All Forum Posts by: Justin S.

This would be a great cap rate if everything works out "perfect" according to your numbers.

When you file a co-op, all you do is register for a new Tax ID, and then submit a name change to the assessors office. As of right now, the assessor still considers your buildings commercial (feel free to call and ask them). The change from commercial to residential happens when they cut statements at the beginning of 2014, it does not happen when you simply file a name change.

Don't shoot the messenger here, I'm told the exact same thing you are. That the city requires you to meet current building codes in order to be considered a co-op, and current building codes mean sprinkler systems among other things. I obviously hope you and your attorney are correct, that the buildings don't need to be updated but just keep in mind that just because you've filed paperwork and your name has been changed on the assessors site, that does not mean you are home free yet.

I have to completely agree with Will here. 5% doesn't even scratch the surface for vacancies, and repairs will never be lower than that in the long run.

I rehab and rent out, but also own a number of multi families and commercial. I will talk with my attorney again, but last I heard there were some new issues. What happens is that you file the paperwork, but when you actually get your taxes they will see if you meet the new criteria. The process of filing the co-op is very easy, but if it actually converts to residential on taxes in 2014 is the big question.

I heard CR and Marion were losing so much from co-ops that they made it much more difficult, and many other areas are doing the same. Feel free to message me when you get a guaranteed answer.

Also, the maintenance/vacancy budget is absurdly low. You will have vacancies, repairs, non-paying tenants, updates, etc. Even if two of the big items are done, you still have 7 air conditioners, 7 stoves, 7 fridges, etc. In CR/Marion I usually use 5% vacancy and about 8 - 10% for repairs, especially in the first 1 - 2 years of owning a property.

Tyler, you should talk to a real estate attorney about co-oping in Cedar Rapids. They have changed the laws, so you can't co-op unless it has a sprinkler system and a couple other things. Previous co-ops do not have to be changed, but co-oping old buildings is now VERY difficult.

Use the lower leases to your advantage. In real estate investing, you are buying based on cash flow, so if the previous owner mismanaged the property, and rates are that low, you should be able to buy the property at a deep discount. Many of the properties I've bought have been mismanaged, I try and not have the tenants pay for the mistakes of the old owners. As stated above, if they are good tenants, then slowly move the rent up. If they're bad, get them out as quickly as possible, and you can raise rent very quickly.

Hey everyone. I currently own a lot of single family homes, a couple apartment buildings, and one commercial strip mall. I really like the commercial side, so I have been trying to find more of these kinds of deals. This is not a flip, fix, or anything that I'm used to. Simply buying a building that's already leased to a tenant.

It's a standalone restaurant building that has been in place for five years. It is in a great location, in a Wal-Mart parking lot in a big town. The building, parking lot, area, is by far one of the best areas in this town.

The restaurant is a large national chain, and the franchisee owns nearly 100 of these restaurants. They are very profitable, and have been in business for 40 years. The purchase price of the building is 1.33 million, and the NNN lease amount is $105,000, making this property approximately a 7.88 CAP. The current lease goes for 10 more years including 1% raises every year, and there are 5 additional lease options on the property all at 1% per year.

This kind of deal is very attractive to me because it seems very consistent. The perks of NNN are nice, as that is what my current commercial property is right now.

Has anyone worked on these kinds of properties? The cash on cash return seems good, and the mortgage pay down is very nice as well. If I did not take income from this property, it could be paid off in 13 - 14 years.

I would love to know everyone's opinions. Thanks!

Al Williamson I have read the e-myth series, and that is how I currently have my business set up. Right now, I'm doing almost no day to day work, and I'm kind of bored. Honestly, I enjoy doing a lot of the physical work, and lawn work can be scheduled around vacations very easily. I don't feel like it would affect quality of life for me, and ultimately would give me extra income that would help me pay down properties faster or help expand faster.

I have property management already in place, I just do most of the repairs and rehabs.

Hey BP. I've been spending some time analyzing my costs, and as I begin to make the switch to living off of my real estate income, I'm looking at ways to make more or save more. Currently I own two apartment buildings, a strip mall, and a number of houses. I am actively buying more properties, and believe I'll be buying 2 - 3 more apartment buildings this year. They are all in a similar neighborhood, so I'm debating beginning to do the lawn work myself. I don't mind this kind of work, and I have a lot more free time to be doing this. Over the past year, I've been purchasing every tool I could ever need and then some, in order to save money, and now I'm debating buying a nice commercial mower which would pay itself off by the end of this summer. The problem is, then I would need a trailer for my truck, and then I have to decide where to park that trailer.

So that brings me to the big question of, how many of you investors have own a workshop of some kind? I really like commercial properties, and there are a few good deals in town that could get me a nice workshop with room for all of my tools, extra things for the rental properties, and now possibly keep some landscaping options. Like a lot of you, I troll craigslist for extra fridges, stoves, etc and when a good deal comes up on tile, doors, or normal things I go through a lot, I stock up on them. Just in what I save in landscaping would be enough to pay for my workshop, and would also build long term equity with mortgage paydown, and give me a nice tax writeoff in the meantime. I'm already at 10 properties, and see no reason I won't be at 20 - 25 in the next two years or so, which will then make it almost necessary to have a storage place. Last but not least, I see some value in keeping business and personal separate, and currently my rental stuff is overpowering my house and absolutely my garage.

Would love some thoughts!