All Forum Posts by: Mike A.

There's an old bank for sale in CT in a great location. It's a pocket listing, so it's not on the MLS yet. However, the building is in excellent condition, but one major drawback. The bank vault is still in the building. It's an old First Niagara bank that Key or HSBC didn't buy. Any suggestions on how to remove a bank vault?

We're installing Internet in our buildings in order to offer smart devices for use by the tenants for an additional fee of $30 per month. The tenants would also have complimentary Internet access as well. Within their lease, we have them signing an Internet usage agreement. Our attorney feels this is enough to protect us from any legal liabilities. 

Anyone else run into something like this before?

Nope. My original offer was with the said money down. I was told he'd consider it and after I sent my proof of funds, he now wants 10% down. There's technically enough to purchase for cash, but I like to have a large buffer for when things go wrong.

Anyone?

I've been negotiating a contract for a 20 unit building. Funding has been secured and a letter as well as proof of funds has been forwarded to the seller. On my 1.5m offer, I stated I'd put down 50k and 1031 the rest; which was verbally accepted. The seller is now requesting 10% down. One, that wasn't in my offer. Two, the seller has been very fickle with the sale of the building. We've actually been negotiating since February and I've already walked away once. I also do not trust the seller as he will not certify the profit and loss statement. He will only sign the statement saying with the best of his knowledge, but is providing tax returns for the last three years on the property.

Any suggestions on what to do here?

I do not need the money right now, and I do not want a payment on money not in use yet.  In theory, I could take the money, dump it into a Vanguard Muni fund until I need it so it negates the loan payment, but I just like to have the option of having it until I need it. In addition, since it's only 500k, I cannot get super low rates like I can on buildings which are a million +. I can get a loan at 4% on a 1.2m property, but on a 500k property, I'd spend a point more plus closing costs. Plus, in NY, I've recently found out that there is a 1.85% mort. tax which I'd have to pay as well at closing.

And no, I do not plan on selling soon. 

My team just rehabbed a building in White Plains. Purchased for 200k, added about 40k in upgrades and it now appraises for $475k and is fully rented. I tried to get a LOC from Penfed and they wouldn't give me a LOC for 300k because the building is in a LLC. I really do not want a mortgage on this building, just an LOC.

Any ideas?

I was walking in Jersey City today and there was this shell of a building of central ave I believe. I'd like to see if I could buy it and rehab it. How would I find out how to acquire it from the city or bank or whatever? I cannot find it listed anywhere aside from when it was last sold a few years ago.

Open to ideas and suggestions.

Originally posted by @Nathan Gesner:

I don't think you can do a good job managing rentals from 150 miles away but that's your choice. Personally, I would do a better job of screening until I found a good PM. Driving 300 miles to deal with an inspection is probably more than you would pay in monthly management.

You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Agreed, but believe it or not, there are not many decent PMs in this area. I checked the site you recommended, and we used one of them before. We gave them two buildings fully occupied and within the matter of months, they were vacant. The management fee is negligible, but the additional fees on questionable items are becoming an issue. The other issue is the current PM is hard to get in touch with. Sometimes they'd respond fast, others, not at all. I've requested repeatedly, just provide an acknowledgement or response within 1 business day. They say yes, but then, goes back to the standard operating procedure.  Both buildings are in downtown and bring in around 250k a year in rent; so they are not small. The only leverage we have is that we collect the rent, not them. Myself or my partner can get there in about 1.5 hours, so it's not that bad. I am just trying to get better transparency; similar to what we have with the units we manage directly.

Tell me about it. They show proof of the parts receipts, but the labor, since it's independent contractors (they say), there is no proof aside from a timesheet. No tax on the labor, which I think is a bit suspect BTW. Plus, anything under 300 they do not need prior approval so there's a few nuisance charges that are like, 40 bucks, 80 bucks, 120 bucks, etc.  It's in a major area, but the PMs up there are horrible. The first one we had some how figured out how to magically have all the tenants leave in 3 months. This one, filled the units, but these BS charges are really getting to me. They will be done on one rehab in two months, so I wanted to take it in house (since we already have the software) and just deal with a realtor to fill the vacant units.

Anything within 80 miles we manage directly. Since this is double that, we thought it would be best to have someone on the ground. We can fire during the rehab, so we're bitting our teeth until they are done. He went on vacation for a few days, so he refuses to answer the phone. It's driving me crazy. He was good since we took over the building, but he's been pretty bad the last month or two. Since we are doing this rehab in partnership with the utility company, it's hard to fire him and his firm in the middle of the job. I took a drive up there last Wednesday, no one was even at the site. It would had been faster and prob. cheaper if we just sent our team up there.