All Forum Posts by: Michelle Shriver

Thanks @Tchaka Owen for your input.  

1.  I neglected to mention that the property is in New Orleans, not York Haven.  I live there part time and have a rental duplex in addition to a small personal condo.  I actually may need pest control as well, thought we typically handle that on an as needed basis.

2.  True on the vacancy.  Though the current owner has had it at full occupany, he had to evict a cash paying tenant, at the same time one of his Section 8 tenants just up and moved and he wants to evict one other person.  He has a few that won't be going anywhere for a while.  I don't think he screens well and if I were to end up with the property it would probably take a year and a half to get it nice and stable.

3.  He just hired a property manager, so that could be another issue that I would have to deal with.  I think 10% is too much when he doesn't need to collect rents, plus I would be involved in screening the tenants.  So there is some possibility there.  

The thing is, it is close......which is why I've posted it here.  

Thanks again!

Thanks @Jonathan R McLaughlin

The current owner purchased it in 2012 for $165,000 plus negotiated a mechanics lien from $60K down to $30K, so we will just call it $200,000.  The owner from whom he purchased it paid an eye-popping $848,000 in 2007!  I'm guessing that he got himself in trouble by overpaying, and while the demand for apartments is traditionally high, I'm guessing rents went down as more rental stock opened up.  There had been a shortage of housing due to a hurricane in 2005.   

The property was distressed and maybe only one unit rented when the current owner bought it.  He let it sit for the better part of 2012 before he began to work on it.  

Within the last 5 years he has done a new roof, actually built a peaked roof onto a flat roof, all new HVACs, new water heaters, fully renovated 4 units, flooring, cabinets, doors, bathrooms, etc.  The other 8 he did what was needed, paint, repairs, flooring, appliances.

The assessor updated the value just last year, so I don't expect it to change too quickly.

The insurance amount is from the current owner, I need to check with my own agent.

How much liability do you think would be wise?

With regards to flood insurance, I checked the FEMA maps myself. Flood insurance is not required but it's close to areas that flood so I think flood insurance is a must.

No real upside on the rents as it is Section 8 and 1 other program.  Don't see it doing as well on the open market.  Parking lot for the tenants, but no opportunity for extra income there.

Building was built in 1979.  I agree we are low on repairs.  There are always oddball leaks and repairs that one doesn't notice.

About 5K of what I allotted is for the termite treatment.   The immediate things that I see are new soffits (13,000 sqft rectangular building), some brickwork in two areas (some loose bricks and settling), a hole in the parking lot, new outdoor lighting, painting the exterior doors and architectural arch-like things on the upper windows of one side of the building and the faux balcony things (including railings) at the upper windows of the opposite side of the building.  Maybe another $10K?

Thanks!

The seller is asking $749,000 for this property, the tax assessor has it at $627,100,  I've analyzed it at $600,000.  It needs some exterior work, and what appears to be a minimal amount of interior work.  I've only been in 4 units, of course I'd need to see all 12 and have the appropriate inspections.

Though I've analyzed it as a cash deal, I would get financing for it, 65-75% of the price up to 7.5% interest rate, though hopefully lower.  

I don't think it will appreciate much, my primary interest has been cash flow which I don't think I'll get much of after financing.

Any thoughts or additional things I should consider I would love to hear!

Property Information

Purchase Price:  $600,000 

Estimated Repair Costs:  $30,000 

Total Cost of Project:  $630,000

After Repair Value:  ??  

Property Description:  12 - 3 bedroom 1 1/2 bath, Section 8

Rent Total:  $12,833.00

Vacancy - $1,283.30 (10%)

Repairs - $1,026.64 (8%)

CapEx - $1,026.64 (8%)

Water & Sewer - $355.00 (3%)

Electricity - $180.00 (1%)

Garbage - $210.00 (2%)

Insurance - $1,208.00 (9%)

Property Taxes - $805.17 (6%)

Flood Insurance - $447.00 (3%)

Lawn - $150.00 (1%)

Termite Contract - $75.00 (1%)

Management - $1,283.30 (10%) 

Total - $8,050.05 (63%)

We have 10 SFRs under management in the Youngstown, Ohio area.  We have an agreement with our PM to complete repairs under a certain amount, I believe it was in the $100 range and my husband upped it to maybe $200-$250 range so as not to be bothered by too many little items, but he doesn't remember.  Emergency things like no heat get handled immediately.  

I had suggested organizing emails into folders so it was easier to find info, but sometimes emails cover more than one address.  My husband also said it was too much work.

We recently had a vacancy, we went through and determined work that needed to be done, got our proposal, made our revisions and OKd the work.  

We got an additional small bill for exterior work that we'd already paid for in 2015 which was never completed.  We had bugged the PM for 9 months to have the contractor (they share a small office building) complete what we'd paid for and my husband finally gave up.

However, I was really pissed when we got billed again, and I remembered this particular repair because of what we'd dealt with before.  I reminded the contractor with past email documentation that we'd already paid for this and the contractor's secretary (wife) sent us an email backtracking on how she wasn't sure exactly how to describe the work and that at any given time different things need addressing and it may not have been the same thing we paid for.  Well, this patronizing tone made me even more upset, though I was nice to her and just requested that she send some photos of the additional work that she didn't know how to describe.  She must have assumed that because we are out of state investors that we never visit our properties.......we'd been there 4 times in the previous 6 months!

Photos didn't come, and I went through every proposal and email and invoice related to maintenance on this property to document that our request to have the work completed wasn't just a one off that could have been missed, and that it had been ongoing over a period of time.  

Wow, what I discovered.  There are many issues at play here.......and I'd like to say that basically our contractor is a good guy who does a decent job.  Things get missed, that's expected.  He has grown and has at least a couple of trucks that I'm aware of and a bunch of guys working for him.  I know a good contractor is difficult to come by, though I am going to begin looking for others.  My PM had another guy that he was using in addition who just didn't work out.  He claims it's difficult to get good people, though I'm not sure how hard he's tried to find different options.  

My husband is very organized and keeps the books and spreadsheets, though he doesn't delve too deeply into the repairs.  Our PM uses software called RenTec which tracks a lot of things.

So, what I discovered is some painting which we paid for in the laundry room that was never done, a hot water heater that was replaced 2 1/2 years after our initial renovation which included a new hot water heater (yes, they were both done).  But didn't someone notice that the water heater looked fairly new?  There was a warranty on the first water heater, what happened with that?  

OK, so I take responsibility for those things.  We had an opportunity to notice that the paint wasn't done when we got inspection photos during the tenancy of the previous occupants.  

Another thing was a repair made to the exterior of the house in March of this year that I noted was a problem with a picture during a drive by in June.  That either wasn't done or was done poorly.  We've paid for that again as a turnover repair.  

Now that you have the long, drawn-out background, I'm looking for ideas on how to best organize previous proposals and invoices so as to avoid these problems.  We are also working with our PM to not just send us general photos of the completed project, but to check the work specified on the proposal.

I agree it sounds like there are some deeper issues at work.  Marriage counseling is a good idea, buying in secret is not.  

Pursue your dreams and deal with the discomfort of not having her support.  It doesn't sound like you'll go into financial ruin over it.  Get your support here from the BP community.

I was in a situation when I thought I may have to ask my property manager to start eviction proceedings against a tenant.  I wanted to understand how the whole process worked so I did some research.  I remember that stipulation about not accepting partial payment really stood out to me.

Then, some time later, in another state where I self-managed, I did have to evict a tenant.  I did some research to make sure I followed the correct rules for the city/county/state and went to court.  The ONLY question the judge asked was if I'd accepted any partial rent payment, which I had not.

Good luck, you'll have your house back soon!

Nice deal!  Thanks for the breakdown on your thoughts and numbers.

@Jerry W.  That sounds pretty good, right now I have a referral for a company at 7.5% and lots of fees.  Is that a local group you're working with?  I'd love to know more, I'm looking at a 12plex and in a different location 2 6plexes.  The 2 6 unit buildings are a package.   

Find some local real estate meet-ups and a local REIA. I've found an REIA to be particularly helpful. You can probably attend 1-2 meetings before deciding if you want to join.

Take what you've learned from the books and podcasts and analyze deals from the MLS, just for the exercise of it. Go out and look at some places, drive by, talk to neighbors, then get a realtor to show you ones that you like.

Congrats, super exciting!