All Forum Posts by: Mark Swim

Mike,

Good luck with the remainder of your deployment and thank you for your service.  I have a couple of investments in Green Bay, a mixed use retail/apartment and a 6 unit apartment building.  I'm starting to work with the Ecumenical Partnership for Housing and am looking to purchase some single family homes for them.  It would be great to meet up when you get home.

I've worked with Deron Andre (www.andrelawoffices.com) on several real estate deals, but (luckily) haven't needed him for an eviction.  Besides his law practice he is also a partner in the property management company that I use, so I'm sure he knows his way around the eviction process.

Does anybody have a recommendation for a good insurance company that handles apartment buildings (5+ units) and multi-tenant retail in the Green Bay area?  The company I am currently working with has not been very responsive and I'm ready to move on to someone else.

I'm don't know the specifics of NJ tenant laws, but you shouldn't have to worry about evicting them.  An eviction is typically reserved for someone who is currently bound by a lease and is not abiding by the terms of that lease.  If you want the tenants to stay then offer to have them sign a new lease at the higher rent.  If they refuse, then you should be able to give them notice that they must vacate the property (don't know how many day's notice is required in NJ).  

Thank you for for the thoughts, @Todd Everard.  After speaking with an attorney, I also decided to submit separate OTP's.  The main reason was that if something went wrong with one of properties then the entire deal wouldn't fall apart.

Last year I purchased a mixed use space and financed through Community First Credit Union.  At that time I got 5yr/20 amort @ 4.5%.  I'm going to shop this to them and am hoping I can get something close to that again.  However, I'm always open to looking at other lenders if you have any suggestions.  I have spoken with Bank of Luxemburg before and they also seem pretty good to work with.

Thank you @Jeff Kehl.  I'm planning to talk to the bank about whether to put that single duplex on a conventional mortgage or not.  I'll definitely need a commercial loan for the other two properties.  I'm also planning to make sure my PM keeps track of these properties separately.  Not only for my own analysis, but for future pricing considerations when and if I decide to sell them.

Thank you for the advise, @Jessica Zolotorofe.  I hadn't thought about getting a release for the individual properties.  I've already negotiated the prices individually and I was just wondering if, legally, there would be any advantage to for using individual offer to purchase agreements for each property or putting them all on one.

I've agreed on a price with the owner of 3 different properties for an off market deal - one 8-unit apartment building, 3 duplexes on a single lot and 1 duplex on another lot.  I haven't given him the official offer to purchase, yet, and am looking for some advice on the following:

1. We've negotiated the price of each property individually.  Should I submit a separate offer for each property or lump them into a single offer?  Pros and cons of each?

2.  I will be financing these through a local bank.  Does it make sense to carry a separate mortgage on each property or lump them all into a single commercial mortgage?

3. The 8-unit and 3 duplexes are all filled with tenants from the same ethnic group and are a pretty tight knit community.  My concern is that when I need to turn a unit that my pool of potential tenants may be limited.  Has anyone dealt with this type of situation and what was your experience when trying to attract new tenants.

I’m in the early stages of looking at an 8-unit apartment building and would love some feedback on my numbers to see what others think of this deal (or no deal). I visited it this morning and was only able to get into one of the units, for now. It’s in a working class neighborhood and I would rate the place as a B or B-. From the research I’ve been able to do it appears the rents are about $75 per month lower than the average of other buildings in the area.

The owner has several other properties and is liquidating some of his holdings. They will not share the P&L and rent rolls until there is an excepted offer. The offer will contain a contingency based upon review of the P&L and rent rolls, and the owner is fine with that. They are not interested in any owner financing and have already rejected offers from other investors of $270,000 and $280,000. Here are the numbers that I have so far.

Building size & type: 8 units, brick exterior

Location: Green Bay, WI

Year built: 1972

Apartment size & layout: 822 sq. ft. – 2 bedroom, 1 bath

Price: $299,900

Income

Rent: $525 per unit

Coin operated laundry: unknown

Expenses

Property Taxes: $6,620

Insurance: $3,000 estimated. I haven’t gotten a quote, yet.

Property Mgmt: 8%

Maintenance: $2,000 per year estimated

Electric: $119 per month average for common areas. Tenants pay their own electricity.

Gas: $171 per month average. Landlord pays all gas.

Water: $309 per month average. Landlord pays all water.

CapEx: $189 per month estimated.

Vacancy: 10% estimated. The average for the area is around 5%, but I’m using 10% to be safe.

Other expenses that I don’t have: lawn care, garbage & snow removal. Any others that I’m not thinking of?

Financing

My financing estimate is based upon another property I purchased and will hopefully use the same bank. I haven’t approached them about this property, yet, but am optimistic I can get the same terms as before: 5 year term amortized over 20 years, 25% down, 4.5% interest rate.

When I run these numbers it doesn’t look too good, but I’m not sure how accurate I am with some of my estimates. I’m curious to see what others think. Thanks in advance for all of your help.

There's a guy by the name of Kevin Bupp out of the Tampa, FL area that is a good resource for MHP investing.  I've been listening to his Real Estate Investing for Cash Flow podcast for a while and really like it.  I think he has also started another podcast specifically aimed at MHP investing, but I haven't listened to that one.  Good luck!