All Forum Posts by: Luke S.

Anyone have a template for a letter they use when they buy a property and ownership turns over?

Just curious what i should be including and avoiding...

Thanks in Advance,

Luke

Offer accepted... Financing green lighted. Hopefully doing all the inspections and such starting next week.

Trying not to get to excited :) But pretty stoked.

I am working on negotiating our first project deal which is coming due to networking... (i like being able to talk to anyone) and you guys on this board building up my knowledge.

I will post some details after we get everything under contract (still haggling some, but they will get there). It is weird to think that 2 months ago i was in this town looking at a P.O.S. 3 plex house, now it appears our first purchase (with high end trustworthy consulting) is going to be a 40plex in the same town that i scoffed at the idea of before (parents are buying 50% of the project, i didn't have that much cash around).

Sorry this is a generic statement, just excited at the potential.

ND

I plan on it. (waiting to hear back) But isn't splitting up utilities amongst units like that kind of sketchy due to people pointing fingers and what not?

Anyone have advice on this?

I am looking to buy a 4 plex that the owner currently pays all heat/electric on.

Do you guys know the implications/cost of splitting up these bills (or just one or the other? )

Thanks in advance.

Luke

I agree entirely (although I am convinced I have that manic depressive heat issue wife... :p ).

One question for you guys, how expensive is it to partition out the gas/water to each unit if it isn't already done? (sorry if its a stupid question, but one i should have asked initially as it was in my mind to do before i posted initially)

Bryce Y.

Roof - 2 years old.
I calculated vacancy into the bottom.

(any good spreadsheet templates you guys use?)

the sq ft is about the same as my crappily insulated house is, and i only probably dump 1200 into heat for a winter?

My plan in the long run as tenants get replaced is to meter out water and slowly pass those expenses into the tenants.

Thoughts?

What do you mean about the general expenses plus capital depreciation? (sorry, treat me like a child as I learn more of the intricate terms)
- how much into each term do you think as well?

I am not overly worried about keeping it rented, but just a natural pessimist/conservative person so nervous about competing for rentals against the guys with a bigger reach.

I will begin with a little drawn out story about me before i get into the project.

Born and raised in Agriculture, will be focused on that industry throughout my life. I will however focus much of my capital and investable income into Multi Family Real Estate. I was lucky to learn some of the ropes from a very large Fargo ND property owner and am almost as cheap as he is in general :p.

The property I am looking at is in a neighboring town outside of Fargo with a Tech school and decent consistent renters. The couple I am looking to buy from are dwindling down the size of their operation (the wife manages it all and is sick of managing 170ish units by herself, she hates delegating work so she is cleaning and doing to much labor). They have one unit in the neighboring city (in MN state lines) and figured they would sell me this one if I wanted it. They are very open and good people to work with, IE will help me start building a team of repair men/cleaners, etc....

Here are the logistics of the property.
4plex
3 2bed 1 bath - $475
1 1bed 1 bath - $400
Coin Laundry - $75
Monthly Gross = $1900
(one unit currently empty, two tenants long term older people)

Expenses (that they gave me)

Insurance = $1891 (2013)
Prop Tax = $1684 (2013)
Snow/Lawn= $1220 (2012/13)
Garbage = $700 (2012)
Utilities = $1550 (2012)
Heat = $2000 (2012)
Total Expenses = $9045 ($753.75/monthly)

Cost $125,000.
Needs new siding (not going to repaint it), and paint windows.

Financing =
20% down 100k note @ 4% = 477 a month

Buy for 120, 30k down 90K note @ 4% = 429 a month (probably do this one)

total expenses = 1182.75 (mortgage and expenses)
Gross income at 25% vacancy = 1425
Net income at 25% vacancy = 243/month (2916 a year)

This is almost 10% cash on cash at 1 unit empty at all times.
On a 10% vacancy its over (528 a month/6,336) 20% cash on cash....

Please help me pick this apart some; like I said, its my first deal and I am just nervous, to conservative, etc.. :p

We haven't computed the new siding cost (would be using his siding guy who is relatively good/cheap). Also, new appliances in all units, carpet is 75% and units as a whole in great shape.

Thanks in advance for the thoughts/help.

Luke