Triplex - 19 Cap / 46 COC but.....

[Chris Adams]

Yes those numbers are correct, but there are some details in this deal that are out of my normal comfort range. And these details are the focus of my questions.

First off, my current rental properties are some of the nicest single family homes for rent in my area. Thus I have some extremely good tenants, college educated, with great jobs.

Ok this current deal is a triplex in the C class area of town. Not bad at all just older and property values are not going to appreciate very well. The houses are old, early 1900's and some are maintained better than others.

I have a showing on this property this week, I have not seen inside yet.

Concern #1 - Current Tenants

This triplex is full, 3 tenants, 1 pays monthly and 2 pay weekly. All rents seem fair, the normal problem I see when I analyze Muti's is rents to low.

Weekly rent payments are not uncommon around here, we have a fair amount of factory jobs and most hourly workers don't budget well.

I don't currently have week to week, and it bothers me on this deal. I use IPN for payment so the extra paperwork is near nothing, but I see possible headaches.

From what I have heard about this deal/building/owner I assume there are no leases, Ill know more soon. So this means I can clean up tenant issues in time.

Concern #2 - LL pays all utilities

I received all of the numbers from my realtor on this property. He has a long relationship with both me and the seller, so I trust him more than an unknown.

I have never dealt with paying utilities, other than sewer which is I pay on my homes since the city can lien for the bill if unpaid.

My guess is this is another situation that comes up when renting to lower end tenants. I'm just wondering how this can burn me at some point.

Who gets the T-stat control? What if someone leaves the water on for a week? These are just some scenarios that can create more liabilities that I have with my SFR units.

I am going to look at the inside this week and will start my due diligence after that.

I really feel like I am moving from one end of the rental world to a totally opposite end so this is starching my comfort level. But I also believe that If I want to attain all of my long term goals as a REI that I am going to have to expand my comfort level and expertise into different areas of investing.