All Forum Posts by: Nathan Kyle Taufer

You're late with rent and don't want to pay or vacate... Seems pretty cut and dry to me. Maybe try not being a child about this, pay the rent that is owed and find a new place? You're risking having that on your credit which will make finding your next place next to impossible You're paying under market rent and late. I would have evicted the first time you were late. 

You could still capture 100% of your initial investment back if it appraises correctly. Use the delayed financing exception. To recapture your rehab costs, you'd have to include them as an assignment to your contractor at time of initial cash purchase on the HUD-1. You'll get 75% LTV or 100% of purchase price (including assignments on the HUD). You can also put things like first year's insurance in the initial HUD as an assignment to recapture all of that capital. You don't have to do the LLC to yourself shuffle if buying in borrowed cash, so long as the borrowed cash isn't secured against the property you are purchasing. Any borrowed funds would simply be satisfied on the refi before paying you money from your initial investment. Plus you can do this on day one after the cash purchase. The only stipulation is that you'd want rehab complete, and you HAVE to have a rental contract in place to execute DFE.

DFE is a great program that far too people truly understand. I wish more lenders with familiar with it. 

I guess I'm curious why you'd consider it the ghetto. I have fellow investors from cleveland that are now local to me that travel there frequently that claim the area is decent and upcoming, trulia claims it is a low crime rate, while some claim it is a war zone. I know you're heavily invested in Cleveland, and I'm all ears. I've read your ultimate guide to investing there. Should I run? If you've got strategies I'm all ears. I'm just in this to make money. 

 Thank you. Excellent considerations. The projected rehab cost is for 6 of the 8 units, with 4 of the vacant units needing the bulk of the work/money. I'm keeping 2 of the 4 current tenants. In those two units that I removed tenants from, I will do some light rehab, and those other two occupied units will be cleaned up at a later date. Just some painting and I'm done there. The 4 units that were renting for 475 are in need of some aesthetic love. I'm fairly confident I can get at least $525 monthly rent by simply cleaning them up and making them uniform. I'm not doing any cabinets or countertops at this juncture, I will be painting cabinets in some units and replacing hardware, making paint uniform in color, and flooring uniform in material throughout the units so they simply flow and show better, minimal fixture and covers/plates work. RUBS is something I will have to look into. I'd have to do some more market research on what the expected water pay out for tenants in that area is. I can't find a definitive answer. These are the great questions and interactions I need more of. 

Debt servicing will be at the rate of $879/mo via private lending ($145000 at 6.1% for 30 years). The down payment is the $30k plus a few thousand in closing and servicing fees, which is simply going back to my contractors via the lender. 

Thank you. 

 I understand the skepticism. Only 4 units are currently leased, current rent roll is only $25200, and I'm going to remove those tenants in time to to rehab as well. The unoccupied units need a lot of cosmetic work, the 4 leased units aren't too bad, just need paint but the cosmetic conditions are bad in the unoccupied units. Five different paint colors, shoddy cosmetic repairs here and there, 3 different flooring types and old as hell. Previous owner had limited interest to repair anything and just pocket cash. Supposedly wants a bigger cash complex and is selling multiple complexes. I wish I had the capital to buy more.   

Off market 8 unit brick apartment building in Cleveland built in 1920, Manhattan Beach area

Purchase price - $145000

Rehab costs - $30000 (cosmetic consisting of windows/paint/flooring/trim/carpentry)

(6) 1-1 units under market, currently at $475/mo, raising to $550/mo after rehab 

(2) 2-1 units at $600/mo, raising to $625/mo after rehab

Electrical, roof, foundation, water heaters, furnaces solid

Rent Roll $54600

Property management 8% $4370

Vacancy est 10% $5460

Maintenance est 14% $7644

Taxes $4200

Insurance $1900

Water $4000

Trash/lawn/snow $1200

NOI $25826, or 14.4% ROI at low end $269 NOI per door per month

These are high ball estimates, the building is older, 1920, but it is solid, just needs a new dress for these solid bones. I don't anticipate 14% maintenance or 10% vacancy, but thinking worst case scenario always helps me evaluate the deal and helps mitigate any unforseen circumstances. Plus if allotting for new roof/heater/water heater every so many years, allotting 5-6% of that cost every year just helps with any big hit items in the future.

Thoughts? Any strategies to reduce water costs? Can I individually meter out water in Cleveland and recapture that $4000?

Thanks, Nate

$700 for 2 new hot water heaters? Is that per unit or both? That's a pretty optomistic figure in my opinion. 

Jerry please email me, [email protected]