Apartment Hunting Advice

[AMP]

Speaking of income from property and insurance.  I have a friend that owned a building in Tulsa.  It was insured for the value it cost to build it.  He was renting it for $2,500 per month. He owned it outright with no Mortgage, only property tax and insurance.  

The building caught fire and was a total loss.  The insurance would only pay the cost of the original construction which was $750,000 then. Today's cost is 1.6 million for the same size building.  So he not only lost the building, he also lost his $2,500 income from the rental. Now he only has an empty lot after paying to have the building removed.  

Another nightmare of owning commercial buildings.

[cannon_fodder]

$300 wont even come close to covering the mortgage on a duplex.  Let alone insurance, tax bill, maintenance, and other costs associated with owning a building.  And utilities?  

Assuming insurance is $50 a month, taxes $25, and a lowly $25 a month for maintenance.  Then lets pretend utilities are only $100 for 2 residences every month.  That means the guy only has $100 a month to pay a mortgage.  So, using those INSANELY low numbers for his other expenses, the landlord could afford a $15,000 building.

I dont want to live in a $15,000 duplex. I'm fairly confident no duplex selling for $15K could legally be leased.

Either they are pulling the wool over your eyes, you are mistaken, or this man is subsidizing housing to the tune of $500 a month.  
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Likewise, grade "A" office space in Tulsa leases for around $13 per square foot.  So for $125 in Tulsa I would expect to get about 10 square feet of office space.  So if you truly have a nice office for $125  a month for all that you say - get a lease and sublease that thing.  You would certainly make more money subleasing at a 3 or 4 times markup than whatever you are doing now.

Your landlord must be a fool to give away that kind of money.
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And $50 a month for electricity running 2 A/C units?  When I lived in Iowa we had 2 window AC unit and payed about 4 times that in the summer for electricity - it tends to be hotter in Oklahoma than Iowa.

Same with the $200 a month.  Either it is government subsidized or they are losing money on it.  Gas bill would average $50 for a family of three, water minimum of $25.  So they are actually paying $125 in rent.  Of which a minimum of $25 goes to insurance and another $25 a month to maintain the property.  So $75 a month.

Are we talking about slums here? At $75, pretending its an 8 unit complex, you could buy an apartment building for just shy of $100,000.  That is nothing.  My meager little midtown home is worth more than that.  Hell, I'd be DAMN GLAD to sell him my house for $100,000 (under what it is worth) if he will lease it back to me at those kinds of rate.

I'm just afraid I cant believe those numbers unless I actual saw them offered.  They are just too good to be true, which probably means they are.
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As per losing money on real estate - more millionaires are created from real estate than any other sector.  If you do it right, real estate will pay for itself in the long run and you build up free assets.

[YoungTulsan]

Isn't Westport doomed to be bought out and leveled?  They optioned it for The Channels, but even without The Channels being a success, it would seem the place is for sale.

Sundance looks to me like a pretty typical apartment complex (take that for what you will) for the area, with pretty decent residents for the most part.  The "security gate" is just for show, as you can walk right into the complex no problemo.  Thats true for most places though.   Take a look at Lincoln Park at 19th and riverside (just before Denver) - It is pretty nice, maybe a little more costly than a Sundance or Legacy tho.  Underground parking garage with a security gate that actually works, and you'll be the envy of all your friends on the 4th of July.

[cannon_fodder]

Some office rates for Tulsa:
http://www.tulsaproperties.com/properties.asp?corridor=Lewis

Average $12 per square foot.  The ones closets to 51st and Lewis were closer to $16.  Did you lease 3 square feet of space or is there some idiot leasing his property for 10% of the market price?

Right at 51st and Lewis office space is selling or has recently sold for $85-90 per square foot.    Putting it in the lease range of 14-$15 per square foot (industry standard 1/6 cost = lease price estimate).

Either you really know how to find idiots willing to give their property away, or something is drastically wrong here.  And month to month is usually more expensive, as the owner wants security in his income.

Bah!  I call BS.

[cannon_fodder]

quote:
The building caught fire and was a total loss.  The insurance would only pay the cost of the original construction which was $750,000 then. Today's cost is 1.6 million for the same size building.  So he not only lost the building, he also lost his $2,500 income from the rental. Now he only has an empty lot after paying to have the building removed.  

Another nightmare of owning commercial buildings.

Dear god!  You insure a commercial building for a particular amount of money.  You call up CFR or Colemont or whomever and say "I need to insure my structure at X used for Y for $$$, get me some quotes."  They provide quotes for that dollar amount of coverage and you pay the premium. If you care to know, commercial insurance is usually paid in full in advance for the entire year.  However, it is most frequently financed and paid with 25% down and the rest over a 9 month period.

If the building burns down, they have to either prove the cause of the fire was outside the policy (ie, you torched it) or pay the amount of coverage stipulated.  Its not like a car where there is a haggle over the value of the used vehicle. It is pre determined by contract.

If your friend insured a building for less than its value too damn bad.  I call BS again.

[AMP]

It was the building near 61st and Garnett where Leisure World was located.  The building was built from concrete and steel, however the business leasing the property had stored, for some unknown reason, large amounts of Styro-foam from the packing material of Hot Tubs in the warehouse area of the building.  I believe that was the fuel source for the fire.  

Either way the insurance coverage he had in place was not enough to rebuild the structure at today's cost, and the building owner lost both his building and the income from it.

Simple mistake that is made a lot in business.  

I have another friend that lost a non-commercial large two story storage building on his land during construction when a worker using a grinder accidently set the building on fire when it was very windy and dry last Winter.  He suffered too from lack of adequate coverage on his structure and contents as well.  They lost two automobiles, a large F-450 Ford Truck, two tractors and other vehicles that were stored in and near the ourside of the building at the time of the fire.  None of which were covered by the building policy.  Two of my street motorcycles and some expensive hand tools were in that building and I never got any money for any of them.  Didn't expect any either as I had no coverage other than liability insurance on those.  

[cannon_fodder]

Again, when you are in the process of constructing a new building there are special forms of insurance that you carry.  Not only should the prospective new owner (or bank) have a construction loss policy, each contractor is often required to get an insurance certificate.  Not to mention most business have equipment insurance built in as part of their General Liability policy that will cover the cost of replacing equipment that is damaged or stolen.  If you care, the premium is usually based on volume of sale X a modifier.  The modifier depends on the industry and the track record...

It sounds like you and your friends commercial woes might stem from a lack of proper insurance.  If you take the risk of having no insurance, then you have no right to complain when you lose out because of it.  It sucks, to be sure, but an extreme risk was taken to avoid cost and they got called on it.

Either you got screwed by your friend or he burned himself (pun intended).

[AMP]

The late Tulsa homebuilder Vernon Mudd owned that building near 51st and Lewis.  It sits along 51st Street West of Lewis on the South Side of I-44 highway.  

It is a two story building. The office suites which were around 500 sq feet rented for $75 per month, and a two car garage we rented there for a couple of years was $250 a month with attached office space.  

Property owners like used car salesmen have three prices.  Wanting, Asking and Taking price.  Depending on how long a property sits vacant may determine how good a deal you can make with them.  People get screwed on purchases and leases every day.  

A wise Jewish friend of mine once told me that during negotiations always be aware that most people will accept a 1/2 loaf of bread versus a full loaf of bread in sketchy economic times.  He always said "A 1/2 a loaf of bread is better than no loaf of bread."  He also pointed out that God created Gentiles because someone has to pay Retail.

Need to also remember most people will not divulge what they are paying for space.  The average or numbers per square foot are created from reports generated by the property owners and leasing agents and not the business owners that are paying the rent in those spaces. May get a totally different number if you could get honest answers from the renters.  

Buy a brand new $20,000 vehicle today, then take it to the Car Crusher tomorrow and it will bring around $120 in material.  The catalytic convertor range from $30 up to $140 depending on the size of the engine.  Wheels and tires bring around $15 each ussed, if they are aluminum wheels.  Most things are only worth the weight of the material they are made from.  Some may have additional value from the use one may get out of them.  

Most savvy business owners buy used equipment, rebuild it and put it back into service.  They save tons of money doing that.

[AMP]

Both owners owned their buildings outright and had no construction loans or mortages on the property.  They had owned the property for years and just failed to upgrade the coverage.

Neither one were involved in the fires, one was a construction accident and the other was caused from improper storage of material of the renter.

[Conan71]

Call me Inteller, but $150 to $200 per month rent for an apartment will usually only attract scum.  You know, people with bad habits who don't have a tendency to respect other people's property or have a concept of proper etiquette with noise.

People who can charge that little either: have paid off the building long ago, are accepting gov't subsidies, or are renting sub-standard property which is barely up to code.  I'd also bet they are under-insured as well.

I always tell people who are looking for a place to rent, be it an apartment or a house, to look at what kinds of cars are parked around the area.  You can get a pretty good idea what kind of neighbors the area attracts just by looking at what they drive and how they take care of it.

I pay a little more for less square footage than I could get a mile or two north of where I live, but having good neighbors is an important criteria for me.  I don't worry about cars coming and going through the night or having my house broken into.

[AMP]

The two younger gals in or office mid 20's have lived there for over a year.  Parking lot has 2006 Chevy, a 2003 Ford F-250 a 2002 F-150 and a 90s F-250 pickup.  

Neighbors on one side have outdoor cookouts during the mild weather. I have atteneded a few, they make some awesome BBQ using pecan wood.  

No noise around there that I have ever heard when I was visiting, the gals don't ever say anything about noise.  Their neighbors are all older seniors mostly in their 60's retired couples.  

Noticed a few of the homes on their street are undergoing some major landscape improvements and one has been completly remodled in the past year.

It is a very quiet nice neighborhood compared to some I have seen in other parts of Tulsa.  The owner is not trying to Retire off of other people, he owns the property outright and has for over 25 years.  He makes a little money from his rent, most he puts back into the property had it completly sealed and painted last summer and he installed new appliances in most the units.   He has been retired for five years and is not looking to become rich off his investments.  

Some people think you must pay a high price for anything to be quality, that is not always the case.  Depends on who you are dealing with.

[AMP]

As far as code, each unit has circuit breakers the box looks very new clean and shiny and all the breakers are marked as to what they control.  All outside wiring is in conduit other than their cable and phone lines.  

I did not see any holes, leaks or gaps in the brick work or woodwork on the outside.  Inside the walls are all smooth and painted professionally in two tone umbers, hardwood floors are sealed with polyurathane and the windows are all double pane with screens.  

The plumbing works great their unit has a large deep stainless double sink with a sprayer atachment and a brand new Whirlpool Dishwasher and Stove.  I have prepared a few salads and dip at that sink.   They have a Brand New Refrigerator and a wash and dryer in the laundry area.  

They are back in the neighborhood with little traffic.  I have left there as late as 11pm on a Saturday night and never saw any kind of traffic you are speaking of.  We have dropped them off from 1am until up to 6am returning from out of state trips and have never seen anyone or any traffic around.  

If anyone is making noise around there it would be us dropping them off with our odd hours. LOL

[Conan71]

If that is the case, it's a rare land-lord indeed, and even rarer that he attracts quality tennants.  Common thinking amongst a lot of landlords is that if you charge low rent, you get "low renters".

I'm willing to bet though there are more police calls north of I-244 in the Harvard area than there are south of it.

[AMP]

The construction was not being done on the existing building that burned, it was an addition and not original construction.  The addition was only a concrete slab at the time of the accident.  A metal building was being erected on the slab and the worker was removing an outside exterior wall of the existing building.  He got the metal building as a salvage deal and it was being assembled on the slab.  

The building was insured and he owned it outright with no mortgage.  The contents were insured but not any motorized equipment that would normally carry an additional policy.  His kids motorycles, tractors, ATVs, Jet Skis my motorcycles and two cars owned by others were not covered under that policy as it typical with most insurance policies.  They cover much less than you would think.  

His riding mower used for lawn maintenance was covered along with his hand tools and other equipment in that building.  The two large F-450 Trucks parked near two of the five overhead doors were not covered by the building insurance and neither had comprehensive coverage.  Both were in the process of repaire, the fire department and helpers were unable to get them moved back from the building in time, he lost both of them.  Crushed two of the cars that were in the fire they had no insurance coverage either.  

Non covered loss was around 20-30 grand in the entire deal, but the two other owners of vehicles there did't care as we chose not to have comprehensive coverage on those vehicles as the premium costs outweigh what the insurance company will pay for a loss in most cases.

I have lost way more than that in less than a few hours on many occasions so I considered myself lucky that I was not there and got burned up in the deal.

I did get $8 in metal salvage weight for my two burned up motorcycles. May of paid for the gas to take them there.  All the aluminum was melted off so there was not much left.

I am not attached to any vehicles or much of anything I own anylonger like I was when I was in my 20's.  Heck I have given away 11 motorcycles and 20 bicycles in the past 10 years.

[Steve]

quote:Originally posted by Conan71

If that is the case, it's a rare land-lord indeed, and even rarer that he attracts quality tennants.  Common thinking amongst a lot of landlords is that if you charge low rent, you get "low renters".

And they are right too.  I was paying $350/month plus electric back in 1983-1985 for a very lovely 1-bedroom 1,000 sq. foot duplex at 16th & Columbia Place.  $200/month for an apartment or duplex today? I would be very suspicious of either the landlord's sanity, the neighbor's desireability, or the crime in the neighborhood.

"Call me inteller" - I nearly fell out of my chair laughing at that one!