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Hi Fishies,
Looking for any reviews/suggestions regarding Pubmatic. Most important is the tech stack and learning aspects.
Big data technologies(Scala-Spark etc) and Java.
Also in discussion with Impetus and Autodesk (via third party i.e. Applicantz).
CTC is not a concern right now as what they are offering is enough for me right now.
Any suggestions would be helpful
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Have done your due diligence? Have you read the leases? Have you received rent rolls? Any property updates in last 3 years and records of maintenance?
I know the tenants sound “ideal” but in my experience, I’d ask for the units empty so you can get tenants at market rates. It is going to be impossible to raise rents 70-100% without you running into problems with existing tenants. Also, go meet the tenants and ask them about repairs etc. You’re more likely to get the real story from them about problems with the property.
Also, property might be a deferred maintenance nightmare. Make sure you turn everything over with a fine tooth comb. Get structural engineer, contractor, HVAC, electrician in to tell you all the work that needs to be done ASAP in addition to appraiser. This is your only chance to know all the hidden costs and try to negotiate off purchase price.
Good luck!
Subject Expert
If the market rents are double the current rent roll, then even if they list at market price and drop to 70% or 80% of market price, a month or three of vacancy and lost wages is covered within the first 6 months of tenancy. Hopefully OP has accounted for some early vacancy in his funding model.
If the rents were only 20% or 30% below market, I would be less inclined to suggest such an aggressive approach. But 100% below market is really bad.
Subject Expert
You have 2 choices:
- be a “nice” landlord and let them stay as long as they want, perhaps slowly increasing rents by a minimal amount.
- be an investor and either issue them a new lease and close to market rents, and/or give them the boot.
You mentioned that they are “ideal” tenants, but also mentioned that they are retired, which likely means fixed income. Even if they take great care of the place, there will be a very small margin for raising rents before they get upset. In my mind, ideal tenants have jobs with rising income and can absorb rent increases. Anyone who has had a fixed rent amount for 3+ years is likely to leave with any major rent increase.
Arizona has seen rents skyrocket, especially in the last year, and rent is expected to continue to grow. If you want to take investing seriously, you need to be sure to capture close to market rents whenever possible to help account for times when rent growth isn’t happening and/or when there are damages and repairs.
When you calculated the price you were willing to pay for this triplex, did you use current rents? Or market rents? Are you accounting for the rising costs like property taxes, utilities, and trades in the future? The reason rents rise is a combination of the supply / demand curve as well as other rising costs. Flat rent for 3+ years shouldn’t be expected in a booming market like Arizona, and if you don’t raise rents now, you’ll never maximize the value of your investment.
I’m sure some people might think I’m being scumbag landlord with this type of advice, but the reality is that investors take on a lot of risk, and the reward for that risk is market rate rents.
If you want to be graceful in letting them leave, you may want to give them a 90 day notice of a rent increase, and only increase the amount by a portion of market rate. But if they are under rented by 100%, any increase is going to be alarming.
Subject Expert
Vacancy isn’t a bad thing. If it takes a month or two of vacancy to double the rents, I would take that every time!
I don’t think your raise is enough. I would do a 90 day notice that rents are going up 20% with a 1 year lease or 30% with a 6 month lease. I would expect both tenants will plan to leave, which is probably the best situation possible for you.
Where is the property located?
In New Jersey you may have some issues.