All Forum Posts by: Wade Sikkink

Interesting.  I think you have a good plan.  Let me know how it turns out.

Your cash on cash returns look decent.  Not exceptional, but decent.  The cap rate is lower than I would be interested in for my market, but that's one that can vary a lot from one market to the next.  Debt coverage looks good.  At these numbers it looks like a solid deal and based on what you've described of the area you may see better than 2% rent increases and property appreciation over time.

The trick will be getting it at $600k vs. the $700k asking.  I'll bet your numbers fall apart at the higher asking price.

@Eric Siebert Zillow is just one piece of information and it can vary a lot so don't over emphasize it. Another good source of info on various areas is local REI meetings. You may already know about it, but in Omaha the group I would recommend checking out is the Metro Omaha Property Owners Association.

http://www.mopoa.com/

It's always nice to come across fellow Nebraskans on BP.  Good Luck.

The best way to stay on top of rents is to be active in your market. Check the sources mentioned here, but also call for rent ads and talk to other landlords. Most will be open to sharing that kind of info with you and you might also get some info on vacancy rates in the area. Local REI meetings are also a good source of information.

Good luck.

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We've had a similar situation where one tenant tattles on another tenant.  It's usually over parking spaces, but we've had reports of the smell of smoke also.  We have a strict no smoking policy in our properties.

Smelling smoke in a neighboring unit is not grounds for a tenant to terminate their lease.  If you don't have a no smoking clause in your lease then you don't have grounds for a notice to cure.

My advice would be to go talk to the tenant in question.  We usually say something along the lines of, we've received some reports of a smell of smoke in the building and we're just reminding everyone that there is no smoking allowed in the building.  We don't know who it might have been, so we're just giving everyone a reminder.

To answer your question, if your other tenant decides to leave your only real recourse is to not return her security deposit.  Going to court would be a waste of time and money.  Better to just let her go and find a new tenant.

Good luck.

Yes.  This is pretty common.  You can use the equity in your personal residence, or the equity in other investment property you own.  This is a very basic technique for buying real estate with "no money down"

I would recommend doing your homework on this.  I've built my personal residence twice and despite aggressive attention to detail on my part, things never go as planned.

We have a lack of multi deals in my market as well and we've been looking into building for over a year now and I simply can't make it pencil out with enough margin in it.  The lots are too expensive and there are too many possible gotcha's on the construction for me to be comfortable cutting it that close.

People on BP get enamored with deals all the time.  The conventional wisdom, which I agree with, is to wait for a good deal rather than jump into something marginal just because you want to do a deal. No deal is better than a bad deal.  I'm not saying your new construction deal is bad, but if you've never done new construction, you will encounter problems and over run your time and budget.  Unless there is a ton of upside in the deal you will end up worse off.

I would recommend reading J Scott's deal diary that they made into an ebook on the new construction job he did in Atlanta.  J is a experienced flipper that literally wrote a book on how to estimate costs and he had a ton of unexpected issues and costs on that project.  It's an eye opening read if you are considering new construction.

Good luck.

It's going to take time.  If you are doing it on a budget, then don't expect to make a big transformation in a short period of time.  We had basically this exact situation with a 14 unit.  Good structure in a good neighborhood, but the previous owner neglected maintenance and was handing keys to anyone that handed him $400.  We had a number of undesirable tenants when we took over.

We just tackled it one unit at a time.  We tried our best to deal with some of the original tenants while we worked on improving the property.  As units turned over we would gut them, renovate and raise the rents.  After 3 1/2 years, we've renovated all but 3 of the units and those 3 units are occupied by long term tenants that were there when we bought the building.

You have to be willing to kick some people out.  There were a few situations where we gave a tenant a 30 day notice that their month to month tenancy was not being renewed.  Once they were out, we renovated the unit and rented it out again.

Taking on something like this takes patience, but you will be rewarded.  We refinanced the property 3 years after buying it and the increase appraisal plus what we'd paid down on the mortgage at that point gave us a $200k increase in equity.  Making $200k in 3 years seemed pretty good to me.  In addition, the cash flow of the property paid for all the roughly $75k we spent on renovations during that time.  We didn't pay any of that out of pocket.

The icing on the cake happened just the other day.  My wife was out and about and ran into a deputy from our local sheriff's dept.  In chatting she mentioned the building we own.  The deputy said, "We don't ever get called out to that building anymore...."   Ah, success....

Good luck.

If a prospective tenant isn't able to email an application back, we have them snail mail it to our PO box.  We get quite a few applications returned that way.  As you said, on lower end properties, some people don't really do email.