All Forum Posts by: Michael Talerico

@Steven Lanahan Steven-  I'm not sure why I never saw your post several months back regarding my 5-unit property I had for sale, but I'm just realizing now scrolling through some of my old posts here on BiggerPockets. At any rate, my sincere apologies! I actually still have the property, so if you were still interested in knowing anything about it, I'd be happy to send you the info. And to avoid any correspondence/communication issues this time around, please email me directly at the email listed on my profile profile page. Thanks Steven. 

Terence Williams I just completed a rehab of a bank-owned property, so I can definitely give you some insight into how it all works: When you buy the property, you buy it "as-is/as-seen,"of course, so make sure you do your due diligence and take all the necessary steps to protect yourself before pulling the trigger. Things like back taxes, title encumbrances, insurance issues, etc, etc are all things to consider, so make sure you have the time, capital and resources in place if you decide to move forward and make sure you figure all this into your calculations when analyzing the property. Once you buy the property, depending on the circumstances, you will have to call the utility companies to get everything turned back on. However, in some cases, an inspection of certain property systems might need to be conducted prior to this happening (i.e. having an electrical inspection done). Additionally, depending on where the property is, you may have to go through dewinterizing it, so keep that in mind as well. Once the property is up and running again, you can basically implement your rehab plan and proceed accordingly assuming you've taken care of any issues that might obstruct you being able to start working (i.e. getting certain permits, if needed) As a sidebar, remember to plan on making sure everything will be up to codes upon the completion of the project. Once you have completed your rehab, you and/or your agent can start marketing the property. I hope you find some of this information helpful, but please remember, every deal is different and my experience may end up being totally different than yours. Plus, I only listed the most salient aspects of my flip; explaining every detail of my day-to-day experiences would require much more than what I could write in a discussion thread, so be prepared!

@Sam B Thank you for the comment.....I sincerely appreciate it! My intention was to be as thorough and transparent as possible with what I'm selling, so I did my best to include as much about the property right up front. 

I am currently looking to sell my 5-unit apartment building located in Utica, NY. Below is some preliminary information regarding the current state of the property. If you are interested in knowing more, I would be happy to provide any and all pertinent documents/pictures to allow for any due diligence if we get to that point:

It is currently 80% full and I am currently marketing to get the 5th unit occupied (I anticipate full occupancy before the end of March). As it stands, it is producing a gross rental income of $3000/month, and with the 5th unit occupied at a $650 monthly rent, it will be generating $3650/month. Full year leases (with escalating annual rent increase schedules) are in place for each respective current tenancy. The neighborhood class would be between a B and C and yields a cap rate around the 10% mark. The net operating income for this property is currently about $20,760, but with the 5th unit occupied, the NOI will jump to $28,560.

Approximate expenses are as follows:

Gas/Heat/Electric: High-end will be around $450 through heating season; this amount will drop during the warmer months due to the heat being shut down, so the gas expense will predominantly be for appliance use and hot water. The way it is currently set up, there are two boilers heating 2 units; electric panels heating 1 unit; and a furnace heating the remaining 2 units. With the exception of one of the boiler-heated apartments and the electric baseboard heated apartment, the thermostats are not accessible by the tenants, so the heat usage is regulated. Starting Sept 1st and January 2016 (new leases), respectively, the electric baseboard heat tenant and the boiler heat tenants will begin paying for their electricity usage, thus, making all 5 units completely separate electric. Additionally, I plan on/recommend putting a lock box on the thermostat in the boiler heat unit to make it a heat-regulated apartment like the others. So with all these changes, the "Heat/Gas/Electric" expense will drop significantly.

Water: $123.89/month

Insurance: $125.00/moth

Annual Taxes: $308.33/month

Property Management (8% GRI at full occupancy): $292.00/month

Capex: I've spent almost $5000.00 on separating/updating the electrical systems; I will be spending between $5000-$7000 for a new roof (shingles on the pitched part of the roof and resealing the flat part of the roof) as soon as the weather permits; it has all replacement windows; 3 hot water tanks and 2 boilers that are all in great working order; aluminum siding that is in good condition; and a full parking lot that is in exceptional condition. So with all this work done, I have my current monthly Capex monthly expense to be $50.00.

Grounds Care/Maintenance: $83.33/month

Vacancy (5% GRI at full occupancy): $182.50

This brings the high-end monthly expense total to $1615.05, but it should be a few hundred dollars lower by the beginning of next year, especially with the built-in escalated payment schedule in each lease, so I would conservatively estimate something closer to $1400/month.

So based upon these numbers, at a 10% cap rate, the property is valuated around $225,600.00. With 20% down at this price, after expenses and debt service, the property should yield about $1044.17 ($208.83/door) per month, giving you a 27.77% annual "cash-on-cash" return.

Tenant profiles are as follows:

"Apt A" is 2-bed/1 bath occupied by a couple that has been there for about 5 years. They just signed a new lease at the beginning of the year.

"Apt B" is a 2-bed/1bath occupied by a couple that has just moved in.

"Apt C is a 1-bed/1-bath that is currently unoccupied.

"Apt D" is a 2-bed/1bath that is currently occupied by a single tenant, whom just signed a new 6-month lease March 1st, 2015. This was done to stagger the leases, in which I plan on re-implementing a 12-month lease term upon the next lease signing in September.

"Apt E" is a split level 2-bed/2-bath with an attached garage. This couple moved in last month and are currently signed to a 13-month lease.

I welcome and encourage questions, so please feel free to contact me if you are interested in learning more about this property. Thank you.

Asking Price: $219,000.00

I am currently looking to sell my 5-unit apartment building located in Utica, NY. Below is some preliminary information regarding the current state of the property. If you are interested in knowing more, I would be happy to provide any and all pertinent documents/pictures to allow for any due diligence if we get to that point:

It is currently 80% full and I am currently marketing to get the 5th unit occupied (I anticipate full occupancy before the end of March). As it stands, it is producing a gross rental income of $3000/month, and with the 5th unit occupied at a $650 monthly rent, it will be generating $3650/month. Full year leases (with escalating annual rent increase schedules) are in place for each respective current tenancy. The neighborhood class would be between a B and C and yields a cap rate around the 10% mark. The net operating income for this property is currently about $20,760, but with the 5th unit occupied, the NOI will jump to $28,560.

Approximate expenses are as follows:

Gas/Heat/Electric: High-end will be around $450 through heating season; this amount will drop during the warmer months due to the heat being shut down, so the gas expense will predominantly be for appliance use and hot water. The way it is currently set up, there are two boilers heating 2 units; electric panels heating 1 unit; and a furnace heating the remaining 2 units. With the exception of one of the boiler-heated apartments and the electric baseboard heated apartment, the thermostats are not accessible by the tenants, so the heat usage is regulated. Starting Sept 1st and January 2016 (new leases), respectively, the electric baseboard heat tenant and the boiler heat tenants will begin paying for their electricity usage, thus, making all 5 units completely separate electric. Additionally, I plan on/recommend putting a lock box on the thermostat in the boiler heat unit to make it a heat-regulated apartment like the others. So with all these changes, the "Heat/Gas/Electric" expense will drop significantly.

Water: $123.89/month

Insurance: $125.00/moth

Annual Taxes: $308.33/month

Property Management (8% GRI at full occupancy): $292.00/month

CapEx: I've spent almost $5000.00 on separating/updating the electrical systems; I will be spending between $5000-$7000 for putting a new roof on [[shingles on the pitched part of the roof and resealing the flat part of the roof]] as soon as the weather permits; it has all replacement windows; 3 hot water tanks and 2 boilers that are all in great working order; aluminum siding that is in good condition; and a full parking lot that is in exceptional condition. So with all this work done, I have my current monthly CapEx monthly expense to be $50.00.

Grounds Care/Maintenance: $83.33/month

Vacancy (5% GRI at full occupancy): $182.50

This brings the high-end monthly expense total to $1615.05, but it should be a few hundred dollars lower by the beginning of next year, especially with the built-in escalated payment schedule in each lease, so I would conservatively estimate something closer to $1400/month.

So based upon these numbers, at a 10% cap rate, the property is valuated around $225,600.00. With 20% down at this price, after expenses and debt service, the property should yield about $1044.17 ($208.83/door) per month, giving you a 27.77% annual "cash-on-cash" return.

Tenant profiles are as follows:

"Apt A" is 2-bed/1 bath occupied by a couple that has been there for about 5 years. They just signed a new lease at the beginning of the year.

"Apt B" is a 2-bed/1bath occupied by a couple that has just moved in.

"Apt C is a 1-bed/1-bath that is currently unoccupied.

"Apt D" is a 2-bed/1bath that is currently occupied by a single tenant, whom just signed a new 6-month lease March 1st, 2015. This was done to stagger the leases, in which I plan on re-implementing a 12-month lease term upon the next lease signing in September.

"Apt E" is a split level 2-bed/2-bath with an attached garage. This couple moved in last month and are currently signed to a 13-month lease.

I welcome and encourage questions, so please feel free to contact me if you are interested in learning more about this property. Thank you.

Asking Price: $219,000.00

@Gabe G.  Gabe, I am a fairly new landlord, but I can certainly relate to having these types of dilemmas. I think that while it is incumbent upon the landlord to be clear right up front with things like tenant responsibilities, repairs that have merit, etc, etc, we all know things could go very differently once the tenant has taken occupancy. With that said, outside of a highly unreasonable and needy tenant that you simply may have to manage and wait out until the lease is up, I feel that your approach should be a measured one, in that some tenants need more attention and training than others. In other words, the goal is to get all of your tenants abiding by a policy or protocol that best suits your needs as a landlord, all the while making sure that (1) Your tenants see that you care about keeping them happy and content living in your property and (2) You, at the very least, can limit the possibility of something serious happening due to tenant neglect. So initially, this could mean that you may have to do some things that YOU might find to be completely ridiculous, but over time, effective communication and prompt property management should ultimately help shape the behavior of your tenants to what works for you. 

@Greg V Thanks for the follow up on your project! Since my initial post, I've learned much more about the property I'm looking at and I've actually gone ahead with submitting an acquisition proposal. The great thing about my opportunity is that there is an aggressive revitalization effort going on in my market, which is really starting to gain traction due to a significant surge in both industry and entertainment over the last few years. Additionally, over the last 4-5 years, local developers have had incredible success developing/renovating mixed-use buildings, so now there are actual numbers aspiring investors can use to market their business plans more effectively to potential lenders, rather than having to speculate. So in a nutshell, these recent developments have really helped loosen up lending standards for local banks here in my area, so I'm much more confident that I can make a run at getting this project financed. Also, as an FYI, based upon my conservative valuation, post-renovation, I'm looking at a building worth in the neighborhood of 1.5-1.6 million. 

Thanks Greg! 

Hello Everyone-

I am in the process of trying to acquire a mixed-use building in my area (that is mostly in disrepair) via a master lease option. To make a long story short, the person who acquires or purchases this building will have the opportunity to utilize approximately 1 million dollars in grant money that was appropriated to help revitalize our downtown area. While the building is currently negatively cash flowing (about -$500/month according to the broker I'm working with),  the owner owns this property free and clear with no encumbrances. If I was able to negotiate a deal with the owners (whom I actually know quite well), there are at least two caveats in play: (1) The grant expires if not used by the end of 2015, so I will have to look to get an extension (my contact with the city informed me they can request an extension, but only after there is a new owner in place) and (2) The repairs must be completed upfront, so I will have to obtain financing to fund the project (the estimated renovation budget is roughly 1.1 million dollars). 

As part of my offer to the seller, I plan on working in a 90-day due diligence period for me, where if I am unsuccessful at securing the funds within this time period, I can walk away from the deal and they can continue to market this building to other buyers from that point forward. Does anyone have any advice that will help me with the acquisition or financing phase of this potential deal? Any thoughts or opinions will be greatly appreciated!

I am in the process of buying my first multiplex property and it is currently fully occupied. While I am ok with this in this particular situation, the landlord I am buying the property from has been paying the utilities for all the tenants, which I'd much rather not do. With that said, I am waiting on getting back the estoppel agreements from the tenants so I can get a better idea of what I'm dealing with (i.e. month-to-month tenants, leases that indicate utilities included, etc), but I would ultimately like to get all the current tenants to transition into paying for their own utilities ASAP once I officially take ownership of the property. Does anyone have any suggestions on how I should approach this?