All Forum Posts by: Holden Latimer

@Austin Wark

Property management and a maintenance guy are separate roles. I am guessing you want to manage the unit yourself to save on costs. I would hire out on a job to job basis especially since you don't plan on purchasing a fixer upper. I would guess it would be much cheaper to just hire out rather than give free rent. Best of luck!

Welcome to the multi-family investing world and good luck with getting the right deal for you! 

I would say that you should plan on taking care of anything and everything if you are not looking to hire a handyman or contractor. If you buy a property that doesn't need fixing I wouldn't expect too much maintenance stuff, but generally anything related to painting, fixing drywall, etc. the tenant is going to expect you to take care of everything. I would be prepared to take care of yard work and general maintenance in the meantime. You will learn skills as you go (YouTube) and like me you may quickly decide it is more cost effective and convenient to find a solid handyman.

Best of luck!

I have been marking a 2bd apartment in Salt Lake City for about two weeks. My two first phone calls on the property resulted in each potential tenant telling me that they had a felony.

The first caller with a felony said that he was charged with a felony for "possession" when he was 18 years old (about 3 years ago). My first mistake was telling him that the incident by itself probably wouldn't automatically disqualify him and that we could schedule a showing.

While walking his wife and him through the unit things really started going downhill quickly.

Do you have pets? Yes we have two dogs that are "medium" size (Okay two large dogs)

Do you smoke? Yes but we can smoke outside (When its a cold winter night in Utah? Yeah right)

How is your credit? Only negative thing is we maxed out our credit cards for our honeymoon (Yikes)

By the end of the walk through I am thinking to myself, "You don't meet any of our criteria."

I then had the gal to ask if it would be just the two of them. Their answer shows me just how clueless some prospective tenants can be. The wife then told me that they were thinking of bringing her brother along.

Does he have any issues? (And I quote) "Well... he has two theift charges that we know of..." (The absolute last person I want on my property is someone with a history of theift, sheeesh get a clue)

Needless to say I said no thanks and wished them luck finding a landlord who would look past that many issues ha ha

@Account Closed Thanks for the reply!

Obviously if the seller or his/her agent had this information they could have a third party put in a dummy offer just to enact the escalation clause. 

If my agent was unethical and only cared about maximizing his own commission he could similarly direct a third party to put in an offer to drive my price up to the escalation clause's cap.

While this is a risk, I believe if you are confident in your escalation cap and trust your agent this type of clause in the long run could potentially save you a lot of money.

Was reading this article today and read about something I had never heard of before. Escalation Clauses. Basically the author describes using this strategy when the buyer's agent asks for best and final offers. Rather than blindly raising your offer, the author suggest putting an escalation clause within the offer which basically stipulates that you will beat the highest competing offer by a couple hundred dollars up to a specified price cap. This protects yourself against needlessly raising your offer in situations such as this.

I was wondering if fellow BP faithful have had experience structuring your offers in this way? Thanks!

http://www.heraldextra.com/business/local/utah-cou...

@Jake Davies

My agent, who is also an investor and owns a neighboring 4-plex, brought the deal to me off market. Unfortunately the deal hit the market before we could go under contract which caused us to pay about a 4% premium over the seller's initial asking price. 

@Jake Davies

It is awesome that you are starting out at such a young age. While I am not really that old (27), I wish I had gotten started as early as you plan to. 

I am currently house hacking my first property which is a multifamily 4-plex in Salt Lake City. My wife and I purchased the property almost a year ago and have had an overall positive experience. As primarily a buy and hold investor, I plan to hold this property for the foreseeable future.

Going into the process I really planned on adding value to the property through renovations. We completely turned 2 units right away and made some improvements to the other 2 unit interiors. We also put in a new fence, new windows, etc. To save on costs, I learned as much as I could and we did most of the work ourselves. Apart from the value we added via renovations, I believe we bought some rent lag (meaning rents were below market at time of purchase) going in.

Since we acquired the property we have raised total rent by just over 20% and conservatively, after our recent refi of the mortgage, will be cash flowing well over $1000/month. Remember though that we put in quite a bit of capital apart from the down payment in order to add value to the property.

The two remaining tenants we inherited are leaving after this month and we will be doing some additional renovations and rent increases in order to stabilize the property.

While our result have been pretty awesome compared to my going in projections, it was no easy road. 

Qualifying for a mortgage isn't exactly easy because we are a unique type of buyers. It helps that most lenders will allow you to use 75% of in-place rents towards qualifying. Look into doing an FHA loan which only requires a down payment of 3.5%.

DYI renovations while cost effective will likely slow you down and with some projects will likely cost you more. Time is money so don't drag a renovation out too long if you are losing rent for long periods of time. Unfortunately I didn't have the luxury of contracting most of the work, but I would suggest it if you have little to no experience with renovating a property. The hardest thing I have found so far is finding a reliable contractor that doesn't charge you an arm and a leg for their services.

Price required that we buy in a less desirable neighborhood. We bought in Rose Park which is avoided by many investors. Parts of Ogden also seem to have a poor reputation. These areas are in most cases avoided for good reason @Douglas Larson, but if you have a good strategy and understand market rents, you should be able to be successful in certain pockets.

Sorry, this post went way longer than I intended. I wish you luck in finding an opportunity that works for your situation. Let me know if you have any questions or want to bounce ideas off of someone who has been in a similar situation. Best of luck in whatever opportunities come your way! 

Thanks for all the responses! Wanted to provide and update for those interested. 

I dropped off two notices today: 1) 3-Day Comply or Vacate and 2) 30-Day Lease Termination. This should allows us to start the eviction process this week if the tenant continues to smoke in the unit. I decided that cancelling the lease was our best option since the tenant quitting smoking is a long shot and not something we are willing to bank on. 

She was obviously upset about it, but I tried to help her see that it would be in everyone's best interest. I am hoping that we can get her moved without an eviction, but I am willing to go that route if she does not comply with the notices we delivered today. I will likely provide an update in the coming months. May be helpful to also outline how the renovation goes on her unit. We have seen good rent increases from the other two units we have renovated and I would expect we see a good bump here as well.

Thanks again!

@Matthew Maggy

Thank you for your response! Good luck as you start your journey as a landlord in a few weeks.

As I mentioned in an earlier reply, the main reason we have put up with the smoke issue for this long is because we have been hoping to hold off on the high expense it will be to turn her unit. We are in a position now that it will be in everyone's best interest for her to move and that is how it has to be. I am well aware that this is business and should be handled that way. Hopefully we can remove the tenant in the most civil and cost effective manner possible.

@Joel Owens

Great insights! Thank you so much for responding.

We have been planning on the high expense of turning her unit. We renovated two of the other units over the last 8 months, but her unit will be a headache I am sure. This is probably the main reason we were willing to put up with some issues for the time being while we replenished some capital, but obviously this situation is not working and will only get worse when the winter comes again. Thanks for the advice!