All Forum Posts by: Sharon Rolel

I would find a few other people with hypothetical millions and get a big complex going, value add type (doing these in Texas, but with many partners as I don't yet have 1m$). Using the cash to get more SFRs is not the point of having that kind of money, I think. I would try to get in with the big boys and learn as much as I can.

For a multi-family properties which are valued by their income, raising the rents gives more than just more cash-flow. If the market dictates a hike in rents, then in that case it might be better to even let the tenant go if he doesn't like it, maybe having some downtime between tenants, but having more history to back a higher value of the property for a sale/refi.

I was just thinking about this the other day, although perhaps from a different angle. Today it's quite possible to become very rich practically instantly (relative to traditional business and RE) with the internet and globalization.

Interesting observation, Steve.

I spoke with the agent (he's a good one) and he told me that this kind of building would have lead paint, but it is covered by several coats of paint as it was banned in the 70s. Either way he said people don't care. For asbestos, he said it was mainly used in something to do with furnaces and would anyway not be accessible to tenants.

It would have a chimney, not sure if anything was done about it. He said a little brick work and repairs to stucco may be done, but no structural damage, from his observations.

Plumbing is still the original galvanized steel, the same agent has an offer in on a similar smaller building that is being renegotiated because of the steel plumbing, and he would share the estimates he gets when he gets them.

http://www.biggerpockets.com/forums/88/topics/72368-16-unit-century-old-building

Joel, it isn't that kind of a situation, I think. The owners are, from what I understand, very far from being in any kind of financial trouble. They are from Vancouver (other side of Canada) and own other properties, so the lender won't give up anything so easily knowing they will probably keep up to their obligations. If the property will be sold underwater (it will be, even at 425k which I am not going to pay anyway, I have an offer in of 380k) the mortgage will still be repaid in full to the lender, by the seller. We will work something out, but the last buyer who didn't get his LOCs in order for the rehab so ended up not buying, spoke with the lender who will provide 25 amortization 5 year fixed loan at 4.25% at 65% ltv. I'm more than willing to take those terms.

Even at 425k I would be paying very little for potential and is quite close as far as (real) cap rates from comps go. I was planning on rehabbing what's currently vacant and just move people around and doing 1-4 units at a time. Another option which would be more viable had the place been 50% vacant, since it consists of 2 separate spaces, would be to put everyone in 1 half, rehab the other half without interruptions, then move them to the rehabbed half and doing the first half. I will look into it, but I don't think enough leases are expiring soon to make it.

I based 750k ARV on ~750 rents, which are fair, but I'm counting on at least 700, not 800, which are possible and would be nice, but are a bit optimistic.

It's right in town, on a bus route, and like I said there is ample parking on the street. Most houses in the area don't have a garage or parking space as they were built so long ago. But the streets are wide so people park their cars there.

Aaron,

There is a big newer furnace, same as any other building in Canada I inspected, pretty much.

8 parking spots, right now with the rents being cheap and units not being in good shape, tenants generally don't have cars. There is street parking available but it can be a slight issue.

Seperately metered, though I will look into the fuses/breakers.

Asbestos, lead paint, and plumbing are important issues, I will inquire. how serious can it get? Obviously having to replace all the plumbing has the potential to be a deal breaker...

It depends on the numbers for each property, but generally speaking 10% cash flow every year is better than having 10% appreciation (even if it's compounding) as per the "time value of money", which means money you get today is worth more than money you get when you sell the property.

Joel, having you guys try and discourage me is why I'm here!

To answer your questions:

The laws only prevent me from demolishing the building.

It was originally an apartment building, no conversion has been made.

Ontario has rent control, and some strict rules about evicting. For 2011, you could only raise rents by up to 0.9% without asking for permission, for 2012 it is 3.1%.

The figures I came up with are 20k for a new roof, 17500 for 50 windows 350 each, and 4k-7k to rehab each unit, 7k being the worst case scenario, and 4k is something that I wasn't quoted, but a couple unrelated professionals have stated each unit would require.

I am not sure about finishes, I think it's mostly the apartments being in bad shape that keeps the rents low. I will be "looking to rent" tomorrow, spying on some of the competition.

Everything is up to code and has been recently replaced (I have documentation).

The roof has no pitch.

Bill, I agree, it's a whole neighborhood that is old and it looks to be in fantastic shape. (place was founded 1858)