All Forum Posts by: David Cable

I want to pre-empt this post by stating that I understand that any information provided is done so for discussion and informational purposes only, I will not take anything written as legal counsel so please speak freely....

I purchased my first multifamily property in March and assumed the tenants with the property, only one tenant having a lease that transfered over; fortunately all tenants minus one are of good standing.  After my management company caught the trouble tenant stealing power from a temporarily vacant unit, I waited until the first of the next month (a few days later), collected rent from the tenant, and contacted the power company to correct the issue.  Having no security deposit nor a lease with this tenant I requested that he depart by the end of the month and I would pro rate the rent upon his departure.  The power company has not reconnected power to the unit as he is unwilling to pay for it since I have taken ownership(his choice I guess) and the tenant now is 12 days overdue on rent.  A couple days ago one of the property management staff found a new meter providing power to the unit (I can only assume that he stole this meter from a nearby building) and again contacted the power company to discontinue the illegal connection.  The tenant has stated that noone is going to remove him from the property.  I am concerned about the condition of the property once he is finally pulled out of by the sheriff's office following the eviction.  

What recourse do I have against the tenant?  How do I collect funds from an individual who is not only a burden on me but the state as well (welfare recipient)? I would like to collect for the missed rent, probable damage to the unit as well as legal fees.  Is there any way the state will garnish the monthly welfare checks?  How is an individual held accountable when he receives money for nothing but refuses to pay debts incurred?

Any insight would be greatly appreciated.  Thank you Bigger Pockets!

Mileage expenses before the acquisition of business do not fall under the accountable plan, right?

Do those qualify as startup expenses?

i.e.

1/1/2017 - Mileage for looking for properties

3/1/2017 - Mileage for acquisition of property (business start date)

5/1/2017 - Mileage for renovating one unit of complex

So 1/1 will be startup, cannot be reimbursed, while 3/1 and 5/1 can be reimbursed?

Thank you, Lance.

Re: the travel mileage deductible expense, does the entity reimburse the owner?

i.e. 

I have a multimember LLC taxed as a partnership.

For one trip using my personal vehicle for the purpose of renovating one unit at an apartment complex, total mileage = 100 x 53.5 cents/mile = $53.5

Does the LLC then reimburse me for that amount, so that the expense now becomes the LLC's, and not my own?

I am reviewing a multi-family complex for my first investment purchase and would greatly appreciate some experienced insight into my evaluation of the property....  Info provided by seller:

Requested Purchase Price - $369,000     Six Units - $750/mo each     Trash - $135/mo     

Water & Sewage - $500/mo     Taxes - $3461/yr     Insurance - $3500/yr         

Maintenance - Approx. $1200/yr     Roof - New in last 6 mo     HVAC - Window A/C units   

Windows - Replaced in 2010     Kitchen/Baths - Updated 2011     

Water Heaters - 4x 4 yrs old/2x 2yrs old     Electrical - Updated in last 6 mo     

Laundry Room - Common space currently used for storage, has washer/dryer hookups

Bank Loan Terms: Interest Rate - 6%     Amortization - 20 yrs     Downpayment - 20%

Given the purchase price of $369,000 w/ 20% down ($73,800) my loan amount would be $295,200. With an amortization of 20 yrs at 6%, I calculate monthly P&I to be $2,114. Adding the monthly expenses of trash, water/sewer, taxes, insurance, 5% vacancy rate ($225), 5% maintenance in lieu of their given costs ($225), 10% CapEx ($450), 10% Property Management Fee ($450) my monthly variable/fixed expense are $2,770. Thus:

Monthly Expenses: $4,844     Montlhy Income: $4,500     Montlhy Cashflow: -$384

1. Am I setting my expense percentages (vacancy, maintenance, CapEx, Management) too high given that capital expenditures seem to be minimized due to the recent updates and maintenance costs are reported lower?

2.  What other formulas/metrics should I be utilizing to evaluate the property?

3.  Good Buy or Bad Buy?

Any feedback within this thread will be tremendously helpful to all the newbie investors getting their feet wet.

Thank you