All Forum Posts by: Ross Leavitt

100% yes. The clock does start again when you refi. The "clock" is tied to your loan, not to your ownership of the property. So new loan, new 1-year period.

Of course you can sell the house at any time if you need to move. The 1-year period doesn't prevent you from selling the house during that time, just moving out and keeping it as a rental.

We build new 5-bed/5.5-bath houses and rent them to students near OSU in Corvallis, OR, and there are a couple other builders in town who build similar properties. They're technically single-family homes, but when they're sold, the price is always based on the CAP rate because they're income properties. The problem is that these sales are rare, so comps are scarce. We always explain this to our lender in hopes that the appraiser will lean into the income approach, but our appraisals are hit and miss.

A couple years ago we had the worst. The appraiser used houses in a bad part of town as comps and didn't consider proximity to campus. He came back at $390k. Later that year we had a different appraiser work on our identical houses across the street, and he valued them at a more realistic $540k, a ONE HUNDRED FIFTY THOUSAND DOLLAR DIFFERENCE.

@Bill Schrimpf thanks so much for the offer! I’m going to be looking for 10+ units, so I would expect the commercial agent would make the most sense. To be honest, I want to spend another couple weeks giving myself more basic education on the market before I start calling up a commercial agent, but once I get to that point I’d be very grateful if you could put us in touch! I will keep your name and give you a call once I get to that point.

Happy Thanksgiving!

@Chris Levarek thanks for sharing your experience, and that makes perfect sense about why NC was more attractive at first. It's amazing how affordable Phoenix still is for being a hot market. To me, that means it still has room to grow.

@Justin R. I'm curious if you ended up buying anything in Reno! I'm a property manager in Oregon and I'm preparing to buy multifamily out of state. I'm seriously looking at Reno now. 

Congrats on the project going well so far! I'm a property manager in Oregon and am looking to buy multifamily out of state, and am looking seriously at Phoenix. Where is your project located? Are you planning on doing more like it?

How much additional capital are you looking for? What kind of equity position are you offering? Is it a long-term hold or do you plan to sell as soon as all the units are occupied?

Have you worked through the rental property calculator in the Tools section? Also, where is this property located? You should find out the market cap rate for similar properties in the area, to compare your projected cap rate.

Also, have you gotten the current financials from the owner? It's important to know how the property has actually been performing. Either get the most recent 12 months of income and expenses, or at least last year's income and expense report.

Did you get the 50-60k number from a contractor? To be honest, it sounds low for the work you're describing.

Here's my quick, back-of-the-napkin analysis: 1,100 per unit, and 800 for the one bedroom (just a guess, since you didn't give an estimate for that unit), and 5% vacancy

Annual income: 147,060

35% of income is a good starting point for expenses: 51,471

NOI: 95,589

That's an 8.6% cap. Did I miss something? 

Also, I manage about 200 bedrooms in Corvallis, OR near OSU. Students are a special breed of renter. They're profitable, you just have to have to be more proactive with them, get large deposits, have cosigners, and plan on doing a lot of repairs at turnover. The fact that all your units turn over at once means that season will be very busy. Most college towns have a season during the school year when most units are pre-leased for the following year. It can be high-pressure, because if you aren't fully leased by the end of that season, you risk having a unit sit vacant all year.

You're on the right track!

@Chris Levarek I have a couple questions about your thought process in market selection. Phoenix seems to be growing a lot as well, so why did you choose to go out of state? Also, since you're buying not only out of state, but on the other side of the country (long flight!) how often do you travel out there? 

I am a property manager in Oregon, and I'm researching Phoenix for multfamily (hot market, relatively easy flight), so I'm especially curious what turned you off to your home market. 

Thanks for sharing your story! Sounds like you're off to an impressive start.

@Adam Fleck  what part of Oregon are you from? I live in Springfield, and I've been eyeing a move to Idaho for a while. How has the transition been for you?

Also, do you think there is more upside left in this market cycle in the RE market in Boise than there is on the West Coast?

A tile guy should be able to replace individual tiles, and that is a more reasonable repair. Hire him to replace all 4 broken ones, and charge them for 3/4 of the cost to cover the 3 that they broke. Broken tiles are not normal wear and tear.

I'm a property manager in Corvallis, and our properties are almost exclusively rented to students near OSU. Needless to say, we deal with lots of repairs. Here's what I've found in my experience. It's really better to hire out all the cleaning and repairs that are going to be charged to the tenant. Hire someone reputable to do the work, use their deposit to pay for it, and refund what's leftover. Tenants are almost always unhappy about the charges, and it's FAR easier to justify the charge if it's simply the cost of having a reputable contractor do the repair. If you DIY it, they're going to question the amount of time you spent, but if it was done by a professional, they have less to complain about. That's my experience.

Good luck, and feel free to message me if you have any other questions!