All Forum Posts by: Christian D.

You can write it off and take the full deduction in the first year they are put in service, i'm not sure why you would capitalize and depreciate $1,000 cabinets.

$160K/unit seems a bit overpriced, especially if you are in a secondary or tertiary market and with one efficiency unit.

 Can you dropbox the proforma or OM for us to review?

I would suggest trying to work out an extension, although the bank may request more money upfront in exchange for a financing extension, at least this gives you more time to tap a another non-QM lender.

I also agree if you had a financing contingency in the PAS agreement, you should try to make this claim if all else fails and definitely be strategizing with your attorney.

This pandemic has caught everyone off guard, unfortunately it's just bad timing.

These are some great points.

In addition to a lease agreement, I would just clarify Section 8 will require the signing of a House Assistance Payments Contract (HAP Contract) -- this will be executed by the landlord and case worker on behalf of the tenant working for Section 8. Although this contract will outline the main terms of the lease agreement, this is not an actual lease agreement, but a contractual obligation between the landlord and Section 8/HUD.

What is the average time for evicting tenants in Norfolk under normal circumstances?

It sounds like the seller filled these units before you were even in contract so there's nothing you can do if you inherited this tenant I would also recommend accounting for a lease up fee in the first year in your underwriting for each tenant you are inheriting on future acquisitions for this very reason.

If you have a mortgage on the property I would suggest contacting your lender and requesting a mortgage forbearance for 90 days. This will alleviate the stress of having to make debt payments while your tenant(s) are in arrears and not paying.

Unfortunately, I think you're going to have to wait to the courts re-open and lift the eviction moratorium in your state before you can move forward with any action against the tenant.

@Carl A. when does their lease expire?

It's important to remember office leases are completely different than residential leases, and a 6% commission across the board is not as common as you'd think. 

But it's also common for commission structures on office leases to vary based on different markets and states.

Depending on the complexity of the lease, typically there will be a step down on commission payouts, but this is also more common on longer term office leases such as 5, 10, and 12 year leases, and retail leases in a core market like NYC.

See if the broker is willing to negotiate terms, perhaps they will entertain the following:

6% of the base rent for year one

5% of the base rent for year two

4% or 3.5% for the base rent for year three

Also, when will the commission be paid? Is the broker expecting for the full commission paid upfront? You don't want to put yourself in a position where you have already paid out the full commission upfront in year one, and for whatever reason the tenant breaks their leases or defaults halfway through the lease term.

This is interesting, but I would just clarify to say you've collected 100% of the discounted rents.

In reality, your collections were 80% for the month. However, because of the current market conditions I think this is still a fairly good number.

@Andrey Y.  It has nothing to do with "being human" -- i'm also both a tenant and landlord in NYC.

 Please continue to do what you feel is appropriate for you, your tenants, and your business. 

I would just encourage everyone on this thread to do some due diligence and explore how other successful and reputable real estate companies/landlords are navigating through this pandemic, and to conduct some research before you start making decisions based on a Biggerpockets post by a guy in plaid shorts claiming he is a real estate "specialist".

@Anthony Wick what many people on this thread are not understanding is you immediately expose yourself. Why would you offer abatement's to tenants you are not even sure can't pay you? Tenants who were planning to pay their rent in full for April will now pay less because you've given the option to do so. At the end of the day, there is already a freeze on evictions, that's the bottom line. If a Tenant knows there is no consequence for not paying anyway, why would a 10% discount change this? All you're doing by offering these incentives upfront is expressing you're in panic mode to your Tenants and giving those who would have paid you in full the chance not to do so.

We are only in April, the pandemic really only started on March 8th -- what about May and June when people have now been out of work for over a month? Aside from a 10% discount, what about the increases this year in utilities, maintenance costs, RE taxes, insurance, and inflation? You're 10% discount is now added to another 10% in annual increased operating costs -- and I don't see rents pressing upward this year so you've lost your hedge.

Your main goal as a real estate owner is to increase revenue and decrease expenses, period. I understand these are unprecedented times, and many people on here may be newer real estate owners navigating through a recession type environment for the first time, but we are in the first inning of this pandemic. 

I'd also like to mention there is the possibility of the Coronavirus relapsing again before the end of the year. So if you offer incentives to your tenants now, and then things normalize for a few months and we all have to go through this again at the end of the year or Q1 of next year, you've already opened yourself up to having to offer another round of rental discounts. So now you're bottom line has immediately decreased by 20% (because you were not patient enough to see how things play out) on the year on top of the tenants who are not going to pay you anyway, and on-top of the annual operating expense increases. 

I'm not saying do not help your tenants who are requesting relief. But again, my suggestion would be to let each Tenant come to you individually because each Tenant is going to ask for something different. It's best to speak with each Tenant on a case-by-case basis and see how you can work out an assistance plan.