All Forum Posts by: Chris Svendsen

Tough call. If could self manage could be worth it but appears you have a decent amount of work to do.  Where is money for rehab coming from?  If from some sort of loan did you account for that money in your numbers?  Expenses seem low unless you plan on doing maintenance and repairs yourself.  Not horrible deal,i just bringing up points to think about. For that much cash out of pocket I would like a litttle more cash flow but thats me.

I am working on my third deal now and every day think this is going to lead to financial success or ruin, but also realize that 2 years ago I had nothing to worry about but also nothing to get me out of what I am tired of doing.  Best advice I ever got is do it now, you will soon find out, like we all do, that you should of done deals years ago.  Set your goals, device a plan to reach them, and then act on that plan.  You won't ever reach success if you don't try. you can do it and everyone here at biggerpockets is here to help.

Oh and just talk to broker.  Tell them what your plans are and that you looking to change.  Never know, they may be a source of deals for you.

I pay my CPA $700 for doing my LLC and personal taxes. Way more than I like to spend but saves me hours of my personal time so worth it to me.

Oh also the property is in central Pennsylvania  lots of good hard working class individuals  with lots of rental  people.  Home ownership rates are fairly low in that area there are a lot of people that rent.  Other opportunities this property will afford me is  possibly moving it into student housing or into short-term  property for a nearby hospital for traveling nurses .  I have multiple Avenues  we could go if needed  which is what also was attractive about the property to me.  With the building also included in the sale are two additional vacant Lots next door  which could possibly be developed or rented as is to a local business looking for overflow parking  for their building .

thanks all. The meters are a concerned because I have an investor in that area we're in a single-family they require them to move the meters from inside the building to outside. My only concern is that may be required on this building that's why I'm going to talk to the Electrical Company. It shouldn't be an issue but just something on my check list. As for the building right now it's about D Class Property my plan is to move it into a nice solid C. Currently the building is very poorly managed. It's a mom-and-pop operation where mom basically does everything pop just collects the rent checks. Some tenants have been in there since 2006 without a rental increase. Got this deal off Market from our realtor who was contacted by the seller to sell the property. He called me immediately knowing I was looking for such a property. Building needs cosmetic Renovations and some Plumbing upgrades for a few of the units but most have already been done. Currently purchase price will be $150,000 20% down payment is where I get the $30,000 out of pocket. The bank will be financing a hundred and twenty thousand. As a property sits I could rent out a additional units that are vacant for roughly five to six hundred a month after Renovations I should be able to bring in 700 to 900 a month depending on number of bedrooms. I'll be making a little bit of money at the start but the goal is to bring up the status of the property and double my monthly Revenue coming in. I am paying less then I believe I would be if the property was on the open market.

Well, I have been working on getting an 11 unit multifamily under contract for last few weeks.  Happy to say that officially today I had my offer accepted and now moving towards closing.  That being said I have lots of questions and wanted to see what you all think and have to say.

First, I will be using a HELOC from another investment property that I have to cover the down payment on property and closing cost. I estimate that to be around 10-12.5K in closing cost and 30k in down payment. Got a decent bank offering me 5.95%, 5 years fixed, amortized over 25 years commercial loan. The financing side I think I am doing okay. Questions come up on how to proceed with rest.

I have a trusted friend and contractor who will be doing the repair work on property so we will be doing a walk through of property again to formulate a game plan for repairs.  I was going to have the Electric, Plumbing and Drains, Heating System, and Roof all inspected by independent contractors in their fields.  Any areas I should be looking out for on a small multifamily during inspections? 

Other items I will be taking care of is talking to electric provider to make sure that having Meters inside a door accessible from the outside of the building is not going to be a problem. Currently the meters are not on exterior of building but on the inside of the building.  We will also be talking with planning and zoning to go over planned renovations and make sure they do not require building be brought up to current codes with the renovations we have planned.

Once we get to settlement my plan is to provide tenants on how we will collect rent-Check, Money Order or 2 different forms of online payments, plus how to contact us in emergencies and for repair request.  Short term Plan is to assure tenants that for time being we will keeping things the same for existing tenants as we renovate the property.  Long term we will be increasing rents on renovated units, charge back electric usage to tenants, and increase lease amounts on long term tenants.  Some have been in building since 2006 with no increases in rent.  

I would greatly appreciate any other items you think I should get inspected, or info I need to gather during my due diligence period. One item I am not sure if going to do or not is site environmental testing.  One bank required it as they have found some rather nasty things around properties in town and others have not required.  Do I spend the money and get testing done to see if the empty lots included with sale are clean or am I better off with a don't ask don't tell thought process at this point. In future may develop lots but for now just going to leave open.

I think that covers it for now.  Surely more questions will come up in due time.

I used smartmove from transunion, a sponsor on the site before and maybe now, and simplified the process for me.  The applicant pays fees directly to transunion and I just get a nice easy to read report of credit, criminal and eviction history.  I would ideally want someone 620 and above unless higher end home, then be looking for above 700.  I looked for stable employment, no credit history, credit history, and explanation from tenant of why score low if was low.

Okay, to get to the point I am not looking for advice on amount to offer, but items to put as contingencies in the offer.  This is going to be on  a multi family unit over 5 units so falls into a commercial loan.  I wanted to make sure I am covering myself enough in the offer.  There are a few items I was going to include but want you input.  Here is what I was going to put in.

1.  Satisfactory inspection reports for Roofing, Plumbing, Electric, and Structural

2.  Clear enviromental testing report

3.  Financing

4. Appraisal

5.  County Confirmation of Zoning and renovations allowed without having to bring entire building up to current codes

6.  Clear Title

7.  ????

one thing numbers wise really jumped out to me was monthly HOA fee of $449. Is that accurate or was that supposed to be a year, if so that helps numbers a lot but still not looking great unless you can somehow increase rental amount.

@Patrick Soukup  and @Ray Johnson