All Forum Posts by: Ken P.

@Dhanush Kondoth I assume when you said full time maintenance guy, you meant that he would be the exclusive maintenance person for your 18 units, not that he would work full time at maintaining the 18 units?  18 units is no where near enough units to keep a maintenance person busy full time.  Typically the number of units is on the order of 70 or 80 or even more before there is a full time maintenance person.  I self manage 26 units and typically have 1 or 2 items per week that need to be addressed, with some weeks with none, and just send in a non-contract handyman, plumber, and HVAC people as and when required.

In the case of the apartment building we bought, which was not finanaced by an all new loan but rather by the assumption of an existing loan, the local bank had no problem with part of the funding for our down payment coming from a HELOC.

Brian, belated congrats on closing on this huge complex!  Although we couldn't invest in this deal with you, I toured the property and was very impressed at the quality of the asset you and your team were acquiring.  Good luck!  Hopefully the stars align and we'll be able to come on board next time around.

@Joseph Gozlan The conference was most beneficial for the connections to other investors that we made there, for the vendors we met, and for the ideas we were exposed to in the breakout sessions.  There was no push at all to join LU.  As I mentioned, we weren't LU members and didn't feel any pressure to become members.  

There were many syndicators at the event.  LU has very strict criteria to become a lead investor (leading a syndication) and it is only open to members of their Premier Investor Group, as is investing in the LU syndications as a passive investor.  To me it seems like their rules are structured to protect the passive investors, to the detriment of the syndicators, at least until the syndicators get a few deals under their belt.  However, as mentioned, there are plenty of non-LU syndicators swimming around the periphery of the Expo who are looking for passive investor partners.  From my conversations, many LU members who haven't been able to invest in all the LU deals they'd like are willing to consider outside syndications, despite the potentially higher risk.  

Hope this helps.

@Joseph Gozlan, my wife and I fly down to attend the Lifestyles Unlimited-hosted Wealth and Passive Income Expo in the spring in Houston.  This year there were ~5,000 people there I heard, including many like ourselves who are not members of LU.  It's a great chance to network with other real estate investors, listen to some relevant speakers, and attend sessions on a variety of real estate investing topics.  

We use SmartMove, a TransUnion service, for our tenant background checks.  Their background check costs $30 after the BiggerPockets $5 discount, and covers credit, criminal records, and eviction records.  It has proven its worth over and over again.  Look under Perks on the BiggerPockets site for the discount code.

The benefit of credit checking should be obvious, but we've also rejected potential tenants with decent scores in cases where they are moving from staying with family (thus no recent rental history) but the total of their credit & loan bills on the report show that paying the rent we charge would put them on the edge of financial disaster. We don't want a tenant having to choose between repairing their car and paying rent, because we know we'll come up the loser in that decision.  

Besides verifying whether the tenant is lying about their eviction record, the eviction report also shows eviction filings, which often don't lead to evictions.  One tenant we declined had never been evicted, but the report showed that 5 different apartment complexes over the previous 5 years had gone to court and started eviction proceedings.  Obviously on-time rent payment wasn't a priority for that person, so we left it to some less-careful landlord to accept them.

Kevin Williamson usually writes about politics, but wrote this article recently after spending time in court evicting a non-paying tenant. I enjoyed his observations and musings on the lives and situations of some of the tenants renting in (presumably) lower end properties.

http://www.nationalreview.com/article/447292/under...

Out of 26 units, I have 2 legacy tenants that pay by mail, both retirees who have the checks to me usually a week before the due date.  For everyone else, rent is due on the 1st, with no grace period.  Most pay by auto debit, but those that pay with cash go to our bank and deposit in a sweep account.  There is no question whether rent is paid on time or not, because bank deposits of cash show up instantly online.  Same would apply to online payment methods.  For the future, and as you add more rentals, I would recommend keeping it similarly simple.  

The big questions are what sort of neighborhood is this in and what quality of tenant can you attract?  I bought a C- MF property on the edge of, but not in, a war zone, and it has turned out to be a very good investment.  We were able to rehab units, attract a better class of tenant, and have improved gross rent receipts by 30%+.  My brother, on the other hand, owns C MF property in a smaller city that just doesn't have the job base to support a stable tenant population.  No matter how nice his units are, he still struggles to keep them occupied with paying tenants despite 10 years of trying.  Location, location, location.

Thanks for all the good input.  It sounds like calling the utility companies is the best way to try to get the info on utility usage, so I'll call Monday and then report back on the responses.

@Joseph Gozlan, just curious on how a property management company could help estimate costs for this is a 100+ unit apartment complex with heat included.  Wouldn't the utility cost vary greatly from complex to complex depending on the heat source, vintage, building condition, etc?  That is, I'd expect very different heat costs between a 100 year old mid-rise building in Detroit with a central boiler vs a 1970s garden-style complex in suburbia with hot-water baseboard heating.  Even for two complexes with similar style heating systems, I would imagine costs would vary greatly depending on the age/technology of the heating plant. I will ask several PM company owners I know in the case where the utilities don't provide the data, if you still think this approach has value.

@Aaron Howell as I mentioned in the original query, this property is not on the market, so there is no seller's information package available to review.  We will be approaching the current owners with an unsolicited offer, because we think under the right terms we can achieve good returns for our investors and ourselves by improving operations.