All Forum Posts by: Brandon McCombs

I'll add that a while back (about 4 years ago) I bought some Logitech Alert cameras for my house. I bought 2 outdoor cameras. We got them from Best Buy at a discount since my wife worked for them at the time. The software that came with them was Windows-based and I just installed it on my personal computer. The video/audio footage is stored there as well. Motion detected is available and so is black/white night vision. We just mounted them to the soffit of the house. The cams retailed for $250 each. I don't believe Logitech sells this line anymore; I think they have a different product line that supersedes this one.

Since then AT&T has also released their own set of cameras and software which stores everything in the cloud. I didn't like their design because there was limited cloud storage so you may only get a couple days to review the clips before they rolled off (and it didn't seem to be proportional to the # of cameras you buy either, which isn't fair or adequate). AT&T did allow financing of the equipment though. TimeWarner and/or Comcast have their own product line as well. All these are for residential use though but it means they are cheaper so they would fit your budget better. The TW/Comcast one may not work for you though if having it billed would conflict with the existing tenant's service.

 The available options for the various aspects of a security system are too numerous to mention. You'll have to do research to see what options a particular system has available. I'm currently working on a renovation after a fire and will be installing at least 14 cameras in and around my building as part of the rebuild.

I'm going with a DVR system. I don't want cloud-based storage, which costs extra. I don't like not having control of my data, not to mention cloud-based storage is typically so limited that it would roll off most likely before I knew I needed it. I'm getting color night-vision. All cameras will be IP-based using PoE (power over ethernet) so I'm having cat5 cable ran to where all the cameras will be located. The data will be sent directly to the DVR where the software is hosted. Some systems allow network-based storage to be connected or they may provide only software and you buy the hardware. I prefer the DVR-based solutions. 

You shouldn't make this be dependent in any way on the tenant. For my system, I'm having a coax drop installed with TimeWarner so the internet access to view the feeds is available with a smartphone app. The power will be on the landloard breaker panel, etc. My property is a multi-tenant apt building. For a single family rental, you won't have a choice of having some dependency on the tenant unless you end up paying for the required utilities to avoid issues with their not paying and then you lose footage/access as a result.

I recommend talking to a consultant in your area to discuss what you want. They can ask you questions and you tell them what you want. They will then find a system that meets your requirements. You can then negotiate from there to add/remove features. Cameras can be mixed and matched to some degree with the recording units. And there are many different types of cameras (quality of the footage, quality of construction, features, etc.). I'm aiming for cameras that are about $200-300 each because I don't want to take any chances of having issues when an incident does occur. My system will probably end up costing about $4k but I don't have the final estimate yet. I believe my contractor is going to be choosing Lorex brand, which are about mid-level cost-wise from what he says. He also mentioned Vivotek. Those may or may not be too high-grade for what you are desiring. But that's what you have to figure out: what do you want? Then go from there. There are just about as many options as there are when buying a vehicle. Do you want a truck, car, SUV? Then you decide from there with more specific details.

@Richard Copeland

Thanks for taking the time to reply and the info you provided. I have existing leases showing the higher rents for the units occupied at the time which, when fully occupied, equates to an avg of $600/unit/mo. Probably not much reason to do that now given the casualty loss but I'll keep that advice in mind.

Although a newly remodeled building up to current code has more value in my mind, I don't know if that translates to paper because both the bank and the appraiser said that the income approach will be used for the valuation, which means that being up-to-code won't manifest in the valuation unless it shows by our being able to demand more rent. The fact that it's new should definitely be passed through to the rents but things like fire suppression that we are now adding probably won't have any bearing on the new rents since tenants (at least the residential ones) wouldn't care about that. Maybe the commercial tenants would?

You mention comps. The key question I have, and the purpose of this post, is to determine where would the comps come from? Is MLS the sole source for comps or do appraisers use less official sources to confirm what the going rents are? What about Craigslist (which of course only shows what people are asking, not what they get) or HUD FMRs used at all?

The larger complexes in our area that have 20+ units (1 complex is for students and another isn't) don't use MLS; they don't need to because they get rented by word of mouth or Craigslist due to how well known they are. So those wouldn't be factored in to the appraiser's numbers if he only looks at MLS. This would be unfortunate to some degree if true since those larger complexes are the units in our area that are actually garnering higher rents compared to the onesy-twosy units that private individuals are trying to rent out in our area. Those larger complexes are generally offering units that are larger, up-to-date with amenities and are of higher quality than units being rented out by individuals. It was one of these complexes I called as a basis for my initial rent numbers.

For commercial units, in the same town there really isn't anything that is higher than Class C but 20 minutes north or south on the interstate there are Class A and B office spaces. So I've priced mine at $16/sqft/yr vs the units 20 minutes away at $19-22 (and the local units are around $8-12) because of the building being new, has fire suppression, etc. I don't know what the appraiser will decide for these but I hope that he agrees with my logic of the higher rent due to the fact mine will be renovated compared to the ones run down elsewhere in town. But he did tell me that if I have a lease that is above market rent then he can use that for the calculations. There is a chance that I may have a letter of intent with a particular company but I don't know for sure yet.

Regarding being close to another town with similar demographics, the town I'm in is a college town but 20 min north is West Virginia University, which is in a town that is booming and has thousands of townhouses, student rentals, you name it. I've been looking at their rents and have priced accordingly but can't quite match due to the fact that mine aren't in the same town and don't have the same amenities due to not being large complex (i.e. fitness center, pool, etc.). The appraiser said that the growth from the town up north won't really have a bearing on my valuation, at least from a cap rate perspective. Accordingly, I assumed I have to also adjust for supply/demand dynamics between my town and the larger college town up north even though it's only 20 min away.

Do loan officers actually sometimes consider information provided by the building owner and allow that to override what an appraiser has said (assuming the sources are reliable)?

Last year I had a fire in my 9 unit mixed use building. There were seven apts and 2 storefronts. The building is mostly gutted and we've taken the opportunity to redo the layout to make it flow better since it is a 90 year old office building converted into the current configuration. We were underinsured and only had the bldg for 8 months when the fire occurred. We will be going back to the bank to ask for a construction loan for the renovations. The renovations are going to be between 600k and 700k. Because of the existing loan the numbers will be very close so it's really up in the air whether we'll get approved or not. I'm juggling the rent numbers with the construction costs against what may be calculated as the appraised value.

The bank has already told me the income approach will be used to approve the loan. I don't know yet whether the same appraiser will be involved in the 2nd appraisal. The loan officer told me he uses a GRM calculation with a value of 7 to do his preliminary analysis to see if it's worthwhile bringing in an appraiser. So in preparation for the appraiser doing a more in-depth analysis, I've been using the bank's GRM calculation to estimate my building's ARV. I tried looking at MLS for apts that have been rented in the area, which is what I assume the appraiser will look at, but in the past couple years there are only 2 apartments that were rented through MLS. I looked at HUD's FMRs which are about in par with my rents however, the FMRs from HUD include utilities and in my bldg tenants pay all utilities so in that context the rents are much different. Note that I do not plan to rent to Section 8 but rather was just using the HUD FMRs as a guideline for my area.

So my question would be for anyone, especially appraisers, reading this, if MLS doesn't provide sufficient listings to show what market rents are for my small-town area, then what other sources will an appraiser be able to use? I want to be able to preview those same sources so I can ensure that my rents will be able to provide a sufficient valuation based on GRM so I know my max budget for construction costs to make the building valuation be above that.

I've also called around to some of the larger apt complexes in the area to see what they charge and based our rent off theirs (with some adjustments). But I don't want to get my hopes up that my numbers look good and then suddenly the appraiser comes back with wildly different numbers that are much lower. When he conducted the original appraisal he low-balled us then on the gross income for the bldg by quite a bit. His avg unit rent came out to be $497 but with the rent we were getting for our units the avg would have been just above $600 at full occupancy. This is despite his report saying he obtained info from market data (but he never talked to me about the bldg while writing his appraisal nor mentioned specifically the source of the market data) so I'm concerned we may get low-balled again and then be stuck with a building we can't renovate.

Not sure what forum this best belongs in so I just picked one. I'm asking for opinions on the matter, especially from an appraiser's or loan officer's perspective.

I've been told that the bldg I'm having to basically fully renovate due to a fire (it's currently gutted right now) won't command an appraised ARV above $500k due to the town it's in. However, preliminary numbers from the contractor indicate that the renovation costs alone might be at least $500k. I still owe $200k on the property (only owned it 6 months when the fire struck). I doubt my loan officer will approve another $500k on top of my existing $200k loan if the 9 unit mixed-used building doesn't appraise for what the current math says it must appraise for: $700k. If anyone is wondering why I have to borrow the full $500k it is because we were underinsured due to a combination of my lack of experience with commercial property and our insurance broker not properly advising us on what the policy amount should be. The policy amount ended up being the sale price so we don't have any money left to rebuild; all the insurance money was used up during the cleanup phase after the fire.

This brings me to a question. If someone builds a new multi-unit building that costs X amount and the town in which it is built dictates the rental income for the structure is X - Y then how would someone get approved for the construction loan in the first place? And what would the appraised value of the building be afterwards? Is it going to be X (the construction cost) or Y (the expected rental income)?

I spoke to the appraiser who appraised my building 2 years ago when I was first going through the purchase transaction and he states that too many banks have been burned on using the cost approach with people paying too much or over-improving their investments which has caused most people in the industry to only use sales and income approaches to properly appraise a property. If this is indeed true then I probably won't be able to get a loan. Although my building isn't new, the only thing not being replaced is going to be the exterior walls and 2/3 of the roof so my thought was that it should maybe be appraised using the cost approach since it's close to being new construction from that perspective. But the appraiser didn't seem to agree.

Any thoughts?

Yesterday I trimmed the carpet where the blue paint was spilled. Some of the fibers were blue through and through but a lot of fibers just had the paint on the surface so it's looks a little better despite the carpet also now being shorter in that area. I think the brown spots might be chocolate syrup but just a guess since I've never seen chocoate syrup stains before. I'm going to work on cleaning up the spots and charge whatever the time is to the tenants and hope that the time and effort also improves the look of the carpet, if even just a little bit.

The existing carpet brand and type is not known. It was already there when we bought the house so I doubt it can be matched. The new carpet stain area is fairly large and would be difficult to patch (3x5' probably).

Yeah I'm aware I can only charge the pro-rated life of the old carpet. I already hired professional carpet cleaners (mentioned in my 2nd paragraph). The new carpet we installed is Stainmaster and is supposed to have a 10 year life and now within 9 months of that these idiot tenants have already stained it. So it sounds like, unless I want to actually pay for new carpet, then I can't bill them for anything except for time trying to clean the existing carpets, which is what I figured but I wanted to make sure that I wasn't forgetting something.

 The second paragraph where I mentioned having carpet cleaners come in to clean was referring to professionals. And no, the paint and syrup didn't come out without any problems.

Hello,

I just had a tenant move out after being in my rental unit for about 9 months. The day they had moved in last October was the same day we had new carpet installed in the living room of the house. Carpet upstairs in the bedrooms was quite old but still usable. Upon move out I find that that there is blue paint (about 2"x12" long) on the carpet of the master bedroom and 2 large stains (about 3"x6" each) of unknown origin on the carpet of another bedroom. On the carpet of that 2nd bedroom I also discovered syrup. There were also stains on the *new* carpet in the living room.

The tenants didn't have time to have the carpet cleaners clean before move-out and asked if I could order the carpets cleaned and just take it out of the deposit so I said I could. I hoped all the stains would com out but wasn't holding my breath. In the end, none of the stains came out.

So the question is, in your situation, what would you do as far as penalizing the tenants such as by deducting something from the deposit for the stains (seems to be located in heavy traffic area where kids would be sitting where the couch used to be) on the new carpet and the stains on the old carpet?

I didn't have any intention of buying carpet right now for the bedrooms because it was obviously still functional and, for the most part, still in good condition, but doesn't look good with paint, syrup and other unknown stains now on it. I plan to try using scissors to cut the fibers infused with blue paint in the hopes I can make that area look better. And for the syrup my plan is to use detergent or something on that to help it. The other stains though I suspect just won't get any better. If I can't make any of those look any better then I feel the tenant should be penalized for being irresponsible and damaging my property. Do I have to actually go to the point of buying new carpet in order to legally justify deducting something from their deposit or do you think it would fly to just say "damaged carpet" as a line item and try to calculate some value to it (and if so then how would I calculate it since I wouldn't be replacing it?)

As for the new carpet in the living room, it's Stainmaster carpet and was *new*. Having this type of behavior from the tenants is just unacceptable in my opinion. 

Has anyone encountered similar situations and, if so, how did you handle it?

This is in Ohio by the way. No specific law covers this type of situation.

thank you

@Colleen F. The police chief called me because he said they wanted to get in the rental unit to see if the tenant had anything from the town where the chief was from. I'm assuming at that time the chief wasn't yet aware that my tenant had moved out and left nothing behind so there wasn't any reason from my perspective to need to see it. But I've attempted to get in touch with the police chief to no avail.

@Mike S. There is no forwarding set up. He was using my other tenant to hold his mail. The police ended up confiscating it before he could pick it up. In Ohio the law says that if I don't send the tenant's deposit to them within the time period I'm liable for damages as well, except that if the tenant never gives me a forwarding address the law specifically states that the tenant is no longer able to receive damages from the landlord.

@Benjamin Timmins "That totally makes you sound like a shady landlord. Id never want to rent a place from you."  That doesn't mean much coming from you based on the tone of your other messages. The feeling is mutual. Plus I wouldn't want you as a tenant anyway.

@JD Martin Why would I want to keep his deposit? I don't want to. By the time I take out money for cleaning that he never did and holes in walls from hanging stuff and any thing else that he did/didn't do per the lease he may end up with getting back $150 or so. So it's hardly worth it to expend too much time on determining if I can keep it only because there may not be a way to return it. I've never dealt with people in jail before so I was unaware he may still be able to get mail; assuming I can determine which jail. I'm not shady so I'm not concerned about posting on a public forum. You guys are just cynical apparently. I am not looking for workarounds to get his deposit but rather to know how to give it to him and, apparently, trying to send it to him while he is in jail is the a viable option here and one that I wasn't aware was valid but it does hinge on me having to track him down rather than the onus being on him to give me the information. I'll ignore the rest of your message since it's purely based on speculation and hypothetical scenarios.