All Forum Posts by: Preston Roth

HI Mike

You are right, seller is not insuring for the actual build cost so that is part of the increase for sure, but the biggest reason is the knob and tube

Thanks David - I kind of suspected that, about $150-175k for this job. I have heard that knob and tube is fine as long as its been maintained properly and no insulation has covered it, etc. It would also be nice to reduce the 18k in increased insurance and maybe its worth doing, it would take about 10 years to recoup those costs if my estimate of 150-175K is correct

Hi Steve, No seller will not renegotiate I have asked.

All,

I need some advice on a potential purchase that is coming down to the wire. Here are the specifics in a nut shell.

* In contract on 35 unit very well kept and clean building with 0-1% vacancy in Washington for 2.1 Million with a 7.2% CAP, which is good for the Washington area.

*After going through inspection it was determined the whole building is still knob and tube, it was highly suspected but wasn't fully determined until the walk through inspection.

*Current owner pays $4500 annual insurance expense, extremely low and I feel her insurance doesn't know its probably all knob and tube otherwise she would be paying a lot more.

* The best insurance quote I have had is 23k for building and general liability coverage, quite an increase and has a net affect on CAP rate to 6.9%

* I have asked for a reduction in price or rewire but seller is not willing to do. Take it or leave it scenario

*Im having an electrical contractor review the knob and tube to confirm integrity of the system

My questions and counsel needed are the below items

1. How concerned should I be with knob and tube, if the inspection on the system comes back positive? Anything I should do to ensure that protection? Or would you not purchase just because its knob and tube?

2. With a 18k increase in annual expense it seems like I should maybe look at rewiring the building to save that added expense, does anyone know on average what it might cost per unit to rewire? There are 19 one bedroom units and 16 studio units. There are no fuses FYI, breakers have been updated.

3. Does anyone have an electrical contractor who works in the Washington that they might refer to me for both the review and quote for rewire?

I really appreciate the help!

Also interesting, if you google map the business address, its in a residential neighborhood.

hello. Does anyone have a good broker that works with insurance companies that insure older buildings? I'm in the process of buying a property but initial quotes are coming in 3 times what the current owner is paying. It's a 4 story early 1900 building not sprinklered building. Any referrals would be great!

Hello Bigger Pockets family! I have a question. I'm currently in contract on a 36 unit complex and currently going through my investigative process. During my investigative work I have found that the insurance for the building is going to be 3 times what the current owner is paying as the current insurance company has changed underwriting rules and the old owner has had this company for years so they have been grandfathered in. Current cost for the owner is 4500 a year, which is really good to begin with, they have a 10k deductible and it isn't insured for the full rebuild costs, so that too explains the lower cost. The quotes I have received are about 13kannually , about $700 more a month,  numbers which of course I did not figure into my calculations when I made my offer. I believe I should/need to renegotiate, but have never needed to do something like this in that past. Any suggestions how I should approach and or reevaluate what that 700 per month would equate in a lower price? I figured a 30 year loan on 125k equates to about 700 a month, should I look at reducing the offer by that much? Any thoughts would be greatly appreciated. I have no agent this is seller to buyer deal. I have great rapport with the current owner, so just need some thoughts on whats fair.

All, Thank you very much for your thoughts and suggestions. It seems the easiest and "smoothest" if you can even use that word when knowing your going to be dealing with the city, would be bulldoze. Its about a 10k sq lot between the two houses. Destroying the properties is just such a travesty...

I'm bit of a penny pincher too, so if I do follow through on something like this, I would prefer to do this all myself. Educate myself, and develop it. Would you say this is doable, or would I be better off paying or partnering with someone who knows all the in's and outs...it is in multnomah county afterall! I actually changed the occupancy when I purchased the first home of the two and it was a major pain working with the city. It took 6 months, cost 10k and when the final auditor came through she didn't even view the repairs/changes I was required to do to change from residential to business. I basically could have done nothing and they would have approved me.

Hello All

I'm very new to BP but have been reviewing a lot of the posts that have come through to better acquaint myself with the site and its benefits. I'm very impressed with this sort of comradery and desire to help one another. It seems like a family with everyone having an interest in your success.

Im curious if anyone in the Portland Oregon area has any advice or thoughts on my below situation.

I owe two congruent properties(2 early 1900 homes with a lot of character and in very good condition) both in CS zoned areas and located in the hot Hollywood district right on sandy blvd. Im interested in possibly developing that land, which would entail moving the houses or destroying them. It would break my heart to destroy them as the craftsmanship is unmatched today I believe in detail and materials. Ive never developed nor do I have the slightest idea where to start, other than here on BP and just educating  myself through other avenues. My thought on development is some sort of commercial main floor/personal condo type development on the 2nd. Maybe rentals or maybe sell the condos and rent out the commercial. Very early thought process for me, but I believe the land is very valuable and will continue to become sought after. So is this something that makes sense to do? 

1. Keep them as they are, rent them out and let the equity grow?

2. Buy land and move the houses to a new location and develop the land? 

3. Mow the houses down and develop the land?

Any thoughts would be greatly appreciated.

hi Adina

I haven't looked much in yamhill so here may be some better deals there, but Washington county isn't great either 150k a unit on average.

Yes Aberdeen is definitely looking at revitalizing the area so that's a big plus.

@Brandon Turner any advice for Aberdeen? Would you mind giving some contacts for plumbing, electrical, handyman and other good contacts for someone buy a multifamily in Aberdeen?