All Forum Posts by: Heshel Mangel

I wanted to share some details and timeline from a recent project we did - hope this will be of benefit to some readers. 

Aug 2019: 

Purchased distressed 20 units in Cincinnati, OH for $450,000 all cash

Property is 70% occupied with rents averaging $375/month, loads of deferred maintenance both interior and exterior

Begin to cure basic and necessary repairs for health and safety of the residents while we look for construction funding for the future rehabilitation project

Oct 2019: 

Received term sheets that were satisfactory and began working towards the construction plan. We helped ready the existing residents for relocation by providing information on other local available apartments as well as social services who help in these situations. Provided money to those residents to help them with their moving costs. During this time we began interviewing contracting companies and bidding out the work we wanted to accomplish

Jan 2020: 

Property is empty and construction begins, first on the exterior then moving on to the interior

Apr 2020: 

3 months later the project is just about complete, we can start to market the units for lease. Unfortunately, we are now in the midst of the COVID-19 pandemic and leasing is very slow but we do get the first few residents set up in their new apartment homes

July 2020: 

Community is 95% occupied with average rents at $675/month (range from $613 - $735)

Rehabilitation included: Rebranding and signage, exterior pavement and concrete, fencing around the community, restoration of the brick and masonry, weatherproofing, gutter and roof repair, landscaping and lawn care, security surveillance, interior renovations included new flooring, paint, appliances, sinks and countertops, low flow facuets, repairs to the plumbing and electrical systems, new water heater. 

Lessons learned: While it sounds all good and rosy, this project was not without some lessons learned. Hiring contractors, managing them efficiently, and how to create clear expectations and guidelines are so vital to any rehab project, all the more so in a complete makeover like this one. If you create a process for how to manage this type of project, it leaves no room for arguments later on - I'd suggest creating a clear guideline on how often contractors get paid, have an inspection on any system before paying out.  

@Jose Fernandez my suggestion, if you are investing from out of state, is to stay away from those areas. You need a great PM to take care of your properties, and they won't take on your properties in those areas - there isn't enough in it for them to warrant spending time there. If you are out of state, I'd focus 1st on finding a PM you trust and go where they guide you. 

@Dave Meyer - thanks for the email today. As @Todd Gutekunst said - we are missing the password for the spreadsheet. 

Also - I see that we are considering new listings to be 8% lower than active (more than 7 days) listings, but why do you think new listings today are HIGHER than new listings 1 week ago? 

We are a data driven industry. There is no other way about it. Data drives action. I am looking forward to seeing your insights, and would love the opportunity to see the data as well as have the clear visualizations as you show that allows us in the industry to make quick and decisive decisions based on the data. 

@Arthur P. @Brian Boyd I am sure that I am late to this discussion thread - but there will most definitely be delays on eviction proceedings - regardless of state and tendency. Courts are going to shut down for months. 

@Mendy Blasberg Welcome to the site and welcome to Cincinnati! 

Those details are all up to the purchase agreement that you enter into with the seller. It would not be unusual for you to have an inspection contingency where you are given time to physically inspect and do a financial audit on the property. If something comes up you don't like - you can either renegotiate or pull out. 

Let me know if there is anyway I can be of assistance!

 Mark - welcome to the site! My advice, if your goal is passive income, is to find an operator (someone who puts together and operates real estate investment deals), and partner up with them. It doesn't matter so much where that operator is located. You can be in cincy, and invest with someone who is buying in Florida and make great passive returns. 

Kind of sounds like the renter's best interests aren't really being taken care of..no? How funny is that - a government ordinance claiming to help the people that are really just to line the pockets of big (insurance) companies. In the end, the renter will still have to pay and probably their rent will go up as the owner's look to mitigate the risk..

@Michael Ealy I keep writing your name as Mike and it don't come up ;)

We are looking forward on closing some of those deals. Very impressive that it got all shopped out that quick. The right deals find the right buyers. 

The only caveat I have with rents per square foot, is that in lower-income neighborhoods and lower rents, prospective tenants generally don't look at the "per sq ft" cost and are instead looking at the "bulk" costs and comparing that to other rentals in the area. 

It's a good evaluation approach but when really digging into comps I think the total bulk amount matters as well.

@Lamont Marable the entity transfer that they are referring to is going to be done away with soon..the counties and school districts know what is going on and want their tax money. In either case, an assessment is done every 3 years by the auditors and property values readjust accordingly.