All Forum Posts by: Nicholas W.

In my limited experience inspectors aren't great but I'm sure there are a few good ones out there. Like Russell mentioned they can't see through walls so they won't find more than an experienced investor will. What they can do is provide a second set of eyes who has no emotional, or otherwise, attachment to the property. They also provide some bargaining power, usually prior to making an offer you don't have 2 hours to go over a property with a fine tooth comb. Even if you do do your own inspection after the offer but prior to closing you won't be able to renegotiate based on it unless you are a licensed inspector.

Finding good service providers seems to be a common problem so I thought I'd offer some tips. Although not construction related, I own a lawn care business which is similar when it comes to vetting potential customers. Keep in mind these tips are for finding a GOOD service provider, not necessarily the cheapest service provided.

• When calling do not say "I'm taking bids," instead say "I need some work done." When I hear "taking bids" I check out. Taking bids implies you want the cheapest price, and a good contractor isn't usually cheap.
• If you were referred by someone, be sure to mention that. A good contractor doesn't want to disappoint a current customer or colleague so they will be more likely to follow up with you and provide you with a fair estimate.
• Be forth coming with information. Don't call up and ask "what is your hourly rate" without giving any information about the job, where it is or what it entails.
• Be polite. A good service provider is busy and doesn't need your job. Don't expect them to drop everything and run right over to provide a quote and don't act as if you're doing them a favor by giving them the opportunity to work with you.

Like I said good service providers aren't cheap and cheap service providers aren't good. If you're having trouble finding a good one it might be due to your attitude and dialogue on that initial phone call.

I know you're trying to find out a technical answer to your question but I don't think you will. It's an extenuating circumstance and there probably isn't an official rule on the books for such a circumstance. It's good that you're trying to do your due diligence but I don't think you have anything to worry about. As long as the mortgage bill is being sent to the address I highly doubt there will be any questions from the bank. The fact of the matter is you are living at that property and are renting out a portion of it to some roommates. I don't think they can dictate what portion you rent out or don't rent out.

Obviously this is not legal advice and just my opinion.

I think I understand what you're saying. The kitchen will be an "L" shaped kitchen with the stove entirely making up the short portion of the "L". I think most mis-uderstood that portion of your problem. 

I think notching out the counter would cause problems getting the stove in and out in the case of service or replacement so I don't think that is a good option. Also you may have issues opening the range door as it would hit the adjacent cabinet.

Is it possible to cut the back portion of the cabinets off an inch or two to make up the difference? So instead of the cabinets being 24 inches and the counter being 25 what if the cabinets were 21 inches deep and the counter 22 inches deep. That would be what I would try to do assuming I'm understanding your situation correctly.

I'm all about the creative finance idea and have been doing a ton of research on it lately. I have a decent amount of equity in my house that I can tap for a down payment on a multi-family (ideally a 4 family). I have questions about making the offer. With a primary residence transaction the offer is contingent upon preferred financing terms and an inspection and you typically put in an offer right away contingent upon doing your due diligence but I can't see an owner accepting an offer contingent upon me coming up with 100% financing at the drop of a hat.

When you plan to use creative finance, HELOC, cash-out refi or private investor how is offer structured? What if I don't get as big of a cash-out as I thought or my private investor has an issue with the deal for whatever reason? I plan to do the cash-out refi prior to putting an offer in, but just asking hypothetically how these transactions work.

Do you get the previous years operating statement of the building before the offer or is that typically only disclosed after an offer is made? I keep reading about a LOI, letter of intent, what exactly is that and how does it fit into the process? I guess I'm just wanting to know more about the typical start to finish process on purchasing a smaller multi-family.

Thanks in advance for any guidance!

 This is an interesting problem you have here. I would think the best and cleanest way to do this would be to ask if the supplier will credit back unused oil. Naturally they won't give you a full credit but something is better than nothing. Unless you have a way to definitively confirm the amount I think you'd have a hard time just billing the tenant. The first thing I'd try is to approach the tenant and ask if s/he'd like to buy the oil from you and settle on a rate which will be mildly to severely discounted before you sell if back to the supplier. You're going to take a loss, no doubt about it, but I don't see why a reasonable tenant wouldn't be willing to pay you 50-75 cents on the dollar for something he's going to have to purchase anyhow.

$300 per month will account for the reserves for repairs and maintenance as well as capital expenditures. Most months you will spend very little if any of the $300, but when you need a roof you'll be glad it's all there.

You may have added in it, but I didn't see a vacancy expense listed. That should account for around 5%. Also I didn't see capex so I assume you lumped that in with repairs and maintenance but I'd venture to say that $40/door would be a little low for both repairs/maintenance and capital expenditures. Maybe $60/door or so would be more appropriate. 

Also keep in mind that 5 unit's will be more difficult to finance than 1-4 families.

As for the local cap rate I think you'd only find that by talking to local investors and/or real estate agents who work with them.

Here's some good reading that should mostly answer your questions:

https://www.biggerpockets.com/renewsblog/2015/05/1...

To answer your final question, transferring them to your LLC could trigger the "due on sale" clause of your loan and you would have to pay the entire loan back relatively quickly.

 Mark, that was very helpful, Thanks a ton! I will review the link now to get a better understanding.