All Forum Posts by: PJ Kolnik

@Account Closed yeah a french door unfortunately, previous owners had configured the kitchen island in such a way that a regular swing door would not open all the way. Great looking kitchen, but who would have thought the dimensions of both the kitchen and the building itself would be so restrictive on the types of fridges you could buy!

@Eachan Fletcher Good point. I probably could have spread the water heater repair out over the course of the year, but I think I was being optimistic at the beginning of the year that this would be my "major capital improvement" for 2019. And you're right, getting to know the personality of some of these older buildings is a must to be realistic about appliance purchases and even advising your tenants on moving in furniture - otherwise they often try to fit the square peg in the round hole and destroy the walls in the process with huge couches and furniture.

@Luke Saglimbeni, @Jim K., @Dan H. @Bob Prisco because your advice seems to revolve around how bad of an idea it is to have 350 / month - I agree. The Rent - PITI is 350 / month / unit. Rent-PITI is closer to 1050 / month overall.

@Brie Schmidt I knew about the water heaters and brickwork before I purchased, but like many capital expenses, you don't know always know when they'll need to happen. You do your best to make things last as long as they can, but sometimes when it rains its pours. They were budgeted for. 

@Michael Ealy I totally agree, cashflow does not equal Rent - PITI. When you're first starting out though, you really are asking yourself - how much can I trim off the top to put into the next deal? What level of risk am I willing to expose myself to on a current property before I move onto the next one? Honestly, one of the best things that happened to me at the start of all of this was not having enough money to do all the repairs I thought I needed at the outset of the purchase. I pulled another 18 months of useful life out of the things that needed to be repaired this year. Thankfully I haven't spent a dime of the profit (outside of repairs and maintenance) over the time of ownership so all these things were able to be paid for without dipping into personal funds.

@Account Closed I guess I should just be happy my first property has tempered my optimism regarding low capex spending when I write up my deal sheets.

@Bjorn Ahlblad that’s insane. Nothing crazier than real life. Kudos on your resiliency.

@Aaron K. Agreed, I’m glad I was keeping reserves from last year and I’ll definitely be keeping about 10-15k in that account for vacancy / repairs from now on. Thankfully I didn’t suffer from the worst expense this year - vacancy.

@Cameron Philgreen looks like you may have done well this year, congrats! I am just finishing out the year with 2015 Forester and I can happily report that I will have grossed about $2100 here in Chicago. It really was not all that difficult either. I probably was not as aggressive on pricing as you may have been and I had to balance the schedule with times that my wife needed to use the car, but I can feel content knowing that I covered the cost of ownership for this vehicle for the year (no monthly payment). 

I knew that there would be good years and bad years and maybe a bit of something in between. I own a 3 unit in Chicago and cashflow about 350/month/unit after PITI. I figured that would keep me pretty well set.

When I bought the place I knew there would be stuff to fix, I just didn't think it would happen all in one year.

- Replace all 3 water heaters - $1500 for parts, ~$1000 for labor (had the plumber move some piping too to allow for future 3rd bedroom addition in the basement)

- Top unit, fridge went out! - $1750  - I know you're probably thinking - dang that's a lot for a fridge! Well I tried to go cheap and buy something off of craigslist only to get it to the front door and realize there was no way it was going to fit even with the doors off! These older buildings in Chicago have narrow doors and narrow staircases. I had to eventually pay the guy 70 bucks just to take the fridge back and then go to Lowe's buy a brand new, counter depth (measured everything to find this one that would fit) french door fridge... with delivery thankfully.

- Roof and Brick Repair - $4500 - my parapet wall was old and definitely needed to be fixed, I was just kind of living on a prayer until it really needed it. Well the roof sprung a small leak at the end of this summer and you don't want to mess with water so I went ahead and fixed both the roof and decided that while they were up there it was time to rebuild parts of the parapet wall.

- A few other small handyman calls - $500

I try to build good contractor relationships and make sure that we have a good dialogue throughout projects, but those costs still add up and I just don't have time to do all of these repairs myself. Anyone else have a lot go out on repairs this year? Any good strategies to deal with Capital expenses?

@Meir Greenblatt you need to incentivize the result you’re trying to get. A good free meal is great to show you appreciate their current work and effort, but do not expect it to completely change how much they’re getting done in a day.

Setup a milestone payment schedule with clear bonuses that they can achieve if they beat those schedule milestones at the same level of quality. Sit down with them, make a plan (not all contractors are great planners in my experience), and pay them as much of those bonuses in cold hard cash.