All Forum Posts by: Troy Young

Someone asked me to buy their building, I figured I'd gather some of your thoughts.

It's 4 large storage units (each unit is about 22x40 and 16 ft. high), with 2 apartments above the storage units (a two bedroom and a 3 bedroom). All units have gas, water and electric and are all on separate meters. It's about 10 years old.

Price: $200,000 (He said he paid $30k for the lot, $20k to run utilities, $170k to build the building so overall he paid about $220k for it).

Land contract with $0 down for 10 years at 5% and payments about $2,121 a month. Taxes and insurance are a little under $250 a month. Currently he has the storage units rented for $225 a month and the apartments rented for $400 a month (total of $1700).

I expect to be able to raise the rents to $2200.

As is it's horrible cash flow and income for this purchase price (I bought a triplex this year for $19k that brings in over $1400 a month). But since he's financing it... if I keep it rented and people paying, it's as if I just have to pay taxes and insurance on the building for 10 years and he's giving it to me for free. It's hard to turn down a nice asset that someone else is paying for.  

I just joined Port Huron Area Landlord Association (PHALA) a couple months ago... It's $40 a year but they have meetings every month (attendance optional). They bring in great guest speakers, provide many useful forms, and can be great for networking or for asking questions. If you have any questions about PHALA or PH real estate stuff in general feel free to send me a message.

I'm looking for a free Mortgage Agreement template... Using it as security on a loan... Can anyone help me out? Thanks in advance.

I use John Coury... In with Touma, Watson etc. His office is right by the city and county buildings down town PH. That group of lawyers are pretty good with Real Estate issues. John also works with my client in NYC so he is alright working with people long distances or over the phone etc.

I rather not invest in Port Huron because the city (the gov't) can be a pain to deal with at times but the numbers are too good to pass up. I've picked up some great deals just outside of Port Huron but Port Huron always had great deals available.  

You may be able to find a private/hard money lender. Another option is to find an owner willing to finance the sale via land contract or rent to own etc. If you know any real estate investors in your area maybe see if they will finance one for you if they make a little on top or you may get some money and experience managing some of their properties for them. I love finding young ambitious people to finance houses for. Many times I'll finance 100% of the house for them if they do some work fixing it up and sometimes even finance the repairs if they do the labor.  There are all kinds of options out there, keep looking and you'll find them.

it all gets down to if you can easily invest that money at a higher interest rate than you are paying. If the rate is 5% and you can't figure out how to make more than that pay cash but if I could borrow at 20% and still get a better return easy i'd still borrow.

Do the deals where the numbers work for you and don't do the deals that don't pay you enough. If you can't go through a house and see what will need to be fixed soon pay for an inspection. Most of mine I buy in decent shape and mainly do paint, clean, and flooring to rent it. In 5 years I try to have the rent buy the house and repairs. Others that need more work I just try to double the value of the house in 5 years. An average deal for me is paying 20-25k spending maybe 1k to fix it up right away and rent it for around $700. I have about $100 in interest that I pay (fully financed) $150 covers taxes and insurance, I manage them myself, so that leaves $450 a month ($5400 a year) for cash flow, paying it off faster, and to cover repairs as they come up. That can cover your major expenses which could also increase your rent, increase the value of the property and you should run out of major things to fix before having to replace them again. Most things aren't that expensive and those that are like a roof should last at least 30 years. Stuff like a toilet is $100 so that month I make $350 rather than $450 and don't worry about the toilet again for quite a few years.

Sounds good. I'll use it next time I need to screen. Thanks for all the help.

If you have used "Smart Move" for screening your tenants how did it work for you? How much does it cost per applicant? Are there any other resources that you like more?