Building a $$ Duplex, Questions 4 LLdrs.
Hudson Valley Carpenter
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One of my building projects for the next few years will be a duplex. If I’ve learned anything new from the current recession, it’s that everyone needs a steady documented income in order to borrow when credit is tight. Therefore, as I’m retired from contracting, having this kind of income is important to my other plans.
I have a couple of questions for landlords and others who build and maintain apartments: Assuming that each of the large three bedroom apartments is in the top 20% price range, what finish materials are most appropriate to attract clients, and from the perspective of long term maintenance? And what materials should be avoided?
Assuming super-insulation, what systems and newer technological developments should be considered? BTW, part of my reasoning for going super-insulated is that heating and cooling systems can be minimized, making the $$ investment equation between insulation and HVC favorable to the owner, me.
Thanks for sharing your experiences.
Replies
Hudson, where are you going to be building?
Western Orange Co, NY.
Edited 9/7/2009 3:20 pm by Hudson Valley Carpenter
Proper zoning?
I want to point out to you that anything "new" as far as rentals goes, as a rule fill up quick.
I think you may be thinking about the right things, energy efficiency. After the first rentals, you will have to keep it rented.
Are you sure that duplex is the right rental to make money? I have never found that the numbers work out for duplexs, unless one is owner occupied.
Residential, zoned for duplex but nothing larger. Several older duplexes in the neighborhood.
Are you sure that duplex is the right rental to make money? I have never found that the numbers work out for duplexs, unless one is owner occupied.
The only other rental option is single family. Checking rental prices in that area, duplexes and townhouses bring nearly the same prices as single family homes.
You'll have to explain your remarks more completely for me. I don't have enough knowledge about rentals to understand your concerns.
It is difficult to make the numbers work on duplexs. Tim Mooney can explain better than I.
I know I used to own 8 houses with the best payers being the 3 families. Anything over 3 and I had to buy different insurance. The worst was the duplexs, because there are only 2 apts to carry mort., taxes, ins, and upkeep.
I suggest you go to Mr.landlord.com. There you will find leases for each state and they will run credit checks for $10 each.
Basswood had the right idea. Appliances stay. Less in and out damage.
Thanks for the information and the web site.
I have owned several rentals over the years, and still have the one I have owned for 25+ years. Even higher end tenants have no respect for other's properties. Anything you use, make sure it is a product that is readily available, so that when it gets broken, it can easily be replaced.(Anderson Windows for example, they can supply replacement parts for window serial# 0001.)
I have to replace carpet every three tenants, on average. I think hardwood would be a disaster. Appliance, what ever is cheap, they will be replaced. I use one piece fiberglass tubs and showers, no grout joints. Vanities and cabinet, same thing. ("The to doors just broke, I didn't do anything to it"
The best was the tank breaking off the toilet. " It just happened."
Toughest easy money ever made.
Thanks Dave.
What type of flooring do you recommend for kitchens and baths? Which appliances do you supply for one year leases? All or? Do you allow pets?
Do you have any other recommendations or advice?
Tim Mooney had a thread about his rentals. (too lazy to search)
IIRC he has only 1 paint color. Floors are all tile. easy care stuff.
don't remember the rest of his list. But if there is anyone that would know it is Tim. He doesn't build new though. At the price of existing stock I don't think you can build new.
Esp in So Cal. What does existing stock look like?
Thanks for the Mooney thread reminder. I recall reading part of that one. It's certainly informative. I'll look for it.
The new duplex is planned for property I own in NY State. I'll be leaving SoCal soon.
Pets are the worst.......
AAAaaarrrggg.
I'd rather have a chain smoker.Remodeling Contractor just on the other side of the Glass City
Pets are the worst....... AAAaaarrrggg.
I expected to hear that, LOL. It's just that this place is in the country, where people expect to be able to have dogs so I'm not sure how to deal with that issue. Seems like there must be a profitable way to include pets.
Surcharge - double rent structure - figured into the term of the lease.
Just like "build to suit" in a strip mall - all improvements are figured in to the lease.(including tear out to put it back to original condition).
Figure out you original numbers without pets. Then figure in new carpet, paint, misc moldings, scratches on doors, Smell, future lost renters due to dander issues, etc. reset the rent for them to have the pet there. If you don't - you're losing money. If this sound unreasonable - you aint cut out for it...Remodeling Contractor just on the other side of the Glass City
ROFL, so we're back to NO PETS.
Your fee structure makes perfect sense to me but it's sure to offend most pet owners. I imagine that's why most landlords simply say no pets.
i must be the only landlord in the country that will take pets.
so if you say NO PETS!,you will eliminate at least half the people out there,around here i would say close to 70%. some of them would make you excellent renters.
i look at people with pets, now i'm not looking for a zoo,or anything less than 2yrs old. no pit,dobermans,german shepards [and just a peeve of mine dauchands!]. if the people look good i will take on their pet for a 300 per pet fee,non refundable,ever.
heres what i have found. if someone has a mutt that they let chew,poop,p,they are not attached enough to pay 300.
for someone to lay down 300 they think a lot of their dog /cat and spend time and money on them and paying this is no problem.
i have had this policy for 15 years,who know how much i collected [a guess18k],up till 2 years ago i never had one ounce of damage from a pet. now since then i have had one house with 2 dauchads,ruin probably 1400. worth of carpet, and another dig a hole at the door that cost 125.00 to patch. so i have lost a little on those.
but it's better than settling for a so so tenant with no pets,that could very well end up getting a pet.................the older i get ,
the more people tick me off
I've seen it done that way too.
I would think that we could agree that LLing/PMing is more of a dance than a science. I'm just throwin' out some ideas for the OP.
Heck I'd rather throw a upcharge into the rent than do a one time charge. Then the longer they are there, the more chance the mutt has to damage, the more they pull their share of fixing it...$25/month upcharge for pet is $300 /yr, instead of $300 per pet...Remodeling Contractor just on the other side of the Glass City
I'd like to handle the pet question that way too, maybe add something to the security deposit and to the rent. And write something into the lease too.
Here's my landlord/pet story:
I rented my house one winter to a woman with a cat. There was a short knee wall, with a wooden door in it to access some storage space behind the wall. Cat gets behind wall (through the door, maybe?) cries and the owner knocks a big hole in the wall to get the cat out.
Huh! Is it legal to require an IQ test as part of the screening process for new tenants? What sort of number would indicate the ability to comprehend the obvious solution to such a quandry? Fifty? Seems like anyone who could tie their shoes would be able to figure that one out.
BTW, I wear sandals with velcro straps, more often than laced shoes. :-)
Edited 9/9/2009 3:36 pm by Hudson Valley Carpenter
the best iq test you can give them is just let them keep talking. it's amazing what they will say. meanwhile i'm taking mental notes.
and if every landlord they have had has been a ahole,i figure there is a reason.the older i get ,
the more people tick me off
the best iq test you can give them is just let them keep talking. it's amazing what they will say. meanwhile i'm taking mental notes.
What do you think of the idea of soliciting new tenants through major corporations in the area?
I've had that in mind since discovering, years ago, that several of my newer neighbors in the rural area where I intend to build, worked at the national headquarters of Mercedes Benz and BMW.
That's about a forty-five minute commute, in an area where there are numerous other headquarters for corporations.
The idea is to get help in finding quality tenants who, knowing where the referral came from, have an added incentive to keep their lease agreements.
i would sure contact them,let them know when it's available.some companies have a in house bulletin,thats a good place to advertise and one that we use.we also advertise ours by placing a sign plus one at the nearest busy corner, in the catholic weekly paper[this works really well if you are in a area that has a private school that is desirable] and craigslist.
i would try and get a feel for how long they are going to be around. moving in and out alot is really hard on a house.
i'm in a area with a air force base and some army. these people are excellent renters,they have been taught what is expected of them. the biggest problem is , keeping them long term. if you sign a years lease with them,they have a stipulation ,that if they get transferred,lease is null and void. now this sounds bad but i wish all of mine were rented to military.
only experience will tell,but i have a hunch if the guy drives up in a 75k mercedes,making 500k yr,he actually views you as less of a person than himself. might be a worse renter than some guy thats working on the manufacturing floor as a lead guy making 75k. he will appreciate coming home to a nice place.
is a 45 minute commute common in this area? here very few people would do that long of drive.the older i get ,
the more people tick me off
Thanks for the marketing ideas.
A forty-five minute commute isn't bad at all for people who want to live in the country but must work in NYC. There are many thousands of people who drive or ride trains for an hour or more each way daily, from all quadrants surrounding Manhattan. Since 9-11, many more people have chosen to move away from the city and commute.
And there have always been certain corporations which have seen benefits in building their own office facilities in Northern New Jersey, across the Hudson from Manhattan and a bit farther north, in a wealthy suburban area.
I supply stove, fridge and dw. No place for washer and dryer. Ceramic in baths, Pergo in one kitchen, vinyl in another. Thinking back, they all had vinyl in the kitchen. I don't allow pets, there is always a stink after they left, when I did allow an occasional pet. The escaped large snake that got into an adjoining rental was the most exciting.NO SMOKING, that allows me more ammunition if I need to keep a deposit. I use a realtor to get tenants, no fee to me, tenant pays. The realtor is used to getting references and running credit checks. That doesn't tell the complete story, but it does weed out a few. I have had people give a reference, and when called, they wanted to know when and where their old tenant was, so they could try to collect back rent. Never had any place trashed, but usually there is disregard for things like taking off muddy shoes,not cleaning spills on carpet as quickly as a proud owner would.Be ready for excuses that you could never had thought of. Put in a late payment charge, mine is after the 5th. You can always waive it, but you need to set the pattern early. you really don't make much income. especially early into the project, but you will have financial growth. However, when you go to sell it, you get hit pretty heavy on capital gains. I want to sell my two commercial-two apt. building, I need to get so much for it, so I can pay capital gains, and have enough to live under the Palm trees, that the price is ridiculous. You wind up giving back the depreciation. Selling and doing an exchange in kind, is a very closely watched transaction, with time requirement, type of purchase, handling of money, that I won't get involved in it.Long term it rally is the best way to build equity. However, you can't buy groceries with equity. It is an investment that does give you growth and income, mostly growth.
Dave, Thanks for taking the time to answer my questions, and for adding a few things I need to know but hadn't thought to ask.
Peter
". . .Even higher end tenants have no respect for other's properties.. . ."I guess I would have been a special tenant that you would have appreciated then. I don't ever recall breaking anything in any of the places I rented or destroying carpet, doors or bathrooms. I can quite honestly say I left the places I rented in better shape than I found. And come to think of it I couldn't see any of the friends my age back then (20's - 30's) ever trashing their places either. I think a lot of it had to do with being in the trades and respecting work that goes into making something. It's just counterintuitive for someone to spend their days building and creating to come home at night and weekends to beat the c*** out of their habitat and feel good about it.
I remember avoiding places where I could tell the owner had the attitude, "It's good enough for a rental" and if the place had Luan hollow core doors I'd run the other way.
Yes, you would be special. I would estimate that you would be 1 out of 10.
It absolutely happens, unfortunately , only in about 1:10...
I agree with your sentiment that you can "feel" the level of care from a landlord. It seems that the slumlords have a higher ratio of damage/filth.
And i would agree with Dave - income level don't matter.
Reminder to self - I should take more pics.
I had one that I had to go check on for a client just last week - (renter moved out) - she left the place better than the day she moved in. I was floored. Holes from pictures on walls, that was about it. She was special too...
Left from another I got going on for another client - figuring (2) 30 yard dumpsters, and no surface untouched just to get it back to the quality that the landlord started with.
Had to stop by another of the same clients properties ( that I had completely rehabbed two years ago) (full reno) to replace a toilet seat.... From the time I walked in, until the time I walked out, I threw up three times in my mouth. Slammed the doors so hard that the panels fell out...Dried dog diareah in the two year old carpet...Garbage so deep on the basement stairs that it was impassable....Dirty dishes that overflowed all horizontal countertop surfaces and had to be spread to the floor...Enough soiled laundry on the bathroom floor that the floor wasn't even visible...
People are nasty.
Remodeling Contractor just on the other side of the Glass City
I have no idea how you choose your clients or how one would go about reading a persons lifestyle habits and whether or not they would be good tenants.
From my experience and those of all my male friends when we were all renters many years ago living in a pigsty was not a good way to attract a mate. So we sure as h*** worked on keeping a nice lair should the need arise to accommodate a companion. Some women may not be put off by old pizza boxes littering the carpet but the type we were looking for would walk out the door if there was even the hint of dog smell or if the furnishings looked like they came out of a dorm room or frat house.
I know how long and difficult the eviction process is but can't landlords write in some sort of inspection clause? Once a month visits by the landlord might be enough to catch a mess that could turn into a disaster a few months down the road.Edited 9/7/2009 7:55 pm ET by ted
Edited 9/7/2009 7:58 pm ET by ted
I have no idea how you choose your clients or how one would go about reading a persons lifestyle habits and whether or not they would be good tenants.
That's a good question but I'm afraid that the answer can be found in the laws of most states. From what I've been told, there's not a lot that can be done to exclude anyone who is financially responsible, on paper.
I'd be very interested to hear if there are exceptions to that.
Dave, FYI Home Depot sells shower doors with a lifetime guarantee.
My son had a rental house close to me, tenant calls says "It just broke".
I knew he had bought it at HD, went for a replacement.
Warranty, it's broken it's free, don't care why.
Called the manufacturer and they were really pleasant to deal with.
Shipped me a new door and then a second one to replace the freight damaged first one.
Can't think of the brand name but ask the Homers.
Joe H
I've owned a few rentals, just have one now. Here are a few thoughts:
Even careful tenants damage walls and floors moving in and out. Look at floor plans that are easy to move in and out of (biggest doors, landings and hallways possible).
The more large appliances you supply the less move in/out damage, IMO.
I like hardwood floors upstairs (much less dirt and traffic makes it up there--my current rental has hardwood and tile floors as good as new after 4 renters the last 7 years.
I do big heavy hardwood 1x4 casing with backband and 1x6 base with base cap. Simple, classy and the cap and backband provide some extra protection and can be easily replaced.
Even careful tenants damage walls and floors moving in and out. Look at floor plans that are easy to move in and out of (biggest doors, landings and hallways possible).
Good to know. I consider 36" entry doors to be appropriate, with minimum 48"X48" landing and unobstructed foyer space.
The more large appliances you supply the less move in/out damage, IMO.
Do you include washer/dryer? How about the added responsibility of servicing appliances? Any problem?
A RE agent told me that you get more reliable tenants if they have to provide their own appliances. Any thoughts on that claim?
I like hardwood floors upstairs (much less dirt and traffic makes it up there--my current rental has hardwood and tile floors as good as new after 4 renters the last 7 years.
Another good piece of experience, thanks.
I do big heavy hardwood 1x4 casing with backband and 1x6 base with base cap. Simple, classy and the cap and backband provide some extra protection and can be easily replaced.
Sounds impressive. Can you please post a photo or two?
I like larger doors on interior rooms too (2-8" bedroom doors instead of 2-6" makes a difference).My halls are 4' wide rather than 3' too.You can advertise "nice new" without saying everything that is included... make it seem more expensive than it actually is (given that appliances are included). Get those with deeper pockets looking, then they buy due to how nice the place is and the unadvertised extras.I also provide a small dumpster for the duplex as part of rent. You never want a tenant "forgetting" to pay for trash service for a few weeks. Helps to keep the place clean.There are always horror stories. I've only had 4 rentals over the last 20 years (had 3 at one time). Good to keep those bad stories in mind... but I've had mostly great renters (only a couple of marginal renters).I would let my current renters move into my house, if I needed to leave the area.Here are a couple examples of trim I like for nice rentals:
Have you ever tried direct marketing your high end rentals to particular large companies?
There are a number of major corporations which have their national headquarters within commuting distance of the location where I'll be building. Others too, like IBM, which have large manufacturing facilities in the area.
I've been considering speaking with their human resources departments, to see if they'd like to offer my nice units to people transfering into the area. Seems like a good way to pre-screen renters. What do you think?
Thanks for the photos. That casing is really nice. I can see doing a set of those in the master suites.
The whole idea of hardwoods as trim is definitely worth serious consideration. What finish did you use on those?
I'm wondering how to avoid having to re-finish something that complex. I recently re-finished some oak cabinet doors which had originally been done in laquer, about fifteen years ago. Spent too much time on that. Certainly don't want to do it again.
"A RE agent told me that you get more reliable tenants if they have to provide their own appliances. Any thoughts on that claim?"
Around here they go to the "Rent To Own" store. They will even move the tenants stuff as long is it is not payed off to the next place. Stove and refrigerator seem to be typically included by landlords in this area. I wouldn't want to clean melted crayons out of a dryer, but I am also concerned about tenants installing washers/dryers themselves. The quality of the tenants washing machines also concerns me.
On the pet issue, I am getting $50/month pet premium in a rural central Ohio location. I have been doing this for 2 years, and have ammended it to include outside pet's as they are only outside while you (the landlord) are there.
Edited 9/9/2009 10:25 am ET by bdeboer
Thanks. I'll definitely limit the appliances to kitchen stuff, no washer/dryer, though I will provide a space for them. I'm thinkin' that the "no pets" policy may be necessary too.
Good points.
I do mdf 1x 4 mouldings w/ caps , and throw on a capital of crown to dress them up (out of harms way) simple but dressy...Remodeling Contractor just on the other side of the Glass City
I use random paint-grade hardwood 1x.I also like the cabinet head crown.Chairail, like a simple 1x3 with eased edges might be smart too.
Edited 9/8/2009 10:31 am ET by basswood
I do the head crown on the door casing sets/openings...
Easy to do and dresses up the "squarish" casings...
They don't get screwed up, up there.Remodeling Contractor just on the other side of the Glass City
NO PETS... PERIOD.
Tile floors on bottom floor,VCT. When I have to use carpet upstairs, I put 6 mil plastic under,on top of foam to save on cleaning and replacement costs.
I have 8 1 bedroom apts. in one bldg.4 up 4 down. It is better to have empty apartments than a bad tenant.
Small tourist town. The basement is my shop, storage, laundry.
Larry B
Thanks Larry.
>everyone needs a steady documented income in order to borrow when credit is tight<
have you asked the bank you use if they currently loan on rental income? I know a few that won't right now.
have you asked the bank you use if they currently loan on rental income? I know a few that won't right now.
No I haven't but the bank I will use is the one that will find a way to put the positive information I give them to good advantage.
There are hard working loan officers out there, people who go out of their way to make the numbers work for their clients. It takes some time and effort to find them, particularly during times like these, but they do exist.
not saying they don't exist. I just know of a few that lost my business do to their lack of interest. You ought to be sure your plan will work the way you want it to before getting too far down that road. If you haven't run it by the bank, then you don't know for sure that they're going to work with you.
Already done, thanks.
I've had rentals for 35 years now and have learned most lessons the hard way. I've had upper income single family homes, duplexes, mobile homes and trailers. If I was starting all over knowing what I know now I'd only have trailers.
We got rid of the duplexes and upper income single family homes pretty quick. The tenants in them did more monetary damage to the units than the low income ones and are much harder to kick out. Had a friend who had a tenant in real nice neighborhood. The guy's wife developed cancer and he used that as an excuse not to pay rent for 7 years. My friend took him to court on a regular basis and the guy would cry about his wife and the judge would let him stay if he would pay a little. That's what he paid too, a little and then nothing until the next court date. When they finally got him out it turned out he left because the house was destroyed.
The last trailer I bought cost $2500.00 plus setup. I spent about $2000.00 on repairs and carpet and started renting it for $400.00 a month. In less than a year it was paid for. That was 16 years ago and it's never been vacant since then. I now get $700.00 a month. Over the years I've probably put another $10,000.00 in it in repairs and remodeling. You can do the math.
Thanks for sharing your experience.
Another horror story. I'd bought a nice duplex right close to the police station in an upscale neighborhood. Moved a decent seeming guy in and several months later found out he had a Chow dog living there. Went by and confronted the situation. Of course the dog stayed outside, etc, etc. When he moved out a year or so later and we went in to clean up the stench was unbearable. We had to air it out 2 days before we could work inside, all the carpet was ruined, cabinet doors chewed, you get the picture. Pulled the carpet but the place still stunk. Mopped the floors with Mr Clean, and 409, and TSP, and anything else to take the odor away. Finally rolled on 3 coats of poly making sure to flood under the walls. That seemed to get it so we ordered new carpet and listed it for rent. Carpet guy comes and has carpet rolled out in every room. I couldn't smell anything but new carpet. prospective tenant comes to the front door, stops, says, "Oh gosh, it stinks like a dog" and walks off.
We couldn't rent it at all and ended up several months later letting a realtor have it just for taking over the mortgage. After figuring the rent in and expenses out that 3 years of duplex ownership cost me right at $28,000 and I got rid of it about 1990.
Maybe the answer to the pet question is to get references on the particular pet as well as the potential renters, from a former landlord.
"Yea, Gypsy was cool but her owners were slow payers". LOL.
Edited 9/8/2009 12:25 pm by Hudson Valley Carpenter