All Forum Posts by: Jared W Smith

Hello all-  In an effort to work toward comfortability in pulling the trigger on my first deal I am analyzing several local deal (in Westchester County, NY). 

I came across this 3-Family for $350k. Seems below the average for the area. This property needs some interior work to get it rent ready. So I am seeing if it can work out. I first ran the analysis at the listing price and doesn't look like a bad deal, but am I missing something? Seems a bit to good to be true. The high cash flow may be diminished by the age of the building and possibly more than expected repairs and replacements upfront and ongoing maintenance.    

Purchase Price: $350k

Downpayment: 20% = $69k

Closing cost: $6k

Renovation/Repair cost: $40k

Unit Make-up: 3 Units (each 2 bdrms, 1 bath) 

Rent: ~$1800-2000/unit (per rentometer) (Ran numbers based on $1800)

Neighborhood: C neighborhood (not ideal)

Built: 1901 (Most questionable part, many items may need replacement and extra maintenance annually) 

Thank you in advance. 

I second @Karen Margrave. In tri-state area, that sounds about right. $16-20k range is what I'd say but he's probably a little on high side since it seems most contractors these days in the area are very busy therefore they can choose what they take on. 

Karen is also correct in that you will need to make sure the framing for the attic space is adequate for a habitable space. Also you may need a new stair if one is not already present for access. 

Disclaimer: I am an architect, but I am not YOUR architect. I am not giving professional advice only general information. Contact a local architect/engineer for a detailed consultation specific to your project/locale.    

Welcome! 

I gave response to your other post. 

How did you end up with Triplex? 

Congratulations on the triplex! I'm working toward my first rental now. 

As far maintenance, I think it may be best to get a handyman on board which can do various things on the property on regular basis. I'd say also to hook up with a landscaping company for the yard work. Have them come see what work entails and give you a price. My personal SFH in Yonkers is a 6,000 SF lot and totals $140/month for yard maintenance. I've seen price range from $120 to $175 for similar lots.

I'd love to hear what management you're utilizing and what your experience with them has been. @Marvin Lowenthal 

@Oren K. is correct, however there are several other factors affecting this type of conversion @Ryan Deasy. Warehouses are typically not constructed in such as way to satisfy the building codes and zoning ordinances. I would advise you to get a zoning specialist or architect on board. A variance for a zoning adjustment can be a long arduous process and even after the time is spent proposing your case and paying the municipality fees, there is no guarantee that you will be approved. 

Are there other loft-type warehouse conversions in the area? Any residential buildings close by? What is the zoning types in and surrounding the property?  

I think your problem is, the contractors are reluctant in giving cost when the scope of work is not narrowed enough. Contractors work on quantities. They do not want to be limited to a cost they give you and then the scope changes or gets larger or more complex. With architect/engineer drawings, it is black and white.  

If you do not want to hire an architect, at a minimum, you need to sketch out the whole property, floor by floor with dimensions. In each room/space you need to describe in detail what you want done. This may help some but this will depend on your experience with construction and relaying various repairs and renovation items. IF you are not experienced with this, you may be better off retaining an architect on an hourly basis to help narrow and document the current conditions and proposed changes.  @Brandon Arce

@Robert Chen Awesome.. Congrats! I'd also be interested in hearing answers to your questions. 

Another great meet up. We must all conquer our fears! 

@Jonathan Miller @Tyler Hiatt  Here's a perfect example thread: 

You will see however he's taking on all the responsibility for design, permitting and construction oversight. 

@Robert Feinstein If I am hearing you correctly, you'd be paid for an agreed to sum for your Professional Services + 15% equity, correct? That seems to be more or less the route I'd be looking for. I'm sure you are aware, this carried an inherently greater risk different than a typical Architect-Client relationship. However I'd argue that your prof. service fee be paid out before anyone gets equity cuts, in case the sale is not as lucrative as planned, you still get your fee. A safe guard of sorts I guess.