All Forum Posts by: Heath S.

Address?

 I'm looking at doing a 6 unit in Phoenix and would love to talk with your guy and get his input.  If you wouldn't mind connecting us I'd appreciate it.  Also, I do a lot of work in Tempe, if you want to connect and grab coffee let me know.  Thanks!

@Claudia Almaraz I am an agent that works mostly with investors.  I am getting 20%+ cash on cash return.  The properties are about 325K-350K though, so it may not fit your budget.  If you would like more info feel free to DM me.

@Justin Fox

I'm in Arizona, so I can't go down there.  They don't care at all, and as of now, it doesn't really seem to be my problem either since the water bill stays with the property.  However, I don't feel right passing it on to the new owner, and legally I'm sure it is my responsibility.   But the person at the city just says, sorry its on the new owner...so there isn't much I can yell at them about.  As for the meter, I believe the new owner is having the city replace it, according to their agent.

I will see what I can do and let you know how it turns out.  It's not a big town, so the lady answering the phone is the same every time and does not seem to care.  I'll report back after I talk with title and let you know.  Thanks

@Chris T.@Andrew S.

@Nathan Miller - tried that, they can't verify when the thing stopped working, so there is no way to tell if it was over 10 years or over 5 years, technically.  They won't settle either, they won't even separate my portion from the amount due, because then they have no recourse.  As it stands now they know they will get paid.

@Wayne Brooks - I know I am responsible, but it comes down to whether I can argue that the city is responsible for having up to date amounts owed.  

@Chris T. - No, I haven't, I feel like I would end up paying more to have an attorney deal with it than it would cost to just pay it.

I recently sold a property in Michigan.  The city went out for the final water meter reading to get the final amount due and it turns out that the final bill is about $2K.  

The Escrow company held back $400, the city issued a final bill of $243, which title paid.  Then, after closing the city went back out to the property and apparently the water meter is inside the house so they use a remote meter that is on the outside of the house to get readings each month.  Well this meter was undercharging me for 10 years and now the city wants me to pay $2K.  This is a 2 unit property and the water bill was about $250 every 2 months which seemed totally normal.  I paid the water for the tenants, it was included in their rent.  

Now that the property is sold, it is technically the new owners responsibility since the water bill stays with the property and would be added to the tax bill if its not paid.  I don't want them to end up with the bill, but I also don't think that is right that the city has this faulty meter that has been accruing since 2005 and now I have to pay a lump sum.  

I tried calling the city and they said that ''it was water that was used, the meter in the house is correct, there's nothing we can do.''

Has anyone had any previous experience with something like this?  Is there recourse that the new owners can take against me?  Would the title company deal with an issue like this?  

I'm battling with whether I should just pay the bill and move on or battle a little bit on this since I feel like the city has an obligation to keep their equipment working properly.

Let me know what you think.  Thanks

Assuming you could get the place for 80K, I would suggest you finance 80% with a conventional bank, so get a mortgage from any mortgage company for 64K and then use your HELOC for the 20% down. This gives you the least cash out of pocket, so you can go buy another one.

As for the analysis, If you finance the whole 80K between a new mortgage and HELOC, assuming its at about 5% your mortgage payment would be $919 including taxes and insurance. Then you figure in Capital Expenditures, maintainance, property management and vacancy.

8% vacancy - about $100/month

5% capex - $65/month

5% maintainance - $65/month

8% property management - $100/month

$919+330 - $1250 expenses

Looks to profit you about $100/month.  You decide whether you are good with that.  

Personally I wouldnt purchase it.  I would look for better cash flow.

Hey, 

I am curious what everyone would consider a good cash on cash return for a rental. Either an apartment or a SFR. I have always shot for 20% or higher and I am interested to see if that is high or low based on what your strategies are.

Thanks

@Joseph Duff 

Most advisors will tell you to have an LLC for every 5 properties or so. That limits your risk without too much paperwork and bank accounts.

In AZ the LLC will run you about $100 including the newspaper posting. Go to AZCC.gov for the paperwork.

Once you setup the LLC you can use a title company or deed company to transfer into the LLC. I haven't used them but you can call Deed Resource 480-558-7911. They were referred to me by my title company. 

As for the due on sale clause kicking in with your mortgage company, that is very unlikely from my understanding.  It's very common and I have never heard of a bank calling a loan due for that reason. 

I have no experience with blanket loans but unless you have a lot of equity and are taking cash out, I would not think that the rates would be better than what you currently have.