All Forum Posts by: Rochelle Wilkinson

I got started when I was 27, picking up my first property in San Jose. I'm 30 now and these last 3 years have been surreal... I'm at 10 units now.

Everyone around me was talking about "low interest rates" so I finally got tired of hearing that everyday and decided to entertain the thought of REI. I was doing dividend growth investing at the time (earning 3-4% yield), and when I ran cash flow numbers on investment properties in 2012, my jaw dropped... Those returns look astronomical now, but even back then they were incomprehensible to me... 10%+ CoC returns in the Bay Area! So, even as a newbie I knew it was too good to be true.

When I think back to my life moves... 

B.S degree? That was worth it as it gave me the career and means to invest in REI. M.S. degree? Totally overrated, I think... I got that in 2009 but wish I would have used those tuition dollars to buy property, instead... or AAPL stock. I would be even further along than I am now. ROI was not worth it and it's unfortunate too many in the workforce drink the academia "higher education" kool aid...

Best financial decision I ever made in life was to get started in REI!

@Rochelle Wilkinson

 Sounds like you have a pretty good grasp on how multi family property is valued and are doing everything possible to get it to it's optimal value.  Congrats!  

Getting licensed costs about $2000 to start up and about $1000 a year to maintain, so it may be in your best interest if you will be saving more than that.

Given what turnaround you have been able to accomplish so far it should be reasonable to find a commercial lender willing to loan on your current NOI

Here is a list of some of the clubs in your area

http://www.biggerpockets.com/rei/maryland-real-est...

@Account Closed

The OP being cash strapped does not necessarily mean the property is not cash flowing - though I concur that is the most probably situation.  It could also be that her velocity of burn in attacking the maintenance backlog is exceeding the rate of cash flow ... and the property has not accumulated the necessary reserves {presumable due to the mentioned mismanagement}.   

We've been in this situation before where we've undertaken a rolling-rehab on a newly acquired building funded solely out of cash flow - the cash flow is the governor on the velocity of the rehab.

@Account Closed

The OP being cash strapped does not necessarily mean the property is not cash flowing - though I concur that is the most probably situation.  It could also be that her velocity of burn in attacking the maintenance backlog is exceeding the rate of cash flow ... and the property has not accumulated the necessary reserves {presumable due to the mentioned mismanagement}.   

We've been in this situation before where we've undertaken a rolling-rehab on a newly acquired building funded solely out of cash flow - the cash flow is the governor on the velocity of the rehab.

@Rochelle Wilkinson I can't read your posts because your avatar just shows as enormous letters and number that cover half your posts.  Is it just me?

I just wanted to chime in, though, from what I read of your original post, that I would not put in a community room or offer wi-fi, Netflix, etc.  It will be more to maintain.  Community rooms generally get taken over by one or two tenants, and you'll be dealing with squabbling issues, as well as having to clean it, and maintain it, as well as deal with security issues.  I can tell you that it's a real pain here in the senior building I live in (I'm not the manager, thank goodness!).  There's one old guy who takes over the television set as if the room is his personal living room, and he's argumentative with anyone who goes in there.  There have been issues with homeless people gaining access to the building and sleeping on the couch in there.  Or they're someone's friend and they're letting them in, anyway.

Plus, people put random things in there for people to take for free - but the manager ends up having to throw a bunch of it away.  You'll also have to clean it and get rid of trash, maintain the fridge and sink, etc., etc.

Same with offering a service that you have to maintain like wi-fi and Netflix and Hulu.  Imagine what happens when the wi-fi, or Netflix or Hulu service goes down?  Let's just start with the phone calls from all the tenants...

Yikes!

@Rochelle Wilkinson

 Sounds like you have a pretty good grasp on how multi family property is valued and are doing everything possible to get it to it's optimal value.  Congrats!  

Getting licensed costs about $2000 to start up and about $1000 a year to maintain, so it may be in your best interest if you will be saving more than that.

Given what turnaround you have been able to accomplish so far it should be reasonable to find a commercial lender willing to loan on your current NOI

Here is a list of some of the clubs in your area

http://www.biggerpockets.com/rei/maryland-real-est...

@Rochelle Wilkinson

I must STRONGLY echo the sentiment of several other people here:  GET A LAWYER to help you with this!!

1) You need to find out if you REALLY own this building.  It sounds like you probably do, but please, please do not spend more time/money on this until you know for sure.  It shouldn't take a decent real estate lawyer long to go through the probate docs to figure it out.

2) Have the lawyer review your loan documents and find out EXACTLY what you are legally obligated to fix "right now" vs stuff they'd "like" to have fixed.

3) Have the lawyer compare the bank list of repairs to what your STATE requires that you fix.  You may find they're on the same page, or you may find the bank is trying to pull a fast one on someone they surely know has no experience or knowledge in the area.

*the few thousand you may potentially have to pay this RE lawyer will pale in comparison to the tens of thousands you will likely save in future trouble, time, and repair costs!!!!  DO IT!

4) Join and REI / keep making contacts here on BP....you could really use some help with the scale of your repairs. You're burning $$$$$$ because you have a lay-handyman doing repairs that likely should be completed by a decent general contractor who may cost more per hour for labor, but is bonded/insured, and can likely get a considerable discount on materials, as well as finish the repairs in a timely manner. You don't have to fire your handyman, if he's a good worker....but it sounds like he'll be more of an asset AFTER the major repairs have been completed.

For what it's worth, this is a REALLY inspiring story!  You are KICKING ***, and I hope you get through this a make millions for your retirement! :)

I don't see this activity improving NOI - it is an expense with no visible return to you, just a hope that you might make a fraction of your tenants happier so that they stay. Now if they pay even more when they stay, now that could improve NOI, but I don't see it happening ...

BP is short for BiggerPockets, the site hosting this content ...