All Forum Posts by: Andrew Weiner

I have not read the book but just being involved with syndication deals over the years I have seen a few different things.  Not all syndicators are similar, there are some that take on huge risks and they might not even realize it because for almost 10 years you could buy poorly and the rapid appreciation bailed you out, going forward they might not be able to repeat what worked before.  

I would encourage you to read the full offering document, there should be details on how the profit is split, are you able to liquiditate early if you need (can you sell your shares even at a discount?), what kind of capital reserves are being kept, what are the contingency plans if the market is down in 4-5 years?  Is there any preferred return?

The rehab numbers are the hardest part even for people who have been doing this for a while.  Experienced contractors regularly have to add change orders once they get started because things arent always the same once you start doing the work.  

Try to network locally with some contractors that have done the kind of work that you're hoping to do and ask for some of their most recent proposals.  You can try to use that as a basis and extrapolate out to your project.  Labor costs for skilled labor vary across the country as well as with the age of properties so I think you would want very local data to use. 

l would imagine that the money is yours but it would depend on the exact working of the addendum. Ask for it from the title company and they would also probably verify that you are entitled also before distribution.  I can send some referrals for lawyers in a DM. 

I'm sorry to hear that you have ended up in this situation, unfortunately it does happen sometimes.  

Your closing costs look reasonable to me based on my personal experience (I'm not an expert though).  The majority of your closing costs are the 7% commission you are paying (4% to your agent and 3% to the buyers agent) which is $6,550, then the $2,850 credit to the seller.  This is all before title, tax, conveyance fee's, water hold, etc.

I use RentPrep.  I don't use their application because I want the data in my PM software but they do have a direct application that they can apply and pay the fee directly on Rent Prep's website.  

The difference between a duplex and a 4 unit home are not significant.  Things don't really change until 5+ units.  

There are some things that become more sensitive though to look out for.  One of the biggest is parking.  Is there enough parking or on street parking to accommodate 4 units worth of tenants, this can also be a problem for duplexes.  Other considerations things to look at include; are any utilities common (like paying for a boiler for all 4 units instead of individual furnaces), how does access/common areas work, do the tenants all have access to laundry, are there any common area utilities (light common area lights, electric or gas for laundry) that would stay in the owner name.  

Parma is a great area, Garfield is a strong rental area with lots of demand.  Any of the suburbs should be good candidates, the school district tends to dictate the desirability.  

We go with Black appliances actually.  I know it wasn't one of the options but... 

The black appliances look cleaner after use and getting black appliance paint to touch it up blends better than trying to touch up white appliances.

Another option is to try to rent it without appliances and give the tenants a one time credit for bringing their appliances and then they are responsible for it for the duration of their lease.  Section 8 pays a bit less but it avoids damage and possible replacement in the case of damage.  We show many units without appliances and let them know we will bring in appliances if they do not want to provide their own.  I was skeptical at first but a number of people do take us up on it and it saves a lot of money.  

It's not just will the manager handle section 8, it's the specific area.  We have trouble getting vendors and staff to go to certain parts of town, that's a bigger issue than if the office is willing to deal with the paperwork of section 8. 

Also in Greater Cleveland one month to put in a tenant with a voucher is very aggressive.  To hear back from CMHA with a rent offer is 4 weeks, another week for first inspection, if it passes on the first try then its another week for contracting.  Thats all after you find the tenant, screen them, get a deposit, and submit the packet.  So figure the minimum is 8 weeks.

I am concerned that the numbers just dont make sense for Cleveland right now.  Make sure your not buying on the wrong side of a city/school border and are using rent comparisons that might be geographically close but are really different renter markets(like buying in East Cleveland and using Cleveland Heights rents).  

Last comment, if you are using the pricing guides from CMHA as your rent standard, that would be if fair market rent comparisons are available and you pay for everything.  If your tenant pays utilities, appliances, etc. It comes down significantly from that chart. 

There are a good number of buildings that fall in that range in north Cleveland Heights.  I would find some commercial agents in the area to get started, a lot of deals are done off market prior to listing and they have a vested interest to make it happen so they get both sides of the commission.  

In this space I would recommend networking with multiple agents/brokers because if they are off market deals then other agents might not even know they were available.  One of my friends who deals in larger multifamily gets most of his deals from his lender, again they are incentivized to get it to one of their good customers so they can get the purchase and future refi's on the buildings.