All Forum Posts by: Carl Hebert

@Dave Holman, I definitely need to setup a meeting with Norway Savings, you're the third person in the last month that has recommended them. I have a real good relationship with Key, but I want to shop around and check rates. 

@Dave Holman This is interesting info, I am currently closing on a deal that has two houses on one lot and both are in need of new heating systems. They currently have oil furnaces hwbb.

Did you install the units yourself? If not who did you use to install the units? Thanks for any info and for what you already provided.

Carl

@Bernie Huckestein Thanks for the info on the refi aspect, I haven't had any issues with regular mortgages, but was interested in refinancing investment properties. 

I am in the process of remodeling a single family purchased last year and will rent it out after it is finished. When done, will want to pull some equity out to purchase another property.

I have a meeting with a branch manager at Keybank this coming Thursday and will be asking that question specifically. 

I will post any info I find.

You do not have to accept section 8 in Maine. I have talked with one of the agents here in Lewiston/Auburn and there is no law saying you have to accept section 8. That being said it is true that you can not discriminate against someone because they have a section 8 voucher. Sounds fun doesn't it? I look at it this way, if they have section 8 and are willing to go through the application process (background screening etc) you can not deny them the chance. If they pass your application process and are willing to see if you get approved for section 8, then why not rent to them? As has been said earlier they probably will not be at the top of your list because of the fact they are on section 8 and you have no worries.

The only reason I would not do section 8 for an apartment would be if the rent offered by section 8 can not match my asking rate. Otherwise I really have no issues with section 8. Most of the rent gets deposited into my bank account on or near the 3rd each month and the tenants themselves have a huge incentive to keep their rent up and that is to keep their section 8 status. 

I have not had any issues with my section 8 tenants and a fellow real estate investor of mine here in Lewiston/Auburn also has not had issues with his section 8 tenants. We both always have at least a few section 8 applicants every time we list a rental. Lewiston/Auburn is pretty big in this aspect.

Most of the section 8 tenants I have had are either folks with disabilities or seniors. 

@Cameron DePaola Last year I did exactly what you are trying to do, it was fairly simple. LHA (they handle section 8 here) only required a 30 day notice be given to the tenant for the eviction/vacate. Tenant was not happy, but I needed the property for myself. I offered a great referral if needed.

Have to say though that the old landlord let the lease lapse and tenant was on a month to month. Here in Maine and according to LHA only a 30 day is needed with no reason needed. If as you say there is a lease and it has not expired and it does not have a clause to terminate early you are kinda stuck unless they break the lease. 

Section 8 folks may not like it but the courts will. 

Your heating, taxes, water, seem fine especially if it is oil heat. Mortgage seems high unless you are not putting down 20%/25% and or including taxes and insurance again. 

The only way this works is if you can lower heating by switching to natural gas if it is available in your area. Get it at a lot lower price, you will be surprised at what some sellers are willing to accept especially if a building has been on the market for a awhile. I offered 20k below asking on a 3 unit last year expecting a counter offer and they accepted! It was already a good deal to start with. You never know. You can raise rents once you buy, but I don't know the market there so it may be maxed already. 

There is a few programs out there that will let you put the numbers in and give you all kinds of info like cash on cash return and such. Bigger Pockets has one here you can try for free I believe.

Like a couple people have said already this may be one to walk away from.

@Wyllshaun Gipson I manage my own properties so for repairs I use 7% which is what you would pay a management company as my repair %. This includes lawn, snow removal and such.  I also put 2.5% into a bank account for capital expenditures like furnace, outside painting or siding etc. Vacancy I set at 10% which is high for my buildings, but it is an easy number to figure in my head lol. My actual vacancy rate over the last 4 years is less than 2% so probably should change it to 5% like @Dave Holman.  

Hope this helps, 

@Nick Coral I am not as familiar with Lewiston's renovation program as Auburn's, but I think it has a specific program for exterior upgrades. While you are waiting for the loan process to finish you can start the wonderful process of figuring out what they will require down at city hall. Both cities have been doing this for several years and they want to fix up blighted properties. 

I may be missing something, but you say you have noi of 35k a year? How is that not enough to fix up the building? I priced painting a 3 story 3 unit last year and it was around 5-6k, at the cash flow you have you could have 10k saved up in time for painting season this year and if the program from the city kicks in you would only need 5k or so. Using your own cash means you don't have a loan on the property and after the repairs are done you can raise the rents easier and keep more cash for yourself.

Good luck with the building and keep a positive attitude, because it sounds like you have a good income generating building there. 

I agree with Amy, try for at least a three unit if you are looking for cash flow beyond paying expenses on the property. I lived in my first three unit for 2 years and now live in one of the four units of a building I bought last year. Both with a positive cash flow while living in the building. 

It will be a while before I want to live in a house again lol. Having a place to live and getting extra cash is a good thing!

Grats!