All Forum Posts by: Chris F.

@Chris F. are you going to manage this yourself as there is no management fee listed? Just curious - you also listed that you're removing satellite instead providing Netflix for tenants - why?

@Chris F. You can move the numbers any which way; but at that asking price it won't make much difference. Looks like you are banking entirely on market appreciation, since it is in Ca? All the best!

@Chris F. I am very used to buildings built in the 50's and 60's as I own a lot of that vintage here locally in Berwyn and Cicero, IL. The 60's was a good era in a lot of ways, but you will have galvanized plumbing throughout unless you are lucky. The big thing with galvanized is to make sure your potable water has enough pressure to be adequate in the eyes of a tenant. If your pressure is still good, you can ride it out for a long time. You also will run into a lot of situations where you have to cut pipes out under the sinks as the galvanized rots out at the threads where your P trap connects into the wall. 

You also will want to check the hvac system thoroughly. If this is a boiler building, make sure you have a boiler person take a peek at it. I have a fantastic boiler guy who I trust thoroughly. I now have him look at every building with a boiler before I buy it so I know what I am getting into. Boilers last much, much longer than furnaces, which is good and bad. Most of these 60's buildings still have original boilers, or at minimum original parts of the original boiler system in place. 

The electrical is something you will want to know a lot about as well. The 1960's had much less electrical demand than modern living, so electrical systems need to be updated a lot of times. In my area, the towns force you to do this anyways! I am in the middle of a $26,000 upgrade on a six unit I just purchased in Cicero. 

The 80's should be easier in some ways. They were switching over to copper for your potable water. Your drains could be copper, pvc, galvanized or a mixture. Electric is also less of an issue by the 80's, although sometimes the panels are push style which need to be changed out. 

Roofs are more obvious in my opinion. If you have a flat roof, just see how many layers there are. If you have a shingle roof, your inspector should be able to give you a good idea of the condition. 

It sounds like a recipe for a disaster. How will you deal with raising the partner's rent who lives in one unit and the partner fights you. What legal and emotional problems will you have to deal with to evict your partner.

There are many legal issues you need to abide by to form a partnership. You need an attorney. You can't just take people's money, invest it and wing it as you go along. There are laws you have to abide by.

She is not paying for the unit. She is renting it exactly the same as any other tenant would. If she rented the apartment, you put the money into a bank account specific for that property. At the end of the year, after paying all the expenses she would be entitled to 5% of the profit. If you really run the books the right way she would probably be entitled to 5% of the depreciation, if any. She would only get 5% of the property's appreciation when you sell the property.

Do you really need 5% that bad!!!

Proforma doesn't mean much. There is not a single deal out there that performs exactly as underwritten.  It is either better or worse. 

Ordinary and necessary are the key words...

If it passes that smell test, then we have to examine personal vs business use.