All Forum Posts by: Chris Winterhalter

@Account Closed

Those 3% interest rates probably help you with the cap rate compression you've seen in the Bay Area (and the rest of the country). What's the highest actual cap rate you are seeing in your area right now?

@Stephen Masek

It's sounds like you and Rima have had great success with your single family rentals and have been diligent about saving and/or paying down the mortgages. That is a great position to be in and definitely helps prime you for retirement. If I was at the latter half of my investment career I would probably be chasing nicer product with lower returns for ease of management (2000 and newer). Then you don't have to worry about all the lead and asbestos issues :).

@Waylon Themer

The banking market seems to differ from city to city or region to region. All banks in Cincinnati offer a fully amortizing loan with 5 year fixed rates. St. Louis is a ballon market generally with 3 and 5 year fixed rate balloon options. Although I have pleaded for 7 year terms and/or fully amortized loans I have been unable to obtain these terms in the St. Louis market. I'm sure with the right relationship and right bank it could happen however that hasn't been my experience. I keep pushing though, because that is definitely an on-going concern of mine.

@Gunnar Teltow

@Daniel B. is correct in his comments. Turn over costs are much higher on C class single family houses. Especially because all properties require re-inspection in St Louis County and City whenever a tenant turns over. Also certain small North County municipalities can make occupancy grueling while making ridiculous demands. You definitely have the right idea when stepping up a notch in the North County area. I think you will see lower returns on the "cheap" rentals over the years when factoring in turnover, vacancy, theft, and vandalism. The lower cost rentals always seem to take up more of your time even with a solid PM in place. Also be careful of school districts...so many school districts in North County have lost their accreditation or are rated really low. This can hurt an area over the long term.

I definitely don't want to be a downer to the thread. I congratulate you on the great success you've had in St. Louis to date and wish you all the best in the future. I'm mainly telling you these things from my own personal experience. I too was tempted by the low prices and high rents. It can work for the right type of owner/manager that wants to get their hands dirty. However it can be tough for the out of area owner. Don't get me wrong I like a few areas of North County; Florissant and Overland are solid rental markets (among others) however a lot of North County is not in the path of progress.

@Stephen Masek

I appreciate and respect your comments however don't fully agree with everything that you stated. Our renovation is not invasive and doesn't really require very much demo. It's mostly roofing, HVAC, plumbing, electrical, windows and cosmetic interior work such as painting. Remember that 250k doesn't get you that far on 64 units. However our window sub is lead certified and follows all the proper procedures. In development and construction we all have risks associated with hazardous material, OSHA, and city/county building departments. All of our sub contractors are properly insured and licensed where necessary. I understand that you are an inspector and that your answer to every problem is an inspection however that isn't always the answer. I'm not saying I'm immune to risk. If the EPA or OSHA comes on a job-site more than likely they are going to find something to fine. I don't know the stats however I would imagine that the majority of job-site visits from the EPA or OSHA result in some type of fine or write up. We try to properly follow all safety and environmental regulations and stay up to date on all laws and building codes. So far we haven't had any issues.

@George P. @Patrick Yungck

Thanks! We are almost there just need to get through the appraisal and a few other items.

@Account Closed

Appraisal is $3,000 and loan costs are $2,500...no other underwriting fee or document fee. All lender fees are only $2,500. It's hard to get that in a CMBS or Life loan! Then again it's a full recourse loan.

@Max Householder

Fisher & Co who is locally based in South City. The large majority of their portfolio is in South City and they work great for B/C class rentals. I trust them as well which is very important.

@Stephen Masek

Thank you for your comments. The inspector was Donald Fling and his website was http://www.environmentalconcerns.org. He apparently had all of the right certifications however that didn't end of mattering.

Most of my quotes came in around $1,500-2,000 for phase 1 and $1,000-2,000 for PCA. It's only a 64 unit building and we were only requesting that they walk through 10% of the units. The inspector actually walked all of the units with us which wasn't necessary.

The building was built in 1960 and we are not getting asbestos or lead surveys. My partner has all of the lead certifications and we only hire contractors that have the same. We've done millions of dollars of construction and a lot of it was on older buildings. We know the area and the local inspectors. In my opinion it would be a waste of money. The building is occupied so I'm not sure how we would get mandated to handle asbestos abatement but if we did we would handle it internally. We are commercial mold remediators and did a full gut mold remediation with testing on a 300 room all suite major brand hotel. We have all of the equipment needed and would only need to get certified in asbestos abatement.

@Tom Scott

• iPhone
• iPad
• Laser level & tape
• Clipboard
• Good camera with flash
• Flash light
• Hand sanitizer (yes definitely a tool of the trade)
• AC/DC car adaptor with USB and plug in for those long days in the field.
• Minor tools for checking under carpet, behind walls, checking exterior brick mortar condition and various other things.

@Jay H.

Exciting thread....looking forward to seeing your progress.

How are you financing the project?