All Forum Posts by: Kyle R.

 Two properties were sold, both were condos. I purchased them in early 2013 for mid $120s. Both sold for mid $160s.

 I did a little research on this and confirmed you're correct. I'm going to hold off on RUBS for now, but will likely increase rent at a later date to compensate.

 As of now I'm planning to refinance the property in 2-3 years. There's plenty of room for value add which I hope to start on within the next few months.

 I did partner with a family member on this deal. We each put about $130K into it.

The down payment was funded out of pocket, remaining 80% was financed through a local bank at 5.1% for 20 years.

 I have a professional management company taking over. The property is just outside Charlotte, but rents are low nonetheless. As of now, only two tenants are on section 8. While turnover is a risk, it's a calculated one in my opinion. Even after the $50 rental increase, I can't find anything cheaper in the area. The increase will only be applicable to 8 tenants a month, so if we see a significant amount of turnover generating, we'll pull back.

Before I start, I'd like to thank the BP community. I've learned quite a bit during my tenure as a forum member and consider it an invaluable resource. To begin, I'm 24, a part time real estate investor and full time financial analyst. I started investing in 2013, primarily purchasing class A condos. Over the last year, I've shifted my focus to multi-family and sold the majority of my SFH/condos.

My most recent acquisition was an 80 unit apartment complex. The deal was off market, located in NC, and sourced through my realtor. The property consists of 17 buildings on 7 acres containing 32 1BR/1BA units and 48 2BR/1BA units. It’s a class B-/C+ property, relatively low income, mediocre public schools, and low crime. One of the reasons I targeted this complex was due to the strong growth rate in the surrounding area. A private university recently announced they’re building a graduate campus within a mile of the complex. Around 200 student’s need housing within the coming 5 years.

Most of the tenants have lived there several years, some dating back to 1993. The vacancy rate has averaged 3.5% over the last 3 years and it’s currently 97.5% occupied. The previous owner had rents 25% below market at $300/1BR and $400/2BR. Current market is $375-$400/1BR and $475-$500/2BR. Rent is being raised $50/unit for current tenants. I’ll be billing water back to tenants next year, which will add $30-$45 per unit. Electric is sub metered and trash is already billed back. After both increases, rent will be nearly at market. Also, a laundromat is on site containing 5 commercial washers and dryers.

In terms of condition, the property has little deferred maintenance. A few water heaters are beginning to leak and two sidewalks need repair as they’re cracked and considered a trip hazard. Also, a few minor holes exist in the siding. Total estimate to fix all issues is around $5K. The property is on city water/sewer which is a plus as I’m not a fan of septic tanks. Roofs were replaced in ’07, should be able to get another 10 years out of them.

While the property is stabilized and structurally sound, it has been mismanaged over the last 10 years. As mentioned prior, rents are below market. Also, when a tenant’s lease expired, the previous owner let them stay on their current lease month to month. As a result, 90% of my tenants are on a month to month lease. I have management approaching 8 tenants per month to sign a new one year lease, that way all do not end at the same time. I’m not concerned with a mass exodus of tenants leaving as most month to month leases have been active for several years.

All financials are in terms of year aside from cash flow. Also, I've included a picture of the property below.

Purchase price - $1,198,500 ($14,981.25/unit)

Financing terms – 20% down 5.1%/20 years

Rental income - $345,600

Laundry income - $6,000

Maintenance/CAPEX - $55,296

Utilities (water/sewer) - $41,123

Property management – $27,648 (8%)

Vacancy allowance - $17,280 (5%)

Property tax- $14,452.67

Insurance - $13,191.95

Variable expense - $10,000 (mostly bad debt)

Pest control - $5,923

Tenant sourcing fee - $3,600 (assumes 25% yearly turnover)

Lawn maintenance - $3,200

Court costs - $2,000

Monthly cash flow - $6,891 ($9,705.91 after $50 per unit rent increase, $12,706 after billing 90% of utilities back)

Don't conflate a signed two year agreement with a guarantee that the tenant will be there for the entirety of the lease. I recently had a tenant default on her lease as she lost her job. She was one of my best tenants, always paid on time and never gave me problems. This coming June she would've been one year into her two year lease.

Yes. Last two years of tax returns, credit check, pay stub, etc.

I recently formed a new LLC and received a commercial loan. The qualification was based off my personal balance sheet, not the LLCs.