All Forum Posts by: Zach Adams

Thanks for the encouragement Lee G. I plan on holding the unit so all this CapEx, while all at once, will eventually end. I may be overpriced on rent too. Zach

Thanks Randy E. Sounds like i do need to be proactive and will get the jump on the HVaC. Although I've been a landlord for almost 3 years I've only been really learning the last 3 months. I appreciate the help. Zach

Thanks Joel Owens I'll look into the software. I backdoored into this rental property (and REI) when I moved and was underwater and couldn't sell. Now I'm on top and never did these long term CapEx calcs. Assumed I hold forever but need to educate myself more on the issues. Zach

So the first house I ever bought, which became my first rental almost 3 years ago, is becoming a problem child. Stats: 1955 brick ranch in North Atlanta. B neighborhood. The house has a lot of character and I even leased it to a movie company for 2 months for them to film in! I have a lot of sweat equity in it as well for the years I owned. Valued at $165k and I have about $55k equity. Rent $1265 and PITI is $706. There is a full service pm (maintenance as well as tenant screening and search). I'm hands off. 2 issues: one I can't keep the property cash flowing. I haven't had back to back cash flow months since last summer. Second is vacancy which is a recent occurrence. 2013 wasn't a bad year if I recall but last year I put a new bathroom in as a result of a leak and rotting floors and I did a new roof. Both I knew were issues from owning it. Then to start the year the hot water heater went out. Also in December the long term tenants left. The PM (who takes first month of new lease/tenant) got the place rented and I found out yesterday they're moving out. Aggggghhh!!!! I told the PM I'm not paying for him to put another tenant in there. He said he'd take out his profit if I'd cover is search/marketing expenses. I'm probably going to be ok with this and we will have to discuss. The place usually has a good list of potential renters when it hits the market. Also I know this year the HVaC is an issue. I feel like I'm in a protracted rehab. The tax benefits from all the write offs last year made up for the lost cash flow. But still I'm attached to the property and it's being a pain right now. I could sell it and 1031 into a MFH, but not sure if I should just weather the storm. Looking for similar stories and what you did. At some point the CapEx has to slow down, right??!? I thought I was a buy and hold guy looking for good cash flow and moderate appreciation. Not sure right now... Thanks for any feedback Zach

Congratulations Tracy Selfridge

Yes you can. What's your background? Do you currently have a mortgage that you're living in? Talk to a mortgage broker. I'm doing the same thing right now.

Originally posted by @Dave Foster:

@Zach Adams

Thanks Dave.  Do you know if I can use 1031 proceeds to fund closing costs on a property? In other words, if I sell my current property and have $50k on hand and purchase a new property with a $40k down-payment, can I use the $10k balance for closing costs or does the money have to go directly into the property?

Zach

Originally posted by @Nadia White:

Geographic areas, @Zach Adams? 

 North Metro Atlanta.  Cobb County

Originally posted by @Huy Ly:

Hey Zach, to answer the question 1, could you tell more about your target area, tenant and the ages of the houses?

 Target area B-/C+ neighborhood.  What I've seen from 3-4 properties I looked at was long-term tenants.  Also 1-2 units have been upgraded with new appliances, hot water heaters, w/d, and carpet.  Most seem to be around late '70s.

Zach

Good evening all - 

I'm looking to purchase a multi-family quad for my next deal. I have a SFR in Atlanta that has about $55k equity and could sell for $165k. CapEx has been one thing after another and every time I get it cash flowing, something else comes up. I'm basically in a protracted rehab. I love the house as I lived in it for 7 years before converting it to a rental, but I think my cash could be working harder.

I love the cashflow models of MFHs, and have decided I can probably get a 4-plex for around $200k.  Total rents I'm estimating to be $2200-$2400/mon.  In doing my calcs, I have a few questions for the group:

1) Do you still use 10% repair?

2) Do you still use 5% vacancy?

3) I know HOAs aren't usually good for SFHs or condos, but an agent today said there was a $300 HOA that covers landscaping, water, etc. Typical? Worth it?

4) Do owners typically cover water, landscaping, out of pocket?

5) I may go under contract sight unseen.  I have contacts in Atlanta that could walk the unit, and would plan on, of course, having an inspection done.  Thoughts or experiences with this?

6) any issues with doing a 1031 exchange from a SFH to a MFH? What is length of time I can hold the SFH sale proceeds before purchasing another property?

More questions as things advance.

Thanks!

Zach