All Forum Posts by: Kim Hopkins

Hello! I'm going nuts here trying to figure out how to properly set up a statement that shows my cash flow. In particular, we have a reserve (escrow) account that we put money into each month the year before to cover our property tax bill paid in January. So for January, while we might only have $20k from rental income and a $55k property tax bill, we were still cash flow positive because we used the reserves to pay for the property tax. But the reserves don't show up in that month's "income" so it looks like we were cash flow negative. Does this make sense to anyone? Sorry, this isn't my most coherent post. 

To clarify, the total income for January below would be only $20k but the OpEx (operating expense) includes a $55k property tax bill. The property tax bill is being paid from our reserves, but the cash flow statement below doesn't show the reserves anywhere so won't account for that.

In case you can't tell, I'm not an accountant! 

Thanks!
Kim

@Mark Dante Quick question - did  you actually put on a new roof (i.e. tear off the old one and replace it with the Duro-Last) or did you put the Duro-Last as a layer on top of the existing roof? Thanks! 

Hello Again!

I am trying to make a list of properties and owners to reach out to directly to discuss purchasing their properties. Commercial (not multi-family). It's in a relatively small market but one I know pretty well (but do not live in). Ideally, my list would meet the following criteria:

• Property built after 1980
• Last sale on or before 2014
• Property is 20,000 - 80,000 squarefeet
• Building is multi-tenant (vs single tenant)
• Owner of the building (or LLC) is an individual or couple in their 70's or older

My question is primarily about finding the last 3 bullet points, ESPECIALLY the tenancy (multi vs single). 

Currently, I start with a title search to get a basic list, but the owner name is not provided and the square footage is often incorrect. 

Then I have to go to try to find it on Loopnet or Google or go to the Property Tax Website to try and confirm the square footage. 

Then I have to try to find out if it's multi-tenant which is sometimes impossible and involves a bunch of Google searching with the address to see if multiple suite numbers show up or tenant names appear in Yelp, and occasionally finding it on the Property Tax website. 

Then I have to go to the Secretary of State website to enter the entity name and see if I can find the name of the actual owner (human) who owns the LLC and then cross-check the mailing address provided by the Title Search report to see if it's a residence and if it's the residency of this person.

It's not only highly inefficient and not scalable but also highly inaccurate. 

I feel like I'm on an episode of Shark Tank - there's got to be a better way!!! 

Anyone know a better way to do this? Again, the multi-tenant part would save me a lot of time alone because I ONLY want multi-tenant properties.

Thank you!
Kim

In case anyone is curious, we ended up offering her a flat $5k bonus to lease up at least half the building by 11/1. We left it up to her if she wants to offer all or part of it to the tenant rep if there is one, or just keep it herself. Yay capitalism! :) Thanks for all the help. Will let you know how it turns out. 

Hi @Mark Dante, @Joel Owens, @Tracy Streich, those were all really helpful comments! I also really appreciate the side comments on the cost of the roof, and thank you for the recommendation on the Durolast. I will DEFINITELY look at that. We also thought the roof bid was ridiculous. Based on your comments and the very helpful comment from @Milton Rivera, I asked her for a better explanation of what services would be included with her fee and her response was very well thought out so we went with her proposal. Thank you again! 

Hi @Milton Rivera, thank you for your thoughtful reply! You make very good points. 

This is a general property management agreement, so she is proposing a blanket 4% fee regardless of what project may come up.

One of projects we know we'll need to do is a new roof, estimated to cost $1M. In that example, she would recommend to us several companies to work with, get the bids for us from these companies and coordinate any onsite meetings, and coordinate the process. She would guarantee the work in any way and not have any technical input into it really. So do you think it's fair to pay her $40,000 for that oversight/effort?

Thanks!
Kim

Hi Everyone,

We are engaging with a new property manager for a 100k SF multi-tenant building we own. In addition to their % management fee, they want to charge a construction management fee as a % of the project cost for any tenant or capital improvements. They're proposing 4% up to $250k in project cost, and 3% above that. 

So for example, if it costs us $100,000 to paint the  building, that would be a $4,000 fee to our property manager. If it costs us $1M to  put new roofs on the building, that's a $30,000 fee to the property manager.

In my opinion, $30,000 for supervising putting on new roofs seems pretty steep. We have fees like this in our other agreements but none of our other properties have improvements that could cost this much. 

Any experience on what is reasonable to counter with here if anything? 

Thanks,
Kim

Thanks, Eddie. I'm actually proposing offering MY leasing broker an extra 1-2% to get the lease started sooner than later, say by December 1. You're suggesting that we offer the OUTSIDE leasing brokers an extra 1-2% to bring us a tenant. Think I should do one or both? 

Thanks for your reply, Joel! We have been actively trying to pursue options but not getting anywhere. He did not sign a personal guarantee (it was a sale-leaseback and we made an oversight on this). He has actually recently said he would sign a personal guarantee for the back-rent owed and the future rent, so that's good, unless he's only agreeing to sign b/c he has no assets left. The current lease ends in March 2019. 

We set up an installment plan of which he paid two installments and then stopped. He says he is struggling, worst period of his life, everything is in his business, etc. He says he has jobs that should be coming in the next two weeks and that he is 100% confident he can get current on the rent in the next few months, but we do not necessarily believe him. In our experience, every tenant we've had who has been this far behind in rent has never recovered. 

The next remedy is to do a lockout and either auction his stuff (mostly some trucks) or reach a settlement with him but that is a major pain for us (tons of doors, we do not live there) and questionable how much money we would get.

The above reasons are why we've concluded that the best way to recover the most amount of money in this situation is to replace him as fast as possible. 

Your comment about people not moving over the holidays is a good point, though troublesome. Our hope was that if we incentivize her now to move as fast as humanly possible, she could get someone interested by October at the latest with a November start date. 

Hi Everyone,

We have a large (25K SF) tenant who currently occupies over 50% of one of our properties and is behind on over 3 months of rent. We will probably demise the space into 5k - 11k SF units going forwards. We want to incentivize our leasing broker to find replacement tenant(s) for the space as fast as possible. She's great but we know she's busy and has many projects. We will save a lot of $ the faster we rent this space out obviously. So we're thinking of giving her some extra commission, like an extra 2% or something, if she can rent at least  half the space by November or December 1st. 

What do you think of this plan? 

Thanks!