All Forum Posts by: Josh Sterling

Are there any common methods to divide up the expence of landlord paid heat/water and pass it on to the tenants?

Wood someone be willing to walk through a quick and dirty sequence of events for purchasing a property similar to this. We have been successful with the sfr's but this is a whole different ball game.

Ex.
LOI
Purchase Agreement?
Due diligence (60 days)
Closing

Thanks Joel,
I will contact the utility company to see if they will give me the info. Water is included for most buildings in the area. Heat is included in some. This is a boiler/baseboard heat system, is there any way to pass that on to the tenants? If so please explain.
The landlord provided heat is my biggest concern, however I can't see it being cost effective to renovate the building with a different heating system.

@ned carey we don't have the property under contract yet, I'm still trying to figure out what to offer. Every change in occupancy effects the numbers drastically. Also, if the big expenses like water and gas (heat) are low because of the current low occupancy then I will have to extrapolate to get accurate numbers.

@joel owens the current owner purchased this property as a foreclosure about 1.5 yrs ago. Where would I look for apartment foreclosures?

This would be our first large multifamily deal. (large to me at least). After viewing the property in person we are interested in proceeding with an offer.
I know that the building was purchased for cash by the current owner, and he is offering seller financing.
The occupancy is horrible. I have a rent roll stating 70% occupancy, but the on site manager (looked like Bevis) hinted that it was more like 50%.
All of our single family rentals are in this area, so I am well aware of market rents. I believe that the reason for the low occupancy is that rents are overpriced. (and the lack of a professional appearance for showings)

So my questions:
Income- how do I verify the actual occupancy. I don't want to question their rent roll, but I would have to have an accurate number of paying tenants the day I took over.
Ask for a copy of every lease? Ask for a copy of the most recent monthly bank deposit?

Expenses- this property has owner paid water and heat (baseboard). This is a huge portion of the expenses that I would need to be sure about. Shoud I ask for actual bills? I don't feel comfortable just "taking their word for it" on the expense spreadsheet I got.
What about other contracts/bills for lawn care, snow removal, etc? Should I ask that the owner provide everything?

Lastly, Due to the low occupancy, if I run my numbers with the current income this is a losing deal. How do I decide what occupancy to use for my calculations? I believe with market rents that I can get occupancy to 90% plus, but it will take time. However if I offer based on current occupancy my price would be half of asking.

Any advice would be much appreciated. Thank you

-SR

We have had our first couple turnovers this year. So far this has been the sequence of events:
1)waited till the tenant moved out (usually the last day of the month)
2)spent a couple days getting the unit ready
3)listed and showed the unit (usually have a new tenant lined up within a couple days)
4)waited till the beginning of the next month for the new tenant to be able to move in

This means that I am losing 1 to 1.5 months rent with a turnover. I'm thinking there must be a better approach, but all I can think is to show the unit while it's currently occupied.

Does anyone do this? It seems like a huge pain to coordinate with the old tenants for every showing and hope they have the property presentable. I know I could specify in my lease that they are required to allow showings, but is it worth it?

...or would you just accept the lost rent as a cost of doing business in exchange for the convenience of leasing the property on your schedule?

Which model fijitsu scansnap are you using?

Thanks Karen,
Where would I look for retired or inactive brokers?

...

Hi Everyone,
After doing a bit of research I've found that in order to start a property management company in my state you must be a broker. To be a broker you must be a full time RE agent for 2 years in addition to the other requirements.

Is there some way around this without getting a brokers license?

I'm sure I could partner with someone who has a broker's license, but I was thinking more along the lines of finding a small real estate brokerage and making a deal with them to "use" their license in exchange for a small cut of the profits.
Is that legal?

Any other ideas would be greatly appreciated.

Thanks

SR