All Forum Posts by: Phil Morgan

What parts of Cleveland are you buying in? There are a lot of investors if you look through this forum and the marketplace. 

sorry sorry sorry, should have proof read.  Everything in my post is for INSURANCE not taxes.  current owner is paying $11k in insurance

I have a question for the seasoned owners out there.  I am buying my first larger complex of 36 units.  I am wondering what kind of polices you get on buildings like this.  The current owner is paying $11k per year in taxes but when I go get quotes I am getting prices around $20k which seems like a huge bump for the same property.  Do you get replacement cost?  What is the norm for a property like this?  Would love to get it down around what the current owner is paying but I want to make sure I'm covered in case something happens.

@Austin Gleason I purchased the deal analyzer by itself, without the training. I decided not to do the training but once I run out of capital and want to syndicate I will probably consider his training program to help that process. 

As someone from the Cleveland area I can say that he brought hundreds of millions of dollars and many jobs. From bars and restaurants around Cleveland to schools he opened in Akron, he has made a HUGE impact on the town and surrounding areas. His impact will still live on within his projects and community outreach programs but the there will be a significant drop in downtown business during basketball season with him away. I wish him good luck and respect him for what he did here and what he will continue to do even after he leaves.

I would get all the facts. Leases, rent rolls from the owner showing who has has and who hasn’t. Any pending legal battles with the delinquent tenants would be important as well. The seller has to know he is selling a train wreck of a property and if he expects to get a decent price he needs to clean up what he let happen. Are you working with an agent/broker? I would get one. I good one. One that has experience in that area. Get all the info before you start running numbers.

Wow there is a lot going on there!  First I would ask if people are on term leases or month to month.  Sometimes older owners don't even have leases, they just collect rent and hope for the best, so that would be my first question.  Make sure you are running your numbers on what they ARE collecting and not what they SHOULD be collecting, that will be a huge difference.  If he is shoving a proforma down your throat you can tell him to pound salt, you will have months of evictions, renovations and attorney fees to deal with before you ever get to a proforma number.   Find out local tenant laws and know how long the process is going to take to do the evictions.  Make sure you inspect all units to get a true idea of condition before pulling the trigger on anything.  The one decent unit they show you should not represent the other 7.  An agent told me this and then I found a 400lb pig living in one of the other units.  Never trust a sellers agent, never.

You have a lot of work ahead of you but this could be a fun and profitable project if you get it for the right price, and have a good attorney on call.....

File an eviction for non-payment of rent and go through the motions.  It will take a bit but better to do it legally than get sued by the guy for moving his stuff illegally. 

I use this from @Brandon Turner's book:

PLUMBING: Tenant shall be held responsible for all costs related to Landlord's repair or maintenance of any plumbing stoppage or slow-down caused by Tenant, whether accidental or purposeful. Tenant agrees not to place into any drain lines non-approved substances such as cooking grease, sanitary napkins, diapers, children’s toys or other similar object that may cause a stoppage. Tenant shall notify Landlord of any plumbing leak or slow drainage within 24 hours to avoid additional charges. Landlord shall use all reasonable efforts to remedy the plumbing problem. Tenant shall only use a plunger to attempt to fix a slow or stopped drain, and not pour chemical or other drain cleaners into any stopped or slow drains.Tenant shall also be responsible for any plumbing system freeze-ups occasioned by Tenant’s negligence. 

I bought an 8 unit property a few months ago knowing I would have to evict someone right off the bat.  Thankfully they were month to month and I modified the sale price to reflex the lost rent and cost of the eviction.  Odds are you can get a better price if you do the work yourself.  Get a good lawyer, it's not that hard.  If you don't want to put in the work I would look for a turnkey deal.  You'll pay more but have less work, your choice.