Apartment building investment/rent houses..

[1st choice restoration]

Anyone own an apartment building or Rentals? We own some rentals now all of them are houses though. Got an opportunity to buy a 16 unit complex. Anyone ever owned an apartment? Guys that own rentals do you find it good for your tax situation. Thanks

 

[D Luke]

Every time I start to consider rental properties someone who's opinion I trust talks me out of it.

I know a guy can do well, especially w/ multi-family, but it's gotta be a major headache.

 

[1st choice restoration]

This opportunity is in a college town...across the street from the college. There's 2 buildings. 4 2 bedrooms upstairs and 4 one bedrooms downstairs. $600 for 2 bedrooms and $500 for 1 bedrooms

 

[1st choice restoration]

What are the reasons that talks you out of it? Just the headache of it?

 

[D Luke]

Headache, the fact that you might have to be hard-nosed and kick families out on the street, liability, etc.

There are definitely potential tax advantages though. The reason it appeals to me is you can make a down payment and potentially have your rental income carry your mortgage, then in 15 years have a free and clear building to sell for profit.

 

[Bob Pruitt]

This opportunity is in a college town...across the street from the college.

It's like any other investment... Are you buying it right? Low price...even when you add all the repairs and upgrades required... below current market value would be best. We have learned Real Estate can be volatile. What condition are the systems in, plumbing, electric, Air Conditioning...roof? Does the apartment stay fully rented all school year? Are units leased or rented month to month? Lots of variables but location seems ideal. Most that invest in College rentals are part of investment groups that have full time maintenance men, accountants and managers... so doing this yourself could be lots of work. Investments can make you rich or... Wish you the best.

 

[1st choice restoration]

These particular units were built in the 60s most of everything is dated. But it's a unique opportunity because it could be an owner financed no money down. Around $300k

 

[Desk Jockey]

The college kids can be rough on your property. I hear lots of landlord stories. 3-inches of sand for a beach party in the dead of winter. lol

Although they do pay a premium in Lawrence for housing. The twins pay $800.00 per occupant. $1,600.00 for a 2 bed apt. and its not even one of the name properties.

Check it well, it might be worth spending a little for an inspection. HVAC, wiring, roof, wet basement or failing foundation.

 

[Chris A]

Rental rates in Kent are similar Richard, crazy what they're getting close to campus

 

[FB7777]

Like many here , I'm sure, we work for some rental,complex owners.

Most that we know have earned their money elsewhere and invested in rentals. Being well funded is key

Repairs are expensive at times. Helps if you're handy or,if you give a break on the rent to a handyman tenant

Expect the unexpected...had a water call couple weeks ago from one . He then got an unexpected,'gift ' from the town . His quarterly water bill that was $7000 higher than normal due to leaks in the units plumbing

Next month he is dropping $75 grand to upgrade the heating system and controls before winter

Collecting rent checks sounds great but ...

Renters don't give a shit

 

[steve_64]

There may be a reason the owner will finance it.

 

[Chris A]

I work for a couple that owns and operates 5 buildings totaling 60 units, they do everything from painting to cleaning and most repairs. I don't think they "make" any more than I do, but I'm sure after 25 years they have a shitload of equity in that place

 

[Old Coastie]

These particular units were built in the 60s most of everything is dated. But it's a unique opportunity because it could be an owner financed no money down. Around $300k

No. Just, no.

I have a friend who did that and when they were late one time, the owner foreclosed, keeping all the payments AND improvements. He owed $60,000 on the farm, offered a $100,000 buyout and the owner took the property back in foreclosure. Why? Because he had an offer of $500,000 on the property.

Get a mortgage and have a lawyer examine the terms.

 

[KevinD]

I have purchased several rental properties over the last 20 years.
I've never needed a dime of income off the properties so all extra money went to pay down mortgages early.
All are paid for today and now the extra income makes life pretty easy financially.

I cannot stress the importance enough though of tenant screenings, rental history, background credit and job checks.
I married my wife with less information than I know about a perspective tenant.

 

[1st choice restoration]

Exactly Kevin. I'm with you 100%. We currently own 5 rental properties and just want them to pay for themselves anything extra goes back into the properties. My goal was to get 10 to 15 houses but now this apartment deal has come up with the potential of 16 units at a cheaper cost per unit then buying 16 houses...

 

[tres davis]

You know what's hiding in the hidden places of a building from the 60's.
I find that most sellers grossly under estimate how much work their old properties need and use square footage comps that are the same/similar to newer buildings.
Personally I don't want anything to do with the headaches that come with a building that old

 

[1st choice restoration]

Small town all properties old....

 

[Nate The Great]

Here in Hawaii you can as a home owner rip out and throw asbestos in your city trash can..... As a business, you'll get fined back to the stone ages.....

You can wash your car in your driveway at home, but can't if you are located in a commercial area....

 

[steve_64]

In Germany you can't wash your car in the driveway.

 

[rick imby]

I bought everything I could borrow on between 1987 and 1990.

Best thing I ever did was hire property managers about 1998.

It is so expensive to build now compared to 1960. Upgrading is much cheaper--if done right. Interest rates are so cheap now. The government will pay a significant portion of new windows.

It is all about the value of the building. Everything can be repaired or replaced. Sounds like a good location.

It is all about the numbers....

Rents will go up with inflation---I believe we will see real inflation in the next decade. Maybe even the level of the 80s. Your payment will stay the same.

But I have been wrong in my inflation prognostications before.

My theory has been borrow a million dollars on property that will easily pay for itself and grow older.

 

[Askal]

Wow. 8k income per month for a mortgage payment of less than 2500 with insurance and taxes? If it sounds too good to be true...

 

[rick imby]

It would pay off or remodel or replace a lot of appliances quickly.

 

[1st choice restoration]

Hey guys thanks for ur responses. Update on the property. Currently got the purchase price down to 250k. Seller is someone I've known a long time and I've always cleaned the apartments for 20 years. So basically I would be buying 16 total apartments in 2 buildings. There is some updating that needs to be done but all apartments are good enough to rent today!! All bills paid which bills currently run around 2300.00 a month for the last year.. I think I could pay property off in 5-10 years

 

[rick imby]

I would be all over it....

I am currently having another duplex built on one of my properties. It will be two 600+ squ foot apts done up nice with washer/dryer etc. I own the lot so only the building but it is going to be 160k... 250k for 16 units in a University town... I will be there tomorrow---lol---

 

[KevinD]

Hey guys thanks for ur responses. Update on the property. Currently got the purchase price down to 250k. Seller is someone I've known a long time and I've always cleaned the apartments for 20 years. So basically I would be buying 16 total apartments in 2 buildings. There is some updating that needs to be done but all apartments are good enough to rent today!! All bills paid which bills currently run around 2300.00 a month for the last year.. I think I could pay property off in 5-10 years

250K for 16 units
$15,625 per unit, I would buy it in a heartbeat.
$2300 sound a little low on expenses though. Double check that no expenses are missing...
What is the current rent roll and are utilities included or tenant pay?

 

[1st choice restoration]

Yes utilities are around 2300.00 a month. That's electric, gas, water and trash and cable tv. Insurance around 400.00 a month. Yes problem I'm having right now is only 7 units are currently rented and all month to month leases. I feel this complex is is overpriced. Currently rents for 700 and 575. And to be comparable to other apartments units need to be at 600 for 2 bed and 500 for 1 bed. 100% occupancy would equal $8800.00 a month