All Forum Posts by: Ahmad H.

I think there's more to this story. I've had a building burn to the ground and a fire resulting in partial damages, luckily no one was injured in either. The insurance didn't bother asking or checking once for a smoke detector and whether it was operational.
How would the insurance know there was only one smoke detector? What if the owner had replaced the battery and the new one died early? What if the detectors didn't work due to a manufacturer defect and not lapse in replacing batteries? I imagine it's hard to tell from a burnt lump of plastic if the smoke detector was defective, the battery was defective, or if the battery had any juice left.
Let's assume the smoke detector was operational, how does that stop a building from burning to the ground? Is the tenant supposed to hear it and put the fire out themselves? What if the tenant wasn't home?
I am playing devil's advocate and think this coverage denial can easily be fought in court. 

That said, smoke detectors are for the safety of the occupants more than protecting the property from fire damage. It is crucial to ensure they are operational as it could be the difference between a life-or-death situation.

@Pat Greene Congrats on your first rental! If I recall correctly, the City of Troy requires rental inspection with every new tenant. Check with the city that they have valid ROPs, and if they do, leave things as-is. If they don't, ask for an ROP inspection for the 3 units, and let the inspector tell the tenant that the hoarding is a fire hazard and must be cleared up. Only do this if you're prepared to fix whatever else the inspection uncovers, but inspectors are usually helpful and friendly when you ask for the inspection and not from a tenant complaint.

1. Contact the city inspector and ask them what needs to be done. Explain that you want your property to be safe and try to ask for options to achieve that. They're much nicer and helpful when they know you want to do the right thing. Go meet them at their office or at the property, don't limit communication to phone/email. For all they care, they think you're some rich landlord being rude to tenants and want to teach you a lesson.

2. Based on the purchase price, I am assuming this house isn't that big. 30-50k for floor joists and bands seems ridiculous. Cracked floor joists get sistered, and bands you can replace, but unless this is a 3000 sqft home and you're replacing every single joist and band that estimate is crazy.

3. Get the tenants out ASAP. Heck, if the city says it's unsafe, even better to expedite their removal.

@Adam Rose Your best bet is to grab a hotspot device from a mobile provider (the cost is anywhere from $10 to $25) per month and use a smart lock, like this one. There are no keys to worry about. You can set up one-time access codes or generate codes that expire after X minutes, hours, days, etc.

https://www.homedepot.com/p/Go...

If you don't mind the risk of keys not being returned to the lockbox, you can use this and it doesn't require wifi:

https://www.amazon.com/Master-...

@Robert Flores My rentals are mostly 100+ years old and I would be cautious of buying & managing them from afar. 10% CoC is tempting only until you run into your first major repair and realize profit went poof for the year or couple of years. First off, I would budget 10% of rent for CapEx, at minimum and I wouldn't buy anything without 10-15k in reserves available right after closing. Things I would do/consider to reduce chances of headaches down the line:

1. Call the building department to check for existing & past violations for the property. Learn about their rental requirements as far as certifications, how frequent, cost, and if building is current on everything.
2. Run a camera down the sewer line to check for sags, tree branches, and other issues. Replacing sewer line to the city main, depending on many factors, can be anywhere from 3k to 10k+.
3. Electrical system: Does it have circuit breakers or fuse boxes? What kind of wiring is there? Romex, BX, knob & tube, etc..
4. Is there asbestos insulation that needs to be removed? Lead water lines?
5. Furnace/boilers: How old are they? When do you expect they'll need to be replaced? Budget for that or better yet get them done early on if they are close to end of useful life and save yourself expensive emergency heating repair
6. Is there a driveway that will need to be plowed? Get quotes from several companies now and don't rely on owner's expense line for snow removal.
6. Are you buying one or plan to buy many? If only one, in my opinion, the headache is not worth a few hundred bucks a month. Only do this if you plan to scale, as scaling will also bring your costs down, and you'll have more leverage and better relationships with your team.
7. You're potentially buying at or very close to the top of the market cycle, so this is a pure cashflow deal, unless you hold for 5 to 10 years. Go over everything with a fine-tooth comb to increase chances of +ve cashflow

@Andy Kolb Depending on the age and type of meter, you might be able to request the full water usage data from your water department. I had a $1000+ bill last year and got the full data file, which had a graph showing gallons used for each 4 hour window for the past few months and a line-by-line for water flow each minute. The data helped me figure out that it was an intermittently leaking toilet, got if fixed, and next bill dropped to $120. 

@Gaurav Nandola Sorry you're going through this. It can be tough dealing with repairs and tenants from a far, even with a management team in place. Considering you bought near the market top, this could be something you need to hold for 5+ years. Your decision to keep or sell should depend on your projections on how things will go. Do the properties need any major CapEx in the next 5 years? How about cosmetic renovations? Is this a market where only locals are successful or there are OOS investors making money there? Reach out to investors in that area and local RE meetup groups to learn more about the market and what works and what doesn't, then decide on best course of action.

@Kim Hopkins If I were in your position, I wouldn't pursue eviction and would focus on an offer that makes the tenant money. Based on my loose calculations, tenant is paying around 3k/mo in rent has 29 months left on his lease. You mentioned that your property is 1.5% cap with current rent, so I am assuming he would have to pay at least 2x his current rent for a similar space. 3k extra rent per month x 29 = 87k. While 100k cash for keys sounds like a lot, in this context, it really doesn't do much to motivate tenant in going through the hassle of securing a new space and moving the business there. I would calculate how much additional cost the tenant has to pay to rent a similar space for next 29 months and offer 1.5x to 2x that amount. That way you're making money and the tenant doesn't feel like they're getting screwed for your benefit only. Would it be better for you to pay this guy an extra $50-150k and get that capital now to reinvest or wait out his lease and hope for a similar deal in 2024/2025?

Hi BP,
I have a passive investor interested in partnering with me on next deal. I buy distressed multi-family, rehab, and rent. I'll be finding the deal, managing the rehab, renting, and on going management. The latter part of renting and managing is standard 10% of monthly rents but what should be the compensation for finding the deal and managing the rehab?

1. 10% of deal value as compensation. Essentially, partner would put up 60% and I put up 40% of all funds, with LLC ownership split 50/50.

2. 5% of purchase price as acquisition fee. 10% of rehab cost.

3. ???

Feedback & suggestions are welcome. I would like to find an arrangement that works for different deal types, instead of customizing for each, to keep things simple.