All Forum Posts by: Mike Roy

Originally posted by @Roy N.:

@Mike Roy

Ugh! Kerosene space heaters ... I'd be pulling them out as well.  

What are electrical rates in the area?   Regardless, I would have a serious look at the Mitsubishi Mr. Slim (MSZ-FH series) ductless heat pumps before putting in a gas or propane space heater.   Costs will be similar to what you quoted above for the Rinnai heaters, but the operating costs will be much lower and they double as air-conditioning in the summer months.

 Nice idea, I will definitely look into that.

Originally posted by @Roy N.:

@Mike Roy

If the system is hydronic (baseboard or radiator), then the key bit of information will be whether each unit is plumbed as a separate zone from the others.  If this is the case, then separating the manifold in the mechanical room and placing each zone on its own, smaller, boiler is relatively simple.   If domestic water to each unit is also separate, then you have the option of sub-metering water.  If at least the domestic hot water run to each unit is separate, you will be able to place the cost with each individual tenant.

The current system is Monitor heating units fed by K-1 fuel.  The plan would be to switch to Rinnai heaters fed by propane, as that is what is heating the fourth unit.  I have one quote for the conversion, $7,500, though I think I can get that down a bit.  If I could get it done for $6,000 and fully pass along the $250/mo heat cost, the thinking is that it would take 24 months to pay off the project.

Thank you all for the input.  In this market, some tenants pay for heat and others don't.    The fact that the one separated system is paid for by the tenant leads me to think I can pass along the cost, even if I have to reduce rent a bit such that I'm partially passing along the cost.  However, the building makes money without the conversion, so I think I'm good either way.

The units are in very good shape, so I'm hoping the $200/mo estimate for repairs isn't low balling.  I'm also estimating 5% vacancy, which my broker says is fair for what she's seeing in the market.

I too would be curious to hear from more Maine landlords on the forum.  

Best,

Mike

Hi BP Community - I have an offer out on a fully occupied brick 4-unit building in Maine and would like BP's opinion on the deal. This is my first one, and I feel pretty good about my analysis, but I always appreciate a second opinion. Here are the details: Purchase Price: $180k Down Payment: $45k Gross Rents: $3,033 P&I (30 yr. @ 4.5%). $684 Tax: $445 Insurance $150 Management $304 Water/Sewer $85 Trash $85 Heat $250 (3 units on central heat, other pays on own) Repairs $200 Cap Ex $150 Vacancy $150 Total $2,253 Monthly Profit $530 Cash on Cash 14.13% I'm seriously thinking of separating the heat, despite the $5-$6k cost, and passing the cost to tenants. If I can pick up the $250 in cash flow, the new system would pay for itself in a couple of years, and then Cash on Cash jumps to 20%. What are your thoughts, and what am I not considering? Best, Mike

Hello BP Community - I am looking to insure a brick 3250 sq. ft. 4-unit in Midcoast Maine and the best quote I've found on a DP3 policy is $1,700, which includes full replacement cost of $564k, 10% rent loss, $1 Million liability, $5k personal property, $5k medical, $5k deductible.

I understand that rates vary by region, so would any New Englanders, or Mainers specifically, care to weigh in or recommend an insurance company.

Do most of you carry DP3 policies on your 1-4 units?  I took a look at commercial coverage, but it seems a bit unnecessary.

Another concern is that perhaps I don't need to insure full replacement value, but just enough to cover the purchase price and clear the lot.  Do you recommend using an agreed value instead of the loft replacement value?

I appreciate your insights!

Mike

Hello - I'm looking to buy my first rental property and was wondering if it is generally better to go with a mortgage broker or a direct lender for financing.  I used a broker for my primary residence and have a good relationship with her; I'd use her again.  I'm just wondering if there are advantages of using a direct lender that I might not be aware of.  I appreciate any thoughts you have on the subject.

Thanks,

Mike

Hello - I'm looking to buy my first multifamily rental in the spring/summer of 2015.  I live in Boston but grew up in Midcoast Maine and am interested in investing there because I'm familiar with the area, I think I can achieve 20-25% cash-on-cash in "B" towns (including professional management), and the the location is reasonably accessible to scout for properties and periodically visit them.  Based on the numbers, it seems that 2-4 unit properties in the $75k to $150k fall into the cash-flow sweet spot.

I am interested in Bath, Brunswick, Waterville and possibly Bangor as target areas.  Are there other towns that you might recommend looking at where you've had success?  Have any of you invested much in Lewiston, and are the risks of that area worth it?

Also, while I am considering pursuing a real estate license, I will work with an agent in the early going.  Can any of you recommend a good buyers agent in or around my target towns?  How about a good property management company?  It is a huge priority of mine to build a good network since, most of the time, "I can't get there from here."

If you have any general advice about investing in Maine, or anything relevant to add, I would sure appreciate it.

Mike