All Forum Posts by: Greg L.

@Bill Couture

Are you keeping tenants to all one sex?  How do you handle overnight visitors and house rules?

@Bill Couture

Thanks so much for the information! 

This property fell into my lap mainly because the previous owner couldn't manage it due to some personal problems they had, so I'm getting it for a very good price.  They had turned the third floor back to an apartment even though the place is licensed for six rooms.  I may take your suggestion and turn the one apartment into room rental as well, but I'm definitely going to run it with the 6 licensed rooms it has now.   I see this as a huge opportunity even though folks claim these tenants are the lowest, but I'm not going to rent to felons and drug addicts.  I turn down a lot of working people at another building I own simply due to insufficient income and many of the folks who live in this other building have roommates or family they live with to cut costs.  There are many people with $1500 of monthly income who can only afford a room and who need to park somewhere that's set up with a bed, TV, laundry and etc.

Here in PA, a tenancy over 28 days might fall under Landlord Tenant laws rather than hotel contract law.  That leaves a bit less flexibility in that you can't just "lock them out", but I don't see that being that big of an issue as long as one keeps the agreements on a m2m basis.  Are you just operating under landlord/tenant in your state as far as your arrangement with the tenants?

 Funny you mention m2m agreements.  That's what I'm thinking and I'm considering whether it would be better administratively if they paid monthly also rather than weekly.  In PA, tenancies over 28 days may be subject to Landlord Tenant laws rather than the actual contract meaning I have to go to court to evict rather than just lock them out.  That makes m2m the way to go and yes, screen like crazy.  I hadn't thought about splitting the utilities, but it may be easier to fold it into the rent.  My building is electric and I'm going to put in one of those blue tooth thermostats so I can control.

 Bill,  I'm closing on a apartment/licensed rooming house in the next few weeks.  It has one 2 bedroom apartment and 6 rooms.  It's completely empty as the seller had some life changes and couldn't manage it and just wanted out, so I'm getting it for an excellent price.  It's in a blue collar type neighborhood.  The seller used to live in the apartment so it's perfectly set up for an owner occupied situation.  I'm trying to figure out how I'm going to manage it and I've heard the argument about having someone on site, but it just seems that 6 rooms isn't really that much to manage if I screen tenants well.  What I find intriguing about your comments is that you're self managing.  

How are you getting tenants and how are you screening out the bad actors?  I noticed that you provide everything just like a hotel which I'd like to model.  I'd prefer that they not bring in stuff.  Do you have to worry about things like TV's getting stolen?  How much time per week are you spending on this property?

 Thanks for that Chis.  I think I'll start with that setup.

 The property isn't particularly distressed although there's some deferred maintenance that needs to be addressed.  Yes, save for the roomers, tenants pay their own utilities and it's electric.  I'll probably go on a budget and will suggest those who pay for it do the same.  This property is a C class type area, so upgrades won't necessarily yield any additional rent.  The City did indeed conduct an inspection and found items that didn't have permits, so I'll have to pull those and have them inspect.  The building is a legal rooming house/apartment building, so nothing to worry about there.  My inspector thinks that I'll need to sink in 5 to 7k to deal with the issues which isn't bad.

 Initially, yes, but that's kinda folded into the numbers.  I don't expect to carry that long.  I just had my inspector in there today and checked again with the code officer and it looks like the fire escape won't be necessary, which means I'll be able to ramp up more quickly.  The inspector estimates the other things will cost me about 5k to 7k to do; and some of that is stuff I can do later and after getting a temporary C of O.    The problem is that by the time I close, it's late September and I won't ready to rent until November/December which is not the optimal time of year to be looking for tenants.

 That's something I definitely wasn't sure about.  As a matter of fact, I was debating how many washers and dryers to put in considering they run about $ 800 a piece.  I think I'm going to put in plumbing for 3 washers but start with 2 washers and one dryer and just see how it goes.  I'll have 2 two bedroom apartments and four roomers, so I'm figuring at least 8-10 people will be using.  Do you think that number will work?  

This one fell into my lap. It didn't hit the MLS and the seller simply wanted out.

Brent.  thanks for the critique.  I will manage the property myself.  I'd expect my water costs to go up with laundry more than my electric, but perhaps I should bump them both.  I just got the code inspection back from the city and I'll need to put in a fire escape.  Between that and the other improvements, I conservatively estimate another $ 20,000.  Throwing that into the analysis, cap rate is approximately 20% and Cash on cash return, assuming I fund repairs out of pocket, is 52%.  I may get my bank to lend me the money for the improvements as well.

Once I have the C of O, it will probably be winter. so I anticipate having to carry.  In a way, it's good it's empty as that facilitates repairs and allows me to put my own tenants in.  In my market, I can fill it in a month or two beyond winter.  The rooms I can fill in winter.