All Forum Posts by: Jay Levy

One thing banks will look for is your Cash Flow to Debt Ratio or Debt Service Coverage Raion.  

In my experience they like to see 1.2+.  Calculate this by taking your monthly revenue subtracting your monthly expense and dividing the result by your debt service.  This gives the bank an idea of how much excess cash you have to pay the debt.  This is also very important for you to know because it also will tell you have much margin of error you have on revenue and/or expenses before the property becomes a cash drain.

Adam,

One of my first Investments was seller financing from a relative.  They didnt want to be dealing with managing the property and i didnt mind taking it on and the economics work.  My relative wasn’t in need of the cash, in fact that realized they would be better served by providing a 15 year mortgage and getting regular payments on the property.  They felt the interest rate they were going to get ‘beat’ what they could get by investing in other assets given the risk.

Maybe you could ‘sell’ your aunt on the regular cash flow and interest they will be earning.  

Jay

Nina -

One thing we always ask for on our quote is to break them out by materials and labor (hrs and rate).  This will give you a much better sense if the pice is one you feel is ‘fair’.  It’s pretty easy to figure out the price the materials these days, leaving you to decide on their markup and labor rate.

Jay

Hello 

After about 2 years of using Quickbooks we have outgrown the platform and are in the process of switching to Yardi Breeze.  It seems as if the cutover is taking around 40 hrs of work and than there will be some duplicate accounting for a few months until we are comfortable the platform is working for us.  

Has anyone else made the switch to Breeze?  Im looking to a group of people to bounce ideas off of and support each other in the use of the platform.

Jay

Craig - 

My view is set it up from the beginning correctly and it will pay dividends in the future. Setting up an LLC is really easy to do, I have done dozens of them over the years, it takes about 20 minutes. There are many benefits including reducing liability, easier accounting for the property / properties, tenant professionalism, etc. There can be challenges also, many lenders won't lend to a property held in an LLC and/or you can't get a traditional mortgage on the property, where rates tend to be lower.

From a tax perspective if you each own 50% of the LLC the financials (profit / loss) will be reported to you on a K1 which you each will use when filing your taxes. Im not sure how the accounting / tax / year end numbers would work if the entity was not in an LLC but in each of your names and you were filing separately.

My disclaimer here... I'm not an attorney or an accountant so you should definitely talk with one for 'trained' advice.

Thien 

Based on the number looks like a decent opportunity around a 10% cap.  Vacancy looks a bit low, i typically do 1 month or 8%.  Also may want to leave a bit more of a buffer for both the initial repairs and the on going maintenance.  

Goodluck with the project.

Jay

@Justin R.im dealing with a similar situation now.  We have a 2 family on two separate meters, that we are planning to put solar on. We haven't figured out the best solution yet, but leaning towards just the entire building go into the solar and including the cost of electric in the rent.  

We have done the analysis and between the state and federal subsidies the payback period is around 5 years, financially it makes sense to do.  Its now just about figuring out the logistics with the billing.

I’m looking into install solar panels on several multi-family properties (2 - 4 units). During the summer months we rent these properties to short-term renters and we pay the electric bills. In the winter months we put longer term tenants in and they pay the electric bills.

Does anyone have any experience on putting solar into multi-family properties... some questions i have are:

- Did you remove the sub meter and just have one meter for the entire property?

- How did you bill your tenants for usage?

- Any other tips / ideas / learnings from doing this would be helpful.

Thank you

Jay

I have 12 units that we are doing a combination of short term (less than 30 day), mid-term (30 - 364 days) and long term (1year plus) rentals.  

We are looking for a software suite that can help with budgeting and planning.  Excel is no longer scalable for us and we are looking for a platform that will allow us to put in forecasts for the properties and ideally pull data in from an accounting system to report.  

Any advice on systems that could be helpful?