All Forum Posts by: Rick Rascoe

@Shane H.did younge through with the buy? How did it turn out?

I'd like some info on it myself. I saw a couple of investor's posts on here a while back, specifically about the Gatlinburg area. I havent been able to find the posts again.

I'd like some info on it myself. I saw a couple of investor's posts on here a while back, specifically about the Gatlinburg area. I havent been able to find the posts again.

Congrats David! I love it when I hear people get out of the rat race!

Hi Justin,

   My experience in the apartment building side has been salty so far. I didn't use other investors. I bought a 7 unit and a 4 unit in a small town. They are old buildings (1900), but not in a bad neighborhood, and the cap rate was good (18.59). It was affectionately nicknamed Cabrini-Green by the local cop due to the condition and a few of the tenants inhabiting the building. There was a lot of deferred maintenance (decades), and I have spent quite a bit fixing things instead of doing the value adds I had planned on. They will be done this year. I also had to replace some bad tenants, including one that the last 2 owners couldn't get rid of. I have good tenants now. 

   I pay the gas, water, trash, and sewage bills. They pay electric. There were gas stoves and two water heaters furnishing all the hot water in the 7 unit. I replaced all but two stoves with electric. I have installed 1 of 7 electric water heaters (will be one in each apartment), and when done, the gas will be shut off to the building. Water meters will be installed on my side to charge tenants for water usage. I am also considering eventually charging a fee for trash. One unit still needs to be renovated and is not rented. Rents have been pushed up from $400-450 to $450-575. I did spend considerable money on replacing almost all of the windows and vinyl planking some of the units. I also overpaid a terrible contractor to remodel a unit and then had to pay one semi decent contractor and a good contractor to finish the job (I also did some of the work). I dont even want to tell you how much that apartment cost to have completed!

   The 4 unit has 2 commercial units and 2 apartments. I haven't raised the barbers rent ($200 for about 200 sq') even though he told me I could lol! I found out he was the one mowing the small yard behind the building, and he's been there for decades. I dumped over 3k in windows in that building upstairs (rented). After kicking the tenant in the back unit out, I decided to do a remodel, and it hasn't been done yet due to cash constraints (hoping to get it done this year after completing the flip I have coming up). The second commercial unit is set up as a small laundry that I run and completed in December 2018. Only 6 machines and not much $$$ coming in so far. I pay gas, water, sewage, and trash in that building also. It uses a boiler for all the heat. I plan on doing the same value adds on utilities on that building. Not sure on the heat yet, may go electric.

   Another mistake was not using a property manager to begin with. She would have saved me alot of headaches, and stopped me from some of the expensive upgrades and over runs initially. She also would have kept me from having the vacancy rates I saw for the first year and a half. 

   I used the bigger pockets calculator to figure the deal. I took some equity from another property for the down payment, and used a non - portfolio lender to write a commercial loan for the whole deal. Contractors and vacancy ate me alive the last two years, but when I complete the value adds and the last two remodels, It will cash flow nicely. If I would have had other investors or greater reserve, the work would have been completed in the first year. What saved me so far? I bought the buildings for $135,000 and I figured conservatively. I made a lot of mistakes on this, but I learned a few things and still have a property that will be a good investment going forward. Rents are $3650 per month now and will be $4700.

Congrats!!!

Thanks Clint!

Anyone familiar with the Kokomo market? I used to live there decades ago while in the USAF. Looked at some properties, but not familiar with trending in the market.

Hi Josh! You guys need to make the calculators be able to use more than one loan/financing option. I am making offers with 60-70% down (Commercial Loan) on apartment buildings/multi units, with the seller taking back the rest. The bank is talking about wanting skins in the game, so I may actually need a third finance option (money pulled from 401K at a low rate) figured in. I can do all this on a calculator, but I really want to like the application's breakdown and I want to print off the PDF's to take to the banker.

Hi Michael. You didn't mention how much you needed to purchase. I would say house hacking could be an option, but I don't know if that will work on a ten unit. Why do they refuse seller financing? Even if they say no to seller financing, they may go for a 5 year lease option. That would give you time to repair, rent, and refinance.  It would also give you enough time for seasoning to refinance