All Forum Posts by: Eric Waterman

I have a situation where a tenant, which I’m trying to evict but can’t due to the moratorium, has stopped paying the gas bill.  The utility company has shut off the gas to the unit.  The utility is in the tenants name.  As the landlord, am I required to transfer the service to my name while the tenant is still living there?  I’m not responsible for their past bill according to the utility company.  I don’t want to turn it back on for the tenant to run up gas charges.  The tenant should be leaving but I don’t know when at this point. I am trying to figure out what I am supposed to do.  If it is my responsibility to have gas on then I’ll do what I have to do.  It is just for heat and cooking. Heat isn’t an issue right now because it’s middle of summer.

Closing costs look a little light. The transfer tax alone is $2300 ( Buyers portion 2%). Home inspection will probably about $400-500 for a duplex in that area. Plus legal/settlement and title insurance. It’s an old home circa late 19th century...may want to budget for more up front repairs and deferred maintenance. 

Also the Town of Smyrna required landlords to have an annual business license which runs about $55 per unit. Each time you go to fill a vacant unit the town will need to inspect as well, which costs a small fee. It doesn’t add up to all that much but something to be aware of.

Hard to say. I'm not familiar with the scope of what the home warranty provides. Will it replace appliances when they brake? What about flooring in the unit? Just a couple items on top of my head, those are capex items not covered by your HOA...which I assume covers the exterior stuff.

Where are you looking in NJ?

@Daniel Karbownik is a great resource for Monmouth and ocean counties.

I have a great recommendation. PM me and I’ll pass you his name and number. He works all over DE and invests himself.

@Account Closed

Did you guys ever get together? I’m looking to invest in small multifamily apartments in Delaware and looking to connect with some other investors/professionals. I’d be interested in getting together.

@Donald S. - Thanks for your time and feedback I appreciate it! I did give him a 30k foot view of my perspective...he was stuck on the fact that I was at $38k per unit, which seemed crazy to him. I told him that I’m underwriting the deal to income it produces. I’m confident in my numbers...so I’ll pass on this one.  Based on his response he doesn’t have anything in the way of support for his price. He put it on the market for $680k in Aug 2017...crazy. 

@Ibn Abney - thank you for your time and feedback. It is an older property so I was trying to be conservative on the maintenance. I believe the rent is under market, so there would be some play there.  As far as cap rate goes it really depends on the sub market within wilmington. I would say 9-11%...more for warzones and less for areas like trolley square.

It’s a c class neighborhood so I’m comfortable with 10%, though the rental market is pretty strong, I could probably reduce that. Overall, I don’t think I deserved the amount of vitriol I got from the owner. It’s not a deal.

I recently engaged an owner that posted his 5 unit property for sale as a FSBO. He wants $395k for 5 units. the gross monthly income ranges from $500-585/mo/unit...it averages to about $567mo per unit. Total gross rent of $2,835. The package provided by the owner only listed monthly expenses of $415 (not including taxes, insurance or utilities). I don't know what that figure includes.

Taxes = $1,743/yr

Insurance = $1,817/yr

Utilities = $1,459/yr (water, sewer, trash)

I put all this info in my cost model. I added in vacancy (10%), property management (10%), maintenance (10%), $1k/yr for Contract services, $750/yr for legal costs, I escalated the taxes, insurance and utilities by 3% (numbers provided are from 2017). When all is said and done I project an NOI of about $17,500/yr.

The asking price would amount to a cap rate of ~4.4%. To me that is way way too low, even for new castle county (Wilmington). I think the property is worth $180-190k. 

I emailed the owner back and said that I appreciated the information and opportunity but I was not going to be able to help him out. It was a bridge too far. I told him what I thought the property was worth to me...well I got an earful. I was told I’m a swindler, pretty much scum and I have no idea what I’m doing. Yikes, haha. 

I have confidence in my modeling ability, But just wanted to post this deal BP to get a sanity check.

I did talk to a couple of agents today...some were quoting me replacement value of the property which is like 3-4x market value...is that typical? One quotes me actual cash value on building and replacement for any renovations...