All Forum Posts by: Charles Soper

Well, between the two units that works out to 2 bodies per bedroom :)  I know Seattle is crazy expensive to buy as well as rent right now so that doesn't really surprise me.  I assume you've run your numbers and are happy with the cashflow number?  Is it enough to compensate for the potential brain damage of self-managing section 8 tenants?

So highest and best use is the game at hand.  How big is the lot and what is it zoned for?  Was there a specific reason you chose townhomes over single family or larger multi-family?  Could you build say a 10-unit multi-family instead of fewer townhomes?  Would the area support that kind of property?

You may have to dig a bit and network like crazy but St. Pete is full of opportunity right now in just about any niche you want to tackle.

Flips can be good but beware scope creep and capital gains, they're capital killers.  Remember, ultimately flipping is a job, you finish one and you need to find another, and another, ad nauseum.

Have you considered a small multi-family house hack that you can live in and rehab?  Many find great success with that and it can really set you up for the next move into something similar or even larger.

As @Jeff Copeland mentioned, if you have stable W-2 perhaps something more passive is better, maybe not turn-key but something close that might be easier to start with.  Carpet and paint, rent forever kind of thing.

The choice to accept section 8 is completely up to the owner/landlord.  That said the answer for me would be somewhat dependent on what you are getting for rents, where the property is located, and what quality of tenant you have in place.

Nice thing about section 8 is that you get paid without a hassle (assuming no gov. shutdown situation).  If the area is stable or gentrifying then rents should be stable or on the rise.  The quality of tenant is the variable, most people that need section 8 are good people who just haven't quite figured out how to improve their situation in life, they just want a place to live and will generally behave if they have a solid, clean, safe place to live.

Make sure you check local laws and rules around section 8 so that you don't get yourself in hot water, perhaps get in touch with the existing owner/property manager and see what there experience has been with section 8 and especially the current tenants.  Why are they selling, is it a headache they don't want anymore?

Hope those thoughts help...

I've found it's more effort but usually you'll find better prices anywhere but Home Depot or Lowes for the bigger ticket items like cabinets, flooring, doors, etc.  That said you might look into getting a commerical acct with the likes of HD, if you purchase in large enough quantities they'll discount their retail prices decently.

Wow, one could only wish for an expense ratio of 10%, what you seem to have here is about 30% which is still low. They are definitely understating expenses or have found a way to live on property, self-manage, and keep expenses to a min through relationships who do jobs on the property for nothing or an extreme discount. For you're analysis I would suggest you run on a 50% expense ratio which leaves you at $15210 NOI which at they're stated 9.7 cap is a purchase price of $156,800.

So reasonable numbers vs. their actuals equal a value that about 60k apart, sounds like you have some negotiating to do. Couple of questions that would come to mind, what are the prevailing rents in the area of this type of property? Is there room to raise rents without doing any work? Condition of the property? Can you put some CapEx in and then raise rents?

Also, you might reach out to a commercial broker in the area and see if they can give you the prevailing cap rate for the area and size/class of property, with that you might be about to get a feel for what other properties in the area are trading at and give you some more leverage for negotiating.

@Bjorn Ahlblad it doesn't seem like there is much published regarding one vs. the other, certainly nothing in the last 2 years anyway.  It seems that garden might be more desirable to live in for couples and small families but the mid/high rise has it's place for singles and possible retirees.  In the right location or with the right amenities it seems the mid/high rise can also demand larger rents even when the surrounding area rents are lower for different asset classes.

@Scott Mac thanks, having never owned a property with an elevator and being so far removed from living in a building with one these things are foreign! I gotta imagine that service contract isn't cheap and the CapEx to replace them is probably a scary big invoice.

@Steve Hall thanks for that, I had figured elevators, fire code, and insurance but didn't consider security.  I think we'd look to some sort of controlled access solution and fortunately this property is in a downtown area and  walking distance to many amenities so parking shouldn't be an issue but something to look into, the OM actually calls out less than 1 space per unit so that might be a concern.

Anybody have experience with elevator maintenance contracts or CapEx? Does that seriously impact to CapEx reserves?

A broker recently sent me an OM for a 100+ unit 7 or 8 story high-rise apartment building.  I’ve not stopped to consider the major differences in this style of property vs. a garden style community of multiple buildings and maybe 3 stories at max.  Does anybody have experience in high-rise buildings that might be able to advise on what the major underwriting concerns would be vs. garden style?