All Forum Posts by: Isaac S.

Hey Greg,

Thanks for chiming in! My primary plan in this market for this type of asset, is to buy out as many tenants from their extremely under market rent controlled units, do improvements and re-rent at market and dispose or refi. BUT, the secondary option is buy hold and allow organic turnover and do the improvements one unit at a time and keep operating as a stable addition to the portfolio. During DD, along with finding the real underwriting deficiencies, it became obvious that my back up strategy would be most likely and therefore every basis point matters, since, I will be at the mercy of 3% rent control until tenants move at their own pace, so the lower CAP at close matters more to me, than if I would have been able to apply the primary plan.

Is $20k difference enough to walk away from an otherwise reasonable deal on a $2M property?

My friend/advisor with more experience says I am being a cheap knucklehead and that the $20k is not relative when you factor the forced appreciation and income/valuation of the improved asset(proforma), but, I think it is math and $20k is always relative and I have my criteria(4.5cap) and was very transparent about it from when I first submitted the original accepted offer, and my DD uncovered several hidden deficiencies that make the credit necessary to maintain my original underwriting numbers and even though I understand my friends rationale, I don't want to give in any more slack(adjusted to 4.4cap), than I already have...

What do you experienced multi family acquisition people think?

Cash is king!

You will only compound your problems if the market crashes, you will have 50-80% less cash to reimburse all those tenant's  deposits that may have to move because of said crash's trickle down impact on them.

Also, it may be illegal to do(maybe this should have been first)

I have occasionally rented to foreign students.

Check their passport and visa stamp, make copies of them, require a bit larger deposit. IF they are here for work, check the employer, and they should also have a social security number too...if they are here for school, confirm their enrollment. 

If they don't have a Social Security number you will not be able to do a US credit check.

Generally, most people that legally travel to the US don't want jeopardize that privilege by being evicted or having a criminal record, I believe both can/will get your visa revoked.

Good luck!

Of course you should rent to them, what could go wrong?

They will never feel more comfortable than a total stranger to ask you favors that would be absolutely outside the scope of normal tenant relations.

They will never know the right buttons to push because of their knowledge of your personal life.

They will never sour relations with others in your in extended family.

They will never use social media to be vindictive or manipulative.

They will always be perfect model tenants.

They will always love and appreciate you.

They will always do whatever it takes to get your rent before asking you to give them some more time.

They will always treat your rental as if it were a precious flower.

Rule 1. always answer the phone

Rule 2. always return messages within 2min-24hours

Rule 3. don't forget rule 1!!!

but, I guess that's what everybody means by "communication" 

@Will Barnard is giving the most complete thought process and considerations, IMHO

ALSO< FYI...if it was up to me... I would just YOLO your 3.5% into bitcoin and that will grow into enough capital to just buy the duplex with no debt, in about 5 days.

@Jim K. I agree with you....to a point...but this topic is perfect example of a lesson I learned from a past tenant that worked as an asset manager for several different multi billion REITs...I would  ask her about her world managing industrial and warehouse space for the REITs and one time she mentioned that in her company, and much of real estate business, there were two types of asset manager: First(like her) that was office/number/planning proficient and Second(like me), that was handy/technical/hands-on/field proficient

I would offer that, one is not  better off being more of one than the other, they both need to have some overlapping abilities or to be able to overcompensate in their area of expertise. IF you're a numbers person and buy the asset with enough income to justify the expenses, and have enough inventory and diversity, etc, you're gonna be fine, and that person would probably know how important/crucial a few solid tradespeople are for exactly your stated example

Best of luck!

My biggest lesson learned, was don't brag about how great I am on BP.

I like his posts in the threads that I have seen him in. His videos are very entertaining too.

However, I did check out his management fees, when i considered the potential cash flow he talks about, but when I saw charges for opening mail, I was immediately turned off. not to mention all the other charges and the fact that they are extremely high maintenance type of tenants and properties. Seemed like most of the real profit went to the inflated management/maintenance costs...also, full disclosure, I would probably want to charge double his rates for having to manage the same assets

Good luck!