All Forum Posts by: Stephen David Smith Jr.

I had to do detailed research on this specific topic for a commercial apartment development we are doing now in Lakeland Florida. In regards to benefits there are many articles on those however my attention goes to it being the first thing the tenant sees and is the security to their home. This brings a secure and premium feel to the property which makes rent turnover a breeze. More importantly I looked at how technology could not only improve lifestyle but cashflow:

(These are general numbers not associated to a specific product, please price your own product and charge +/- accordingly)

30 Unit Apartment

$150 deposit per 2 "smart keys" (returned if 2 undamaged keys are returned - kept if not returned)= $4,500 on deposit at capacity

$75 replacement - This will bring in a few hundred a year minimum on this property

(Make sure your replacement cost to the tenant is more than your key cost for the hassle of reprogramming and to be paid for your time and cashflow, consider it like a contractors markup for services)

If I pay $200 a lock I am in for $6,000. however in year 1 I receive $5k+in deposits or replacement fees that could be realized. Realistically the locks would pay for themselves within 3 years and would start putting money into the properties pocket after.

I hope this was helpful.

That is certainty bad business, and a possible breach and violation of contract. However you unfortunately, I believe, are going to be stuck speaking with a construction attorney in regards to the matter (the only person who can give advice on what to do legally here, no one in the forum who isn't an attorney can give legal direction it would "practicing law", i would think you could easily get a consultation), even though what your saying in broad terms seems like a definitive violation it all comes down to what does the contract say and more importantly was it written properly and in a way that can be enforced in an expeditious manner. If the contract isn't written how it should it complicates not holding each party responsible to each other as I believe all good contracts should.

Good Evening,

Everyone's advice is spot on however one mention of an item I would look at if everything else is looking great on the offer is the inspection period to get the time to take this look.

1) Ask if he has the P&L on hand along with other documents if you go under contract.

2) If he has done his homework and collected everything to move expeditiously then I would have the deposit made within a 3 day timer after LOI negotiations (he may request it to accompany which is fine since you can request back). So during the 3 days you will have time to review however you will also have time to review under the inspection and due diligence. And for a commercial property that requires you to review financials not released prior to contract, I would request anywhere from 20-30 days for inspection on the starting offer and directly point out it is due to needing further time to review financials and estoppels with each tenant. (In some scenarios this could be considered a short Due Diligence period I am not privy to the property so please adjust the commercial due diligence time requested accordingly for you needs)

Good Afternoon,

A contractor may give direction but will not advise on something an engineers opinion is needed on such as a load bearing wall or structural item separating units.

Secondly I would contact by phone or email (I recommend email) Tampa or Hillsborough Building and Zoning department and ask them. They will have an immediate answer and direction for you. Some reasons a local municipality may not want this is if the majority of the neighborhood is zoned duplex or multifamily and also they will lose some tax income from losing one unit among other reasons.

Good Afternoon @Leo Maldonado,

Lets connect and chat in regards to our mutual business interest. Thank you in advance for your time, and I look forward to connecting.

You do not need a Real Estate license to flip a house, at closing it is your asset. In addition there is a contractor law stating the homeowner can hire subs to complete the job without a contractor overseeing however the owner must supervise the entire project and do it correctly, if you hire someone else to supervise who isn't you or a licensed contractor the law has been violated. You may want to look at licensure for the ability to put your own homes on market and keep that seller side in your pocket, however unless your doing a few a year your real estate license and board member fees will chew up that percentage your saving on one home. 

So go after it, there is a benefit to being licensed however until your volume raises my opinion is it might cost more than it brings in for the first couple to few years.

Good Afternoon,

Cash Flow is King however I don't believe saying it trumps equity makes sense. Equity gives you buying power, ability to refi, and move your capital, or it pays off and cash flows 100%. It really boils down to risk and approach if your young having the assets growing and minimizing equity may make sense. However if you older or less adverse to risk, or have a family you may want the equity. Especially keep in mind you can homestead this for unlimited Florida asset protection for your family, I have a BP blog on that subject to read if you would like.

I guess my point is the Bigger Pockets approach for creating equity by improving a property purchased at a fraction of value and refinancing out of hard money loans or any of the other strategies are great and are incredible ways to build wealth. However each investors has different assets, risks, etc. that need to be taken into consideration.

Good Evening @Erere Ovirevarie,

I wish you much success on your Real Estate journey. A starting point before looking at properties (and what I think you are getting at here) is to organize all your financials and see what approval you can get and shop rates, also a credit score above 700 and one in the mid to upper 600's is workable, however get a great mortgage broker to advise you in detail. I unfortunately see many investors fall victim to jumping on a good price however not looking at their financing cost over the life of the loan. 

On good example of how financing can affect the investment commitment and return can be seen in this article which shows even though home prices have gone up it is 16% cheaper to buy now than in 2018.https://www.floridarealtors.or...

Let me know if you have specific questions down the road as you figure out more, happy to help.

Welcome to the community. If you have any specific questions in the commercial, industrial, or residential investment fields I am happy to pass along knowledge so graciously taught to me by my mentors.

Good Morning @Rob Bianco,

There are many interesting and entertaining things to discuss in regards to commercial (4+units) apartment investments. However the one item I believe is most important without speaking on everything is the ability to force appreciate, in Residential your value ties to condition, location, and market. The big thing with the commercial apartments is it is valued on cash flow, if I can improve that I have IMMEDIATELY raised my value, what other investments give you that control? I have included a definition for Commercial forced appreciation below:

If you can get your Commercial properties to generate a little more income, that income is divided by a capitalization rate, and that's the value your property will appraise for. So you can force your value up by increasing your income stream. That's forced appreciation

An example I have done is when there is additional unused land put in a laundromat or storage that you rent back to the tenants, immediate property value increase.