All Forum Posts by: Nicholas Ludwiczak

@Luke J Nelsen

Did you try rentometer? I find market price with a combo of that website and looking at what other LL's are asking for on Facebook Marketplace.

@Ken Naim 

Purchase price around 500k. NOI at 100% occupancy would be $1,045 with raised rents with the following expense.

I would manage it myself. This is one of the things I am wondering about. I self-manage 6 rent units (2 duplexes and 2 SFHs).

I would use a software management software that people could pay online or setup auto pay. Put I would still manage 84 payments every month including people coming and going. Will that become too much work for what it’s worth.

@Philip Cook

That was my thinking. Some people might leave because they find it not worth keeping it but they will not find anywhere cheaper. The rates would still be “cheaper” than most in the area.

My value add would be the following. Marketing: Currently owner has done zero marketing since he has owned the business and he is at 100% occupancy. I think because his rates are so low, and he is on a busy road. His business isn’t even on good maps and doesn’t show up on a google search. I would change all that including Facebook marketplace when units were open. I could add a few security cameras, but they have had good luck when it comes to security because there is a “house” in the middle of the lot, even thought it’s used by a business, and a few houses right by the units. Cash flow is protected rents. At the current rents, I think it would be a loss. Time commitment is a good question and one I am struggling with. He says he doesn’t spend a lot of time each month but it might be a lot to manage 84 units knowing I will not make enough to outsource management until the note is paid off in 8 years.

CoC RoI is hard to predict because I am trying to do the deal without putting cash down. Owner financing the down payment and bank paying the other 80%.

@Henry Clark

If I was at about $1,000/month with 100% occupancy on a 25 year loan and owner financing on the 100k down payment over 8 years, would you still walk away? If I did the deal, I would be putting no money down. If I financed the $100,000 down payment, or after the note is payed off in 8 years, it would move to $2,266 per month.

So no money down, $845/month cash flow at 95% occupancy and about $800 of principle paydown.

I really do apricate your comment about staying in my “lane”. I have been doing good at acquiring and managing rental properties so it does concern me this new adventure would limit my ability to grow even after having systems and processing in place. My market is small and the town the store business is in is only 300 people, but I am still finding plenty of opportunities for rentals.

I should have been clearer. He is at 100% occupancy, I was just underwriting it on the conservative side after moving to market rents.

Population size of the town it’s located is 300. There is a storage place about 2 miles down the road that is at 100% occupancy between this town and a town of 600. He does have an interesting mix of sized with 40 of the units being either 10x24 or 10x20 and a lot of large units fair below market. A few examples are 10x20 $40 ($55 market), 10x24 $40 ($60 market) 16x20 $50 (Market $110, I would move to $75 to start)

Our suggestion is an interesting way to structure the deal. I am not sure the banking would be willing to take a second position, but I can ask. Thank you for all your other advise as well. I watched your commercial. Very well done, I love your workflow and your property is beautiful.

I have a self storage owner come to me with an off market deal for his 84 unit business with room to expand. It as has a newer model home onsite a business is renting as an office. His rates are well below market, even for the small town he is in. The only other operator within 3 miles would be $5 below the price I would move the rates to and he has been full for the past year.

Has anyone had experience taking over a self storage business and raising rates $5-20 per month? My rates would be at market but I don't want to have a bunch of people moving out at the beginning.

I am going to try getting the owner to finance 100% of the down payment on an 8 year note.

After accounting for all expenses including the note, it comes to about $500 in cash flow at 87.5% occupancy.

As I move purchase price and terms around as we negotiate, at what cash flow amount would you pass on the deal?

@Kody Christensen welcome to the community. I started out house hacking a duplex in Central Wisconsin. I still live in the area. Connect with me if you need anything or just want to talk RE.

@Alexander Kleyman I went from a notebook to Trello. I know the feeling! Trello worked really for my first go around. I could see every person's progress and where they were as I process their app. I included a check list and notes about my finding within each card. The only think I changed about the process is I didn't create a card for them until they replied to my email and requested an app. I was spending why too much time creating cards that never moved pass "email sent to interested person".

@Mark Nielsen

I like your idea of having them sign a one year lease after purchase so you can use that money for the DTI ratio. I hadn't thought of doing that before your post.

If the financing with the bank ends up failing, maybe a commercial loan would work better. I recently purchased a duplex from a friend for $25k that appraised for $65k. One of tellers at the bank made a comment to my banker about why would he sell it so cheap but my banker never questioned me about shady business dealings.

I worked with Rob Posteluk at First State Bank in Wisconsin if you decide to try the commercial loan.

I would recommend Rob Posteluk at Frist State Bank.   

He has been really good to work with for my commercial loans.  20% Down, less than 2k closing costs, with no requirements for reserves.  

I have google voice for my leads, rental signs, web site, etc. My normal number is given to my tenants but I am working on getting them to use TenantCloud for maintenance requests.

I have an upper/lower duplex in Marshfield, WI, about 2 hours north of Madison. The owner before me converted the large home into a duplex and they removed the vents going upstairs, leaving force air in the lower and installed electric baseboards in the upper. Its an old home with old windows and I still have no issues finding tenants with the electric heat. The electric averaged $135/month with the highest bill being $260 last year but that's the tenants bill to pay.

I lived in Madison and had friends that had "free" heat. They would crank the heat and leave the windows open in the middle of winter. I have no idea why but something to keep in mind.

I used water proof laminate in my last two bath remodels and really likes how they turned out and how DYI friendly it is to install.