All Forum Posts by: Charles Kennedy

You are likely looking at your in-place cap rate. If you want a great deal, see how you can increase your NOI, and sell at a similar cap rate.

I.e. your property may bring in $20,000 in NOI today, but you see that you renovate for $20,000 increase rents $200/mo ($3000/year), and properties sell generally around a 6% cap, you can then sell the property for $20,000 more.

Numbers and rent increases obviously vary. Get quotes for rehab and also make sure you understand what your property will rent for post-rehab.

Sometimes the current owner may not even be charging full market rent. You may be able to raise $50/mo without even doing anything because the current owner is charging too little.

Don't look at in-place cap rates - that's what investors who are ok with high single-digit returns look at. You should seek double-digit returns by creating value where it's not obvious. 

Thanks @Mary M.. What about lease termination options in lease? I'm afraid if I say they cancel with 2 month penalty I could have some tenants cancel during spring semester if they drop of out school and I'm SOL for until next school year...

Hey BP,

Me and a partner are leasing our quad in collegetown. We are already getting interest for next school year (August 2019). If we sign leases in the near future, should I (or do you?) collect the security deposit or first month's rent now or at signing? 

Thanks.

@Anna Buffkin thanks Anna - I plan to have realtor do showings. Cleaning out units, I plan to pay a cleaning company for turnover and pass on any extra fees for cleaning out units (like left furniture/food etc.) onto the tenants via a deduction in security deposit. 

@Scott Schultz I plan to set up an e-mail that is something like (citypropertymgmt@email) and then set up a google voice number that is in the local area code so I don't have them think I am the owner. Thanks for the advice, we will try to negotiate if/when we hire a manager. 

@Eric Burgh what emergencies would I have to be there for? I would just call handyman/professional to fix any problem. 

@James Caruso it will still cash flow well if we hire a PM, but it just cuts down significantly. 

@Bjorn Ahlblad the property is vacant so we will be able to screen our own tenants, but also have that downtime (ouch). Yes I have a partner on the deal as well who will be able to assist.

@Alvin Sylvain we talked to 3-4 property manager who all had very high fees.

@Scott Morongell My capital will be tapped out after this for a while. You may be right, but we don't think it will be difficult and will take the extra $7500+ for a few calls a month. I'm young and don't mind "working" for the extra amount. 

@Natalie Schanne

Thanks a million again. All great information. 

@John Casmon

Thanks John. The repairs are something I've already thought through - I plan to speak with each tenant at the beginning of their lease term and also provide them a PDF/work doc that outlines what to do when a repair is needed. Something like "all repair requests should be submitted via e-mail to (email) and your request will be addressed within 24 hours". "Any urgent repairs (i.e. water leak, broken A/C) can be addressed by calling (phone #). Please note any non-urgent matters that addressed via this method will be charged an additional $50." 

In this way I will limit calls to disrupt my day and can simply check my e-mail and call one of a few handyman I've spoken with. 

Screening criteria is a little bit more difficult since they are students. I will require parent co-signers, but I think I will do other basic things - "have you been evicted, how many people will be living in the house, are there any smokers, provide references" , etc. I would love to hear screening questions for tenants... @Natalie Schanne any advice here.

The leasing we have addressed with our realtor handling showings.