All Forum Posts by: Account Closed

Well, I listed the building and no bites at all, but not surprised. Renovated two of the apartments, and no interest whatsoever. There are no rentals available in the area, but I still can't rent these apartments. 

Bruce Woodruff - Thanks for the positivity! I have been looking for a money partner, but I don't really know how to approach people in that manner, nor do I know anyone that has any money. Besides, I wouldn't be comfortable with someone else giving me money, especially after this monumental screw up. I do have a store font in the building and wanted to do a laundromat (none around), but I just don't have the capital to make it happen. Now, I lost the confidence to pursue anything like that. Just not sure about the area. I made a lot of incorrect assumptions already.

Theresa Harris - I made it sound like I was working on all of them, but it was just one unit I had to completely renovate by myself. They really aren't too bad overall, it was just the one unit that needed a complete renovation. The rest just needed touching up, paint, floor covering, etc. As far as the area, it's an island in Lake Superior. There is a university (Michigan Tech) about 15 miles away and there are a couple industries around. The people mostly work at places like bars/restaurants/healthcare. This area is mostly stagnant with some slight growth - 0.2%. 

Mike Hearn - Thanks for all of the information, Mike! I did read it all and I don't know if I have any other choices. The building in question is on a commercial loan with a bank. I can't really do a land contract, and I have to get the NOI up within a year or I lose them anyway, along with my paid off house that I used for collateral. Not happy about losing my first house like that. So much work and time just flushed down the toilet.......... just like that!

Kaci Hunter - When I bought the building (6 units), the owner gave me his financial documents and everything on that sheet has been tripled, except the rents - those dropped. Tenants do pay electricity, but it's like $30-$40 a month. The gas is around $1200-$1500 and the water was around $900 and that also generates a sewer bill of roughly the same amount ($750). So, just for gas and water in the winter, it's over $3000 per month. These units were renting for $400-$500 when I bought them. I raised them to $700-$800, which I think is pretty reasonable, but everyone left. I was told that the gas would be around $500 and the water was supposed to be $200-$300. I also contested the taxes and I was denied. When I called the utility companies for bill history, I was told that they cannot give me that information.

As far as continuing to invest, I don't know. This has caused nothing but stress and loss of money. The whole point of this was to prevent those two things from happening, yet that's all I got for my troubles. Also, I get to lose a house that I had paid off. I guess the worst part is just knowing that I can't do it. 

Anyway, thanks for the information! I do appreciate it, even if there isn't much I can do.

I did accept a job with the railroad however, so I can at least make payments for now. Of course, I have to move away from my family and work on-call for 24-7, but hey RE is worth it, right............ right?

Quote from @Greg Scott:

Before you go the bankruptcy route, I would look at getting out of one or more of the properties to eliminate debt and possibly put some cash in your pocket.

Do you have any equity in them?  What are they worth compared to what you owe?

I have a friend in Traverse City buying property.  If they are near TC he might be a prospective buyer. DM me.

Not much equity, but the purchase was cheap. Maybe that could be an option. Being in the middle of nowhere may be an issue with getting market value.

It’s about 6 hours away from TC. 

Thanks!

I never thought I’d be in this position, but here I am. 

So, I have a few rental properties, but the utilities, taxes, and insurance were all triple the amount forecasted. Over this winter, the utilities drained my accounts completely. I raised rent, but everyone left. I now have no income and no savings left. I can no longer pay the bills, and I have a lot of debt from renovating a unit that was never able to be completed.  Nothing is late at this point, so does it make sense to start the process now?

I tried to plow snow this winter, but multiple mechanical failures netted a loss of over $2000 while working a lot  of hours.

A job is not realistic. I live in the middle of nowhere. There are no jobs. It’s not like I sit around all day. I work on these properties every single day. Even if they were making money, I still couldn’t afford contractors. 

In fact, I don’t see how any of this works. I can’t charge enough to even cover the utilities. 

I was in the same position. A local bank gave me a commercial loan and used one of my properties as the down payment.

Well, you could househack a small multi family with an FHA loan for a few grand. That can eliminate your housing cost and help a lot towards saving some reserves.

Private money usually wants to see some sort of investment track record. 

I did exactly that, last year. 

I paid off a $35k land contract home, then used it as collateral for a loan to buy an 6 unit apartment building and triplex (commercial blanket loan). I think I paid $1200 in closing costs out of pocket. 

Just head down to the bank and tell them that you would like to do something like that, then ask for a few options. 

Thanks, Craig!

I always heard Brandon talking about these kinds of deals when he was on the podcast. I never thought I would get one, but it happened. It was a pretty big deal for me. I am in a very isolated area, so I will not be getting the type of rents one would get in NJ, but it will cashflow well enough.

I didn't have to sell my single family. The bank just used it as collateral for the down payment. Everything still cashflows, so I may not sell the single family, but it needs a roof and siding. I think it may be best to dump it ASAP.

There were no contracts with any of the tenants. They all just paid the guy on personal terms.

Investment Info:

Small multi-family (3 units) and a large multi-family (6 units) buy & hold investment.

Purchase price: $200,000
Cash invested: $7,000

Duplex building converted to triplex. Fully occupied.
6 unit apartment building with storefront and coin laundry. Fully occupied.

What made you interested in investing in this type of deal?

I'm interested in any cash flowing deal, but I like multi-families.

How did you find this deal and how did you negotiate it?

This was an off-market deal that was offered to me by my appliance supplier. I was buying some more appliances, and he offered me the deal. A triplex and 6 unit commercial building for $200k. I had to cover closing costs.

How did you finance this deal?

A local bank was able to get me financing with a commercial loan. I used a paid off single family property to make the down payment.

How did you add value to the deal?

So far, rent has been increased by 12%. The buildings need no work. Not much opportunity for adding value.

What was the outcome?

Still new. No realized outcome at this time.

Lessons learned? Challenges?

Realtors make things easier, but more expensive. It may be worth it to use a realtor.
I wish I would have inquired about the insurance earlier. All delays were due to insurance.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No realtors on this deal, but if you are in the northern mid-west, IncredibleBank is pretty incredible.

I just bought a couple buildings and one of them has a storefront that is occupied. I am wondering if there any people that have experience with this and what things should I be wary of as far as the contract is concerned.

I spoke to an attorney and she is saying that she will write up two contracts for me, one for the business that is renting the storefront and one for all of the other tenants. She wants $1000 to do this. Do you think this is a good price?