All Forum Posts by: Nicholas Morgan

 I feel like the higher rent when scanning listings is a valid concern. I wonder if you can advertise the rent as $XYZ which is not inclusive of the utilities and then as they inquire about the property and you give them information you tell them there is a $X/mo utilities fee. Similar how on AirBnB they give the nightly rate, but when you go to check out there are cleaning fees and similar added on. I'm not sure how a potential renter would like this approach. But if you think about it, there's always the "extra fee" of utilities whether they pay you or a utilities company. So maybe you shouldn't decrease your marketability by advertising a higher rent. Just a thought. 

It's more costly than a thermostat, but a permanent solution could be to remove the ducts from the 2nd unit giving the 1st unit the entire use of the AC system. Then you could have one of those Ductless Mini Split systems installed in the 2nd unit. They often mount on the wall (can even do a ceiling vent if desired) and then a small compressor outside. I'm thinking about putting one in an extra unit I'll be adding to a triplex later this year. 

As for the payment for water, that's also something in looking into for this triplex. Right now, I'm leaning towards RUBS (Ratio Utilities Billing System) which is just a calculation based on factors like occupants per unit and such. I would then just tack the water bill onto their rent invoice. 

Hi Everyone, 

I'm looking to convert a 425sq.ft storage area into a 4th unit in a small multi-family property. 

Do you think I could get higher rent if it was a 1 bedroom apartment (i.e. bedroom with 4 walls and a door) or if I made it a studio apartment (i.e. one large living space)? 

Any other pros/cons of each I should be aware of? 

Doing a studio would definitely improve heating/cooling as I could put in a ductless mini split and it would work well for the entire area. I feel that a 1 bed apartment would be more desirable though from a renter's perspective. 

Thanks!

Nicholas

Hey everyone!

I recently closed on my 2nd property. This is the first property that we have rented (as our first is currently our primary and will soon become a rental when we move out). 

I do my own Property Management and am currently using Innago as a the management software and Stessa for financial analysis. Only have been a property manger for 2 months so still learning the ropes with each software.

During the deal analysis stage, I projected 10% set aside for each of the following: Vacancy, CapEx, and Maintenance. My hope is to have separate 'money buckets' for each of these categories. Similar to how in my personal finances I use the software YNAB to setup a budget and allocate each dollar to a purpose. I imagined Stessa would allow me to do this, but have not found this feature yet.

So my question is - how do you handle this in your business? 

I'd like to know at any time how much money is allocated to the following: 

- Vacancy

- Maintenance

- CapEx

- Profit (money to put in my pocket....or in actuality, re-invest in other properties)

Thanks!

Nicholas 

Thanks for the insight into both perspectives! I might not do the LLC for this one, but will spend the weeks following closure setting up an LLC and using that moving forward.

Thanks! 

Nicholas

Hi everyone, 

I am closing on my first rental property in 3 weeks. I am purchasing it with a standard bank loan in my own name. There is an existing tenant who's been there for 8 years. Buying the property from a friend who says the tenant has been great. I plan to keep her. 

For tenant-facing items, I would prefer to not use my own name. For example, the lease would be between the tenant and [not my name]. I don't want to provide my personal residence in the lease either if I can help it. So I'm thinking about setting up an LLC so that the lease is between the LLC and the tenant. After thinking about it, the LLC would basically be the property management company...even tho it would consist of only me and my wife. Maybe just me, if that's simpler.

What are your thoughts on this? Is it not worth the hassle? Can I create the LLC and then just have all lease documentation refer to the LLC? I am in Ohio, FYI.

Thanks,

Nicholas

 Hi Jeff, thanks for the input. I am definitely determined to purchase the property in mind, but I want to ensure I'm doing it legally. I appreciate your insight into the situation. 

I plan to use an HML or a private lender who can front the total sum (either $66k or $80k depending on how we structure things).

I do think that if I could get a process setup where I can pool funds then I could do much more business moving forward. Even if it costs more money up front to get the proper legal docs/structures in place, I believe all of that will pay for itself moving forward. To be fair though, I'm not fully aware of all the fees and rules for syndication yet so I may be mistaken. 

Thanks,

 Thanks for the information, I will definitely look into the fractionalized mortgage. 

My new plan is to switch from pooling funds and pursue an HML as you mentioned. My hope was to learn the groundwork of syndication now so that I can scale into larger properties as I progress, but it seems it's most cost-effective and simpler to go the typical HML route.

Thanks,

Nicholas

Thanks for the replies! I was hoping since it was a simple loan structure and full payout it wouldn't be the same as a normal security/syndication deal.

I'll still pursue private lending from a single source, but I think if I can get a structure like I mentioned setup legally I could do a lot more in the future. I have quite a few contacts who want to invest $20k or so but at the moment don't have any one person interested in a large sum like $100k. For my current deal I'll pursue a typical private money/hard money lender.

Any advice for locating an SEC lawyer? Should I find one in my state (Ohio) or are the rules consistent throughout the country?

Thanks!

Nicholas

Hi everyone, 

I've asked a similar question a while back, but I don't believe I clearly defined my goal and I am now re-asking with more clarification...

Here's my goal: get a loan from multiple individuals that sums to the amount I need. Use the loan to purchase a property with cash and follow the BRRRR strategy where I ultimately pay the private money loan back after performing a refinance into a conventional 30yr fixed loan.

Example: create a loan of $100k where 5 individuals each lend $20k. The loan could be an interest only payment, 12% interest, and 1 year balloon. 

What's the best way to create a loan like this? 

Here are my thoughts, please let me know what you think : 

• Create a multi-member LLC where each lending individual owns a % equity of the LLC proportional to the amount of money they transfer to the LLC
• Create a business checking account where LLC members deposit their money
• The LLC lends the money for property purchase and the LLC has a 1st position lien on the property
• The LLC operating agreement defines that if I do not fulfill my responsibilities of loan payback and 75% (or some value) share of the LLC decides to foreclose on the property that the property will be foreclosed upon, sold, and the profit will be dividing among the LLC members proportional to their equity in the LLC

What is wrong with this idea? I am calling this a syndicated loan as it reminds me of syndication, but I'm not promising a return based on an asset performing - I'm just setting up standard loan terms. The goal is to pay the loan back in 7 months or less when I refinance into a conventional bank-backed loan. 

Any advice would be very much appreciated!

Thanks,

Nicholas