All Forum Posts by: Dj Hume

@Canesha Edwards Hi Canesha! What an awesome opportunity! Here's my thoughts on structure deal. I typically provide our investors with a 6% preferred return then a 70/30 split after the preferred return. This incentives you to manage the deal property.

Structuring the deal should be the easy part, we need to first deal if there is a deal to structure :)

You'll need to figure out the current NOI, is there a value add opportunity (which sounds like there is) then determine how that will affect the NOI. I'd suggest crunching the numbers with someone who's done a few of these deals since you'll have construction costs involved which will affect vacancy and cash flow.

Hope this helps!

Dj

@Raymond Hill I've had similar circumstances in the past. There are plenty of factors that can affect your decision. Here's what has consistently helped us. 

I would recommend providing 30 day notices about rent increases to each individual with new lease terms (assuming everyone is M2M). In the new lease be sure to outline what is allowed and not allowed (be very specific) and make them M2M leases. Most likely, they will sign the lease for the interim and move out in 60-90 days, which is fine - you want new tenants anyways. Most importantly this should help you get through the rest of winter because it will be significantly easier to find better tenants come March.

Finally, when doing all of this, make sure you over communicate with each tenant. Tell them why you have these rules, talk to them, be a person but be firm. These are tough conversations but they'll be more likely to respect your new rules, even if they don't like them, but ultimately you'll want to start fresh with all new tenants come spring

@Jay Yo

You have the right for any new tenant to go through your application process, so be sure to have the potential new sub-leasers to fill out an app, run a background, sign a sub lease agreement and make sure you are comfortable with the new tenant.

Make sure the current tenant understands that he/she could be liable for any damages of the sub leasers

Hope this helps.

@Joseph P.

Yup, this sounds like BRRRR. When you refinance you'll cash out (and hopefully get your initial $$ out of the deal) then hold the property with renters and pay yourselves every month, win-win

@Wes Smith

Welcome Wes! Happy investing! Wholesaling is a GREAT way to make money, but it’s not investing. wholesaling is a full time job trying to find properties and assign contracts.

Happy to help any fellow BP’er

Cheers,

Dj

@Isaac Schaefer

We’ve had bed bugs in a few of our units, I highly recommend having an expert take care of this, but $2200 is pretty steep. We usually pay around $800 for a chemical application (not heat) and it includes a follow-up appointment to ensure they’re gone.

@Dave DeMink

Dave this is a great question and every operator runs their fund a different way.

Personally we only raise enough cash to close and run the property, we don’t like to raise surplus cash.

We offer a 6% preferred return but it is not mandatory and I make our investors clear that our returns are “blended” over the long-term.

Which means they expect a smaller return the first few years as the property is being re-positioned and stabilized, then once that’s done we start to knock it out of the park with higher than expected returns.

So long answer short, talk to your investors, let them know your short term and long term vision and what that means to them and their money, you shouldn’t have any issue and everyone will come out a little richer

Cheers,

Dj

@Tab Teehee

First off congrats on the success! $4,500 after all expenses is a great cash flowing asset!

I don’t want to be redundant on others post.

My recommendations would be to receive ALL excess cash each month on a certain day with a balance sheet for reconciliation.

There are reserves already set, so you can continue to have them hold the reserves and even have them add an addition sum per unit each month so you continue to build the reserves for future expenses.

I would come to an agreement with the management organization and write up an addendum to the contract that speaks to this and replace any other “vague” language with specifics.

It’s better to do it now, instead of when lawyers have to get involved.

Again, congrats on the awesome property!

@Russ Loven The first step in Real Estate investing is educating yourself. I studied and learned for 3 years before I got my first property.

I'd highly recommend finding a mentor that you can help and he can teach you the ropes. Usually being a minority investor on a property and asking a lot of questions is a GREAT way to do this!

Grab my free e-book, it might be another helpful resource to learn from

@Zach Wright I'd highly recommend a cleaning service for common areas for your own sanity.. tenants tend to not go out of their way to make YOUR place stay clean. 

Have this cost be passed onto the tenant and bake it into the monthly rent. It's a win-win for everyone that way