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| (Landing stairs needing repair) |
Real Property Management (RPM) is picking up the ball for most activities including property maintenance and rent collection. Updated city billing for common services making payments current and setting billing address to send bills to RPM.
RPM performed initial walk through of the property and identified some urgent items to address such as trash removal, stair repair and wall repair. They are seeking quotes for a replacement roof. The first has come in at $25k which is about $5k over estimated.
RPM Property Management fees are set at 9% of actual rent collected for the month. Additionally, we may $12 a unit for eviction services coverage totaling $36 a month. This covers legal costs in the event of eviction needs. RPM accumulated costs exceeded rent collected for the month of January so they roll that amount owed into forward months. No out of pocket is necessary at this time.
Started the cash out refinance. Program requires 30% down and a target of @ 3.5% as a non owner occupied investment property. Considering paying some points to reduce required mortgage payment. Worked with the appraiser to help them understand that the recent cash purchase price was at a discount and ultimately comp approach yielded a $350k valuation. Income approach based on gross rent target of $3,400 yields a valuation of $362k. Working with mortgage broker to see if we can use the higher income valuation without maximized rent currently happening. Seems unlikely but worth a shot.
Updated BRRR business model to include updated Water and Sewer bill. Actuals match estimates at around $100 combined. Removed trash bill from $100 on the model as Providence includes this in the property tax bill. Note, Water, Sewer and Electric will be forwarded to RPM for payment. They will pull from rents collected and distribute back net profit (assuming some remain).
Tenant Update
Documentation for tenant situation was never provided. That includes written agreements and tenant summary. Some confusion has already arisen between 2nd floor tenant getting a free month, 2nd floor tenant monthly rate and conversation regarding 3rd floor utilities. 2nd floor tenant (previous owner occupied) is currently covering 3rd utilities because they were allegedly included in the $600 for the 3rd floor. That was communicated in January.
- First floor: $1,100 collected. Next step is to put under one (1) year lease agreement
- Second Floor: Rent not charged as part of purchase. Month to month expected with no agreement
- Third floor: $600 rent collected, discussed with RPM providing vacate notice by RPM
Monthly Cost Summary
- Management Fees: $172
- Stair R/R, Wall R/R, Trash Removal: $1,130
- Appraisal: $655
- LoC Interest Payment: $1014.85
- Water Bill: $45.52
- Sewer Bill: $91.01
- RI Designated Agent Filing: $49
Activities / Milestones
- RPM walk through: Necessary and obvious repairs are complete
- Refinance initiated: Home appraisal complete and meets estimate
- Rents collected for the first time for first and third floor
- Utility bills transferred and setup for RPM to process
Next / Todo
- Work with RPM to stabilize tenants and establish agreements
- Refinance: GFE based on appraisal values (max cash out)
- Estimate for roof replacement: Expect full strip and replace at @ $25k
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