All Forum Posts by: Peter R.

Hi all,

A collection of properties has popped up for sale that includes 5 of 10 total parcels on a single street. The street is entirely multi-family, duplex to triplex properties.

The 5 parcels include two side-by-side oversized parcels that can each be split in half to create a new "normal" parcel for a net 11 parcels on the street.

This new parcel has enough space to construct a new duplex with parking/back yard/etc.

With the sale of the original 5 of 10 parcels plus the creation of the 11th, if purchased this would give me control of 6/11 parcels on this street. Enough for a majority.

My question is if control of a street is worth anything and would you pay extra for either control of said street or how much would you value vacant land ready for construction in considering how much to pay for a portfolio of property.

The numbers are OK without the 11th parcel but not spectacular. It could generate $100/door at list price but I am unclear on how to evaluate future potential on undeveloped land and if there are benefits to controlling an entire street via owning the majority of land.

Thoughts most appreciated!

Hi all, sorry about the wall of text:

I recently purchased an occupied 4-plex with two long term tenants (5 years and 20+ years) and two more recent tenants (1 year and 3 years.)

All leases had expired before the sale and all are on month-to-month.

After the sale was complete I collected one cycle of rent payments to get the previous owner out of the picture and then turned it over to a PM three weeks ago. An early warning sign was two of the four rent checks were late by 5-7 days. I let this go as there were some transition issues with previous ownership.

In the interim I met with 3/4 and asked what needed to be fixed and any concerns they had.

I then sent all 4 a letter stating I was turning it over to the PM for not only management but I stressed in the letter I wanted the PM to begin fixing issues and replacing things neglected by the previous management.

PM delivers welcome packet and asks for SSN, Drivers License and full contact info to prepare new 12 month leases at the same monthly rent.

The tenants collectively send a letter to the PM asking why they need to provide SSN and ask for a copy of the PM privacy policy. Fair enough, I tell the PM I don't really care about SSN for existing tenants and the PM is providing the privacy policy.

PM then responds with a letter stating they need DL and full contact info to prepare leases, again, at NO cost increase per month. PM indicates that they NEED this info and failure to provide info for a new lease may result in notice to vacate per local laws.

I'm brand new to real estate investing and I'm trusting my (highly recommended in my area) PM company. They suspect lax lease enforcement by former owners and significant deferred maintenance has created an environment where tenants are used to doing what they want, including late payments.

The next rent cycle is tomorrow, so I should know a bit more depending on if the checks arrive on time.

Is the PM right, should we take a hard line and force the issue, even with long time tenants? I'm thinking yes, this should be standard, but two of them have been there so long they may be used to doing whatever they want and that makes me a bit concerned.

Any thoughts are most appreciated, and again, sorry for the wall of text!

Trash/Solid Waste is a fixed fee and is a part of the utility bill paid by the tenant.

I do need to interview a few PM companies in the area, is a half month the norm or does it really vary by region?

Oops! Thank you all for the correction, somewhere in the back of my head I knew it was 25%, not sure why I was running the numbers at 10%.

Taking that into account, adding a buffer for utility and lawn care during vacancy and adjusting upwards for PM vacancy costs per Harry M's suggestion, here are the new numbers:

Purchase Price: 81500
Rental Income: 1300 - Current. I think it could increase to 1400-1500 easily.
Vacancy: (117)

Gross: 1183

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Mortgage: (310) 25% Down, 61125 @ 4.5%
Property Taxes: (83)
Insurance: (133)
Maintenance & Replacement: (166)
Property Manager: (165)
Admin/Legal: (15)
Lawn & Utility: (30)

Expenses: (902)

__

Total Cash Flow: 281/Month

Hi Stephen,

No owner occupancy clause, I would not live in this property. I was actually going to offer each tenant their current rent for a full year if they sign a new lease with my property management company effective the date I assume ownership.

I figured that would be a good incentive to avoid anyone moving out due to worries about the change in ownership.

I've been lurking for a bit and learning a TON on BP, thank you all for this great community!

It's my first post and I hope I formatted everything correctly!

Any thoughts on this deal would be appreciated, I'm thinking of making an offer in the next few days.

Occupied and fully rented duplex. 2/1 per side. Lower income area but not a warzone, access to decent/good schools and minutes to major highways for commute/work.

Separate Utility/Water meters for each side, tenants pay all utilities in their own name.

Purchase Price: 81500
Rental Income: 1300 - Current. I think it could increase to 1400-1500 easily.
Vacancy: (117)

Gross: 1183

__

Mortgage: (350) 10% Down, 73395 @ 4.5%
Property Taxes: (83)
Insurance: (133)
Maintenance & Replacement: (166)
Property Manager: (118)
Admin/Legal: (15)

Expenses: (865)

__

Total Cash Flow: 308/Month

For my first post here, is this a good deal?

Thanks!