All Forum Posts by: John West

@Andrew B. very good thought. I have heard people talking about how laundry can be a headache. I don't want to put coin op machines in for just 3 units. Storage for those three units isn't necessary. They already all have plenty of storage. Each unit has a storage closet under the porch that comes with them. 

@Benjamin Raichel I have not. Its very near the end of a dead end street. It's definitely not prime real estate for a business. I thought of laundry/storage only because there are a 150+ apartment doors within 1/4 mile.

@Deanna McCormick those are all really good points - thank you for your input. I think I will spend a little more time doing a cost analysis on converting to a fourth unit.

Hey everyone. I'm looking to get some input for a property that I will be closing on in a couple weeks. 

The property has 3 actively rented one bedroom units. I have met with the current property manager and after interviewing her plan to keep her. She seems to be a real go-getter and really stays on top of the tenants. The place is going to cash flow very well partially because the seller is very motivated and we're getting a great deal.

Besides the 3 one bedroom apartments, there is a fourth unit that used to be a rinky dink grocery store back in the early 80s. Its pretty much a blank slate with 600 sq. ft. There is a commercial glass door in the front, but there are a few steps to get up to it. 

My question is this: What is going to be the best use of this space? I believe the break even point would be too far down the road to put in a fourth apartment. I'm leaning more toward putting a small laundromat in or putting in a few walls and doors and renting out storage space. Almost the entire street is apartment buildings. I was considering just door knocking and asking local folks if they would use the laundromat or if they already had access in their buildings. Any thoughts? Could we make money with a laundromat, or is it just a huge headache? 

Congratulations @Mike Roy. Those apartments hit the market and were off in a flash. I think you got the deal of a lifetime on those 9 units. I live almost next door. If you ever need anything in the area, let me know.

As for the heating, I know a lot of people around here who use those Rinnai direct vent heaters and they are super powerful. I have a relative who owns three. All three are in two story buildings bigger than those you described, and in all three buildings, its hotter upstairs than down. I'm sure it depends on building design, but I bet you'd be fine.

I purchased a house with cash at auction 6 months ago and had a similar experience. After spending what seems like hours to just a few banks, I rewrote my "script". I called a dozen banks/credit unions in less than an hour. I would ask for commercial lending then politely greet them and then ask if they would give loans based on appraised value or purchase price (in my case). It was pretty point blank and I found that they were happy to answer the question honestly because neither one of us wanted to waste each others' time. Maybe you'll get some good recommendations here, but if you don't... an hour or two at most and I bet you'll find someone.

I am currently buying my second investment property - a duplex.

I am in the middle of listening to the latest podcast (episode #235) and Anson Young is mentioning how important it is to have an inspections checklist. I am meeting a home inspector today and he's going to help look the two units over. 

I would love a bunch of last minute input. Any advice on what to look for during a duplex home inspection? What did you miss on a previous inspection? Is there anything unique I should look for that wouldn't be on a SFR inspection?

@Andrew Johnson Thanks for bringing up the negligence issue. I think too many times, everybody worries about protecting themselves and avoiding lawsuits period. If I ever wrong someone, I will do whatever it takes to make it right. My goal is that every one of my tenants knows that and we all have a mutual respect. The protection I need is from those who are looking to sue and take advantage of me.

@Andrew Johnson Thanks for your thoughtful replies. I appreciate your advice on the insurance. You make some good points for me to consider 

@Scott Trench Your example of how you plan to do it helps. I'm very interested to find out how it works out for you, but given the direction I started in already, I think we'll have to go about it differently.

Before buying my first property, my partner and I decided to form an LLC. I knew there was an option to buy plenty of insurance, but the LLC seemed to protect us a bit more and my partner is very risk averse. I had not considered what affect putting everything in the LLC would have on our borrowing abilities.

I'm still learning the ropes and every step is a learning experience. I'm purchasing a duplex now (my second investment). Already being pre-approved for a 20 year loan with 20% down, I'll likely just go through with that since I know it will cash flow well. Just today I contacted another lender and finally found someone that would give me a 30 year. However, they require 25% down. That 5% is $8,000 extra and the break even point is more than 3 years down the road not even considering the time value of that $8,000.

@Cody L. Thanks for your input. It seems that as you say the whole due on sale clause is rarely executed. They have different rates for commercial loans for a reason, they're protecting themselves from people like us finding loopholes (30 year purchase at low rate followed by immediate title transfer). If you have a good history with many years of payment, I see why they wouldn't care.

Thanks for the response guys. Just to protect myself, (a couple months ago there was an excellent podcast on asset protection) I'm keeping it all out of my personal name even if it is just a quick transfer.

What I'm hearing is that it's really not very likely that I can get a 30 year term in my LLC.

There was a great article by Scott Trench a few days ago running numbers as to why 30 year loans are best. @Scott Trench Am I to assume that this article is just for people doing owner occupied? Has anyone out there been able to regularly receive 30 year loans from a bank that hasn't been owner occupied?