All Forum Posts by: Milton Rivera

@Noel Bradshaw

When this type of treatment is done, the company that applied it guarantees it via a termite bond.  In essence, you pay a fee (typically under $250/year for ten (10) years) and they guarantee the work.  If termites are then found, they would handle the repairs and re-apply the treatment. 

When properties are sold, they try to keep the business and make the bond transferable to the owner.  

A couple of things to consider:

• Ask the seller if there is a termite bond on the home if so, you can get more details (when it was treated and whether it is transferable).
• You can contact a local pest company for them to do an inspection and see if they would then offer a bond, they would have a very good idea of where the core drills are and see if they need to re-apply. Sometimes inspectors have relationships with the pest control companies and this is included in their inspection fee.

Good luck.

@Jeremy Anan

I would also involve your tax advisor to determine what the tax implications will be.  How have they filed taxes in the past and how will that impact you?  Will you need to change the business structure to suit your needs?  

Besides doing the typical title search, I suggest completing a back ground search on the company (including the state and local jurisdictions to ensure all licenses, taxes, and fees are up to date.

South Florida, their building code is one of the more stringent ones due to the Hurricane zone.  There has also been wide corruption discovered within the municipalities with several folks going to jail. 

@Joe Shay

In this scenario, I would do a comparison of the pros and cons of each:

HELOC

• Pros

Tapping into equity that is not really being used.

Keep your immediate cash to be leveraged for other acquisitions.

Relatively easy transaction (from a documentation standpoint)

• Cons

Paying interest on the funds used (this should be factored in your acquisition budget).

Lower overall return

Using your own money

• Pros

Potentially higher cash flow

Less paperwork - no need to secure two loans (HELOC and traditional)

• Cons

Reduced capital

How does this individual transaction play into your long-term goals?  How fast are you looking to secure other properties?  The biggest thing is that you have a property (not really an asset since is not generating any income) that is not really being optimized.  If you are close to retirement and want to make sure you have no debt then that could be a different play, otherwise, I would look into putting that property to work.  

@Jeff Lee

The type of finance you should consider will depend on your overall goals and strategy for the property.  It also sounds like you considering what to do with certain capital, leverage it or not and if so to what degree.  Are you focusing on cash flow or something else?  Depending on your number of outstanding mortgages, it will be hard to beat a traditional 15 or 30-year mortgage.  It may be prudent to maximize those loans first (I believe you can secure up to ten (10) with Freddie).  You can always pay them off early.  

The 5/1 ARM may be a good play if you have a short-term horizon on the property, say you will be selling it in three or four years. If you intend to keep it and you are not able to pay after the five year period you may be paying a higher interest rate and these are trending upward for the next few years.

@Nicholas Lohr

I highly recommend you listen to BP Podcast episode 286 from a couple of weeks ago. 

The bottom line, storage facilities are valued like commercial properties and not single family residences.  If you improve the property, say you go from a regular property to a temperature control unit, this will allow you to increase the monthly rents and hence drive up your revenue.  

@Boris Suarez

Congratulations on the acquisition.   There are few things to consider:

1. How long has the property been listed?
2. What is the typical timeframe to find a qualified tenant in your area? 
3. What range did the PM provide?  What type of expectations did they set?

 I am assuming you did some due diligence when identifying the company that you are using and hence, in general, I would stick with them through the first transaction unless they set some unrealistic expectations.  

One of the key factors is seeing what type of traffic you are getting. If you placed some listings yourself what type of response did you get? Are the listings created by you and the PM the same? Most PMs handle the listings since they should have a process in place and highlight the key features of the home. Please note depending on the property and the PM guidelines, it may not be listed on the MLS.

If there is no traffic at all then it could be a pricing issue if there is traffic but no applications it could be something with the property.  The PM should be able to provide some feedback and let you know what prospective tenants are saying.  You could also be getting applications from unqualified tenants, in this case, you are better off waiting an extra month to get the right tenant than to get the wrong person in.   

@Account Closed

Based on all of the repairs you are already doing, I would target the upgrade. One big consideration, what is the standard in that market?  If in the SE, then AC is standard, if in the NE than you may be able to get away with not doing.   Speak to MEP contractor to see what type of solutions they could offer, do you really need a system in every unit or can you combine via thermostats or other controls?  There may also be tax credit available for updating the MEP system.  

Good luck.

@Moira Mosley-Duffy

I believe it depends on your relationship with your agent. In general, put in an offer since the likelihood of being accepted is low (per your comment 20%).  Once the property is under contract, you can go on full due diligence mode getting the agent to a look at it as well as any other team member (property manager, contractor, etc.) 

@Mike Pennington

A few cost-saving strategies:

• Build several units by pouring a monolithic slab. 
• Try to get plumbing to share walls and or locations (think a bathroom on one side and a laundry on the other) or place bathrooms above each other. 
• Consider using durable materials (think tile throughout in lieu of carpet and/or wood floors).  This is more on the overall lifecycle vs. building costs.
• Keep walls to about 8 ft in lieu of 9 or higher (this will save on lumber and/or drywall).  
• Look for green building incentives that may be offered by the local government.