All Forum Posts by: Walter Hammond

No, it's not abata gut job. They only took copper from basement and the radiator parts. Kitchen baths will get most of the attention plus refinishing the wood floors.

I understand the need to have an application that works on all of your devices, just not sure if getting Office 365 is the best bang for your buck. Your basically taking a monthly paid subscription.

Google Docs or Open office are resources that can do everything that Microsoft Outlook does. They are both free and work on almost any device you throw at it. As far as personal folders and what not, I think gmail can do everything you need as well as allow tags and easy search

These are just my thoughts, I don't like to pay for technology when a free alternative is there. Especially a subscription based technology (such as office 365). HOWEVER!! I haven't played with office 365 so if IT REALLY allows access to all of the devices YOU use within your business, and it is as smooth and effortless with easy to no setup time, then it may be worth it for you.

I'm not as busy as some of the established investors, so just to have that off the plate for an easy $15/month may be worth it. You just have to remember, thats "per account". You, your assistant and your team mates (if they use it) will need their own account. See how that adds up. I hope my thoughts are helping, if they are just adding noise, take them with a grain of salt.

To your success!!

As a techie, what will you get out of Office 2013 or office 365 that you are currently NOT getting in Office 2007?

I am looking at a 4-plex in Cincinnati, OH. It is an REO, so totally vacant. It is in a good part of town for rentals. 2-2BDRs and 2-1BDR's. There are 2-2car garages, so I can rent the 1BDR's for $500 and the 2BDR's for $600

Income: $2200

My Expenses
Taxes: $373
Insurance: $75
Water: $220
Trash: $42
Gas & Elect: $280
Maintenance: $108 ($325 per unit, per year - I just picked that number)
Landscaping: $25 (small yard, less than 10'x 20', mostly winter snow removal driveway & walkway)

I got these utilities by getting rates from a sister property that is fully occupied and has the same layout. gas & electric will vary depending on the heating system I put in place.

Rehab Cost:
Approximately $20,000 - $25,000

Options and variances are because copper was removed from basement. Copper from water main to boiler and all of the radiator units in each apartment unit.

So we can either:
1. repair each radiator
2. Replace radiator with baseboards and include new electric wiring (the electric system was updated by last owner, so all electric is up to date (saves me $3k and all windows were replaced as well in the entire building)
3. Negate the boiler and install 4 separate furnaces and run ventilation to where the OLD radiators were.

The reason I'm vouching for 2 or 3 is because it gives the tenants the cost of heating their own unit reducing my expense, but giving them control of how warm or cool their unit is. Also here in Cincy, there are NOT many technicians who work on boilers so the maintenance cost are pretty steep. I also think this helps "future" proof the building and makes it easier to sell.

Holding Cost: $3,000

This is based on figures that it takes 90 days to fully rehab and get 100% occupancy along with marketing and any random miscellaneous things that come up.

The list price is $84,000. I'd like to present an offer, that shows a sort of line item rehab displaying the breakdown of $25,000 rehab and explains why I'd like to offer $55-60k for the building.

Income of $2,200
Expenses: $1,093
at a 10% vacancy rate, NOI = $ 887

Does this make since? Am I on the right track? Has anyone presented an offer like this to a bank? Lastly, I don't have a down payment. I'll mostly be financing at a high 8% HML or using a home equity line of credit on my grandparents home to cover a 25-30% down payment for a conventional loan.

I know this will keep me with a small cash flow, but it'll give me something, help build some credit and allow me to pay down principle on a building that should be $100k market rate with 20k in equity. This way I can keep and pay down. OR I can sell to an investor, and maybe make $5-10k in a few years. Any advice is welcome (sorry if I put in too much info).

My general contractor came through and suggested to simply cut out the boiler and install base board heaters. I'd pay more upfront for the baseboards and extra electric, but the heaters have all been raided for the copper. So if I put in the baseboards, the tenants will then be controlling the heat & air (window units) and basically paying for it themselves reducing my monthly expenses considerably.

I'd say that average 4-plex, gas & electric with a boiler is about $390 a month (avg). But w/o and putting the bulk of gas & electric on tenants, my energy bill will drop on average to about $150-$190.

The baseboards and electric (this building is now vacant) would cost me upfront cost of $5,000.

Fixing the radiators in the units would cost me about $2,500-$3,000 but the bulk of the gas heating bill would be on my shoulders.

I think its better to switch to the baseboards, but I wanted to know what you guys thought.

David Beard - When you say, do 15% for maintenance. Are you saying say 15% of gross rents for maintenance or of a different figure?

David Beard, Thanks for your reply! I knew my numbers were more disappointing than I assumed, so good catch on the water! I will have to divide those out. I went high on the insurance, I wasn't sure what a good monthly estimate should be for this type of building in that neighborhood.

Do you have any good building inspectors who aren't too expensive that could let me know if the electric looks good? As well, that could check for contaminants that Ron mentioned? I'm ok with NOT doing the windows immediately, but overtime. However the other things about the kitchen, paint, and garage overhaul I'd want to do upfront.

I was definitely thinking more in the 40k ball park for this building. I just wanted to have all my numbers to try and explain how I've come up with my offer.

Roy N.
I don't know if the boiler has been converted. It is gas. As far as the contaminants, this lady hasn't done anything so I'd have to get my home inspection to pull out any of those issues.

I've got the expenses from our local utility companies (average for past 12 months).

Gas & Electric - $250
Water - $678
Insurance - $250 (this was an estimate from other 4 fam around this age I used)
Maintenance - $41 ($125/unit for year )
Landscaping - $25 (this is really just snow removal of garage area during winter and my cost of fuel for cutting grass in summer)
Taxes - $317 (from county assessor)

Approximate Exp - $1,261
Income (with 10% Vacancy) - $1,777.5 (I put the vacant one rented at $525)

Thats an NOI of only $517.50/month.

Looks like I may need to keep on walking from this one.

I am looking at a4 family in Bondhill (neighborhood of Cincinnati, OH). The neighborhood is NOT very good. Not dangerous, but not desirable. Both building are owned free and clear. There are close restaurants and expressway access. Grocery would require resident to go to close by neighborhood, no more than 10 min away.

Asking Price: $80,000

2BDR - Renting $425 (he's doing basic trash takeout and other small task)
2BDR - Renting $500
2BDR - Renting $500
2BDR - Vacant

Poorly mismanaged. A 2 car garage and a single garage that are NOT being used at all. They have laundry. The 2 garage doors needs to be replaced and an automatic lifter installed

All the apartments need to be repainted, just cracks and bad cosmetic look. All 4 kitchens need new counters and cabinets. The carpet isn't bad in some, but I THINK it'll go along way to make the apartments a LOT more appealing.

I'm a bit concerned that all the closets in the units are pretty small, but not sure if that's a big turn off or not. The building is approximate 58 years old. They seem to have the original windows. I mention this because tenants have separate electric, but all are on 1 boiler and 1 water heater (80 gallon). Which the owner is responsible for paying.

Assumptions: The heat is higher because of the old windows. There are approximately 36-40 windows (I'm sure I missed a few in my quick count).

Question: Should these be replaced? (in my area I believe I can have them done on avg $200 a piece)

Assumption: Nicer carpet should lead to a better look to the units.

Question: Should I replace the carpet or maybe only in the vacant unit?

The kitchens are just a simple L shaped counter top roughly 58" x 106. With underneath cabinets and overhead hanging cabinets on the long side.

What is a good estimate on the replacement value of these cabinets (hopefully I can get a deal, since I'm planning on replacing all 4 kitchen counter tops & cabinets). I don't HAVE to do all at the same time since the other 3 units are currently rented.

CONCERNS:
1. The boiler is the original. Realtor says it's maintenance yearly, but I'd like proof of that. This going out could be a big expense.

2. Windows - original old windows, higher heat cost

3. Closets - they are all small, may be a hard sell for today's clientele

OPPORTUNITIES:

Below market rent. By improving the quality of apartments and applying the deferred maintenance that this building has been lacking, I should be able to get market rent close or at $525-$550 a month.

There was a half-done converted apartment in the basement. By adding washer/dryer connections there and putting in coin laundry, I will garner a new income for the building.

Lastly, by reclaiming the garage space, I can charge an extra $25/month parking fee for the 3 garage spaces.

Can any one give any advice on my thoughts/assumptions as well as opportunities? What do you think the cost of the kitchen updates would be? What about the cost to put in 2 or 3 washer/dryer hookups in the failed apartment conversion? There is a rough in already installed. The apartments aren't much more than $650 sqft each so what about carpet cost per unit?

Ok, I THINK those are all my questions...sorry for the long read.

Thank you guys for all the comments. You have helped me to re-think the idea. As a techie, I just kind of have this expectation that if your a "real" and respectable business, that your company will have an online presence.

I'm now thinking I simply need a corporate image, such as Logo for business cards and letter-head. I think that will do the trick for ensuring I seem professional and can give my contact info to investors,buyers, or sellers.

The only web presence I need in the eventual future will be for properties I have for sale and/or rent (can be combined or separate). Thanks for all the ideas and the feedback!! I really appreciate it!