All Forum Posts by: Jonathan Johnson

Thanks @David Dachtera I'll call and ask about that.

@Chris Tracy Thanks!

Hello BP,

I'm sad to say an amazing deal might have fallen through my fingers. There was another buyer who put in an offer a week before mine and his offer was less money but also less time. I didn't know the sellers were short on time and they didn't even negotiate with me. I was asking the broker if my offer was competitive with the other, since she is the selling broker as well, and she said it was. 

All I received was that the sellers accepted the other offer. :(

HOWEVER! I am thinking that there's maybe a 20% chance this deal is not done. I plan on upping my offer price and lowering the due diligence time and resubmitting in the case the current buyer has any hesitations. What do you all think about the likeliness that I might still have a shot? I can get the loan I need within 30 days, and if I can do the due diligence on this apartment within that time I think that's the same as the current accepted offer.

Generally I know brokers don't accept offers past one being accepted. But perhaps she could just let the sellers know of the numbers I'm willing to go to?

@Jonathan Paz I think @Kim Meredith Hampton meant to tag your name instead of mine. :D

Here's what I'm putting together for an apartment LOI, not sure what or if I should save stuff for the purchase contract:

A) Purchase Price (high offer, almost asking price since there's already another offer on the table from Monday, realtor let the seller know I'm putting in my offer this week)
B) Seller Pays closing costs
C) Cash put in an escrow for repairs and operating 
D) Contingent upon inspection and financing
E) Contingent upon partner review and approval
F) Management is to be let go day of closing. 
G) 60 days until closing
H) Allow for a day for contractors to come and bid on projects before closing.
I) Allow for a day to advertise rentals and show prospective tenants rooms before closing.
J) Able to see all units vacant or not.
K) Allow interviewing of available, current tenants.

This is a big apartment complex purchase so I think these are rather justified. I'm just not sure what to put in an initial LOI and what can wait till the contract.

I went and looked at the 4 apartments they said needed "Major Repairs." I was ready for mold, holes in wall, water damage, and broken everything. Turns out it needs minor drywall repair, new carpet, new sink and new appliances. 3-5k tops. Wasn't scared a bit.

@Chinmay J. The utilities are paid by the current company except electricity. That's a potential value add in the future, though I'm not sure how I would go about estimating the cost of individually metering the water. There's also the electric of the building that would be on expenses.

@Paul Gabrail I don't want to have another job, I'd rather someone else manage it. It's a worthy expense if it's 10%.

@Jeff Kehl I've interviewed 3 and they are all about 10-12%, I called several others that couldn't handle this amount.

@Patrick Liska Yeah I agree, advertising would do this property wonders. Any idea on what to pay a maintenance person?

@Kim Meredith Hampton I'm hoping to negociate for 6-7%, but I might be stuck with their 10. How would I advertise for a maintenance person? The boilers and hot water heaters in the basement are relatively new (5-10 years) but they are massive and intimidating to me.

@Chris Stephens @Steve Kontos Thanks.

@Ivan Barratt I simplified the expenses, the real deal is like 3 pages long in the details.

@Omar Ruiz Though there are a lot of units, most are very small. I have asked around and 10-12% for Property management is normal here. Thanks for your reply.

@Account Closed I went and met the management and the repair guy. I suspect one of the guys is both the repair guy and manager, not sure how that happens. Anyway, they are... to put it nicely... ill-equipped to perform. Second or third sentence out of the managers mouth, "I hate people. I really. Hate. People." I know the property management business can be rough, but he talks like that to tenants as well. I won't be keeping any of the current management.

Hello BP,

I'm looking at a 100 unit purchase of 2 buildings. One of the opportunities I see in the apartment is they have a lot of staff.

The management on payroll is as follows: Maintenance at $19.50/hr; Part-time maintenance at 11.75/hr; bookkeeper/accountant at $20/hr; and Property Manager at $30/hr which per year is $40,560, $12,220 (20hr/week), $27,040, and $62,400 respectively. This equals about $143,000 payroll expense per year.

If I just outsource a property management company that charges 10% of the rent, I could theoretically decrease expenses by 43%. 

But my question is, do I need an on-site maintenance person to take care of the properties? They are both 5-story buildings about 60 years old. One has 60 units, the other has 40. Over all they are mostly One-bed rooms (65) and efficiency (9). The Property management company said they have a list of contractors/maintenance/repair men that they could send out as problems arise. Anyone have personal experience doing either?

Email works great.

Yeah I would be interested in talking general real estate. Like managing properties, WV specific challenges like laws and tenant-landlord stuff.