All Forum Posts by: David M.

I would inform them of the market rate of similar rental units.  Then I would say that you plan to get up to market rates within 3 years.  Go with your initial instinct to raise them by the amount you desire.  Then go incrementally year over year until you reach market rate.

Tenants will always seem very concerned when landlords mention a rent increase.  That is human nature.  They could have $2 million in the bank and still they would act terrified if you suggest a $100/mo. increase.  I had one tenant, who paid the least of any tenant I have.  He came with the building when I bought it many years ago.  One day he was mentioning a 'nest egg' he was working on.  Without hesitation, I said :" lemme guess..... a quarter-mil".  His eyes grew wide because I had guessed his number!!!

No way I would rent to friends or family.  I have done that and it has gone badly.  Even friends/business associates recommending tenants can be problematic.  Whenever it goes bad, the person recommending the deadbeat always "...had NO IDEA they were a deadbeat!?!".  Then, the person recommending them loses credibility as well.

forget the lawyers and do the necessary repairs.  put your energy and effort into solving the problem and not into litigation and finger pointing.  you are the owner now and you have to deal with it. focus.  get a plan.  execute.

What about a hard money lender?

add specific language to lease and chalk it up to 'experience gained' as a landlord.

I would pay off all my commercial real estate and invest the rest in something very low risk.

I like the idea of starting smaller.  That way, you can get a feel for the business with less risk.  See how you do managing 2-4 units first.  Consider the basics of being a landlord; communicating with tenants, managing repairs and maintenance can be challenging for many new investors.  It' not just "buy it and it runs itself".

I think you'd be completely overwhelmed with 15 units and that big monthly nut to crack.  Run the numbers extensively because my initial  instinct is that the numbers don't work.

Great story and very encouraging.  I think it's easy for attorneys and brokers to become jaded and to lose that 'human touch'.

I had to develop tenacity and perseverance when starting my business back in the mid 1990's.  I started an automotive business on the thinnest of shoe-string budgets; way under capitalized.  I was in a leased building, counting on a hand-shake deal to buy the property in the future. The owner was an unscrupulous liar.  Consequently, I lost the purchase opportunity.  I was conducting an extremely seasonal business and after 8 years of operation the business was insolvent.  A customer of mine happened to be a local real estate investor and he owned the land next to my business.  He admired my drive and offered me an owner-financed deal to buy this land.  I took the deal and bought 3 commercial building lots in a good location for $30,000.  I began shopping for a large construction loan to build a new car wash on the land.  I was laughed out of several bankers' offices; literally.  I took a break, refined the plan, and tried again.  I found a bank who would work with me and the SBA and the deal happened; I got the loan.  The construction phase had its own challenges.  One example was having to create a 720' sewer extension of the town's sewer line!  I made it happen somehow.  I still remember the first loan payment coming due and wondering where that money was going to come from!

Soon after I built the car wash, I was evicted from my leased space where I waxed and cleaned cars.  I was crushed.  My Dad said "maybe there's room for another building beside the car wash".  He measured the area by "pacing it out" and it looked like there was room.  I borrowed more money and built a new detail shop; no more crummy landlord!

Now the business thrives.  I remodeled the car wash and added new amazing equipment.  I sell used cars.  I bought 2 multi-family apartment buildings and plan to purchase another this year.  Never give up.  Have faith and keep your attitude right.  Look for the positive in all situations.

I own 2 multi family buildings with 14 total units.  I'm working on an off-market deal for a third which will likely close this year. My total units will be 21 at that point.  I own 3 other  businesses in the auto care industry.  When I bought my first building, it was at the urging of some good friends who were also RE investors. I saw my first building as a way to build wealth.  Yes, I also welcomed the extra revenue as a way to even out the seasonal income fluctuations of my other ventures.  All of my RE cash flows.  That said, I find a way to spend all the extra money.  The main use of the extra revenue is capital improvements; new roof, furnace, monitored fire alarm system, etc.  Even smaller repairs like painting and rebuilding decks, stairs and installing new garage doors require spending alot of money.  I remodeled laundry rooms, adding more washers and dryers for the tenants.  

My point is that the extra cash flow is easily spent on improving the properties and thereby increasing the value.  The tenants are paying the mortgage and they are also paying for the improvements.  To me, this is the best plan because I take the long view of real estate and multi-family investing.  My primary business provides my W2 (I'm an employee of my corporation).  There is freedom in not 'needing' any income from positive cash flow.

I'm looking to purchase an off-market multi-family apartment building to add to my real estate portfolio.  I currently have 2 buildings with 14 total units and the new building will add 7 more 1br units.