All Forum Posts by: Ross Kephart

@Vincent Crane@Kyle Penland@Oren K. - thank you so much for your feedback, insight and advice.  I am scheduled to see the inside of the units this week, so I'll have a much better idea of how bad these units actually are.  $125/week for 360 sq ft does not parallel the market, so that seems a little funky.  Starting with a 20-unit highly intensive project may not be the best idea.  At the same time I'm tired of looking at deals and reading books and ready to get something done... obviously if this thing is a definite bust then I won't move on it, but I'm willing to take some risk for an appropriate return.

Azeez K. Thanks for your thorough reply! I am planning to check out the property today and I will definitely ask all of the questions that you suggested.

Joel Owens thanks for your feedback. I am a Director at a Fortune 500 company, which mainly means I don't have a lot of free time and would need to hire a property management company. The small 1-bedrooms is a big concern and I appreciate your thoughts on this... as is the class of tenant, which I presume to be a potential challenge as well. How much would you allocate per door in renovations, generally speaking?

At full occupancy the gross rents would total $10,800 / month. I should have noted that the average vacancy rate in this area is only 1%, which tells me that if I can just get the property in okay shape I should be able to sustain growth an occupancy rate of 90% or better. Why should I stay away as a newbie? Thanks - RK

I am a complete newbie, but I've been searching for property dilligently for the past 6 months and I believe this one has potential... what are your thoughts?

# of units: 20

• all 1 bedroom
• all 360 sq ft

asking price: $379k, down from $399k

year built: 1995 (pretty rough shape though)

current vacancy rate: 30% (6 of the 20 units are vacant)

current rent: $125, collected weekly

location: decent... this property is probably the worst eye sore inside of a 3 block radius

• working class area... some gang-related concerns... all in all a pretty solid town 

expenses: all utilities... approximately $1,900 / month

repairs needed: not sure at this point... 10k-20k would go a long way in improving the look and appeal of the property and would likely reduce vacancy rate

cap rate: 9-10%

Based on the numbers, this is without a doubt the best property I've looked at, but I have a few questions:

• What are the best ways to reduce vacancy rates, generally speaking?
• If small capital improvements would go a long way in terms of increasing the value of the property, what would your approach be with the bank if the goal was to minimize up front capital requirements?
• What concerns would you have with a property that has been around for 30 years and looks pretty rough?
• Given that the surrounding area is relatively nice, how much money would you put into capital improvements (hopefully provided by the bank) if the end goal is to maximize profits.  Note: I'm not sure there is a lot of room to increase rents... $125 / week for 360 sq ft already seems pretty high, I think.
• What would your initial offer be?

Obviously, none of you have time to answer 5 questions, but if you could just pick 1 or 2 that you feel good about, that would be tremendously beneficial.  Thank you so much for your comments and advice!

RK

HBD, Brandon!