All Forum Posts by: Joe Black

Hello,

I plan to purchase a 5 unit apartment. Currently the owner pays for all utilities. Of course I'd like to increase NOI by billing tenants for gas/electric utilities.

My questions are:

1) can I legally do this (I live in California) to long term tenants who are on month to month leases?

2) Many of these tenants haven't signed an updated lease in years, so would that impede my ability to require them to sign an updated lease that includes utility bills?

3) do utilities qualify as a "rent increase" in CA? We now have statewide rent control so I'm not sure how this impacts my ability to charge back their full allocation of utilities.

This is great information. I've been to both cities once but had no idea about these details that distinguish the two. 

I'm curious if Eureka's crime and squalor issues have been increasing or decreasing of the past couple of years. Any insights into where the city if headed would be great.

Thanks for reaching out. I would love to hear more about the upgrades that matter most in this market. From what I see in available units, expensive updates like quartz countertops and stainless steel appliances appear to be overkill and in low demand. 

Calling all Northern California rental property investors, agents, and property managers.

I'd like to hear your thoughts on the Eureka and Arcata rental markets. There's not too much information online so I'd like to hear your thoughts on the quality of the market. I.e., Is there a steady flow of renters, what upgrades will allow for the best rents, long/short term expectations for the market, any trends you're seeing, etc.

Looking forward to connecting with you all. Cheers!

Congrats, Scott. Would love to hear an update on how this is going.

Best,

I think that's what I'm struggling with the most. How do you account for the quarks? I imagine the size of the main unit would interest a family? But the features seem to not attract this target audience.

Another major concern about this house is that it has been sitting on the market for 3 months (with 2 price reductions). The inspections reports are pretty clean considering the house was built in the 1800s. Also, no on-site laundry.

Hi All!

I am one year into my first successful house hack and I just viewed a very promising potential house hack that has some red flags that may cause issues with renting the units long term. I plan to live in one unit for a year then move out. The question: Should I pursue this deal or do the home features create too much risk with finding and retaining tenants?

Key features about the house are outlined below:

Home Details: Single Family house separated into 3 units (2 meters) (1-5bd/2ba; 1-2bd/1ba; 1-1bd/1ba - non conforming)

1) The location: the house is located in front of a freeway on-ramp that has nearby homeless encampment. There are also breweries and expensive condos within 2/3 blocks so its not a terrible location just some nearby sketchiness.

2) Home function: The house has no front yard, no outdoor storage, and almost no backyard for tenants of the 3 units to enjoy. 

3) Parking: Only 2 parking spots for 3 units (8 beds total). Also street parking is pretty bad, you'd likely have to find a lot to pay for parking if you have extra cars

4) Home function pt 2: The home has 3 units but only 2 meters and one unit in the backyard is not permitted by the city. 

5) Main Unit: It's 5bd/2ba and newly updated but I would consider opening up the kitchen to the living room so there is a larger open space which would require losing one room (estimate $20k reno)

Positives:

The home is newly renovated in a walkable urban area close to bars and restaurants with multiple high prices condos in the area. Also, it is within 3 blocks to a train station (BART).

The Deal:

Purchase Price: $775K

Cash to Close + Reno: $70K 

Total Monthly Rental Income (per rentometer): $7K (conservative)

Total Monthly Expenses + PITI: $5,500

Annual Cash Flow: $18K

Cash on Cash Return: 26%

Hi all, I am interested in purchasing my first commercial multifamily (location central coast California). I am targeting properties with low NOI that have room to grow via rent increases and reductions in expenses (i.e., charging back tenants for utilities). I'd like to hear from you how to best do this.

Specifically, I expect many of the tenants to be on month to month leases. After purchasing the property could I just require all tenants on month to month leases sign 1 year extensions with the new utility chargeback terms + additional rent increases? What worries me is now that California has statewide rent control that I would not be able to charge back utilities after charging the fully allowable rent increase.

I guess to sum it up, my question is:

Is adding a new utility chargeback fee to a new lease which is being used to replace an existing month to month lease, considered a "rent increase", and as a result included in the total rent increase amount that I would be capped under rent control. Hope this makes sense.

@Amit M. Sure thing. Its a 3 unit property that consists of main house (2/1), lower unit 1/1, and cottage (0/1). Yes we kept existing tenants in cottage, two units were vacant (thank goodness). Luckily for the main unit we just needed to open up a wall and refresh the kitchen with pain cabinets. We spent the bulk of the reno budget on updating the bottom unit where we stay.

We were also lucky to finish up reno and lease out the main unit at market price right before full covid lockdown.

We did run into some unforseen costs including replacing a roof (ouch) but we survived.

Also, we refinanced after 6 months which reduced our interest rate by 1.1%, never thought we'd do it so soon but it we couldn't pass it up!

All in all this was a great learning experience for our first investment.

@Brian Garlington thanks so much. We spent more than we wanted to but overall we're happy with the experience