All Forum Posts by: Oren K.

I think that someone sliped a decimal point somewhere - The reprort shows monthly NOI of $113..22 which is $1,358.64 annually. With a purchase price of $133K (all in), that works out to a ~1 CAP.

I found the presentation of the information colorful but confusing. Clearly the seller / agent is someone who know how to prepare a sales brochure but needs to double check their math.

Hope this helps.

@Ryan Moore - Vacancy should not be part of your reserve as it is not an 'expense' but foregone / unrealized income. As long as your gross rents cover all the expenses, that is your NOI.

The reserve 'should be' independent of the income the property but the reality is that most owners simply don't have the discipline or the deep enough pockets to do that.

Reserve amount is the a calculation of how long before you have to replace 'big' ticket items at a property (e.g. Boiler, Roof, etc). Alternatively, you make repairs until the item becomes non-fixable.

Some owners / managers include AC unit, Appliances, Common Area (Carpet, Paint), Exterior upgrades, etc. etc. How far you drive this down depends how proactive you want to be vs. reactive to something failing.

Oren

And don't be surprised if on first inspection that they find 'something' that requires them to come back to re-inspect.  

What I love (syncism and carcasim intended) is when they come out on a multi-family property and refuse to inspect anything other then the unit they were assigned to inspect. That way some other inspector can also spend time coming to the property.

They have to keep themselves occupied (syncism and carcasim intended again).

Oren

Justin,

There any number of agents that are on BP. It would be helpful if you provided a bit more detail regarding what kind of 'investment' properties you may be interested in. Are you looking for Single Family, Multi-Family (Non-Commercial ; < 5 Units), Multi-Family (Commercial, > 5 Units), Retail, Office, Industrial, etc.

Assuming you are looking at residential as that is what 90% of BP is about, it would be useful to know if you want turnkey or not.

@Steven Gesis / @Tom Ott work for Smartland which is a turnkey company. They do mostly SFR and portfolios of SFR but are branching into larger Multi-Family in the past year or two.

@Federico Gutierrez does not work for but is associated with a company called Holten-Wise - A PM company but quite active also remodeling and selling non-commercial (under 5 units) properties. Once in a while they also market / sell other stuff what I would call mid size (10 - 40 Units) properties. They do the renovation but do not own the properties they work on. 

As with all PM's / Turnkey / Contractors - Make sure you read and understand their prices and policies before you sign on the dotted line. Each has distinct Pros & Cons.

@Matthew King is an RE agent that focuses on mid & larger multi-family (10 - 100 units) who works strictly with investors (fairly certain).

As you are moving to Cleveland, that is a distinct advantage in that you can take the time to learn the different areas, meet people, develop relationships, etc.

Good luck,

Oren

As @Roy N. said. A Phase 2 looks at actual contamination / leaks that may have occurred. Even if it comes back clean, the tank will very likely need to come out and then the ground is retested to confirm that nothing 'happened' during the extraction.

Assuming there are no other issues (i.e. additional tanks), one option to explore is to get the tank removal as part of the initial quote, you might get a better price, and not do the actual Phase 2 testing until after the tank is out so it only gets done, hopefully, once. A bit of risk in that if there is any contamination, it will require additional remediation and retesting.

Good luck.

Melanie,

It doesn't sound like you want to be a landlord or start building a real estate cash flow portfolio. IF this true, then I would advise against buying an existing property and renting with all that entails and specifically against investing in the US as there are a number of complications / overheads (incorporation, taxation issues, etc.).

If you are convinced that local (or places you know) real estate will continue to appreciate buying a 'pre-sale' unit is not a bad idea just remember to account for the tax consequences when you sell as this will NOT be your primary residence. 

It is always a trade off between risk and potential reward. Where you land is very dependent on your personality and situation.

Oren

Iryna - Understood regarding BRRR but still not sure if that qualifies as 'active' unless the work is being done by employees vs contractors. Just make sure you speak to a CA / CPA who deals with cross border companies / incomes / Taxes.

Hi @Denzel Henderson

There are any number of agents & PM / agents that are on based in Cleveland that are on BP. It would be useful if you could provide a bit more guidance as to what your investment objectives are and the type of product you are looking for. For example;

@Matthew King is an agent who specializes in mid to larger multi-family

@Tom Ott is with a Turnkey company that mostly focuses on single family (though they may be branching out) and provide PM services

@Federico Gutierrez is an agent for mostly non-commercial single family / multi-family but is also affiliated with a PM company.

There are other agents / PMs on BP with some being generalists and some more focused. I'm sure all would be happy to take your call (or call you) but knowing what / where you are looking will help them provide more value.

Best of luck.

Oren

@Iryna D. Omar & Chad have summed things up very well but your quote "Canadian corporations..." makes me think that you believe that your C-Corp is an 'active' business. If your US C-Corp / LLC are primarily generating income by collecting rent, my understanding is that it is not considered 'active'. If I'm mistaken, my apologies.

IF you have not run across these before, read up on "Foreign Affiliates (FA)" which basically says that each year you have have to report in Canada the income of any company (US or elsewhere) your Canadian corporation controls. Also you need to research "Foreign Accrual Property Income (FAPI)".

Together, FA & FAPI, are the basis for eliminating Canadian usage of US 1031 Exchanges.

Here is a link to a presentation (no affiliation) to get you started but you really need an US / Cdn tax accountant for this stuff.

FA & FAPI presentation

There are a number of knowledgeable and well intentioned people on BP and self education is always valuable but these are really questions for subject matter experts (i.e. accountants). As the amount invested increases, the risks of getting it wrong are not worth the cost of paying for correct / good advice (IMHO).

@Darel Ison There are two parts to consider. 

If you want to bring in a company to install / maintain the machines and share income, I suspect that you will have a difficult time as your unit count is so low. From various conversations I had when I looked into this, you need to have 12 - 15 units per set (washer / dryer) to make it sufficiently profitable for them. Even if they kept 100% of the income, it probably is not be enough to justify their expenses (machine costs, service calls, data costs for CC transactions, etc.). Can't hurt to ask but wouldn't hold my breath.

On the other hand, you need to look at your 'competition'. If they are providing this amenity, then you still have to consider it to get / keep tenants in the units. In this situation, you are going be looking for the most cost effective solution which is likely buying (used or new) and maintaining the machines yourself. More aggravation but you do what you have to. Also note that the cost of commercial grade washers / dryers is much higher then residential grade.

One more thought, are your tenants asking for this or are you trying to use it as a differentiator. As a differentiator, even if it costs you at the end of each year but keeps your units filled, it may be worth it. Need to run the numbers to see.

Oren