All Forum Posts by: John Lenhart

At this point, you can always file an appeal. They are free to file in Ohio. 
you will need an appraisal to show that the value is not what the county says. If it was for the price you paid, you essentially will need to show it was not worth what you paid for it for a number of reasons.

it is certainly easier to contest when you do not have a purchase agreement for the assessed value. However if you can get a new appraisal and argue that since you took control of the property there are changed circumstances to show the decrease in value, you will have a case. For example, if you have a 12 unit building and one month after taking over 3 tenants move out because of a flooding or mold issue that needs to be remediated and you have not been able to take care of the building yet, that would justify a decrease in taxable value. 

What is your goal in the next 12-24 months? 1000 units is great but you have to start somewhere. What does your capital look like? Do you want to be an active manager? What strengths are you currently bringing to your investment?

For example, I had a business partner who was a student at University of Dayton. He had limited capital but desire to work hard. He purchased an old house near campus there for dirt cheap and renovated it on his own. He lived in it for a while but then bought another house and rented it to students. He did the same thing 3x over and by the time he graduated he had 4 rentals generating him income. A couple years later he owned 4 additional college rentals.  He dug in and learned the market and learned what he was doing in that particular niche. At a young age of 19, he started getting an understanding on contracting and financing as well as putting in a ton of sweat equity  in the process.

Now he did not choose the path to get 1000 units, but he took his investing in a different direction that suited him and his interests. He let his experience and journey lead him in his investing and his business evolved from that.

But ultimately, find a niche that appeals to you, figure it out and scale it. At your age, use the time you have to dig deep in the trenches to learn from the ground up. 

QuickBooks 

One thing to keep in mind is that commercial leases are going to be treated much differently than multi family. There are a lot of laws to protect multi family tenants because of the special nature of housing, whereas a commercial tenant is going to be deemed to be sophisticated and be able to hire experts to negotiate a lease so they are often not granted the same protections.

Most states let the terms of the lease in a commercial or office space govern so you probably want to check with your attorney on any lease provisions to let them cancel your lease

Typically, They can’t terminate your lease without buying you out. If they want you to leave early, they will need to pay you for that privilege.

Although, your lease may have some early termination provisions in it. It is best to consult with an attorney to best understand your rights and obligations under the lease so you know how to negotiate 

If you use one of the property management systems like webselfstorage or sitelink or yardi, they will integrate the payment system with your website so you do not have to worry about building out a secure site, etc. plus they will provide the data analytics for you. Any website you build can then be a basic site and will look a lot move interactive when it links with the property management software 

A few considerations. 
1) a 6 unit apartment and a 2 unit C class commercial and 4 unit apartment on top will probably have pretty similar revenue (I am assuming it is a lower class commercial property given the building age and size you describe, and I know Cleveland has a ton of older properties like this)

2) while there will be some advantages to having a commercial tenant, if they are a smaller business like a local bar, chances are the owner does not have much additional capital outside of their small business (I hope it is run well for their sake). These properties do not cater to national tenants like a Starbucks or Panera. 
3) when an apartment comes vacant, you can get it rented in 2-3 weeks, but if a commercial space would come open, it could take 6 months or a year to find the right tenant for the space and involve capital concessions on your end to get a tenant in.
4) for the reasons cited above, the commercial income would need to be a decent amount higher to overcome the increased vacant risk and re rental risk than just a life apartment building. 
5) Retail is just riskier in general for the reasons stated above plus you then add in that your retail tenant is probably not the strongest credit risk.

6) mixed use is harder to finance. Some lenders specialize in apartments, some retail, some industrial, etc. while you can certainly find lenders who will lend on the property, the available cash in the marketplace to lend on a mixed use property is not as readily available as it would be for other straight forward asset classes

This would help explain why the cap rates would be so different 

Mike - my office is in blue ash but we have approx 200 apartment units split between east side and west side along with a self storage portfolio in the area with 5 storage centers. 

I have always had an interest in this asset class

Absolutely yes. I did the exact same thing 5 years ago going from apartments to self storage.