All Forum Posts by: Tom Dupree

How much info do you have about the level of owner occupied units in the complex?

@Chris Martin Thanks for sharing the links.  The Code Enforcement information is very useful!

Thanks again,
Tom

@Jason Bott Thanks again for your help in explaining the differences and giving some background information.

@Shane Pearlman I appreciate you telling me a little about your experiences and what worked for you.  Since this will be our first property so we appear to have some flexibility between personal and commercial.

@Jason Bott Thanks for the information!  

How often do you see a duplex under a commercial policy?  Is that common?

Would there be any specific things that might push an investor to use a commercial policy on a non-commercial property?  

I'm trying to better understand what makes up an "Apartment Insurance Policy" and how it might be different than a typical insurance policy.

The context was that an investor has a duplex and decided to go with an "Apartment Insurance Policy" because it offered a higher level of coverage.

Would really appreciate if anyone has insight into 1) what exactly is an "Apartment Insurance Policy and 2) why would an investor decide to use one for a small MF (2 - 4 units).

Thanks!

Tom

I would target an 18 month lease if you are trying to move to a summer lease expiration / renewal (would be Summer 2016).

Does USAA insure if the lease goes month to month?  I'm not eligible for USAA but have heard great things about USAA ... but if you always have to be in a 1 year or longer lease that might restrict your options.

I lean towards the more conservative end of the spectrum ... I look at it from the perspective of needing reserves for several purposes:

1. Operational Reserves - PITI of 6 months (lenders will count easily accessible funds such as IRAs, but I prefer cash in the bank).
2. CapEx Reserves - The spreadsheet approach listing out items of property (roof, etc.) with remaining life is a great way to look at it. One tip on this ... if you live in a community with an HOA you can look at the HOA reserve study to see get an idea. For example, I live in a townhome so our HOA reserves cover common parking areas, roofs, etc. It won't give you reserve amounts for items the property owner is responsible for (HVAC, etc) but it will give you a good idea of replacement costs and expected life of various items of property. In NC an HOA probably paid ~$5k for a professional reserve study done by knowledgeable professionals (civil engineers), so it's worth taking advantage of the information in the reserve study. It will typically include the expected price inflation by category ... for example, roof replacement costs might be going up 5% per year while paving is only going up 1.5% per year.

This isn't for a specific property, but just a general question I have been thinking about.

If you have a nice SF residence in a good school district (which would likely be one of the key features of the rental), how much would you drop the rent if it wasn't rented by the start of the school year?  My initial thoughts are about 5% (so drop a $1,000 rental to $950).  This type of property would be one that really is aimed at families with school age children.

Of course we would try and time the lease renewals to better line up with the school year.

I agree with @Dave Toelkes on using Quicken and TurboTax.   One benefit of going that route is you can see your "business/investment properties" along with other retirement accounts, checking accounts, etc.  While you still run the business as a business, it's good to see how your personal cashflow is doing (and easily track your net worth).

Handling the depreciation in TurboTax is very easy.

I'm actually heading to Philly on Thursday to take a look at the properties.  Did anyone decide to go forward with purchasing from ABC?  

I definitely understand that the prices are above market and that the likely appreciation would be minimal.  Just trying to balance properties with better cashflows along with ones in A/B neighborhoods that might not cashflow as well.  Essentially diversity in property holdings.