All Forum Posts by: Mike Wood

@Tim Youse I would do what you have listed as the cheap route (even thought its really going to be that cheap).  I would suggest maximizing the size of the vanity, as it appears you have extra room to go in width.

I dont personally see the extra value in removing the old tile unless you go all the way to a full gut.

I sure lots of people on here will say that even the cheap route is overkill.

@Tyron McDaniel  I think that saying no one is doing it incorrect. I think more accurately, those of us who do build them rarely sell them. I have personally built five (5) duplexes houses in the last 5 years, and plan to build more. But none of them are for sale.  

Developers that build new with the intent to sell will always get more profit from selling a SFH over MFH, so why would they build MFH. Additionally, there are some very large cost disadvantages to building 3-4units now a days due to the differences in building codes from 1-2 unit and 3+ unit buildings.

I also think financing come into it.  It not super easy to walk into a bank and get a construction loan for MFH, especially if you don't plan on living there. It requires alot of capital to get the construction loan, not something everyone has.

@Erin A. For any property that I have in the city of New Orleans, I always buy flood insurance.  Its cheap insurance if your not in a flood zone.

If I owned property in other areas, it would depend on location and proximity to water.  I would not base my decision on whether the property is in a flood zone or not.

@Nicolae Iovu All of my units are in Orleans Parish, in the city of New Orleans.  Currently we only have 2/1 and 2/1.5 units, ranging from 850-1050ft2, with rents ranging from $950-$1350 ($1.11-1.28/ft2 per month).   The biggest difference in price is the area the units are located.

I would say that while your new construction unit will be much more appealing than an existing house, that does not mean it will rent for significantly more money than existing units (assuming the same features, bed/bath, finishes).

Most of my units (except 3) were ground up new construction built specifically for long term rentals.  If the valuation works, then it can be a good way to add units.

@Nicolae Iovu  In the past, St. Bernard parish has not been very landlord friendly, something that you should check into (I recall some areas like Chalmette where the city council tried or did pass zoning that prohibited rentals).

I would really do some digging on the rental rates.  I think your high based on what I see with my units in New Orleans.

If you finance the builds, you will need a minimum of 20% equity in the finished property, but it sounds like you are thinking about building with cash, so that may not matter.

Another thing to consider is the fact that new construction will go down in value initially, as the premium of new wears off.  So you will likely not see alot of appreciation in the value in the near term from the post construction valuation.

@Nicolae Iovu  Assuming your talking about NOLA, I think your rental rate is high, given your budget for land ($25k lots are not a great area in NOLA). Also, the area would have to have sales comps that can support the new construction costs (in your example, sales comps would have to be $108-115/ft2 or higher).

If you pick the right area, you should be able to build in equity, especially if you GC the build yourself.  As for normal appreciation, I would suggest ignoring that for any analysis for long term rental.

If you pay cash for the property, you will have more cash flow, but your cash on cash return will be lower than if you had a mortgage.  Try the BP calculators to compare the two methods.

In NOLA, I would expect for your expenses to be at least 35% with new construction if your using a PM.

@Rogers Smith While I agree that flat hides better, for me its not worth the scuffs and marks that show up with flat.  Several of my units have frequent turnover (12-18months), so repainting an entire apartment is not desirable after every tenant.  I find that eggshell does a good job of staying clean and is easy to touch up with the exact same paint color and sheen.

@Joshua B. My understanding is a VA loan will require you to have residency at the property. If you dont plan on living there full time (which is what you described), then that will be an issue. Also, as others have said, short term rentals (STR's) are being heavily regulated by the city, and if your not a owner occupant with a homestead exemption, you can almost forget about doing it legally.

In New Orleans, I dont think there is such a thing as a C/D property that can be made into an A property.  

To clarify what @Braden Smith stated, not all properties in New Orleans is in a special flood zone that required flood insurance.  A decent amount of the city is now Flood Zone X, which does not require flood insurance.  Its still a flood zone though, but pretty cheap to insure (most of my $250k policies for 2 unit buildings are around $650/year.) if you choose to.

As mentioned by @Mike S., flat paint is a magnet for stains, scuffs, etc.  I used to paint closets flat white ceiling paint when I first started, but gave up due to having to repaint closets after every tenant turnover. Now with eggshell sheen, most of the walls can be be cleaned using a magic eraser.  Areas with nail holes or dents are easy to touch up with the exact same paint brand/color/sheen.

@Jonathan Jaffe I recommend all walls use the same color in the house/unit, something that you can get additional paint to do touch up.  I use eggshell sheen on all my walls (again, all walls same color, same sheen, regardless of room).  I use gloss white on all trim, and flat white ceiling paint on the ceilings.  If you stick with one (1) color/sheen for walls, one (1) color/sheen for trim and one (1) for ceilings, you will only need to remember a few paint color/codes that you purchased to do touch ups.

I personally use Behr paint from HD.  Sure there may be better paints out there, but I like its durability and the fact that I can purchase paint 7 days a week and late in the evening if I need to, something important for a landlord with a day job.  Plus, I can always go to the HD and give them the paint code and have never had an issue with paint patches not blending in, even on paint many years old.

I have currently have 10 units, and only use 4 different paints (2 wall colors [1 beige and 1 gray depending on the house], 1 trim and 1 ceiling).  

Keep it simple, and dont let your tenants paint, as you will never get the paint to match and will be forced to repaint.