All Forum Posts by: Michael Healy

Bump

Thanks Jason Hutcheson very helpful. I'm about to close on 14 units in two properties around the corner from each other. The picking up the rent thing is counterintuitive to me, but it actually does make some sense as a way to structure facetime with tenants. The part I'm most nervous about is finding a reliable handyman for small fixit jobs, because I am not that handy. I suppose I could learn but simple things always take me three hours of cursing and frustration and I'd rather have something done right.

I understand there's quite a bit of flexibility with respect to how partnership terms are arranged, and that an attorney will be invaluable to any deal involving non married real estate partners. That said, how have you or how would you approach a deal where one partner had strong w-2 income and some basic reserves and the other had substantial capital but no w-2? In this case the w-2 partner is enabling the leveraging through the loan which the other would not qualify for, and the capital partner is providing the down payment. Let's assume management responsibilities are shared but that could be on the table too. Is there an equitable scenario where each would own 50% of the property but, say, the w-2 partner would service the loan and they would split capex? Given complexities of amortization and interest how might you calculate time value of money so they ended up with equal cash in the deal? Would love to know how others have approached this scenario.

I would ask your agent or attorney for recommendation for a commercial lender at the local bank. Generally the commercial will be 25% down 3-5 year adjustable with 20-25 max term. I had to shop around a bit but found someone great at Lee Bank in the Berkshires.

Thanks, Thomas Quinn good point. In my research it seems that most landlords pay the lienable utilities, so in my case water and sewer. The oil heat is a big target obviously and I will also look into water efficiency fixtures for the properties in general. And the high common electric property seems like a good candidate for a solar panel as it's fairly exposed.

I am in contract on two older MFHs totaling 14 units. It's a mix and match in terms of what utilities tenants pay for between the two properties. Both have submetered electric and one has individual thermostat controlled electric heaters in each unit.

The major expenses that the landlord pays for between the two properties include:

• Common oil boiler (10 yrs old) feeding steam system ($9k/year oil bill) in one property - does anyone have experience with gas conversion/replacement and submetering with a steam system?  Is it even possible? What alternatives should I be thinking about?
• The property with separate metered heaters still has a relatively high electric bill ($2,600, and it's not the water heater because that's propane ($2,200/year).. I'm thinking it might be the common area heating elements. If anyone has any wisdom here...
• Water/sewer ($3,800 and $3,500/year, respectively...if I submeter water coming in, does that also apply proportionally to the sewer? Sewer portion of the bills are the really high costs. Massachusetts law requires installation of water saving fixtures in any unit that is to be submetered for water, which is something I would do anyway.
• Trash removal ($1,500 and $1,200, respectively) - I assume this is not commonly charged back to tenants
• Telephone ($1,000/year)...this was a real puzzler until I learned it's for the central fire alarm system for one of the properties. Any alternatives to this?  Seems so last century...

I should add that I'm not looking to become a slumlord, and i'm sure there's a balance between being smart about costs vs. killing tenants with 1,000 papercuts. In general I believe people should be made aware and incentivized for their own consumption. Where do you draw the line when balancing conversion costs, providing value, property financial performance, and individual responsibility when it comes to utilities?

If you find an agent you like and there's mutual interest, you might have luck "learning together" with an agent. I'm working with a guy in Massachusetts who is building his business and is eager for all angles. I met him because he was the listing agent for a 6-family I was interested in that had been on the market for close to a year. (I generally go directly to listing agents and in this case he did a dual agency with one of his colleagues). I'm now in contract on that property. During the process he seemed to learn a lot from how I approached the transaction, and I think he started to see how an investor mentality works and could be another angle to grow his business. He did send me a couple of duds and I was happy to explain why a particular property just wouldn't work from a numbers standpoint before even seeing it. I'm now in contract on another similar property around the corner, and together we learned about creative owner financing, allowing me to buy a second property--an 8-family--with just 10% down on a commercial transaction. He's now sending me great listings as soon as they hit the market. The next learning opportunity with him is conveying why a MFH in a C neighborhood would be desirable from an investor's cash flow perspective, as he primarily works in a markets where people are retiring or buying second homes. Good luck!

I've Googled this problem six ways from Sunday and it seems like there aren't many good solutions that are yet top of mind. I'm planning to reach out to several companies this week. My upfront guidance for them will be, "I'm not interested in talking about whether or not this is something I can do--but rather HOW". If I were an entrepreneurial sort with engineering this is something I would jump on as there are many many MF homes in New England set up this way.

It's shocking that anyone would fall for any of this.

Katherine Rossell I am also looking into this. I'm closing on a 1900 five-family with a relatively new oil boiler feeding a steam system. I've read about possibility of converting the burner mechanism from oil to gas and also trying to get a sense of options for submetering. Whenever I mention this people say, "wouldn't that be wildly expensive?" Truth is I have no idea but if it saves me $9k/year in oil it's probably worth considering at a wide range of prices. I'm less clear on the submetering mechanics but our state law has pretty clear guidance. It does seem like a lot of income properties have separate furnaces for each unit and I'm wondering if this is the optimal way to achieve separate heat.