All Forum Posts by: Brendan Miller

@Trevor Dominique i'd look at alternate materials also (PVC or chain link) or potentially doing the work yourself as well. Installing fences aren't very difficult, it's just labor intensive. The cost of lumber is really high right now, which is likely reflective in the quotes you got. If you could defer the work for another year or two, then you might be able to perform the work once lumber prices come back down to a realistic level. I would also try to identify what your ideal tenant is to help you make your decision. I think fences are marketable to families with kids, and tenants with dogs. If you're going to own the property long term, then I think replacing the fence might be a good long term investment. However, if you can get the same rent without the fence, then I do see how that would be tempting to just remove it.

@Stephen Jones you could look at bringing in a partner or using private money. If it's a good enough deal then you shouldn't have issues finding the money to fund it

@Davis Stoner do you own a primary residence with equity in it? if so, you could do a HELOC against that to fund your rehab, and then refi that property once your rehab is complete. Similar to hard money, you could also look at private lender options (family, friends, or partners).

@Tyhe Barfield I'd vet her the same way you vet new tenants (background check, credit score, etc). If everything checks out and you're happy with your current tenant then I'd add her to the lease. What's your concern with adding her to the lease?

@Darryl Davis I did some initial research about a year ago on this topic. A couple ones that I came across are Rent To Retirement which you'll find a lot of reviews about with these BP forums. I also had an initial call with them, but haven't purchased anything with them yet. Another one was Memphis Investment Properties. You'll find a lot of mixed reviews on this topic, so make sure you vet the company well beforehand. 

@Evan Polaski thanks for the detailed response, that is very helpful. I normally use generic %s for screening initial deals, and then I dive in deeper on CapEx items based on actual condition prior to making offers. As for leasing commission, I have that included in my PM %, but I don't have anything for concessions, so that's helpful information.

@Nick B. I'm not really worried about my insurance numbers, those are pretty accurate for me based on current rentals. I'm more focused on vacancy, maintenance and CapEx

@Nick B. that’s just the metric I use to analyze whether to make an offer, not how I calculate continuing cash flow after the purchase. Normally insurance has been in the $800-$1,200 range based on the properties I’ve been offering on.

I've always based maintenance/CapEx on the gross rents, again just as part of initial underwriting. Do you have a different recommendation?

What does everyone use for underwriting deals on small multifamily properties (2-4 units). Right now, I've been using the below as standard %s, but I often see realtors provide financials with much lower %s. I'm curious if I'm being too conservative and missing out on deals. 

Insurance: about 4% of gross rents

Vacancy: 3-5% depending on the market, and # of units

Maintenance: 5% (I've been offering on 'newer' properties 1990-2006)

CapEx: 5%

Water/Sewer/Trash: $75/unit/month; $300 total/month for a 4-unit

Property Management: 7-10% of gross rents depending on the market

Misc: $50/month; depending on the property, I also plug in minor costs for landscaping, legal, etc

Any additional help/input is appreciated!

Hi @Leela Gutta, I currently use On Q Property Management and have been happy with them. They cover most of the Valley, and my properties are in Tempe and Gilbert. I know there are also a few local PMs on BP so you'll likely get some additional options from them.