All Forum Posts by: Ed Osowski

We used the Robins Insurance Agency out of Henrico for our rentals when they were in the rehab phase. They had no problem insuring vacant properties which were often full gut jobs. Rates worked out to $50-$100 per month based on property size, condition, age, construction type, and location. I believe the industry term is builders risk insurance if you want to shop around. Large agencies like State Farm may not offer it so make sure to contact smaller, independent agencies that can write specialty policies with multiple insurers.

Word of warning, builders risk may not cover workman's comp and other liabilities associated with specialty insurance. Builders risk will help you if your investment burns down but it might be useless if someone falls off the roof. Make sure your contractor is fully insured for workplace injuries, liability, etc. Also, the deductibles I experienced were in the $5,000 range so a separate tool policy or inland marine endorsement may be appropriate if you supply some tools/materials but not enough to warrant filing a claim given the deductible. Long story short, find a broker and be careful to explain your full involvement in your flips. Only then can the broker recommend proper coverage. 

We (Dobrin Homes) are currently working to benchmark local expense data for both single and multi-family properties. To do that, we're attempting to gather raw data showing what the typical investor actually pays for things like maintenance, property management, utilities, etc. 

We'd like to determine the ranges and averages of typical expense categories (maintenance, property management, utilities, etc.). The data will be specific to the  VCU area over approximately the past year. 

Dobrin is offering to crunch the numbers, as well as contribute income and expense data for the 110 units we own. If anyone is interested, we'd ask they share income and expenses, number of units/beds, and at least a general location of the property. It's fine if participants don't want to share exact addresses. 

We'll share the end product with all participants. If we get enough data, we'll break down the average expenses by neighborhood. We'll also gather all the raw data in a spread sheet so others can perform their own analysis. It will be interesting to see if concentrating on a small area and time frame changes the assumptions we all make regarding expenses.

If anyone is interested in participating in this exercise you can contact me via email ([email protected]) or in this thread. 

We have  3 or 4 in Richmond, all purchased with a neighboring house. The long term goal is to build but we haven't done that yet. I think all our lots are zoned for single family, though one might permit a duplex by right. It's definitely large enough.

Sure, 

LURA is Land Use Restriction Agreement. In my case, a previous owner received a loan from a quasi-governmental agency to renovate the property for low income housing. In exchange for favorable financing and tax credits, previous owner signed an agreement that the properties would only be used for low income housing with certain other requirements. This agreement travels with the property, therefore binding all subsequent owners until it expires. 

LIHTCs are Low Income Housing Tax Credits. Basically, an incentive program to encourage developers to build or renovate apartment complexes that will be used specifically for low income housing.

I am not an expert on either and the exact definitions may vary by jurisdiction or issuing program.

Hi everyone,

I've come across a situation I have no experience with. We're currently trying to buy two LIHTC properties. They're in decent shape, located neighborhood we really like. Current owner is open to a sale.

The only problem is the seller wants to include a third property in the deal. We don't want the third one. The three properties are subject to the same LURA, put in place with the financing. 

Seller believes the LURA is a barrier to selling except as a package. It seems that the properties can be split off, just that seller worries the process is too expensive/time consuming. 

To be clear, we do not want to remove the LURA from any of the properties. We just want to buy 2 out of 3 subject to the LURA. 

Anyone know what is involved to break off the properties we want? All properties are located in Richmond, VA.

Ed

Hey Darrell,

I work in Virginia but grew up in Rutland. Is that where you're investing?

As for the fireplaces, I know a lot of people back home who have capped their fireplaces due to heat loss. That said, I also know agents back home who use fireplaces as a selling point. You can make it work either way. I have friends who bought a house specifically because it had a functional fireplace.

If a fireplace is capped or otherwise non-functional just make sure it looks nice. I've seen lots of capped fireplaces with crumbling brick or chipped mantels. That means a major turn off in the middle of the house. Seems like people kind of forget about the fireplace once they stop using it.

A good option is a gas stove in front of a capped fireplace. That way, you preserve the charm without the heat loss and chimney maintenance.

@Joe Fairless 

Property is B- with some value add. We're planning to transition to student housing, should be a solid B when we're done.

Thanks for the advice.

Like you said, I think we'll have our PM oversee but leave the day to day to the current PM for now. We'll do rolling renovations as leases expire. We can switch PMs once we have a critical mass of students. 

Hi all, 

We're closing on a 31 unit apartment building in Richmond, VA this Friday. The complex is currently managed by a live-in PM. We already employ a property manager who oversees our portfolio of 40 SFRs/duplexes, also in Richmond. This deal will increase the number of units we own by about 50%.

Our current property manager is already very busy so it doesn't seem practical to fire the seller's PM. However, we would eventually like to manage the 31 unit building with our own people.

I'm looking for advice from anyone who has gone through a similar situation. Any suggestions as to what roles, if any, our in-house PM should take over immediately? General advice for managing a complex of this size? 

Thanks,

Ed

Hi Matthew,

Turn around (assuming you mean the renovations + rent increases) will take place over the next 12-14 months. Some of the leases have been recently renewed. The goal is to have everything upgraded well before the 2016 off-campus housing fair at VCU. It will be a gradual process due to the existing leases but we're confident in our ability to rent the renovated units as the come available.

As for the current rents, we're buying from an out-of-state owner who isn't up to date on the market around VCU. 

Ed

Hi everyone,

We are closing on an apartment complex in early 2015 and are hoping to line up some private money. We're looking for $50,000-$100,000 for the following project.

The complex is located in Richmond, Virginia near Virginia Commonwealth University (VCU). VCU has about 35,000 students, most of whom live off-campus. Student housing is our speciality and we only invest in a few areas of the city. Local knowledge is our greatest strength and this deal is located only a few blocks from our office.

Specs:

12 2/1 units

Price: $545,000

Monthly rent: $6,315

3% Vacancy Loss

Monthly Insurance: $257

Monthly Maintenance: $1,009

Monthly Utilities: $535

Monthly Property Taxes: $510

Monthly NOI: $3,814.55 (with no rent increases)

Cap rate: 8.4% (with no rent increases)

This is a stabilization project. The rents are currently a bit low for the area. We plan to renovate each unit as the current leases expire and raise rents to about $700/month. The renovated units will be marketed to VCU students.

We have in-house construction and property management teams. This allows us to renovate and manage properties more cheaply than most investors. We've invested in this area for five years and currently own over 40 rental properties.

If interested, please message me on BP or email me at [email protected].

Thanks for looking,

Ed