All Forum Posts by: Daniel Miller

I agree. Just feeding them is a nice act for today. It does not give them any potential future prospects.

Foster has gotten a bad rap. He has done a pretty good job with everything. The commercial brokerage I work for has had some issues when it comes to zoning...St. Petersburg is not very friendly when it comes to re-zoning certain properties/parcels for development. We just had a deal fall through.

Do you know where the Laundromat and Car Wash are at the corner of 7th Ave and 16 St N? They were up for auction approx. two years ago. My broker came to a deal with 7-Eleven to purchase those two properties and build out a gas station/convenience store. Broker met with the city and they were unwilling to change the status and allow those two parcels to be re-developed. Its sad. That would have been a great place for a convenience store and gas station. There are not many options around downtown.

Have you thought of selling your 5 unit?

I prefer to take a zero risk chance when talking about large sums of money being called due. I do not have the risk tolerance or capital behind me to offset this loan being called due, no matter how slim a chance there is.

Combined with the fact that there are substantial closing fees and no reduction of expenses associated with assuming a mortgage compared to a new conventional loan, I am going to apply for a new loan. Parents will be able to get 4.5% and it really makes sense for everyone involved....As long as the deal is accepted or we come to terms.

The homeless population is really keeping St. Petersburg from becoming a burgeoning city. That and our lack of white-collar jobs. I wish Foster would implement a system where the homeless are escorted out of the city, just like in New York City.

You are probably right...that area has appreciated quite a bit. Do you like your 5 unit?

@Patrick L. Hey, nice to see another St. Petersburg Investor. Its in the Historic Uptown Area. As Old Northeast goes crazy with house values I believe Historic Uptown and the areas immediately West of Fourth Street in between 5th Ave N and 22nd Ave N will increase in value. Rents will also rise in these areas.

There are 13 new houses going Highland St N right at 9th Ave N.

I think this area is primed for rehabbers and flippers, and apartment repositioners. The momentum will extend westward from Old NE down 9th Avenue...Just my $0.02.

Dion and Jon,

Thank you both for your advice. I slept on it last night and I feel like getting a new loan is the correct path to pursue. Both of yours' advice cemented that position. I assumed that it would be less expensive and/or have a negligible amount of fees attached to assuming an existing loan. It is difficult to find information like this. I guess you learn by trial and/or error or from other person's experiences!

Thank you again for your guidance. I am trying to put together a deal for 13 units in an up-and-coming part of town with no money out of my own pocket.

Owner is willing to finance 75%.

We shall see what happens.

Thanks Again,

Dan

I am trying to purchase a fourplex.

My parents (due to my lack of credit history) have stated that they will assume the existing mortgage. I talked this over with my RE Agent and he said banks will probably not let me (parents) assume the mortgage and they will call the "Due on Sale Clause".

The mortgage was made in 2003. The residential interest rate at the time was right around 6.5%. I do not see why the bank would not let my parents assume the mortgage. My parents, specifically my Daddy, has a credit score over 800. Also, we COULD conceivably get a new, conventional mortgage at around 5%. I deduce that the banks would have a vested interest in keeping the mortgage, since the interest rate is considerably higher, than what they are currently making loans for. Is my reasoning off? Do banks typically not let qualified persons assume mortgages in this economic climate? I think my RE Agent might be wrong, but I would definitely like some advice. I am confused.

Thanks!

42 of my storage units are very large. 12x24 units with 14 foot ceilings and 10 foot wide bay doors. Contractors love to rent out these units. They can pay in cash (I have a largo drop-box mail box I installed that can only accept mail. One cannot reach into it. It has to have a key to open). Everyone mails checks, cash, or money orders at the beginning of the month.

I make appointments with people and 75% of the time they show up. The Mgmt Fee is the only employee cost associated with it.

If someone wants to see a unit they call me. I make an appointment with them (I live 1.5 miles from facility) and show them the unit. If they like it I sign them up. If not, then we separate. The whole process takes 10-20 minutes.

Mike,

Thanks for the advice. I am going to look into that. I do not know why it is so high. We are not in a flood zone...

Thanks again,

Dan

Hey Michael,

My family purchased a self-storage facility in August of 2012. I really love the business. The people are great. I have had one issue in 14 months. A gentleman was living in the unit. He got pissed that I asked him to leave and he started defecating inside the unit. Did I mention I live in Florida? It baked...That was not a fun morning.

We only have 0.85 acres of land. There is no room to expand. If I could I would though. Its a great business and much less intrusive/exhaustive as multi-family. Also, there is no more land to build near downtown. Even if competitors wanted to come in they physically could not.

Ill run through the numbers with you.

Previous owner purchased in 2004 for $649,000.

We purchased in August of 2012 for $515,000.

I have tried increasing the rents, but when I do people move into the large climate controlled facility. Its $200 for their equivalent, large units with A/C. Ours are not climate controlled.

We are at 100% occupancy within the Self-Storage Units and have 66% of the parking spots occupied.

Gross Rents

42 Units at $160 = $6,720

4 Units at $45 = $180

9 Units at $75 = $675

15 Parking Spots (10 occupied) at $50 = $500

$8075 monthly / $96,900 annually

RE Taxes - $8,300

Insurance - $6,400

Maintenance and Repairs - $4,000

Replacement Reserves - $2,000

Management Fee - $6,000

NOI - $70,200

Cap Rate - 13.6%

We could easily sell this now for $775,000 - $825,000.

Parents do not want to sell. They love the cash flow...and if someone moves out it really doesn't affect the bottom line.

I manage this for my parents, so the management fee might be a little low but it all goes to the family. I am cool with it.

I really wanted them to put 50% down and get a loan so we could invest in something else but they wanted somewhere to put their money.

Storage is getting aggressive here in Florida. Cap Rates have significantly dropped and many are selling for their peak levels.

Another interesting fact...Self-Storage REITs posted positive growth throughout the entire recession!

I hope this helps anyone looking at storage. Its a great feeling to go to the mailbox at the beginning of the month and collect 65 checks!

I had the same question a couple years ago and I could not find any books that tailor to what I was looking for.

I took time off work and assisted contractors with different renovations around the properties that I manage. I learned a lot in a very short period of time. I'd recommend just throwing yourself in and learning from your mistakes...I could never find a book :(