All Forum Posts by: Ryan Scott Isacksen

Thank you @Max Gradowitz,

My wife and I have been looking at Fresno as a first investment, but it sounds like we should look at Bakersfield and compare the two.  Do you work with any property management companies in the area for your investments?

I will look at the numbers and may ask a few questions of the area later on if you don't mind.

Your lender (if you are working with one) can do that for you as well.

I think that you should be able to setup the lease with these terms with the new rent that has the banked increase and also a section spelling out the Capex portion of the rent increase, but I am not certain on that. You will need to send the separate rent increase notice for the capital expenses and whatever banked increase you are able to take. I believe that is a 60 day notice.

Look over the information here about passing through the CapEx and probably be good to give EBRHA a call. (number listed on the website below)

Make sure you are doing that correctly.. rent board challenges aren't fun.  The tenants may challenge anyway, even if you do everything correctly. 

http://www2.oaklandnet.com/Government/o/hcd/s/Land...

You probably will be able to take some of the banked increases as well.

Estimated Roof ~$16,000 * .7 (70% cost passthrough) = $11,200

5 year payoff : ($11,200 / 2 ) / 60 = $93.33 a month increase

You will need to check what is normal for the area as far as deposit etc.  

You will not be competitive if you are asking what is common in a different state, but overboard for your area.  

Rentals that allow pets are less common (at least where I am) and can be a selling point.  You may even be able to add a $200 pet deposit then have something along the lines of a monthly $25 pet fee. 

I would probably set a weight limit around 25lbs.

It looks like 10% is the maximum increase.

http://www2.oaklandnet.com/OAK058515

This should have a bit of info for you: http://www2.oaklandnet.com/Government/o/hcd/o/Rent...

Congratulations on your purchase by the way!  

Hi Calvin,

Yes, you can bank rent and pass through the CapEx at the same time. You can only do 1 rent increase a year, so if you do a banked rent increase, you wouldn't be able to do the CapEx charge until a year later.

Make sure you get the work started (permits pulled) by Feb. 1 or else the new CapEx rules will mean the cost will be spread out over the useful life of the improvement, further watering down what you can charge back to the tenants.

There is a max you can increase the rent by (I don't know off the top of my head) so you may have to still bank some of the increases until the next year.

Knowing Oakland, these could be tenants entrenched for a long time. You will need to track when the CapEx portion ends so that the increase can be reduced once their portion is paid off.

If you incur CapEx expenses later on, there will be new rules that will almost negate any kind of increase for the tenant. Try to get your job started before January is over.

EBRHA - http://www.ebrha.com/ may be able to help you out with some specific information.

I wouldn't suggest having anyone sign a new lease if they are below market.  You want to cross your fingers and hope they move at any point so you can get closer to market rent for the place.

I don't own yet, but I have been putting these into rentals that I manage.

We are in California where there have been drought conditions, so it has been more of a focus.

I like .5gpm aerators for bath faucets and wouldn't suggest going below 1.5gpm for kitchens.

Some properties have had low flow toilets, shower heads, and a circulation pump added to the hot water heater to reduce water waste.

LED lights have gone into some of the properties.  I like there isn't mercury in them like the CFL lights, but once replacement is needed, the whole fixture will need to be replaced.  That seems like a different kind of waste that you don't have with conventional bulbs.  

I do recommend if someone does go for LED lights that you avoid a built in photocell as part of the fixture.  Those are the parts the manufacturer will source from someone else for as cheap as possible and be the more likely reason you have to replace a fixture early.

A9 base LED bulbs are great for high ceiling areas.  Yes, tenants are responsible for their bulbs, but you will still get calls when someone can't reach their ceiling.  That helps eliminate one extra call.

I have worked with energy conservation professionals in the area and have a bit of information to work with.  I do not have stats yet on how changes have affected the properties that have had them.

This is one of the things I will be doing with buildings as I move forward with my own investing. Even without there being financial benefits, doing upgrades for environmental purposes will be part of the legacy left.

I love that there is the chance to have such a positive impact on many people's lives beyond just the person investing.

Proper management and care of the property gives people a safe, comfortable place to live.

Utilizing services in the area gives people working on their own dreams an opportunity to grow.  I know of a handyman company that started out with the person that runs it being shown how to invoice and get proper insurance.

One can impact the physical neighborhood in a positive way.

There is also the chance to make environmental impact with water saving devices, lower wattage bulbs, maybe even solar panels or charging stations for electrical vehicles.

The company that I work with is using Yardi.  It is designed to handle everything including the bookkeeping for the properties.  It works fairly well for the maintenance end that I use it for, but it does have points of frustration.  Yardi has been around for quite a while.

The previous company I worked with used a system called Full Focus.  It was a nightmare to work with.  I would not wish that on anyone.

I submit a lot of things via email or text to the people doing work daily and then have to transpose that into Yardi later.  It is fairly easy to look back at maintenance history for a unit or property or vendor.

I find the version we are using a little hard to interact with when I want to copy paste into a different field.  The program does not recognize the ctrl+c when text is highlighted and the phone number field pretty much only allows you to type rather than copy paste.

Overall I do not have daily frustrations with the system daily.  I don't know much about other systems that are out there.

Hi Scott,

I like Brian's answer, especially since it comes from a position of experience with that situation.  :)

I have to jump in on a question like that myself.

1. I would value add to the person with my experience managing property and with market research that would be placing the investment in an area that is on the cusp of rising rather than already a very hot market.

2. The vehicle would be large multifamily buildings.  Value add situation plus a growing market.

3. Management team would be Attorney, Broker, Local Banker to the area, Management Company, Inspection Company, and Contractors for additional inspections.

4. Pay with acquisition fee and a small percentage of equity in the deal(s).