All Forum Posts by: Justin Bul

Quote from @Stuart Udis:

I would be surprised if there's utility companies out there at this point who don't offer email/paperless statements. The question I want to throw back at you is this: No snow removal company is willing to perform the services or the fees they propose are higher than you would like to pay? I am sure there's plenty of landscaping companies looking to stay busy in the winter months. Remember you are paying for reliability, a contract and additional insurance requirements.....The ability to shift risk in the event of a slip and fall is the most important aspect of hiring snow removal vendor. 

Stuart,

I posed the question in good faith to the BP community. Having spent two decades in risk mitigation, reduction of liability and safety over all else (even profit, especially profit) is not only a smart way to operate. It is vital to my business ethics.

Yes, I have discussed the property with the major (licensed, permitted, insured) players in the market and no, so far none (at any price) are looking to take on such a relatively small and infrequent job. The whole point is for the service to be autonomous for the mid term renter, meaning the sidewalk and drive being treated before they head out the door.

With all due respect, "I'm sure" is an assumption, not fact. I've done my diligence. Short of a solution, I came to BP to see what others in similar circumstances have done. I'm solution-oriented, not penny-pinching in the least.

Have a superb day.  

Quote from @James Wilcox:

Quote from @Justin Bul:

BiggerPockets, 

I am in the midst of the counter-offer process on an acquisition of a SFH in Southern Kentucky. Due to scale, I am not currently looking to place this property under third party management. Having said that, how do you structure the simple things like mail delivery? Do you simply list the mailing address for all applicable utilities and services to your out of state business address and hope nothing slips through the cracks?

Also, anyone in that region have any suggestions for the infrequent but sure-fire need for shoveling/salting services when the need arises? Any company I've reached out to so far simply won't touch the project based on the once-in-a-while nature of accumulating snow. This property would be used as a mid-term rental, so all utilities and services would essentially be baked into the monthly cost.

Thoughts?

@Justin Bul Congratulations on making it this far in the home-buying process! Furnished rentals are definitely my specialty, and if you’re running a MTR, I completely understand why you might not want to bring on a property manager.

If you’re referring to mail delivery for things like utility bills that you need as the owner, you can absolutely have those sent to your out of state home address. That said, I’d recommend setting everything to autopay from your business account and opting for e-bills instead of relying on USPS mail. Especially since mail service can be slow or unreliable at times. It’s still a good idea to have someone check the home’s physical mailbox periodically to clear out junk mail or catch anything that slips through. I personally allow my tenants to receive mail at the property during their stay.

As for snow removal, it’s typically handled on an as needed basis here in Kentucky. We do get some snow in the winter, but usually only a few times a year. You may find yourself lower on a lawn care company’s priority list, so it’s best to build that relationship ahead of time. Once the snow hits, finding someone last minute can be tough. It’s smart to keep a broom, shovel, and salt at the property for tenants to use. While you can make snow removal their responsibility in the MTR lease, it’s always a thoughtful (and liability-conscious) move to handle it yourself when possible.

James, 

Thanks for the reply! Autopay is a solid suggestion, I appreciate you offering that. Having lived in SoKY previously, I'm intimately aware of the episodic need for winter weather services. That's the underlying dilemma itself. Not having been successful so far with traditional companies, I am exploring options with independent contractors such as those on Task Rabbit that I can put on retainer before snow falls. Of course the concern here would be their quality of work (ie, if they're specifically professionally experienced in this) and their insured liability. 

Zach, 

Thanks for the reply. By mid-term, I was referring to the fully-furnished and extended term stay. 

As an update, I elected to pass on this deal. I had reached out to two different property managers and each gave concern about a specific detail of the property that gave them pause whether potential clients would have an issue with a particular feature. When I gave feedback to the agent that had been representing me, it exposed not only an unwillingness to consider factors that could diminish the fair market value, but also put into question for me if the agent was more concerned with representing me or keeping acquaintance with a colleague. 

For these two reasons combined, I passed on both the property in question and the agent who had been supporting me. I am now under contract on a different property in a different state. Much different and beneficial opportunity.

BiggerPockets, 

I am in the midst of the counter-offer process on an acquisition of a SFH in Southern Kentucky. Due to scale, I am not currently looking to place this property under third party management. Having said that, how do you structure the simple things like mail delivery? Do you simply list the mailing address for all applicable utilities and services to your out of state business address and hope nothing slips through the cracks?

Also, anyone in that region have any suggestions for the infrequent but sure-fire need for shoveling/salting services when the need arises? Any company I've reached out to so far simply won't touch the project based on the once-in-a-while nature of accumulating snow. This property would be used as a mid-term rental, so all utilities and services would essentially be baked into the monthly cost.

Thoughts?

Quote from @Tim VandenToorn:

Justin, for clarity when you say you want to take advantage of the 100% bonus tax depreciation that Section 179 allows you to expense the full purchase price of eligable business property (farm equiptment for example), however "real property" like a single family or duplex does not qualify for the full expensing or depreciation. Are you planning to use this property as a short term rental, or for long term tenants? 

This would be used for a mid or long term rental. No short term since it wouldn't be owner occupied. My apologies if I'm factually incorrect, but sources I've read stated that you could use the accelerated depreciation on goods and supplies that didn't become part of the real property. Ie, furniture, linens, etc etc etc. 

I am debating on making an offer on a SFH in Grand Rapids, MI. I flew in mid-week to look at a series of places with my agent. Out of the 7 we saw, one was a standout in the terms of a decent value for the money. In some ways it is turnkey (mechanicals, quality finishes in high touchpoint areas), but in other ways there's additional equity to build from the start (space to add additional livable sq ft). Further, the area appreciated in the high single digits the last two years and is on-trend to do the same for 2025 and 2026. It also quotes quite well for a landlord-based insurance policy vs some other locations around the country.

The detriment is the investor-adverse non-homestead tax rate. In order to make the deal work under DSCR ratios, I would have to step up to a 30% down payment. Though I have this, it'd be taking a down payment investment from approximately 50k to 75k. This would be essentially moving assets from the market to an appreciating real estate asset, but it's still a large increase to pivot to unexpectedly. Is this a smart move still?

After loan approval, I'm not required to keep escrow, so I could keep funds in the market if I thought the holdings would grow faster than the market is improving. I'd functionally be doing a buy and hold deal with the property being used as a mid-term investment, so rent receipts would be decent (cash positive). I wouldn't be throwing money at a problem to force it to work, I'd more so be burying equity into the property which of course I could leverage into another deal.

Any offer would have to be at or potentially slightly above ask to be competitive. I'd ask for up to 2% seller credits toward closing costs (most allowed under my loan) and the usual contingencies which are still permissible in this competitive market. 

Purchase price: 260k (mid-term projections of 2.6-2.9k/month)
Down payment: 77k (approx)
Non-homestead: $6,200/yr based on new taxable value post-close
Landlord policy: $1,500/yr

No significant investment needed to improve the real property to the point of it being rentable, though there would be investment upfront to furnish and stock the home. Looking to benefit from the 100% bonus tax depreciation under Section 179 before year's end.

Would you do this deal?

Quite literally just discovered BPCon. Does anyone still have an unused ticket that they'd be willing to transfer for a price relative to the time that's left of the conference?

Hello, BiggerPocket community...

As with most others posting here, I am looking to get my start in the REI world. I have been spending a great deal of time learning, observing, and even placed my first offer on a property that penciled above the 1.0 ratio for my pre-approved DSCR loan. Unfortunately, there was another offer that was full price with an escalation clause.

Though I live in SoCal, I am looking for deals most likely out of state. The carrying cost vs rental income spread here is just not conducive to an investor of my size at this point.

The rough numbers, if they'd help, would be a carrying cost of PITI approximately $1700 including landlord-specific insurance and moderate property taxes. Approximate purchase price around $250k with the minimum closer to the $200k range. There is room to go higher if need be for a better cashflow positive property.

Ideally, I am looking for opportunities in the midterm rental market. In many areas I've seen, this will allow me to be clear of STR ordinances and restrictions while also fetching a higher monthly gross than the long term rental market.

If you have any suggestions on decent cashflow-positive areas to look at (anywhere in the US), please let me know.