All Forum Posts by: Joe Bertolino

Assuming you have an entry clause...  24 hour notice during normal business hours and I will be there with a locksmith.  That usually gets cooperation.  You have the right to to show the unit to mortgagees.  You cannot push your way in just to inspect but you can 

1. To conduct necessary or agreed upon repairs;
2. To show the unit to mortgagees;
3. To show the unit to workers or contractors;
4. To show the unit to prospective tenants or purchasers; or
5. For a pre-move out walk-through to evaluate damage at the tenant’s request. Cal. Civ. Code § 1954.

Did you end up selling it?  

The numbers I quoted are from a duplex with three studio units.   Main house is a 3/2,  second a 2/1 and three studios.  Rents are $1800, $1400 and $500 each.   $4700 Gross   

$450K purchase

$360K loan

Total expenses$2,958 Mo

Mortgage$1,567

Taxes$468

Insurance$150

Variable expenses$564 (5% vacancy, 1% maint, 1% Capex, 4% management)

Fixed expenses$210 (power and water on the three studios)

$39,696 NOI

16.77 % COC

8.82 cap

$1741 Cash flow.  

When I mean dumps in the mid west I mean that the vast majority of your cash flow is really just unspent capex.  It isn't like Sacramento where the weather is mild.  Its cold, its windy, its harsh.  Your roof doesn't last 30 years.  Paint, flooring, AC units, pipes, etc.  Everything gets taxed harder.  The houses that investors are scooping up for under $100K and making a few hundred dollars per door are one repair or one midnight move out away from wiping out their yearly cash flow.  The type of tenant that paying $950/mo for a $80K house is not the same type of tenant you get in Sacramento in B- area.  The vacancy rate in Indy is 6.11,  Memphis is 9.33. Downtown KC is 11.6%  The vacancy rate in Sacramento is 2.76.  The vacancy rate in the A/B areas in Sacramento is under 0.50%.   The biggest problem I see in Sacramento 2-4 units is that the tenants stay too long and the owners don't have built in rental increases so they fall way behind the market.  

This isn't just an opinion I have.   Before getting into real estate I owned an insurance agency that wrote property insurance all over the country.  19,000+ units.   I dealt with claims from all over including the best turnkey cashflow markets.  My clients that owned 90 units in San Francisco netted more money than my clients that owned 700+ units in Indy or Memphis.  I totally understand the desire to go there because the barrier to entry to lower but over the long run it is fools gold in my opinion.  I think the turnkey providers and wholesalers are the big winners.  

Name the limit ($300K, $500K, etc) and make them name you as an additional insured.   Get a certificated of insurance from there aging naming you as AI so you are notified if it cancels.  

Cash for keys.   Tell them they can be out by the first and you will not chase them for past due rent.  $750 if the place is very clean and re rentable.  If not... you will follow through with the eviction and chase them as far as possible up to and including selling off their debt to the nastiest collection company possible.  Tell them they will be served at work,  things will get really embarrassing.  

Of course that is not a daily thing but I frequently find 10% COC deals. There is still a lot of juice left in Sacramento. There is a major shortage in 1-4 unit rentals and a lot of older long term landlords that are collecting the same rents from 2009. I went to see a duplex in Fair Oaks last week and one of the tenants was paying $825 for a pretty nice 2/1. Market value was $1650+. I see stuff like that all the time.

I come across deals every week that are 8-11% COC in good locations and often with equity on Day 1. Rents have increased dramatically in the past 5 years and many landlord are way, way under market.

I drop 2000 mailers,  send 13k texts and 15k ringless voicemails and a few thousand phone calls to make that happen but deals do exists.    

Saw one yesterday with $4700/mo in market rate rents and a $450k asking price.   It was choppy but the numbers are there.  

My understanding is the bathroom is like for like assuming you are not moving plumbing.  Water heaters require permits but many don’t.  Yes,  upgrading windows triggers title 24.   

 Alterations that include any project that affects the envelope of the building triggers title 24.  That includes windows.  

Contact Gary Link,  he's one of the top eviction attorneys in town.    I am sorry to hear this.  I believe you could have started in July or August if he wasn't paying 25%.