All Forum Posts by: Robert Schumacher

Bab Adetiba I’m not sure what state you are looking at but My initial thought is you may have to add payroll into the equation. In CA, we are required for any complex with 16 units or more. The operating expenses look low. Is there a reason you are attempting seller financing? Commercial loans should be in low 5% range still

If they want it to look pretty, I would encourage them to purchase a throw rug. And I would change them out while the place is empty.

Jason C. I’ve been in real estate for 2 years and have 113 units. They were all self managed until Jan 1st and now we only manage 28 units. The rest are with a PM. We started with a couple SFH and then a 4-plex, followed by repositioning a 10 unit complex. Most of the units are in C class neighborhoods, and the SFH are in B class neighborhoods. Last year we took on a 74 unit complex that is a full repositioning and expect it to take 2 years total. We still have 23 vacancies that we are remodeling 2 per month (as cash flow allows). Most recently we stumbled across a 11 unit building that was too good to pass up. We have created some efficiency by having the units all with 20 minutes of each other. It’s been challenging (to say the least) because I’ve been doing it off the side of my desk while running another business.

I used our HELOC to purchase an 11 unit complex in cash 6 weeks ago. The bank would not finance the 11 unit building because it was vacant. We almost have all units rent ready and rented by 1/15. Once we have all leases signed, the bank will finance 100% for us. (We bought with 3 value plays. (1) vacant (2) motivated seller (3) one unit was down to the studs due to roof leak). Seller replaced roof and now the property is almost stabilized which is the key to having the bank finance it. We got a steal on the property or we would not be getting 100% financed. The ability to pay cash was the key for getting this property. Our cash offer within 4 hours of being listed got a quick acceptance because seller was motivated. Closed in 7 days and they had 7 backup offers. I hope this demonstrates the power of having your HELOC open and available. This was our 3rd time but patience for the right deal is critical if you want all your cash back out. Good Luck 👍🏻

@Paul Fagot Why is the place completely empty? There is a homeless issue up there. Are any units occupied by the homeless who have created residency, forcing evictions. I assume your thinking about an all cash purchase. My experience has showed me that many lenders won’t loan on a property that hasn’t been stabilized. (If you find some that does, I’m always looking). I’m still transitioning a similar project. Best of Luck 👍🏻

Carlos Caloca - we put 20% Dow on the first four properties and now the banks want 25-30% but I believe 20% will do the trick on the first few deals. Good Luck 👍🏻

Have you checked what CAP rates are doing in your area?

Income - Expense / Purchase Price Income: $1400 x 12 = $16,800 Expense: $400 x 12 = $4800 $12,000 / $110k = 10.9% You do not include debt service when dealing with the CAP rate. How is the location? Keep your down low & you should have a nice Cash on Cash return, assuming the property doesn’t have a lot of deferred maintenance that needs to be done now.

I’m getting an error code saying ... “You must have a BiggerPockets Plus or Pro Account to access” Anyone else having issue?

We have a “Cash for Keys” option to save us money. “If you move out by Friday, I will give you $500 cash for your efforts.” This is also our cheapest option because we get our place back to prepare for the next tenant and we don’t pay $1,200-1,500 for attorney fees, plus 35-60 days of not collecting rent. We also don’t accept Checks when people move in unless they pay 10 days in advance. Most tenants understand needing a cashier check to move in. Did he have a previous eviction? If so, he will most likely not take the cash for keys. He will just live there for free for a few months. If his eviction record was clean, we encourage them to take the cash and use it to get themselves in a better place. California is tenant friendly. Your 3 Day Pay or Quit has to be done properly. We have a PM and her attorney handle it from start to finish because we find our time better spent earning money to pay for the eviction costs. Good Luck ~ Lesson learned ~ 💰 4 🔑🔑