All Forum Posts by: Pat Jackson

Perhaps this should be under "starting out".  @Matt Crawford and I are considering partnering on a flip.  I'm investing in Missouri, he lives  in Maryville, nearby where I invest.

I feel we both have similar interests, yet bring different skill sets and attributes to the table.  We'd like to do a flip together, and if things go well, we will consider acquiring buy and holds together.

Assuming we do this, we would hold the flip property in a LLC, with 50/50 ownership. Beyond this, we are scratching our heads a bit. We want to have a contract in place stating who does what, who's responsible for what, who get's what cut, and who will invest what. What are we missing. Should we use rocketlawyer.com, or a real lawyer? What else should the contract include?

What other advice, tips, or tricks do BP members having for setting up a rock solid partnership?  

@Mike Reynolds @Gilbert Dominguez, thanks.  Here are some pictures from the inspection.

floor

ceiling

crawlspace

roof

I'm happy to send the full reports to anyone that really wants to see them.  Just PM me.

@Russell Brazil Man, you’re super great about replying promptly and with great advice. That’s what I’m thinking. He has an “A” property eye. Which I appreciate, as I wasn’t concerned about the foundation till now.

If you find my other posts, you'll see my interest in a 5 unit apartment complex in a C area.  I now have it under contract.  

I had the building inspected this week.  The building was built in 1910.  The inspector found settling (as expected) but said overall the bones are good.

Today calling around for various quotes addressing issues discovered I contacted a General Contractor.  Lot's of great reviews online, well known in the area.  Does everything from new builds to remodels, and everything in between.

Anyway, he went over since the 5 unit is close to his office and did a walk around.  He said, "I wouldn't take this if someone gave it to me".  He sited settling and said the bones were not good.  I did not pay him for his time.  I did pay for the inspection.

Who's right?  I'm going to attempt and get a quote from a foundation specialist.  I'm also going to get the opinion of another GC.  I don't know this GC, but his initial impression online and over the phone (been in business 40+ years) seems pretty solid.  He doesn't have a reason to lie, as he could get the job if I close.

Here are some pictures if someone wants to weigh in.  At this time I'm not subscribing to any wild theories like the GC wants it for himself.  

I appreciate all of these comments. This will likely be a candidate for tenants with a HUD voucher. I've avoided this before, but will consider it now.

@Sam B.@Ned Carey, thanks for the input.  I realize the 2% rule is course at best.  Using the BP calculator this is a ~14.5 cap, that's accounting for 10% vacancy, 10% management, and 15% repairs/cap ex.

This is a REO property. The bank has come way down from asking. We will see.

Hello BP.

A little about me.  I invest out of state, I've done 3 deals, 2 buy and holds, 1 flip.  All single families, all in Missouri.

I'm about to have a 5-unit apartment complex under contract.  Four, 1 bedroom units and one, 2 bedroom unit.  All electric, separate meters.  This is in a new area, new agent, new contractor, new property manager.

The returns would be over the 2% rule.  This summons all sorts of advice I've heard podcasts and forum discussion.  Statements like:

"Juice isn't worth the squeeze"

"Nightmare"

"Not worth it"

From the best I can tell the building is in a C part of town.  I spoke with (from what I can tell) a reputable property manager, and they agreed they'd manage the units.  Google maps doesn't look bad.  I'm waiting to talk to a local police officer, who isn't bound by real estate agent law, and can answer questions about the area.

I realize this area will command a lesser tenant.  Headaches will be more likely.  It may take longer to place a tenant.  In the end, if these are expected, and treated as numbers (say 12% for vacancy and 20% for repairs and cap ex), and the property still cash flows well, am I crazy?  It needs some rehab, I'd likely follow the "bombproof" philosophy.

I don't want to be greedy, but I don't want to pass on a deal just because it's too good.....

Experiences (good or bad) involving small apartments in C neighborhoods much appreciated!

@Matt Crawford, sure not a problem.

Up until yesterday I've always thought it was ideal to split as many utilities as possible, always.  My thought was this, if a faucet is dripping (or worse) I want them to think "I'm paying for that water" and either fix it them themselves or call for a repair.  I'm concerned tenants just won't give two cents if utilities are included.....let drips happen, turn the thermostat up to 80, etc.  I'm also concerned the closer to C the neighborhood is, the more this "utility abuse" will occur.

I just discussed this with @Ryan Murdock.  He prefers to cover utilities in multifamilies with lower quality tenants.  Most importantly they don't let heating oil run out and pipes freeze, but they also don't tend to have as much of their act together, and don't pay utilities timely and get them turned off.

Thoughts on this pro vs. con on utilities?  I've passed over many small multis because I couldn't meter out all utilities.  

Here's the scoop.  Considering an off market 2/1 single family home.  Solid C neighborhood.  Will rent $700-750 after rehab.  It's straight out of the 60s.  Lot's of wood paneling.  The options I'm familiar with thus far:

1. Remove and install normal drywall
2. Install 1/4" drywall over the wood paneling
3. Paint paneling
4. Leave as is

In my experience if the place looks "new" I'll get more in rent.  Thinking I want to just paint the paneling.  

Other downsides to this deal....panel is original 70 amp, and the furnace and AC are ancient.  This house is in Missouri.