All Forum Posts by: Ken Martin

Hi All, I purchased a 5 unit property in SW Michigan about a year ago. I bought the property from the bank for very cheap, but now that I've done renovations, raised rents, billed back utilities, and have the property filled out, the cashflow is great, and the property is worth materially more than when I bought it. My question is this... when i'm listing the property to sell (I want to sell this property, and buyer a larger one), do I use my current tax rate and insurance costs? OR do I use estimated pro forma insurance and tax costs on the potential sale price that will be materially higher than what I bought the property for? The difference in those two inputs in my expenses materially impacts the NOI, and therefore the amount I can justify listing the property for.

For example, if I bought the property for $80k, but now it's doing $28k in NOI, and I want to list it at a 10cap , the difference in tax and insurance between a $80k property and a $280k property is pretty material. If I plug in the higher tax and insurance rates based on a $280k value, it really eats into the NOI and cuts the value of the property by about $70k. 

How do I account for this when determining how much to list the building for? 

@Brandon Krieg and @Nate Miersma I'm curious to hear where caps have gone over the past 3 or 4 years in Kalamazoo. I'm seeing a 4 unit property (looks pretty nice inside) that grosses $4250 in revs a month, and is listed for $600k. I'm trying to get more familiar with the area, but back very rough back of the envelope math suggest caps have come waaaaay in?

And are sub metering/ RUBS common for electricity as well? I keep seeing people predominantly referring to them in terms of water. This particular property has electric heating, so the electric is my main focus.

I have a 5 unit building in SW Michigan... does anybody know of a company that will aid in submetering or RUBS outside of Kalamazoo / Grand Rapids??

I have a small 5 unit mixed use property in SW Michigan and am trying to determine whether I should implement a rubs system or install sub meters. Is there a rule of thumb on which to use? I got the sense that submeters  would be expensive to install, but i'm having a hard time finding a RUBS company given im only 5 units and outside a major city. Any suggestions?

I may have broken the cardinal rule by purchasing a multifamily mixed use commercial/residential property in Michigan that has shared utilities AND electric heat. The two commercial units share one meter, and the three residential apartments share another meter, and electric bills are astronomical. I looked into sub metering through the electric company, but the electrical cost associated was WAY too high for the amount i had budgeted for renovations. My concern is that if i just jack up rents and say utilities included, the sticker price will scare people away. What are my other options? RUBS?