All Forum Posts by: Sean Morrisey

First off...require your tenant to have renter insurance and add YOU as an additional insured. This will not cost him to add you as an AI, and you could attempt to file a claim against his renter insurance policy.

Now, assuming the tenant does not have a renter insurance policy in place, you are in a difficult position of filing an claim against your own policy.

I'm not an insurance agent, but, you may want to speak to your agent right away for more ideas.

I think that getting a truck is a great idea, but, it's kind of a silent way of committing to the fact that you will not outsourcing your property management.  That's not a good idea because it will prevent you from scaling.

So, I suppose it comes down to whether you want to scale or be the "hands on" landlord.

Today, I turned down an offer on my 16 unit multifamily building that would of made me $201,000. Why? Because I believe the cash flow this building will kickoff will feed me for a lifetime. And...30% in capital gains as tax and a $6000 prepayment penalty did not excite me. 1031 exchange may of worked, but, it sure is tough to locate a replacement property that would suffice. Thoughts?

So, just called our local commercial real estate broker association asking them if they have any data supporting who sold the most multifamily property in 2017-2018.  Surprisingly, they don't have any information.

Any recommendations as to how I can find the most productive multifamily real estate brokers in any given marketplace?

Yes, but, I would only be receiving interest only payments. By investing directly into another building, I would receive rents, principal paydown, appreciation, and tax benefits. The IRR would be much greater - unless I'm missing something?

Austin -

All in all, I think this looks pretty good.  I think you should raise your rate to 5.5%...maybe higher?

I think the only thing this calculator does not factor in is capital expenditures.  Meaning...what CURRENT condition are the mechanicals, roof, windows, etc?

My experience has been that homes cut up into units may or may not be legal in any given community. Also, I have found a lot of deferred maintainance in buildings like these that can cut into your cashflow from day one.

Hope this helps!

Ditto that...incredibly insightful, Brian. I would anticipate the cost to setup and maintain a DST in quite a bit more expensive than the LLC structure as well.

Wow...all very creative and informative ideas! Dave's point on a floating close date is fantastic, and I've thought about a monetized installment sale but want to put my capital to work. Never heard of a deferred sales trust...will look into it.

Will your lender permit you to buy this without multifamily experience? I have recently learned from my banker that I can join partnerships strictly with "experience equity". Pretty exciting stuff and it may be a conversation you want to have with your commercial lender to see if you need to bring an "experience" partner into the mix.

I would ask your new management company what documents they will require from your old manager to assist in their transition. Also, I have found it challenging (depending on the tenant) that the payment of rent and requests for repair calls may be confusing for the tenant depending upon new procedures. You may request that your new manager explain how they will assist in this transition.

Most importantly, make sure the move in checklist is properly transferred and that there is no confusion regarding transfer of deposit.

It's great you are being so diligent!