All Forum Posts by: Chris Welch

Wanted to provide another update since my last post. The original set of IKEA furniture is still there. And holding up well by and large - especially the bedroom furniture and the couches. Out of 12 bedrooms, we've replaced two dressers and a desk in the last two years. We've also had to replace two couch covers. But the tenants have paid for some of this damage and because the cost is so reasonable, from an ROI perspective, it's been a good investment. The coffee tables don't hold up and basically need to replaced annually, but they are cheap and the tenants pay for them out of their security deposits. Total annual furniture spend out of my pocket over the last 3 years (minus tenant damage paid from security deposit) has been about $500/yr across 3 apartments. I earn about $7000/yr in added rent to furnish the 12 bedrooms. The best part is that the tenants love the look of the furniture because it's modern and stylish. As long as I keep up on replacements so the apartments look new, we should be in good shape. I do anticipate replacing a lot of the furniture again in a couple years.

Hey all,

For future posters, wanted to update how my experience has been with the IKEA furniture. In total we spend about 7,000 per floor on furniture -- that included 4 beds frames, mattresses, desks, dressers, chairs, floor mats, 2 couches, coffee table, end table, and entertainment center.

Here's what we found:

Pros:

* Shows great because everything looks new, so I can command top rent for my area

* Furniture is cheap so if it gets broken, it's easy to take out of the security deposit

* Couches are easy to clean

* Nixs and dings are easy to cover up with a marker

Cons:

* Takes a long time to assemble all the furniture. It's about 4 man days per apartment for the initial setup. About an hour per piece after that. This adds to the cost.

* Replacement parts are difficult to come by

* Cannot be moved around a lot, or will cause the furniture to weaken

it appears that most of the furniture will last 3 years, but any items that outright break will be replaced out of the security deposits.

Again, my strategy was to spend the least amount of money to max out my rent. I will ultimately be buying commercial furniture similar to what is outfitted in dorms, which will be much more expensive, but will last forever. In the end, I am happy with my decision.

Hi all,

I'm an RIT grad, now living in greater NYC, and have a new real estate partner local to the Rochester area. I'll be flying up to Rochester in a couple of weeks, with the goal of looking at target neighborhoods for multi-families with strong cashflow. I'd love to connect with fellow investors or brokers in the area while I'm up. Hit me up if you'd like to meet!

Cheers,

Chris

Sounds great -- love the enthusiasm of this group! I'm a first timer and I hope to make it, if travel allows.

Thanks for putting this together, Darren.

Thanks for the replies, all! Furniture is already purchased. If anyone has direct experience with IKEA in furnished rentals, would appreciate the feedback!

It's a prerequisite in my area (Binghamton, NY) to furnish student rentals. I'm competing with two different groups: New apartment buildings with top rents and new commercial furniture and older properties with 40%-50% of the rent and yard sale furniture.

I decided to split the balance and furnish my houses with matching IKEA furniture, at least for the first few years until I can afford the good, indestructible commercial stuff. IKEA stuff shows great when it's new, is all matching which students like, and I can order replacement parts online.

I purchased: Sofas, Coffee Tables, Beds, Desks and Dressers.

Does anyone have experience with this? I'm trying to put together a capital replacement budget and wanted to get a sense for how many years I can get out of the stuff I bought. I'm estimating 4 years to be conservative.

Thanks!

@Wayne Brooks This is a student rental. Current kids move out in May, new groups change over in June. We remodeled the first apartment, and used that as a model (along with drawings) to rent the other floors on spec. Great advice on the Interest Only.

@Kris Haskins We have Historic Commission sign off, and the third floor Building Permit ready to go, now just need to apply for change of use with the Tax Assessors office. The building is in a high-density zone, so can be a 3-family by right, and the property across the street is a very similar configuration. We don't expect issues.

As a private lender who is friend/family, what kind of due diligence should I be asking of the borrower (myself in this case) to feel good about giving this loan? My understanding is that hard money loans are more about the property than the borrower, but I expect it would be hard to do an assessment on a property that isn't done yet, right? Would a letter from a realtor be necessary? More broadly, how does a lender independently verify ARV?

Hi BP team!

I'm a prospective borrower looking for money for a fix-and-hold project I'm working on. No one in my network who could lend me money is really experienced either so I want to offer them some terms that are reasonable as a starting point for our discussion. I'd like your advice on my thinking, and would also be interested in knowing more about other hard-money/private options available in my situation.

Here's the scenario:

Project: Upstate NY, 3-unit/12-br multi-family mansion - complete gut, rehab, and change of use from 2 to 3 family

Purchased: 115,000

ARV: 375,000-400,000

Held by my LLC, not personally

Project Status: Rehab is currently half complete. Property is currently partially rented and all three apartments have market-rate lease commitments from June 2014-May 2015. Property will be fully stabilized by Aug 2014, at which point I would like to have the option to pursue a conventional loan.

Finances: I'd like to secure a bridge loan to get me comfortably through the final push of the project. So far everything is self-financed (savings and credit) and no liens on the property. I will still have cash in savings or income to cover at least 75% of the total project, if not the whole thing.

Loan goal: I'd like to take out 150,000 in a bridge loan to pay back my credit cards and get me through the stabilization.

Proposed terms: 150,000 at 9% interest over 24 months. No payments until Sept 2014, and no prepayment penalty.

Again, I'm new and anxious for some mentoring here, so please feel free to pick apart this deal!

Thanks in advance for your help!

Chris

Hi Michael ! Wanted to share my experience if you find it helpful. I also live in Northern NJ and invest 3 hours away. I'm a 'fix-and-hold' multi-family guy. My family and I have a strategy of fixing multi-families to like-new condition with low-maintenance fixtures, split tenant-paid utilities and keeping an answering service for basic call routing (which we recently switched to Google Voice because humans weren't necessary anymore). Some of us live where we invest so we have someone who can drive around the houses as needed, but it's largely hands-off. We have a total of 15 x 3-4br units and in total get minimal calls each week (2-3). Maintaining good relationships with a handful of contractors and using technology like digital answering services (Google Voice), rent collection web sites, etc give us the right balance of knowing what is happening to our properties but minimizing the disruption to all of our full-time jobs. For us, there are two critical periods: one is during the renovation phase, especially if tenants are in the property. Having a trusted GC that can take care of issues is great. After the reno is done, the other critical time is when tenant turnover happens. All our leases turnover on the same day (student rentals) and we feel more comfortable having hands-on oversight, so we are there in person. That said, self-managing the property is a viable long-term option for is. Not saying it's easy or hands-off, just saying is a very acceptable level of effort for us. We find the things that have the most service calls are: Toilet, Sinks, Doors, Windows, and Appliances. Having a handy man or two that are reliable is important. Also, we take a proactive property management approach - if the toilet is actually leaking, replace all the parts that were installed at the same time, not just the one piece. Or if the water heater is at the end of the warranty, replace it even if it's not broke. Some don't agree with this approach, but it minimizes service calls which are more costly in the long run. Hope this helps. Cheers, Chris

Welcome Gursel Demir ! I'm based in Bloomfield, NJ working on fixer-upper buy-and-hold multi-families. Looking forward to seeing you around the site. Would welcome the opportunity to network if you want to grab a coffee or go to a local RE group. Cheers!