All Forum Posts by: Patrick G Ndouniama

Hello @Jaysen Medhurst thank you for the detailed response. The information you gave is very valuable and useful. We are looking to get the rental history from the current property management company to better understand the type of tenants the property attracts. The good news is that there is a locally famous restaurant right by th complex. In addition our realtor stated that security is very high in the neighborhood due to the centers being present and also the street is very quite after 5pm. The ion energy solution looks very interesting. Have you used it on one of your properties? If so what would you say the biggest con is in using the technology? Is it very costly to install? Lastly we will look into the cost segregation. It looks like it is very valuable. Thank you again!!! 

@Theo Hicks thank you for the advice. We will be getting the financials from the current property manager and base our expenses on that

Also wanted to know what is the best way to go about property management for a 12 unit... Do you guys think it is best to find a good property management company or it might be worth hiring someone as a property manager and have him live in the building with free rent + salary ? 

Hi Everyone,

I have been doing a few rental properties in the past couple of years and I am now interested in investing in a multiplex. I am currently looking at an opportunity in the Lansing, Michigan Market.

The multiplex is a 12 unit in the North West Lansing area (Old Oakland). I think the area is average (not the best, not the worst). The property is situated in a commercial zone with a few commercial building around it. There is a recycling company one block away and a waste water treatment a mile away. For now I don't think it is necessarily a problem since those seems to be out of sight from the property and there is no disturbance such as noise/smell... but I am curious if anyone thinks otherwise?

The building is in decent condition and currently 9 units are being rented (rents between $600 and $700). 3 units are currently being renovated (paint + new floors). Tenants pay electric and owner pays for water/sewer, gas. The asking price is 420k but I believe I can get it down to 400k or below.

I don't have all the numbers yet but I asked the seller to provide rental history and expense reports etc... I wanted to know what is a good way to estimate the expenses to calculate the cap rate for a 12 unit property? Is the 50% a good estimate for a 12 unit in decent condition in an average neighborhood?

Also since I am new to the multiplex investing, what are the common pitfalls that come when dealing with 12 unit multiplexes? What are the things I need to be extra careful about? What are the mistakes people commonly do when dealing with that type of properties?

Concerning the financing I will be going for a commercial loan. Initial estimate I got was a 20 year commercial loan at 6 to 6.5 interest rate (5 year term). I am not familiar with commercial loans and this seems pretty expensive to me. Does this sound reasonable? I am planning to shop around but wanted to know if it is possible to get commercial loan on 30 year with a fixed rate? What are the standards for these type of loans?

Sorry for the long post.

Waiting for your advice! 

Thanks 

@Kevin Siedlecki - Thanks for your reply. I have the manager line up for 7.5% but they also take half of the first rent for new tenants, because I took 4% as vacancy rate that means I expect to change only one tenant of one unit in a year, so property management cost monthly is = 2800 x 7.5% + 700/12. Yes I intentionnally didnt include any CapEx, maintenance and repairs because this is the part I am struggling to estimate, so I added all the expenses that I know at the moment. this is why I was saying $675 includes all the repairs, maintenance and my cash flow. what does your 10% CapEx is supposed to include? Only big repairs like roof, furnace etc... or does it also include repairs that needs to be done for new tenants like floor, paint etc... Should I add additionnal expenses on top of the 10% CapEx?

Yes I am putting 25% down, and on top of that I was planning on doing some rehab work when the tenants moove out. Maybe paint and change the floors, I was thinking it might be less expensive to invest in durable floors instead of having to take care of the carpet that needs to be changed oftenly...

Also I wanted to understand what is your reasonning when you say that 12% COC ROI is your initial floor. To me it seems like 6% is a decent return, If I compare with the other type of investment I could do with that money... So is that 6% is the best case scenario and in real life it is going to be way less that is why you shoot for 12%? Or is there some kind of other reasonning behind that?

Hi All,

I am new on BiggerPockets and was looking for some feedbacks on on an investment property I am looking into. I have been navigating the website for the past few days and it looks like there is a very knowledgeable community, hopefully you guys can help me here.

So I am looking at a duplex 3be/2.5ba each unit.

The current rent for each unit is at $1400 and I think it is under market, it could probably rent for $1500-$1600. The asking price is 379k but after talking with the listing agents it appears that the seller is really motivated and I think it is possible to get it at 320k.

In that case my basic expenses + mortgage would look like this = mortgage + taxes + property management (7.5%) + vacancy (4%, vacancy is very low in the area) + insurance + garbage (sewer/water paid by tenant) = $2125. That based of the $1400/unit rent (that potentially could be increased) leaves me with $675 for the maintenance/repairs + cash flow.

So far this is the best deal I have been able to find in the area. I wanted to have some feedbacks from people who have more experience dealing with duplexes. Do you think this a good deal? Do you think I will be able to create cash flow? Do you think I will end up loosing money on this deal?