All Forum Posts by: Dennis McNeely

You'll have to find an answer based on zoning, demand, and your ability to
control the appearance of the additional improvements - you don't want
to create a junk yard behind your triplex!

Some thoughts - garages or carports, for extra income from tenants

If you have the ability to add a second driveway, consider trailer / boat / rv storage in an area enclosed by a privacy fence, or even garages to be rented to non-tenants for cars / storage.

One other question that your carpenter / building department / insurance company may flag relates to the spacing between balusters, which has decreased over the years. Depending on which code is being enforced at your location, the balusters may have to be placed close enough to one another to prevent a 4" ball from passing between them.

Of course, if your building is historically recognized, that may change the discussion completely.

I've been in construction and land development for my entire working career, and my understanding (in the places I've worked) is that most construction requires a permit. "Most" gets a little weird though - for example, in Michigan, you can strip and re-shingle a roof without a permit, but you have to pull a permit if you replace even a single square foot of the sheathing under your new roof. It's more straight forward to replace faucets, sinks, light fixtures, etc, all of which can typically be done without a permit.

Only homeowners working on their own owner-occupied home are excepted from the requirement that a permit be pulled by a licensed builder - but even then the homeowner *does* have to pull the required permit. The same holds true for pulling any specialized permits (plumbing, electrical, HVAC, etc).

Having said all the above, there are many homeowners and real estate investors who choose to fly under the radar. You pays your money, you takes your chances :)

Quote from @Catherine Ding:

Quote from @Dennis McNeely:

We have a duplex in Florida which had heavy smoke residue in it. We had to wash the walls, then prime and paint them, as well as washing and painting the cabinet faces in the kitchen (building is in a C neighborhood). We also replaced all the carpet and pad in the bedrooms, and thoroughly cleaned the ceramic floors. 

We didn't have to go so far as to use ozone, as once the above was done, the odor had disappeared nearly entirely.

Best of luck with it!

 Thanks for this! Do you remember how much it ended up costing?

This was about 2 years ago, and involved a 750 sq ft 2br 1ba unit. The total cost was about $4,0000 and took about two weeks. It could have been much worse!

We have a duplex in Florida which had heavy smoke residue in it. We had to wash the walls, then prime and paint them, as well as washing and painting the cabinet faces in the kitchen (building is in a C neighborhood). We also replaced all the carpet and pad in the bedrooms, and thoroughly cleaned the ceramic floors. 

We didn't have to go so far as to use ozone, as once the above was done, the odor had disappeared nearly entirely.

Best of luck with it!

@Corbin H.

I'd first confirm the extent of the damage. It's rare that an entire line would collapse, so have someone identify where the problem begins. Make sure the equipment being used has a camera at the end of a snake-like cable which can be tracked by someone at ground level. That will locate and document the nature of the problem, as well as letting you know how deep it is. Hopefully it's out from under the foundation and beyond any porch or landscaping outside the building - and it isn't under a driveway.

Next hire someone to repair just that section. You should save money to replace the entire sanitary lead, but solve the immediate problem first. In most municipalities I've worked, you don't need a licensed plumber to repair a sanitary lead - but the contractor should be bonded and insured. Get a fixed price - not a quote for time and materials.

Don't just run with the first quote you get. Make yourself comfortable with both the contractor's ability and with their price. If you aren't comfortable talking to contractors, find a buddy that will join with you in that conversation - but be part of the discussion yourself.

IMHO, $20,000 for the job as described would be great - if the contractor was quoting a price to the Department of Defense :)

Note that if the sanitary sewer is on the other side of the street (and your sanitary lead is broken under the street), that's a different conversation.

Best of luck!

You may be getting caught up in the paralysis of analysis. First decide the area(s) of interest to you as an investor - both geographically and the type of investment (SFR, small / large multi, storage, etc). Give some consideration to the amount of money you want to invest for a down payment plus any closing & renovation expenses here too, although if you find a sweet deal you can find outside money to extend your reach.

Next run the property through a quick analysis. For residential, compare the actual rents (*not* rents suggested in a proforma) with properties currently for rent and with historical rents for similar properties using sites like Zillow and Rentometer. Once you're comfortable with the total gross rent you can charge, multiply the total monthly rental income by .95. This allows for a 5% vacancy, and gives you the effective rent.

Next, multiply the effective rent by .55. This allows for 45% of the effective rent to be spent on all your expenses (taxes, insurance, management, common area utilities, etc. - but not your mortgage payment), and gives you the net operating income (NOI). If you're comfortable with a smaller percentage for expenses, change this part of the calculation - just realize you're ratcheting up your risk exposure on the property.

Divide the net operating income by the prevailing interest rate (5%? Hey, I can dream!) to get the total amount of debt the net operating income can support. Divide this number by .75 or .70 to reflect a down payment of 25% or 30% respectively, and compare that result to the asking price.

All the above takes about 10 or 15 minutes max - even using just a calculator. The majority of that time is spent verifying rental income for the unit mix in the property. Congratulations - you've just eliminated the vast majority of properties you choose to evaluate. Once you've done enough of these, you can decide if you want to invest even these 10 or 15 minutes - you'll recognize which properties are beyond the realm of reason and discard them immediately.

Now take the analysis one level deeper by looking at the property's current condition. How much do you anticipate spending for renovation, and can this money come from the NOI or will you need to spend it out of pocket immediately after acquisition? Does the property lend itself well to other income streams - paid laundry, storage area, or carports for example? What will it cost to make those income streams happen?

Also, keep in mind that you should have enough profit (NOI minus principal and interest) to be able to realize a reasonable rate of return and still be able to set aside some money for capital expenditures - for example, money for new roofing, paving repairs for drives and parking areas, etc.

In the end, you have to get to the other side of analysis though. Put that calculator down and pull the trigger.

Good luck with it!

I ran an adult foster care facility licensed for nine for a few years, and had a few thoughts at https://www.biggerpockets.com/forums/48/topics/1173808-what-...

Take a look and see if anything there stokes your interest (or your concern :)

I have someone that collects small accounts for me in Wayne County (Michigan). You can try giving him a call - Michael Goethals in Royal Oak, Michigan. Unfortunately I can't post any contact information, but perhaps you can hunt him up.

I have no association other than being a satisfied client.

Good luck going forward!

... or Casey Bulak at Noel Selewski Agency in Grosse Pointe. I shopped around a but, and they came out on top - and haven't increased prices since.