All Forum Posts by: Mark Fedorov

I have a seller of 11 SFHs and 5 multi (2,3,4,6 and a weird one). They are between $76 and 270K, 

They are located in Bethlehem (4), Emmaus (1), Whitehall (2), Wescosville (3), Weisport (2), Lehighton, Nesquehoning, Allentown & Caty (1 each).

They all seem to be a 6.5-8% cap rate depending on area, they all have tenants in them currently, they all have been well managed. All sales will be without agent fees.

I am listing for a friend, PM me if you are interested, and what you are looking for.

-Mark

Wow, I recall my drinking from the firehose days...

My suggestion is that you have two options:

1) - Spend your time finding a good project management software (like Encarta or Yardi), you have to realize that a GOOD system is worth it, and that is why some systems are more expensive than others - Spend you time hiring 4 good people, two for maintenance, two for office, PAY THEM WELL, but make sure they can work independently, let people go before they become (or make) a mess, going though employees in the begining is no big deal. - Make a WRITTEN responsibilities list, you take some, give most to the others, manage the people not the work.

2) Hire a good management company in the area, manage them with bi-weekly meeting, and make sure their contract has a clause that can get you out on 30 days if you don;t like how they work.

The management company should cost you about 2-4% of the rent roll more than you doing it your self. If you have 125 units, you should  have  rent roll north of $1MM per year. So that is $20-30,000 per year that you are saving by inserting yourself as the on-site manager.

I don't know of any books about doing this, seminars with the software are pretty eye opening.

Different approach: Put your money where you mouth is:

Come up with your number, and tell them what you will pay; explain to them: Three comps, each with these deducts (or an appraiser), then adjust for issues you know about, give them that math (send them the spreadsheet), then tell them that you are willing to risk it to be on the market at what ever price they think will work, because you know you have a good price, and your offer to buy at that price is good for 6 months. So with your offer suggest:

- You will change your lease to month to month, and allow them to end the lease with 60 days notice when they have another buyer.

- You will let their agent show the house at any time with 24 notice, and you will keep it clean.

In exchange they will;

Sign only a 6 month contract with the listing agent, specifically exempting the sale to you from the agent's contract (so the agent will have to sell it for 6% more then what you offer for them to break even)

At the end of 6 months of failing to sell it on the market, they sell to you.

JC's building department is hell. If you really want to do that, you need to hire an architect to put together plans, but also (and more importantly) guide the process though the building (and possibly zoning) depts. Do not start this project lightly, I can not stress enough how much extra time, money and patience this will take.

I suggest finding a JC architect, with experience with the building department, and get his take on the project, also try to make the AOS so that your deposit is refundable until you have the permits to get this done.

I think it is here already, but:

1- Have exterminator continue to put traps, or you put rat killer down inside. Also you can put rat bail outside, but if the tenant has dogs and the dogs eat it, that would be bad (for the dog). Also, get the holes in the roof closed up and also trim all the trees that overhang the roof, that could be how the rats get up there.

2- Tell your tenant that you are sorry, but it will be handled with his renter's insurance (which, if you have a good lease, it will say that he has to or should have it) FYI: outside or in the garage makes no difference here, it is HIS bike, not yours.

3- Make letter (for documentation) about the poop outside and tell him that the poop is the cause of the problem, and that he has to clean that up or he will be evicted (I am sure there is a clause in your lease about maintenance and  keeping things hygienic. If the heath dept saw that, they might condemn the building (and if you call them, they can do that quickly to get the tenant out). You have to understand that the rats, coming from the tenants's dog poop is ruining your investment. If the tenant does not clean up, you need to get him out before there is permanent damage.

If your tenant will not help you improve the situation, you will have to get rid of them. You should personally inspect the place every week looking for rats and dog poop. take pictures, build your case.

@Radley Estrada, and actually, if they lose the key, and they want to drill it out, or hire a locksmith to do that... that is no sweat off of my back, the worse they can do is screw up their mail box. And if that happens, I go order another mail box door, and I can mark that up more.

I have found that it is liability coverage and declared value of the building. My insurance guy will get me a quote based on what ever information that I have about the building, and I use that. 

I am not an insurance sales person, but I am an insurance believer. 

My philosophy is that in all likelihood, you will never use the insurance, but if you need it, you will want full coverage. So if that extra $2,000 per year saves my $250,000 of out of pocket rebuilding cost, yeah I will pay it. 

Some people's philosophy seems to be that; in all likelihood, you will never use the insurance, so pay the minimum that the mortgage company is asking for.

I see this as two ways of balancing risk. Cash in the pocket now vs possibly having immense bills in the future. You have to pick what you are comfortable with.

Your criteria are too vague. I would say 3-4x the income, verified by calling the public number of the company they work for. Credit report of 600+ with no current delinquencies, They have an old landlord that I can talk to, and you get the current contact information for 2 of their closest relatives (and you confirm the phone and address is correct).

I also make sure that my gut agrees. Check out their rental history with their credit report, is their cell phone an area code that they did not tell you they lived? If you find little lies, that means that they have no problem lying to you.

You absolutely have to know why it failed. Ask the person who gave you the report who gave it to them, and go up the chain to find the guy who checked off "Fail" on that sheet. It could be something small (rusted out HWH) or something huge (failed sewer pipe), I love the idea of taking risk  and getting paid for it, but as Meatloaf once said..."I'll do anything for love, I won't do that" 

....( I assume he was talking about a plumbing inspection.)

Actually, I would complain more that the management company does not have their own people to move the boxes out, and they can not install a new lock themselves.