All Forum Posts by: Dominic Lucarelli

@Daniel Chang You would be correct, sort of. The building owner runs a Postal Contact Unit, which authorizes him to sell Postal Products. Since I'm still a current Postal employee, I am forbidden to OWN that contract. I plan to retain the current building owner as the holder of the contract (with a small payment going to him monthly) to keep that business within those walls, and I'd operate the business for him. But that's another topic altogether. 

The water is muddy here because it appears (to my untrained eyes at least) that every dime the Post Office makes in this building is paying the commercial loan ON the building.

My intent is to separate the two, hence my original question. What can/should I charge for rent? I can't be a good landlord without this knowledge.

I've checked on Rentometer for my area. The 2 bed rent is spot on for my area, but the studio is not. Unless it's TINY or in bad disrepair, I could bump it up but I'd need to see it first.

But you both have pointed me in a direction. Thank you F Todd Ryan and @Daniel Chang

The prepaid reserves are your escrow funds for those specific items (taxes, insurance, etc.)

And I agree: just using a quick and dirty 2% rule, this is a bad deal and extremely risky for you in general.

Is it possible to find a Flip-In in your neighborhood? That's a great place to start.

Hello fellow BP members!

I've been in discussions with an owner of a Mixed Use Commercial Unit (3 small storefronts, 2 apartments upstairs) in White Oak, PA. I'm very interested in it (either as a buy or NNN lease), but the numbers don't seem to add up. So here's where I'm at:

Asking Price: $100,000

2 bed apt: $550

Studio: $300

Storefront Left: $350

Storefront Middle: empty

Storefront Right: The owner's business (Post Office)

I've been in contact with a commercial lender. Unless the owner's business pays the lion's share of his mortgage, the financials don't make any sense. The lender worked out a quick pro forma with me: a deal needs 1.25 debt coverage to qualify. I intend to offer $60k for the property, but rents/leases at these levels can't support that loan either. The lender says that level of income can support a loan (25% down, 5% interest, 10 yr term) an offer of $40k

**The owner intends to sell the business along with the building.**

With that being said, I think that I can improve this building and business. The studio apt rent is about $100 under market. I currently work for the USPS and I know that I can drive more business through the cash registers.

Sorry for the very long intro, but my question is: how does one compute a fair rent for the storefront/retail space? I feel that $350/$400 for a storefront is too low for the location and amount of traffic that passes by. Or am I missing something?

Thanks BP for raising my REI IQ!

Also in need. Following this topic...

I'm meeting one owner this Thursday to visit a property that's already renting. Assuming very little added cost.

I've got another I've ran through my numbers for a possible flip. Using very conservative numbers, could net an easy $20k. (ARV $110k, $40-50k in + purchase price + holding + transfer/purchase)

And a mixed use commercial property I really want in a heavy traffic area that I need to convince the owner that he's overpaid. (This one would be a fantastic value-add since his residential rents are under market, but I need to see the apartments first for repair costs.) 

All of these are within 20 minutes of my home.

Congrats on locking up a bunch of properties! I've been reading and listening to everything I can here on BP. I'm working on landing my first rental property here within the next month.

What side of town are your properties located?

Hello @Brian Ewell!

I'm here in PGH and ready to invest in my area. My focus is Southeastern Pittsburgh/Western Westmoreland County. Properties I'm targeting in this area value between $20k-$65k and rent between $500 and $725. I'm looking for ROI in the 12-15% range or better. I'm a first-time investor but I've learned so much here on BP. So much I'm ready to plunge in. I'm willing to manage property, collect rents, and continue looking for great deals. If your looking to move some money around, I've got a few properties I'm looking to lock up. Feel free to PM me if you are interested.

How late is he? Is he still current? It is he skipping payments entirely? Is it something as simple as adjusting his due date to the end of the month? 

Try to keep the relationship positive. You don't want him actively trying to screw you over prior to eviction (if needed). 

As a last resort, instead of evicting him you can do "Cash For Keys" and pay him $200 to move out. It's cheaper and faster than him tearing your unit apart while waiting on the eviction process.

As a side note, find yourself a great screening process. This is vital to ensuring your units get great tenants.

Good luck!

White Oak area? I'm in. Can you PM me the details?

Another tip for you is to list this property FOR RENT on Craigslist for a week at your projected rent rate. By doing this, you accomplish TWO things: 

1. Test the waters on your projected rent price. Is it too high for the area? Too low? Is there great demand to fill this vacancy?

2. If you want this as TURN KEY, you'll have a list of potential renters you can hand off to your next buyer.

Best of luck