aspect of it didn't ping my attention.

I've seen the NEC, but not real interested in doing my own electrical work in the USA, it's just so much more difficult than it needs to be here. And dangerous, with that enticing low voltage 110!

Mate I really appreciate your insight!

Good day BP people, I believe I'm close to pulling the trigger on a fourplex that I found off market. We have come to a price and will be working out the details shortly for the transaction. I had a tour of the basement; owner was out of town and he doesn't want me disturbing the tenants. I have a couple of questions for those that own older multi family properties.

1. I found fabric coated wires. My research leads me to believe it is not aluminum wire, but can't be sure. My insurance agent says to get it certified safe by an electrician. Does all this sound plausible? Or more realistically a rewire in short order?

2. I took photos of the wiring, and in the background I noticed insulation on top of the foundation wall...I didn't notice when I was there, but saw it when I was zooming in on the photot to identify the wire types when I got home...I did some some research and it looks like asbestos. The owner assures me that it's fibreglass batts...but I'm not sure. Thoughts on asbestos insulation? This is probably my biggest red flag if it is asbestos, as it is visible and doesn't look in good shape. 

3. Built in 1950, I have to provide a lead based paint disclosure to the tenants and leaflets from HUD. Do you just print them off and hand them out, get the disclosure signed? Of do you order the pack of 50 color ones from the GPO? $66 is $66 after all.

The photos show the wiring, which looks in good condition, and the gray insulation with white fluff at the bottom of it. I always thought fibreglass batts were pink or yellow, no expert though.

When inheriting tenants, as in this case there are 4 rented apartments already in place, do you knock on the doors of the tenants to meet them? And if you do, what information are you trying to obtain or deliver? The current owner seems to not want me disturbing them...I see that as a red flag though. Am I misguided on that thought? 

Apart from a standard building inspection, what other things might I consider? Calling anyone from the city with respect to code violations? Or fees/taxes levied against landlords?  I've not bought a building this old before, nor have I bought a multi family before. Any thoughts, advice, suggestions, anything, will be very much appreciated!

Thank you

Michael King St. Louis MO,

 Some pub owner in England decided that the name was declining so decided to host Nigels from around the world. Looked like a fun gathering and there was one from the US. Nigel Mansell was a fantastic formula 1 driver with an awesome mustache. I had a friend in school called Nigel. 

As a landlord I would be absolutely okay with this. My realtor does it now; he leases an apartment for market rate then Airbnbs it. He's making bank, and calls it rent arbitrage. In MO it's legal so long as the landlord is good with it. If you do it behind landlord's back, if I read the law correctly, the landlord can legally charge the tenant double the rent. 

Make sure the city/county/HOA allows short term rentals though, that would be the gotcha I think.

It works for me because it's such a mixed bag here in St. Louis, and I really don't know all the areas. In fact, it's not the neighborhoods you need to know, it's the blocks. The one neighborhood I'm familiar with has high buy in price, and even the 20 year old houses need new rooves and updating. At the same price I buy brand new ones for, I put 20-25% down so have some equity to begin with. That and I work pretty solidly as an EMS pilot for my regular work (I work 12 days out of every 14).  

Seeing that you are in the construction industry, I guess your full time job is rehabbing properties? You've got a good thing going; I would like to do that, but again, neighborhoods here are tough for me to scrutinize. That and the lack of time I have to rehab a place. What I'm doing makes sense to me because this is my side hustle and I'm in it for the long haul. The first house I bought already has 25% upside in 3 years. And besides, I'm only doing it for my kids; I want them to have opportunities I never had in my life. That and 5% ROI is better than buying trinkets for my wife.

Yes, this works for me.

All of my current SFRs are TK and I'm okay with that. I paid market rate in a desirable area, threw tenants in and have around 5% ROI. ROI would be higher if I'd had lower downpayment (20% down minimum), but using a higher downpayment, lowered my mortgage payments to enable them to be more manageable if I had to carry the notes for an extended period.

The 4 plex may need some rehabbing on one or two of the apartments, and possibly the common area too. 

I'd love to hear how your progress comes along. The BRRRR method seems to be one of the more lucrative methods.

Good luck.

I let a tenant do this once. He'd lost his job and had to move 3 hours away. He was out on the day we agreed upon, and he happily paid another month's rent. Forcing them to stay could make them a bad tenant. An empty house is better than a bad tenant I think. 

Great question Anthony and I'm going through this dilemma. I have 5 doors now and am securing a loan for a 4 plex with 10% down. I found a commercial lender that is going to give me a $60K commercial line of credit, borrowed against one of my SFRs that I own free and clear, so that I can add another 15% down to my 10% and secure the 4 plex. The mortgage is quoted at 30 years 4.875%, and the CLOC is quoted at 'around' 5%. 

My main mortgage guys (a broker and a credit union guy), both required 20% down AND 4% reserves against my other mortgages (another $26K). So on a $300K building, I would need $86K cash laying around. My new way of doing business needs just $30K. And now I'll be able to repeat this and use the CLOC as part or all of the downpayment. 

 Yes and what he said! Nigel, do you ever go to the international convention of people called Nigel?