All Forum Posts by: Steve Morris

When you say "under Sec 8 housing" do you mean the unit has a recorded income restriction or do you mean the tenant is paying with a Sec8 voucher?

I'm going to assume the latter.  Sec 8 vouchers are not a problem since you get a check from the local H/A and then need to go after the tenant for the co-pay.    The caseworker MAY come in for an inspection every once in a while, but they are usually pretty loaded, so if they do inspect, it'll be for cause (i.e. tenant complaint).

I'd treat it like any other tenant since when they move the Sec 8 voucher is gone.

Call the big national brokerages and ask them for the Self-Store specialist.  They can give you an idea of market and they spend all day calling owners.  SHould be able to help you with getting prepared to make an offer.

"A good idea all the time, just a matter of getting over the friction of setting up more bank accounts."

Well, accounts, outside of keeping them straight, are not that hard to set up.  Plus your bank should be able to do it easily.  More accounts yous have that are well-maintained means a better relationship with the bank on the personal side.  Which helps to qualify for new debt.

Don't know about how they calc ROI in your class. If they mean Cash-cash return, good luck. You'll need to steal something with an easy route to upside - Take a number.

However, if you want to be in a particular market, you need to figure out what a "normal" ROI is.

Then the search becomes one of determining current income and your upside on the property.  This is the long-term growth.

Strictly speaking, for tenant monies (like refundable deposits) you should set up a separate account to prevent commingling.

If it's rents and bills, I don't have a problem with using one account - AS LONG AS YOU HAVE A GOOD ACCOUNTING.  Which is why you should have a good prop mgmt software.  You need to see trends and how to improve operations.

Have a lot of people using AppFolio.  Most of these guys charge based on $/unit/month for a fee.

You/your mgr still need to collect rents, software can't do that.  You still need to input date like leases, bills, rent and fee income.

You also need to pick software that helps manage paperwork and service to tenants.  In this environment, you're only defense against a bad tenant is good paperwork and meeting timelines for delivery.

Nothing against long distance ownership at all since compared to Orange County you can find better returns.  In addition, larger cities are going to get a lot more activist and anti-landlord.

However, some caveats:

1) Go to a place you know.  Places like PHX (example) have good and bad neighborhoods.  Bad neighborhoods are stagnant and show little promise of income growth.

2) You need someone you can trust in that area.  Sometimes you can get lucky and find a broker or prop mgmt company.  They should know the town well enough to tell you what's a good buy and realistic upside

3) Since you'll need to hire a prop mgr, talk to them and see if you trust them. Besides day-to-day stuff (lease ups, paperwork, maint), you should be able to have a regular conversation (monthly?) and the question should be "What are the X things we're going to do to increase NOI?"

4) Understand how apartments work and how to read an operating statement.

If you want to DM me, I wrote 80-page PDF on buying and selling nad operating apartments for my clients.  It'll help a lot.

Usually when a bank underwrites, it expects you'll do some reserves for CapEx - Like $250/unit/year. If the HOA covers that much CapEx (some chareg for utilities), I think it's a fair assumption.

Your lender is not requiring insurance?  In any case, if you're doing work to the property get insurance.  The cost is swamped by the potential of loss on the property.

Well, if the seller is being a ******* and not responding, I guess you need to have your atty write him a letter reminding him you may have to put a lien on the property for that amount.

Title can only do what all parties agree to, so not their fault.