All Forum Posts by: Patrick H.

Hi, does anyone have any rentals in the Berkshires and have section 8 tenants? I've been looking at that area and wondering what others' experience has been. What towns are your properties? Do you get full HUD FMR? Do you take advantage of the BCRHA landlord incentives?

Also, I see that there is a Berkshire County HA and also local HAs in Pittsfield, Adams, etc. Is there anything to know about having HAs with overlapping areas? 

Thanks!

Back to the question I would like some help with...I made an offer on a 6/2 two-family (each 3/1) that has an unfinished attic with at least 7-8 foot ceiling. Both units total 2,100 sq ft and the attic is another 900-1,000 sq ft. The property already needs extensive renovation so would it be worthwhile to finish the attic by adding 2 more bedrooms and a bathroom (making one unit 5/2), assuming the cost wasn't too high? In this area, 3 bedroom FMR is about $1,390, 4 bedroom is $1,515, and 5 bedroom is almost $1,750.

Thanks for your input, @Russell Brazil.  I'm not at all familiar with DC, so what makes the areas you mentioned with above market rents different than other areas?

I recently listened to BP podcast 356 with Joe Asamoah who does high end Section 8 rentals in Washington DC. One of his strategies is to buy a 3 bedroom house with a basement and finish the basement making it into a 5 bedroom house. Does anyone else use a similar strategy?  He mentioned getting $5,400+ for his rentals which is way above the DC FMRs. How is he able to do that?

I made an offer on a 6/2 two-family (each 3/1) that has an unfinished attic with at least 7-8 foot ceiling. Both units total 2,100 sq ft and the attic is another 900-1,000 sq ft. The property already needs extensive renovation so would it be worthwhile to finish the attic by adding 2 more bedrooms and a bathroom (making one unit 5/2), assuming the cost wasn't too high? In this area, 3 bedroom FMR is about $1,390 and 5 bedroom is almost $1,750.

I am looking to BRRRR this.

Hello,

I am looking at acquiring a commercial property (strip mall) from a family friend and trying to come up with some attractive ways to make an offer that. I have had preliminary discussions with the owner (he is 75, property is owned free and clear, has no direct heirs) but have not submitted an offer yet. He has a large estate but is currently below the estate tax limit of $11.x million. A few notes and questions...

1. Option 1 - master lease. Pay rent, control the property, inherit it when he dies. I have discussed this general deal structure with him and he is open to it. All payments would be earned income to him, yes? The lease agreement would not reference the estate planning docs at all to avoid any reclassification as a purchase.
2. Option 2 - purchase, he holds mortgage.
   1. Is it possible/legal to have a mortgage where 100% or nearly 100% of payments go to principal? This would make his income capital gains and depreciation recapture rather than a mix of cap gains and earned income.
   2. What are the tax implications if purchase price is, say, $500k, and at time of death principal balance is $400k and he bequeaths the property (worth $600k) to me? Can I inherit it with the remaining balance going to $0?
3. Option 3. Purchase XX% of the property, lease AA%, inherit the AA%. Would my cost basis be XX% purchase price/AA% value when inherit or would it be the full value at time of death?

Thanks for your help!

Are there any CPAs or attorneys here that would be willing to privately answer a few estate planning questions related to inheriting a commercial property? Thanks!

Hi,

Does anyone know what the cap rate range is for retail in the Schenectady/Scotia area?  The property I'm looking at is a small strip mall (~20,000 sq ft), good location on roughly 5 acres, well maintained (I'd call it class B).

Thanks!

Thanks for all the comments so far! 

I havent had a chance to talk to the owner yet in order to get more info but that should take place within the next few days.  I will update as I learn more.

I have done a fair amount of searching to gather more info about the two properties. The separate 5 acres butts up against an existing residential neighborhood and could be sold to a builder or some other type of deal. 

One thing I didnt mention previously is that my dad is an engineer and has done a lot of work for the strip mall owner on various properties, including this particular location. He designed a separate 6,000 sq building (the primary building is 12,500 sq ft) and did a lot of the site analysis, Phase I, etc. He also knows a ton of the local builders, which would come in handy for the undeveloped 5 acres, zoning board people, etc. 

I may be able to get out to the properties with my dad this weekend to check them out, get a feel for quality, etc.  

Thanks again for your input!

A long time family friend is selling off his real estate holdings in order to simplify his life and be more retired. He is in his early 70s, doesnt need the money, and just wants fewer things taking up his time.  I dont have all of the property details yet in terms of financials, rent rolls, etc but here is what I know so far:

One of his properties is a retail strip mall that he has owned for 20 years which totals 18,000 sq ft. sitting on 4.1 acres with a mix of long-term and relatively newer tenants (3 years or less). The building is in very good condition. All leases are NNN. Rents in the area are $12-15/ft. Occupancy is currently about 70% (one tenant, a photo/camera store, closed up shop because of the switch to digital photography). There is also enough space to add probably another 10,000 sq ft plus parking.

Location is on a busy road and nearest cross street is the main road through town, where there is a Target, Panera, grocery store, Applebees, and similar. That intersection is about 1000 ft away and the space in between also has businesses. 

The owner knows that I would like to get into real estate and is willing to work with me.  He owns it outright and would hold the mortgage with no money down required. He also owns 5.2 acres of undeveloped land around the corner that is behind the grocery store and at the end of a single family home development. He would throw in the 5 acres if I were to buy the mall (land in that area is ~$50k/acre). We havent talked price, mortgage terms, etc but I would estimate that the price will be in the $1.2-1.5 million range. 

I know I need to get the leases to see the remaining terms, what is actually covered under NNN, renewals and price bumps, etc, along with rental history, financials, and so on.

What are your intial thoughts on this possible deal? What else should be asking for to evaluate this?

Thanks so much!