All Forum Posts by: Account Closed

I always liked this one:  "In theory, there is no difference between theory and practice. But, in practice, there is." 

@James Wise - Thanks for that info.  Your investor interest in Parma suburbs probably just ticked up a notch or two.

@Noam Adler - The eviction I had which the magistrate made the crazy decision was in Lakewood.  Which I am told is a bit more tenant friendly-- but I've also had another eviction in Lakewood that went just fine.  Like I said, crap shoot.  I'm not sure where Lakewood falls on the Parma <-> Cleveland Heights ratings scale of landlord friendliness.

@Noam Adler - The judges/magistrates are a crap shoot it seems.  Usually we have gotten positive verdicts (got a writ forcing the tenant out by X date) without issue.  Tenant usually doesn't even show I am told (I don't show either, my PM / PMs legal team does.)  We had one where the magistrate took the tenants sad sob story at face value and wouldn't give us the writ so we had to start the whole process over (and I had to pay for another eviction) to get a judgment on that unit, which we just got this week.  I'm not sure the exact timing, but it feels like from the time they file to get a court date, the court date is usually like 4-6 weeks later (boo!) and then if you get a satisfactory ruling, the move out date will be a few weeks after that.  So between the time the tenant hasn't paid for a few weeks, to getting to court, to getting to move out, I would say as a gut check that it can easily be 3 months from the date of the missed rent payment.  @James Wise or any other Cleveland based portfolio managers might have some large-sample statistical data that is more accurate.

@Daniel Graham Wright - Investing from a distance isn't hard for me since I pay a PM company to do everything for me.  I probably spend a couple hours per month on my real estate stuff.  I spend about one hour at the end of the month entering the month's bank transactions and journal entries into QuickBooks per my accountants instructions and making sure everything is accurate.  At this time I also skim the utility bills that were paid during the month and see if any water bills have shot way up indicating a leak the PM should send a plumber out to investigate.  If I spend more time per month than that, it's usually emailing back and forth with my contact person at my PM company about any evictions, vacancies, rehabs, etc... that are going on.  Sometimes it's following up if I'm unsure what the status of something is.  But my time is mostly 1 hour of accounting, maybe a couple hours tops of communicating with my boots on the ground.

@Ryan Ingram - Thanks!  I'm a lot less experienced than many, but I've also learned a bunch of things about my market so if I can help save someone else some pain starting out, I'm all about that.

@Taylor Chiu - I was told to expect 2 or 3 years to stabilize and turn over a 2 or 4 unit type building.  Unless you are kicking people out and not renewing leases to get it done faster.

I have one unit in one of my quads who is an original tenant and he's not going anywhere.  From all I have heard is he is a total filthy slob type borderline hoarder with all his junk, and when he leaves that will be a FULL floor to ceiling gut  remodel.  But his rent is on the higher side in that building and he has shown no indication of missing payments or causing trouble other than if he's so dirty it can attract pests.

Now you have me curious to go figure out exactly how many of my tenants have been there from the beginning.  I'll report back when I figure it out.

@Justin Wilson - Yeah, I don't see the $75 water ballpark figure thrown around too often online but it's a really good default value to pencil into your calculations.

$75-$100 per unit every month is the 'ball park' estimate I was told by the guy helping me get started in Cleveland investing to factor in for your water and sewer.  It has held up to be a remarkably good ball park on average.

In the last 12 months, I have spent $18,153.20 on "utilities".  (90% of that is probably water/sewer with a little of it being the shared heating building).

$18,153.20 over 12 months = $1,512.76 per month average.

$1,512.76 per month spread across 20 units = $75.63 per unit per month.

Now the past 12 months I didn't have 20 units the whole time.  The first few months I had 14 units.  So the true average might be a bit higher once I get a full 12 months @ 20 units but still, that's a good ball park in my experience so far (and remember, I monitor my water bills for high usage / leaks.  Lots of investors probably do not.)

Also worth further mentioning, is unspoken in all of this is that I have accumulated equity in my portfolio via debt pay down (most of my loans are 20 year vs 30) and value appreciation (and forced appreciation through the rehabbing / fix up). I bought most of these properties MUCH cheaper than you can get anything comparable even at the time I bought them, but definitely today a couple years later. SFH for 61k that rents for $1000. Good luck trying to find that in a B area of Cleveland today. Quad for 120k that rents for $2300/mo and is probably worth closer to 200k now. And so on. Yeah the repairs eat up most of my cash flow but that also means the tenants are paying for the rehab over time vs me. I have only had to add funds from my personal checking account once in the past year and a half. In the beginning I was writing checks every month almost. Once I got to about 10+ units it started to be more self-sustaining.

@Jim R. - Thanks for letting me know.  For whatever reason, the website compressed the image.  I updated my original post with an imgur link to a high-res version of it that is hopefully more legible.  Cash flow per door is tricky.  Because most of my units are inherited / deferred maintenance, that means the first time they go vacant I have a huge bill, which can be over $10,000 when you factor painting, new floors, new kitchen or new bath, etc.  So while an individual property might be cash flowing well, pretty much all my money coming in goes back out as other units go vacant and turn over.  It sounds scary but I'm not sure I've had a positive cash flow year yet.  2018 was on track to be but the bad end to the year I mentioned sort of killed it.  But when you are doing 40,000 in repair costs in a year, that accounts for a lot of cash flow that doesn't make it to my pocket.  That's a big part of why I said if I started over, I would start with a fully rehabbed and re-tenanted building vs the inherited route.

Also worth mentioning is that since I do not self-manage, I'm paying an extra 10%+ in rents collected to PM, plus leasing/advertising fees, plus whatever markup on supplies/labor that I could save self-managing if I wanted to go that route.  I'm definitely paying a premium to outsource that aspect of my investing because I have a day job, and I've also done my own self-management before and while I know I can do it, I did not enjoy it so I happily take the hit to let someone else do it.

@Brian S. - Yeah I didn't mention dollar amounts. I was trying to keep the post percentage based but I guess this is worth mentioning in concrete numbers as well. Yes water/sewer is ridiculous. My monthly bills range probably from 75 to 300 total per building per month. Most are probably in the 125 - 225 range. One of my quads has lower water bills than my SFH too. I've never understood that building but it's always had really low water and sewer usage. Maybe there are no bathtubs in that one.

Oct 2018 is where I hit a big clump of vacancies all at once (non payments that became evictions or would have but they bailed before court) so less income from vacancy, plus court costs, plus rehab costs at turnover if the unit was a mess which since most were inherited tenants they usually were, plus PM leasing fees, etc.. equals a pretty sad stretch of months at the macro level when you look at how am I doing as an investor.  :)