All Forum Posts by: Kathy Henley

@Jamarr Lee  Fresh comps will be more accurate than the county assessment, if that is what you mean when referring to the public record of appraisal.

Public tax records of a property is not an accurate value.  Counties use last year's number plus the allowable increase, until a re-assessment, sometimes done annually or bi-annually by the county.  The market may have gone in a different direction.

Comps are more accurate place to begin your numbers, less the renovations that you see are needed.

@Peter Fokas Dry cleaners are not awful. Check the last 2 years of the accounts and see if they paid on time.  Wait! Do you mean that you will own a dry cleaner company? I know nothing about that.

Acquiring a property with an existing commercial tenant is similar to residential:  read the lease.  One needs to know who pays for the repairs and the upkeep of the common areas, as this affects the cash flow; you must cash flow from day one.  If you need to change up the terms of the lease to improve the cash flow, when can you put it in play?  

Due diligence is looking at the acutuals - expenses and income from the last one or two years.  Look for signs of deferred maintenance, troublesome water bills or high residential turn-over.  You are looking for an opportunity to improve things.

To value a mixed use building, separate residential units from the commercial and analyze them separately, then add the two together to  come up with your bid.

@Livia Susan  Don’t go cheap, go smart. One needs to know where they are going, before planning the trip. Gather your vision from Houzz or pay a designer who has the experience of creating inviting spaces. What is your budget? Ask the contractor what can be done for this budget, and ask for a second bid of your ‘vision’. You make choices. People with experience may charge more, but the job is done well and on time.

I am looking at a mixed-use building and the hot water system looks squirley. 9 residential units and 2 retail store fronts share one commercial hot water heat of 75 gallons.  Landlord pays the hot water expense and, the theory is, the rents cover it.  This is not true, as the rents are below market.  I like an undermanaged building, if I buy it according to the actuals. But one must anticipate the cost of improvements. Is a shared water heater workable?  One bedroom/one bath untis. Thanks

@Account Closed  You have not said that this accidental landlord has lost money, only that it breaks even.  The upside is that someone else has been making the payments and he gets all the equity and the tax benefits.  This is not a waste of time.  If he does nothing, the mortgage will be paid in full in 10 years. It would take more effort and out of pocket expenses to make the improvements needed, to get top of the market rents. Talk with a Evansville agent who knows the market, as Zillow is not accurate enough to make real decisions - only speculations.  Selling on the open market to owner occupied must not be overlooked.

@Paul Winka by the hour. 

@Jon Collins I work with Patrick Gunn out on Olive Road. My real estate attorney also owns investment property, which is my team building requirement. He helped set up my Missouri LLC, which went swimmingly. Our first company was set up on line in Wyoming and everything was a little messy, tax wise. He could see where we were going and untangled my mess. Since then, he has answered questions and taken care of title issues without a fuss.

@Simon Stahl Hi Simon,  I am your neighbor in Albany, CA and am willing to help anyone learn. I own 4 investment properties but they are in St. Louis where our investment dollars go farther.  I would be glad to be a second pair of eyes in your endeavors.   May I share my cashflow worksheet?  The principles of accessing the investment would not matter where one buys, it measures the cashflow.  

Oakland, CA passed a quasi rent control bill this month.  Are you prepared?

@Dylan Anderson We too had to search and found success with a small bank, at the commercial loan desk. I gave my pitch in the name of my company and gave her a worksheet of the area rents & expenses. The loan for the duplex was so small, $99K, the agent kept it in house, calling it a portfolio loan.  It was the rents that made the financial application and a copy of last year's company tax return; we closed in 2 weeks. The loan was in our company name and she said that it would not appear on our personal credit report.  Cool!

@Nicole 

@Nicole Bryan The first lender to consult is the same bank that holds your primary mortgage. Mine, US Bank, bent over backwards to give us access to our equity. When we draw money from the HELOC, it transfers electronically into our business account and them we are ready to write a check for repairs or to buy another property. US Bank doesn't care how many loans we have since it is secured by the value of our home. Go for it!