All Forum Posts by: John Umphress

It really depends.  We have an eight unit building in San Antonio and have it under a PM and it cash flows pretty well, but we paid cash for it.  (Part of a 1031 exchange.)  Running numbers on several other properties from 20 to 70 units with some debt and they all cash flow with PM.  There is a certain size where it makes sense to have an onsite manager and perhaps maintenance, but it's way larger than 12.  For  a small property you may have to pay more to make it worth their while (and to ensure they do a good job.)  The key to success is finding a good PM outfit.

Assuming you buy it, are you sure you would convert them to condos or just something you are considering?

@Account Closed, how large (sq ft) are the units?  I assume new construction?

There might be a nonprofit or religious organization that provides rental assistance.  Most cities of any size have several.  That way she doesn't have to move and the rent is paid.

Based on what you posted, I'm wondering if the owner is going to want the loan payments in cash.  Are the seller finance terms so good that you haven't looked into bank financing?  The contractor should be able to give you a sense of the condition/remaining service life of the plumbing and mechanicals.  I guestimate 15 years for builder grade split DX equipment.  Water heaters can go longer if they are flushed and the water supply is not either corrosive or has a high mineral content.  If the owner pays utilities, you may think about upgrading to more efficient equipment.

@Account Closed, more lucky than successful and I guess some could consider me wealthy given where I started from.  (Having some wealth does not necessarily mean you're wealthy.)  I'm just concerned that with the high valuations out there, some investors are getting overextended and operating with pretty thin margins.   Speaking more of MF here but the same could be applied to folks with numerous SF units.  Was out of state this past week and saw a number of MF properties that were bought for a song in 2010, and others that went into foreclosure around then and were completely vacant and badly deteriorated - likely candidates for demolition.    

Some of us have already accumulated wealth and are mostly interested in preserving it.  My focus is having it work for me, not me working for it.

Deals are out there, but harder to find than even a year ago.  Reach out to some  brokers and network.  I'm focused on MF but have sniffed out some deals that are okay - so long as they have steady performance, I'm good.

85% leverage?  Would only do that if I had substantial reserves.  And if I had substantial reserves, why would I give the lender more of my money every month, plus allowing them to have my reserve funds work for them?

Unless you have some years of experience in land development, construction, etc and planned to relocate (at least temporarily) to that community, I would advise against it.  Too many moving parts and details to keep on top of.  I'm involved with developers and builders via my day job - even those who are good and experienced  run into  multiple challenges that have to be resolved quickly.  

Quick story.  Had my eye on a 60 acre tract last year just outside of San Marcos.  Only way it would have worked would have been to subdivide/develop 30 to 40 lots.  Would have meant providing access, a street, utilities, site work, etc.  I know plenty of lawyers, lenders, engineers, planners, contractors and other professionals that you need to pull it off.  And I am local.  Decided against it.  Why? It's not what I do.  I could have done it if I had quit my job, but it would have been easier and turned out better for a professional who does it on a regular basis and knows all the issues/pitfalls.  

The Texas Constitution places limits on HELOCs and cash-out refis.  One reason we had comparatively fewer foreclosures during the recession.