All Forum Posts by: Justin Whitfield

Sorry about no response yesterday, was a very busy day.

It is still listed with an agent to sell, and if someone makes an appropriate offer I will absolutely sell it. I don't want to take a huge loss, but I am willing (and I can handle) a small loss. I agree with @Joe Villeneuve that it is better to take a small loss and stop the bleeding.

For some other suggestions about rent increases, people in these apartments are on fixed income and most cant afford any rent increase, even $25/month. The apartments also have a hard time getting rented when they are much higher than current prices.

Some good news that came in yesterday was my premium for insurance was reduced by almost $60/month so that helps out. I am looking into more efficient methods for the utilities to reduce my expenses there as well.

@Account Closed I completely disagree about nice people coming to bad areas if the place is nice.  People call about the listing for rent and when you tell them the street they immediately say "oh never mind". It may be different in some cities/areas, but not this one.

Thanks for the advice from everyone and I have definitely taken it all in and to heart. I think my goal for now is to make improvements and changes to try and get cash flow positive and build equity until it sells. I don't see it ever being a big money maker.

Welcome to BP @Zach Upton. Another Clemson grad here, class of 2012.

Sounds like you have an awesome background learning to flip the past 7 summers.

Good luck investing and flipping!

I have separate accounts for my partnerships and only one account for everything I own by myself.

I can't imagine having a separate bank account for every property I owned. 

@Joe Villeneuve Many of those expenses aren't just on paper and sit in the bank account. I have had 4 big repair costs for water leaks the past 3 months, around $175 each.  Believe me if it was really cash flowing $675/month I would know it.  The vacancy/uncollectible and repair costs are very real for this property and they are even more than that simple analysis shows. 

@Rob Beland Thanks for the encouragement. I have trouble renting them at prices much higher than what I'm getting. The market just isn't there in that area

@Colleen F. I have spent a lot of money doing improvements and fix ups over the past 3 years to make them more appealing, it doesn't do much in terms of tenant quality. It is in an area of town where good tenants just won't rent.  Good advice about the energy use inspection and utility upgrades.

@John Ma I'm very well aware of how to offer a better product and fixing the things that need to be fixed.  There's nothing "wrong" with the property in terms of obvious things that are broken. Last summer I spent 2 months fixing 3 of the apartments and spent a lot of money, they looked great, but I haven't seen any return on my investment for doing these repairs and improvements.

As far as it being irresponsible to pass it off a bad deal to someone else? That is not how I see it. Many times good deals come from fixing other peoples problems and headaches.  If someone came in with a fresh mindset, new ideas and had a lower price point (much lower than mine) they could make this property work.  I have taken other peoples problem properties or "bad deals" many times and they have been my best investments. 

I suggest reading as many books on REI and business as you can. If you haven't already read them, I suggest starting with Rich Dad, Poor Dad, The Millionaire Real Estate Investor, BiggerPockets Ultimate Beginner's Guide to Real Estate Investing and The Book on Investing with No (and Low) Money Down.

After you've read all of these you should have a better idea of where to start. I don't know of anyone who invests in Real Estate who doesn't have some type of mortgage or loan.

The buyer backed out based on an inspection clause in the contract.  However my agent believes, based on comments made by the buyers agent, it was due to one tenant being $700 behind in rent.

I own a 5 unit apartment building. It really is a very old house (I would guess built in the 1920's) that was converted into apartments sometime in the 80's.  This property has a huge hassle factor and is a headache.

The apartments are all on the same power, water and gas meters, so utilities are included in the rent. They are heated through gas boiler/furnace with radiators, and the only AC is window units.

The units are all different floor plans. 

The Math:

Income

Unit A: Rents for $525, 2 bedrooms, 1 bathroom

Unit B: Rents for $450, studio apartment with mini kitchen

Unit C: Rents for $475, 2 bedrooms, 1 bathroom

Unit D: Rents for $500, 1 bedroom, 1 bathroom, unit is upstairs

Unit E: Rents for $500, 1 bedroom, 1 bathroom, unit is upstairs

Total gross monthly rent: $2,450

Expenses 

Utilities total around $925/month: $450 for power, $250 for Gas and $225 for water.

Taxes and Insurance are $350/month

Management (I manage myself but charge 10% for the analysis): $245

Repairs/Maintenance (5%): $122.50

CapEx (5%): $122.50

Vacancy/Uncollectible Rent (10%): $245

Debt Service: $500/month

Total Expenses: $2510

Monthly Cashflow: -$60.00/month

Obviously this is not ideal.  As I said above, the property is located in a bad area. It's not a good piece of property. The property is one that the hassle factor is HUGE.  It's always been a huge headache and constant source of stress. I owe $67k on it and I have had it listed with an agent for 10 months.  I've had a couple of offers and I even accepted an offer of $52,500 which would leave me covering the difference.

This property attracts poor tenants, and decent tenants won't come near it. It's easy to say "get better tenants" but this property is just not in the location or condition to get good tenants.  I have performed nearly 10 evictions in 3 years on this property, the other 10 properties I own I have only had 1 eviction in 3 years.

Some options I have considered are updating the heating/air systems to more efficient systems to save money on utilities. Switch the meters to be unit specific for power, water and gas. This would be a huge investment, in my area it's around $5000 to have the heating and air system installed, so that alone would be $25,000.

I'm considering dropping the price to a ridiculous level and take my loss and move on.

I would love to hear any advice, or maybe just confirmation that I need to get rid of the property as fast as possible.

I completely agree. Rich Dad, Poor Dad is a must for one of your first books. I probably read it a second time immediately after I finished it the first time, and have read it 5 times since.

I think it's just as important, if not more so, to read self-improvement and motivational books right in the beginning.  They are books you will always go back to, sometimes once or twice a year.

Rich Dad, Poor Dad and CashFlow Quadrant by Robert Kiyosaki

Think and Grow Rich by Napoleon Hill

I would recommend these 3 books as essential in the very beginning.

 They are mostly all in Anderson, but we have a few scattered throughout Townsville, Clemson and Sandy Springs. We used to have apartments in Clemson but sold them around 2006. I am looking to get back into the Clemson market soon.

Thanks for the welcomes everyone!

Hello Everyone

My name is Justin Whitfield, I'm 24 years old (25 later this month) and I'm from Anderson, SC.  I graduated from Clemson University in 2012 with a BA in History and I have been investing in property personally for a little over 3 years now. I own 15 units over 8 properties. I have browsed this website for a while now and finally decided it's time to jump in and network and get involved.

My family has been involved in Real Estate for somewhere around 80+ years.  This includes my Great-Grandfather, Grandfather and Father all building houses and at least 10 of my immediate family members have had their Real Estate license, including both of my parents.

I am passionate about real estate and investing.  I decided recently to get my Real Estate license as well, and I should be completing that by the end of May.

I love to discuss any type of investing and am looking to network and meet with people in the Upstate area of South Carolina.  Specifically I am very familiar with Anderson, SC , Clemson, SC , Greenville, SC , and Seneca, SC.