All Forum Posts by: Tony Maro

Same here, even if by Zoom!

@Danielle McClelland  I bought my first at 45, two years ago, and have two rentals and two ongoing flips, and am in the middle of trying to buy a 6 unit building.  My net worth has increased by about $350k since I started.

When you hear these stories of someone starting at 22 and being a millionaire by 28, just think how much further along you could be in 6 years given your better financial starting point.

I want to weigh in on this from the other angle.  My daughter has a service dog.  It often goes to stores, restaurants and pretty much anywhere with her.   It also wears a vest at those times just to keep the questions down and keep people from petting it.  But, in our state, and actually a lot of states, a vest isn't required, and obviously doesn't apply to a rental.

Also, there's no certification for service animals.  There's also no requirement for any sort of official training by anyone other than the owner - which is great because that training is $30k or more.  I know.

The only time I was asked for a "certification" on our dog was a vacation rental that I gave a head's-up to that we would be bringing a service animal.  Not only that, but the manager of the rental was rude about it.  I ended up having to quote her the laws and threaten to sue to get her to stop arguing with me.  And I WOULD have filed an ADA complaint with the Department of Justice, a complaint with the local real estate commission, and a private lawsuit as well because I was already into the rental prepaid to $4000.

I'm just glad I'm there now to protect my daughter from that kind of harassment.  Due to her disabilities, I fear she won't be able to mentally handle it well when she's off on her own.

Yes, people are abusing the law.  At the same time why should my daughter have to produce "papers" to prove she's disabled?  That's embarrassing, demeaning and deplorable, especially to someone who is already so self-conscious. 

As a landlord I'm with you on the hatred of people who abuse this.  At the same time, please follow the law and be consistent.   

You can ask "Is it a service dog" (Therapy or emotional support animal is not a recognized class to my knowledge, but Denise sounds like she knows more than me)
You can ask "What task is the dog/animal trained to do?" - However you CANNOT ask what the disability is.  Service animals in most states must be trained to perform a specific task.  Even a PTSD dog isn't just an emotional support dog.
You CANNOT ask that the dog perform any task for you.
Also in most states, if the dog damages property, has barking complaints, etc. it does not qualify for special protection.  Speak to an attorney about that though.  IANAL.

I started digging, contacted the auction house and got more details.  The property was just appraised at $195k.  Now, how an "appraisal" works on a commercial property like this is beyond me, or if they're just having an agent pull a number out of the air and call it an appraisal.  It's possible it's based on a comp sale from last year that I'm aware of, but that building was in a bad area and in disrepair.  I've asked for more info on that appraisal but haven't heard back yet.

I was wrong though - it's 6 units, not 5.  I drove by and counted the doors to make sure.

No details on rents, etc. but again, at least $650 is a conservative estimate for the area with a possibility as high as $800 or $900 if in good shape.  I am familiar with rents here.  30 days after auction for closing, with possibility of extending that at seller's option.  10% of auction price due at close of auction.  That makes it a lot easier on me.  5% auction fee surcharge.

My biggest fear now is outstanding maintenance.  It's got a flat roof that I haven't seen replaced in the past decade.  I drive past this building every day.  I know the crawlspace was flooded 2 years ago, but I don't know if water got inside; I don't think it did.  No info on heating system, probably baseboard heat though.  I also don't know if the water / power are metered separately - I plan to drive by today and look for meters.

Now that I know I have time to secure funding, it boils down to getting the pre-approvals done and deciding on what I'd bid.

So to update my back-of-the-napkin conservative numbers:

Rents:  $3900 / mo or $46,800 / yr assuming fully rented which isn't hard here.

Expenses: 

Lawn care ($400 /mo during summer, or $2800 / yr est.  Probably lower.
Taxes / Ins - unknown at the moment, researching
Trash collection - This goes with the water bill here, so if metered separately, zero.
Accounting, legal - $2000 / yr est
Property management - $250 / mo or $3000 / yr

Obviously I still have blanks to fill in.

A local "investor" has about 15 properties going up for auction in the next couple of weeks.  One of which is a 5 unit apartment building that I'm interested in.

Buying any decently priced real estate in my area is a rare occurance to begin with, and finding even a duplex for sale is a once every 5 years thing.  This may be the only chance I have to jump into a 5 unit for the next 10 years.

I currently have just SFH's and even though I've done a bit of reading on apartments I'm not even close to comfortable with figuring out what a building is worth, so I have that risk. I've guessed at the rents ($650 / mo conservative per unit) based on our local market, etc. I'm pretty sure I could push that to $800 to $900 with a little effort but the market here won't support more. Then again he might already be renting them at $900 for all I know or even doing it as a section-8.

So, my back-of-the-napkin approach says it's probably worth $300k to $350k at $3250 rents but since I've barely even scratched the surface on multifamily valuations and not even sure on the rents I'm terrified I'm wrong.

My cap at auction would probably be $250k. I've got $100k in cash, clearly not enough to win the auction, and I don't have time to set up a line of credit - which I probably wouldn't be able to do anyway given what I've recently borrowed on a personal level. The most I could probably get a personal unsecured loan for would be $40k and I don't have time to get a HELOC or for that matter have the equity in my primary since I just bought it this year. Top it off I'm sure I'll need a chunk of that $100k as reserves to handle maintenance and renovations.

Would you guys n gals suggest I attend the auction just to see what happens or should I be prepared to bid?  And if I'm going to bid any suggestions on how to deal with this?  

Do I need the cash in my bank account on auction day?  I have one friend I could approach about either partnering with me or making a hard money loan who might be able to make up the difference until I can mortgage it, but I also don't want to waste his time either and as I mentioned, I have low confidence in myself for this type of deal.  Is there a way to purchase at auction without having the cash in your account on auction day?

My alternative is to check out the other SFH's he's auctioning, I'm sure there's several of those that would be worth the investment and fall within in my cash budget, but part of me really wants to jump into multi-family.

I can't say for the agents on here but I know the ones I've dealt with I consider to just be paper pushers. They don't help you buy. They don't help you sell. They list your property on the MLS and when you're buying they'll show you things you already told them you aren't interested in.

Not once has an agent helped me set up any sort of a search or proactively called me with a possible lead even though I've dealt with two in the past six months that both knew I was a cash buyer for anything meeting close to my specs. The deal I'm closing next week my daughter found on the Internet the day it was listed on the MLS or I never would have got it.

And after my last personal purchase and sale even from primary residence perspective I consider agents to be scum of the earth.  My buyer's agent when I bought my last home flat out lied to me rather than go ask the seller a question.  That's been my experience overall.  Use them to cross the T's and dot the I's on paperwork but don't expect sales or purchasing support.  They just help you get to a closing.

So as an update I found a 3BR 2k sqft on two lots in town listed at $40k. It's in need of about $30k of finishing work (upstairs doesn't even have drywall, for instance.) ARV should be around $95k. I caught it the first day it was on the market and offered him $35k cash which he accepted. Got a contractor and a renter lined up already.

We're supposed to close this week but then the title search came up with two judgement liens on the property that I'm told total more than I'm paying.  His attorney is trying to help him get those settled for less so we can close.

Anyone have any experience with this sort of thing?  What are the chances we'll actually close?  The agent is of course telling me this won't be a problem and expects a week delay at worst.  My closing attorney said he still has it on his calendar but that "it might not close."

Joe, thanks - both sites show no listings.  Charleston (and Beckley) are different markets and a ways away.

Timothy - I haven't considered that actually.  I'll check into that.

I was afraid that was going to be the consensus.  I think I'm trying to bleed a turnip.

No, there aren't any multi-families on the market.  It's a small town in West Virginia (well, small for the rest of the country but pretty big for here.)  Average household income in our county is $33k which means rents can't go up much, either.  We have a temporary shortage of housing due to the floods last year, when around 120 homes were destroyed in our county.  Unfortunately this means there's very little on the market, but doesn't justify higher rent prices because the local economy just doesn't support it.

I'll keep looking.

My other option is to go out a bit more rural, but I don't understand the market and those houses will be much, much harder to sell when I decide to get rid of them.

I don't want to fall into the trap of buying because I feel I have to, but that said I've got cash sitting around drawing 0.01% that I need to do something with and this seems to be the best in my area, other than a distressed property I'm planning to snatch up if the current under-contract falls through.  And no, I'm not interested in investing in other markets right now.

This is on a small 3BR currently listed at $120k.  Built in 1980, renovated in the last few years and move-in ready, doesn't need renovations at all.  Comps are real hard here since it's a small town, but on the same street a similar house but brick outside instead of siding sold for $105 last september and was listed originally at $115.

I believe I can get $850 rent without any problem - probably $950, based on local market rents.  It would be my first deal and I don't have a mortgage currently, so I've got traditional financing pre-approved at 4.8% with 25% down.

Here's what my numbers are looking like:

Mgmt fee:  $75 (going to manage myself)
Maint: $50 (renovated in the last 3 years)
Replacement reserve: $50
Taxes: $113
Insurance: $110 
PI: $377 (assumes $95k purchase)
Total:  $775 (not counting vacancy)

My spreadsheets show a cap rate of 5.7% and COC of 3.49% with vacancy included. I'd like to think things will end up being better - less maintenance fees and less vacancy, but I'm trying to consider a reasonable worst case baring something like sewer problems.

The town has a medical school, and students have a hard time finding places to rent - there's a crappy set of apartments near the school that rents a tiny 3BR for $800.  Run-down 3BR houses in town tend to rent for $800.  Most med students I know with families end up driving twice as far as this house to find something to rent for $950 or less.  I've been told by students that the average a student pays for rent is $600 (2BR) to $1000 (3BR).  I also have an "in" with the students and should have no problem finding tenants.

It's certainly not a home-run, but the numbers are better than any other property on the market here I've seen.  Given there's houses selling for $160k that are currently rented at $800, nothing else gets closer to the 1% rule.  The others that the numbers might work better on are 100 year old houses that appear to have serious structural issues that I don't want to try to tackle as a first property.