All Forum Posts by: Mike Terry

 Great insight thanks!

thanks JD.  How about that some reasonable non political discourse without labelling and name calling.  There is hope for America!!! sarcasm aside, thank you for your thoughts. Good perspective.

 The country has massive debts and deficits.  Our federal government, operationally does not function very effectively and certainly not efficiently.  The cost to remove just one illegal will be in the thousands and way the government operates probably 100's of thousands of dollars.  I don't see any possible way to accomplish this goal.  The last Trump administration was much more show and bluster than it was effective at implementing policy.  They successful cut taxes and loosened IRS enforcement.  That was accomplished with the stroke of a pen.  They unleashed pandemic handouts and loan programs that greased the economy (this was not well thought out, contributed to the inflationary environment we are still suffering from and PPP and ERP loans were flooded with fraudulent loans and benefits)
These programs leveraged existing corporate infrastructure (banks and the government had little or no operational involvement).  The big difference here is some federal state or local agencies will have to be redeployed to take on this task creating a lack of services in the areas they were already operating.  This will create more costs.  Apprehended illegals will still be afforded due process (I presume since this is constitutionally protected for everyone in the United States).  Anything requiring court or judicial decisioning is extremely slow.  So we will be housing feeding and detaining millions of people for well beyond the Trump presidency.  I suspect this is mostly campaign rhetoric that was popular with the current anti immigrant xenophobia that grew out of the pandemic both here and internationally and won the election, but the governments ability to achieve any real change in the population of illegals in this country would be very out of character.   There will be some showy roundup of few immigrants (most likely only in Blue State, because every act of both parties right now is to be punitive to the citizens of the states that oppose the current administration), they will go after people with removal orders already in place, have a couple of press conferences and go back to improving their own personal economic situations.  I hope I am wrong, but the above scenario more closely fits how the government operated in Trump first 4 years. 

PS before you dismiss this as liberal, communist, socialist talk.  I am not a democrat, just a realist. I often think we forgot we the voters are responsible for all of this.  We elected Trump the first time, elected Biden to relieve ourselves of the chaos of his first presidency and now reelected him because he promised he would lower the cost of eggs by pumping more oil.  The binary choice was not a good one, but I wouldn't anticipate some remarkable improvement of fiscal responsibility or operational efficiency in this second act.

I am a career changer. I went from Teaching to Coaching college basketball to executive recruiting (headhunting). It has been a rewarding journey and the transition from salaried employee to 100% commission was scary but has been rewarding and I have been able to surpass my highest W@ in coaching with my new role. I think I was fortunate to find a roll outside of real estate to diversify my income across two different sectors of the economy. I often read that one should seek a commissioned sales role because your comp is uncapped and that has served me well. I think the key to getting a good start in REI is finding a way to have a high 9 to 5 income and using a good portion of it invest in your real estate endeavors. Good luck!!!

Good luck with your adventure!!!



Good luck with your adventure!!!

 Caleb,

currently the 2 6x6 storage units  are rented to tenants for 25$ each.  I don't know if that is included in the total rent numbers the owner supplied.  The three single car garage spaces are vacant and not durrently being utilized and can be monetized through rent.

 Thank you for your response.  What I was trying to say in my response is the units will be easily move in ready on delivery of the property.  The deferral is all on major capital expenditures, roofs, HVAC, Water heaters.  sorry if that was confusing.  The property has forced air furnace in one unit, two boilers heat the other four units.  One unit has central air and the rest have window until AC's

Some units have gas stoves and water heaters some have electric.

rents are at market.  The relatives are vacating. only 1 tenant wants to stay through ownership change.

 Good advice.  I'm not really prone to emotional thinking.  No to worried about that.  I am just trying to wrap my head around at what purchase price does this property cash flow.  I am starting to think it is such a low number that the owner will never accept.  OR I am missing something.

Hi Jaycee,

The owners occupy two of the 5 units.  My guess is they have low level of book keeping sophistication.  What I have are the rents of the 3 tenant occupied units, the owner supplied projected rents for the other two units and a hokey formula on parsing out utilities for the units that are not separately metered.  With my own portfolio I generally underwrite with 10% for repairs, 10% for cap ex, 5 percent for vacancy.  So your 35% operating expenses makes sense and seem plenty conservative to me.  

Hi BPers,

I am trying to valuate a small multifamily property. 

This is a B class property. It is in good condition, but has a lot of deferred maintenance. The property is in the Michigan in a midsized urban market. It's a 5 unit. The rents are $5400 a month. Some of utilities are paid by tenants. some units have electric metered and tenants pay entire amount. The taxes are pretty high at 7400$ a year. Roof, HVAC, boilers, water heaters are all 20 plus years old. It is a remarkably well maintained property. I estimated capex at 10% which I think is low considering the deferred maintenance, 10% property management, 8 percent vacancy. Metering all utilities would make the property NOI better. How much should I estimate this will cost?

This is a Mom and Pop ownership where husband has passed away. It is screaming for owner finance offer. The owner's family currently occupies two units, so the rents are their estimates. The property has a 3 car garage that could be rented to tenants to increase ROI. There is shared laundry, not charged to tenants. There are two 6x6 storage units that are rented for 25$ a month each (that needs to increase). There is also a RV garage. Hard to value that.

I like the property for a lot of reasons. IT can definitely be improved from an ROI standpoint with metered and reassigning all utilities, charging for laundry, renting garages to tenants, renting storage space.

I own a portfolio of duplexes and single family properties that are doing well.  I bought a 16 unit apartment complex that was a expense nightmare, with low rents, that I eventually gave up trying to make profitable.  to give you some idea of my experience.

Any ideas on this one I would love to hear.  What would your do to figure a proforma that supports and offer for a profitable property?

The property has been on the market for over 180 days.  They originally listed at 500k.  It's now listed at $399k.  Here is the listing history:

 So avoid Colorado?  Frequent hail storms pushing insurance rates up in that market.  I would not take advice about a market from someone without any experience in that market.  Educate yourself, become expert, then make decisions from a place of expertise.  Better advice is know the risks, mitigate the risks the best you can.