All Forum Posts by: Eric Halverson

I've been inspired by the most recent podcast to give a quick property update:  

Current Occupancy:  98% (was 100 but 98 is probably a good consistent rate)

rents are now up to 495 for a 2 bed and 595 for a 3 bedroom... water has now been passed on to almost all of the tenants and will be complete here in a few months when the last remaining leases are renewed.

Turnover costs were higher than anticipated as we had approximately 40 people move out so that absorbed all of the cash flow.  Oh, and ironically enough the new assessment instead of waiting until the following year like we had anticipated was done literally 2 weeks after we bought which seemed rather abrupt.  It ended up being just a hair below our purchase price.  taxes are around 41,000 now.

That being said its just now starting to cash flow well and we're looking to do a Hud loan to have a really nice LT cash flowing property unless somebody decides to send us an offer we can't refuse :)

Carpet will be a thing of the past in a few years as we're planning on making turnover costs a priority and keeping those as low as possible.

All in all, a solid deal; will be great after Hud loan is complete.

congrats on getting it rented.. the key in those areas is to essentially never have vacancy.  I don't buy in the west end personally but I do know some people who have had success there.. your turnover costs can get pretty rough there so hopefully your property management company knows what they're doing.

At this point you're really reliant upon them.

I've flipped over 250 properties in Dekalb and somehow don't know Woodfern.. I'm embarrassed.  

That area can be tricky though, very much street by street so I'd heed the advice of folks on here who obviously know the area extremely well.

The Atlanta market has gone straight up for the past 3 years.. even moreso ITP.  I live in Brookhaven and the #s that I have seen don't work for my risk/reward appetite.

Its more for speculative investors who are banking on further appreciation which isn't my style or recommendation.  I'm all cash flow and appreciation is a bonus.

Good areas/opportunities in Atlanta are pretty hard to find right now.  

 Good point Joel.  We are doing a lease audit next week which includes background check information.  Their deposits ara matching up with their rent rolls so payments are looking good at least for the last few months.

Clearly we will get a better picture of what everything looks like then but some good things to be weary of.  We use 3x rent, worst case 2.5 for tenants so we will see if they did that for the majority as well.

 Well, we need to finish purchasing the property but for the right price I'd be happy to discuss a sale.  Feel free to reach out to me or Azeez.

Hey all, thanks for the continued thoughts.

Regarding the occupancy, this one was in foreclosure so its been a steady increase in occupancy so we feel good about the nice steady increase without any marketing whatsoever (not what we're going to do but nice to see).

We've already gotten the insurance quote and added additional liability coverage there otherwise I'd agree that its low.  The quote range was incredible.  19k-60k... crazy.  If someone is buying higher then I believe the rate would go up but we feel comfortable with the coverage especially given its 13 different buildings and outside of a tornado they aren't going to burn down at once.

This is a rural area so expenses are lower than we're used to but this is based on the past 12 months and based on our research.  We're doing a lease audit, etc soon to verify accuracy.

The lender is local and wants a relationship with the seller as they are successful so that is how we worked that out but we've talked to other lenders we've used in the past and they seemed to think it'd be no problem.

aaaaaand I don't know how to link names quite yet soooo.. forgive me. 

Less than a week based on what I'm seeing right now if its c or better and priced at the right #. (obviously some variables here).

I look pretty much every day for them; its a sellers market for sure.

If the deal is reasonable properties are moving in a hurry right now.

Hey guys, some good thoughts here.  i'm new to BP but I dabble a bit in real estate and am involved with the deal so a couple of notes that may help your analysis.

Smart move made by sellers is a 300 security deposit; helps keep the units in at least reasonable condition as that is a decent amount of money for some of these tenants.

First off I'd classify this property as C+ maybe even B-.  Don't let the rent rates fool you; its crazy cheap in this town in south Georgia.  

Occupancy is currently 86% and the current owners literally have no marketing, not the brightest strategy but nonetheless they have gone from 53% from a year and a half ago to 86% with this strategy... its pretty much just word of mouth although it does have very good proximity to the highway system.

The management company we will hire is charging 4% to oversee everything; this includes bookkeeping, etc.  The onsite manager gets 1/2 off rent and 22k/yr as salary and in that area its not a bad deal.  The rest of the admin costs shouldn't exceed budgeted amount.  Tenant screening is covered by app fees and the additional profits from that should cover office supplies, etc. in my opinion.

They have had one eviction since they purchased and decided to maintain a clean environment to have 2 cops live for free and thus have not had one bit of crime.  smart move imo.

Complex was built in the late 90's; seller is replacing 10hvac, water heaters at our request.

as to lender questions... the sellers are up and comers and the local bank has stated they will allow the seller 2nd because they want to earn more of their business.

re: water.. I actually think the water is high; we noticed some billing issues and seller is resolving them now.  

To me, bad debt is in the vacancy #.. Once this baby gets cooking I think 8% and 3% will be the vacancy/credit loss #'s.  You can't find another complex this nice with rents this low.

I like the thought provoking questions though, they're much appreciated.