All Forum Posts by: Michael Encoy

Michael Encoy has started 4 posts and replied 30 times.

Originally posted by @Andrew M.:

@Gary F. Has anything changed for you in the past 7 months since posting?

I'd agree with @Michael Encoy and his evaluation at the beginning of a partnership. I currently own four homes that I rent to residential care home operators in TX. I met with the business owners, looked through their books and listened to their business plan. It helped with this particular operator that there was a family legacy in the industry and they were incredibly competent. We signed a five year commercial lease (state promulgated) before purchasing each of the homes averaging about $1000-1300 above market rents. The tenant is responsible for most of the day to day repairs, with me being responsible for the roof, A/C and water heater.

Be aware that if you do this, the insurance requirements change significantly. You most likely cannot use a DWF landlord's policy. I have a commercial policy consisting of home coverage plus $1MM general liability for each property, and the latter is secondary to the operator's (required and primary) $1MM general liability policy on each of their business locations.

@Andrew M, good point on the insurance. It may be different in other states, but I opted for a landlord's policy supplemented with a $1MM umbrella. This is what property owners who lease to operators who I spoke with opted for.

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@Gary F.

Hi, my mom experience has been great so far. I kind of the just fell upon this model, but I’m a great believer in it. I actually used to work as a consultant in a ALF group so I was a bit familiar with the business model and how lucrative it is for the operators.

I met with the operators prior to leasing my SFH(Los Angeles area) and validated their business was on the right track. I secured a 2 year lease at $1000 above market value. I could have gone $1300 above but I want to build a relationship with the operators with plans to scale with more properties.

I’m in the process of purchasing property to do the same thing.

Have you started with yours yet? Ir are you just inquiring . I’d love to chat(pm me) I’m in the Monterey area.

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Originally posted by @Alina Trigub:

@Michael Encoy

You should be more pro-active: go to ALF-related events and reach out to agencies that support these types of facilities and ask for the local operators names to connect with.

@Alina Trigub

Thank you for the feedback. I will definitely keep this in mind.

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Hello BP community. I am currently an owner of a SFH leasing to an ALF operator. I like this model of this rental investment and looking to scale. Looking at closing on a home in E Whittier/Orange County border in April timeframe. Also, due to high costs in these areas, I am not opposed to looking into the Inland Empire. I am looking for ALF who are looking to lease a SFH to operate out of.

Looking to close in April 2020.

Thank you.

Seeking Assisted Living Facility Operators looking to lease SFH.

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Looking to close in April 2020.

Thank you.

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@Melinda Vaughn

Hello, I’m in a situation where I have an opportunity to rent my property to an operator. Would you care to share on specifics if doing this right?

Thank you!

-Mike

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Harry,

I am in the same situation. Have you moved forward on this deal. My concerns are:

Increasing insurance above the level of a landlord insurance to account for the commercial business that will be in my property.

I've seen figures of 5-7K per client living in these homes. I was offerred $3500 (advertised $2900), how much were you offerred?

The property is located in CA FYI, since I know regulations vary from state to state.

Thank you.

-Mike

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Hi Aaron,

Did you move forward with this? I am in the same boat and was wondering if you had any feedback to offer.

Thank you.

-Mike

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Originally posted by @Lee Ripma:

@Michael Encoy

Do you ever want to live in the property again? Is there some non-financial reason not to sell? If not, you can sell and have a nice little fund to BRRRR with. Make sure you max out the value on this one first though, treat it like your first BRRRR. It's going to have a great ROI.

Lee,

Yes. It was an option after retirement from the military. However, I was just quoted to refi with my current lender:

IRRL NAVY FEDERAL:

30 YEAR:
.5 DISCOUNT POINTS 1 ORIGINATION FEE(PAID AT CLOSING $31,510)
RATE: 3%
MONTLY: $1829.76

3.375 &(NO DISCOUNT ORIGINATION FEE)
RATE: 3.375
MONTLY: $1918.69

VA CASHOUT STANDARD
3.375%

With this new loan, I would be positive in cashflow (about $800/month for a $2800 rent) if I opt for a non-discounted rate. Less cashflow if I cashed out some funds to add to what i have currently saved ($50K) to work on another deal. I will also do some shopping with other lenders, of course.

Thank you, Lee.

-Mike

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Originally posted by @Jaron Walling:

Sell. This is no brainer especially if you can meet the 2-5 years rule. You could pay zero capital gains tax. I agree with @David Pere , take that money to another market or find deals when the housing market cools off.

Jaron,

Thank you for your response. Definitely looking into a more favorable market in terms of value and prospective deals.

-Mike

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All Forum Posts by: Michael Encoy

Michael Encoy has started 4 posts and replied 30 times.

Post: Leasing to Carehome Operators?

Post: Leasing to Carehome Operators?

Post: Seeking Assisted Living Facility Operators looking to lease SFH.

Post: Seeking Assisted Living Facility Operators looking to lease SFH.

Post: Looking for ALF operators looking to lease SFH (Los Angeles/OC)

Post: Renting to a Residential Care Facility

Post: Renting to senior care centers / assisted living

Post: Assisted living renting

Post: Eager to start multiple BRRR process. Should I sell or rent

Post: Eager to start multiple BRRR process. Should I sell or rent