All Forum Posts by: Chase Gochnauer

Yeah even if he only has liability it should at least cover the door.

Yes, there are management problems for sure. I believe they're a pretty absentee owner and leaving management with a tenant and it's not going well. Units sitting for 2-3+ months waiting to be remodeled

If I put in what I would anticipate real expenses being, then it would support that $912k price or close to. It's the fact that my anticipated expenses are so far from what they are saying the last couple of years have been, that I get concerned.

Hello Ron, I see you're in Des Moines as well. 

Not sure of the size of garage door, or if there was any damage to vehicle, but you could mention using their auto insurance to cover it. I would imagine running your car into the door would be an insurable incident. He could get any damage to his car fixed, as well as the garage door, for his deductible. If it's a 1 car garage it might not be worth it to him, but for a 2 car door it might.

Hey guys,

I'm looking for my first large multi-family. I come across one that is in my sweet spot as far as location. Exteriors are in good condition. Interiors are very dated, a couple of units have been completely remodeled.

Asking price: $912,000
Gross rents @ 95% occupancy = $186,447
Addl income(laundry) = $7k

This side looks pretty normal and solid.

The 2013-2015 expenses are where I'm concerned:

$127k, $135k, $133k for each year. Maintenance being $30k-$40k, $10k "administrative", etc. This includes about $14k in management fees. These expenses seem awful high. My business will do a lot of the maintenance, but $30-40k seems quite high to begin with. 

Landlord does pay heat/water, plus common area electric for a total of $25k/yr.

With this, net incomes are $30-$55k/yr which doesn't support the purchase price. I offered $822k giving me some cushion for remodeling and bringing up rents, and essentially that's too low, not even getting a counter, others interested in closer to asking price.

I'm not sure what I'm missing here, unless expenses can be cut 30-40%, it can't support the asking price.

Yeah our in stock laminate here is about $69-$125 for a 12' section, or like <$3-$6/SF. Compared to $30/SF it's quite a big jump.

http://www.menards.com/main/kitchen/countertops-la...

You might run into a problem if you add it to the HUD and this is a short sale. The lender has to approve the HUD usually. If they're the ones only allowing $300 then they may not approve the HUD if another $1k is added.

 I am not disagreeing with you wanting to get him out. I agree with that in a multifamily situation such as this. I would feel the same way about cigarettes which are legal.

I just view the security deposit as being there for you to recoup costs associated with re-renting the unit. If you've experienced no costs, the guy left willingly and left the unit in good shape(no residual odor, etc), I don't see any reason to penalize him financially.

If the guy takes you to small claims for the deposit, how are you going to prove that he was indeed doing this in the unit? If you didn't call the police to take the pot and document it, then you're likely not going to be able to use that as a basis for keeping the deposit.

Give him back his deposit if the unit is in good shape.

I'd think the intent of that addendum is more related to a drug related arrest on the property, or something of that nature. Not finding a bag of pot after the tenant left willingly. 

I agree that I would pass simply because it's a 3-plex in a bad neighborhood regardless of the numbers. 

This is $12k/yr after debt service. This is not the number you use to calculate a cap rate. You would use the NOI before debt service. You cannot take $12k/yr divided by $300k in this case to calculate cap rate(4%). It'd be closer to $31k-$32k before debt service, which would give you a cap rate of 10-11%