219 West Main Street believes that a quality life should be affordable, convenient, comfortable, and hassle-free. That is our goal with neat and clean apartments within a reasonable price range.
This has been my mantra for 18 years now. Sadly, with my health as it is, I am not able to keep up the work that needs to be done. It is time to sell.
The Metrics:
Gross Income:
With the rents set at $625.00, the gross income is $52,500.
With the rents set at $700.00, the gross income could be $58,800.
Debits:
The current yearly expenses are $28,966. Much of this is the price of heating oil, followed by water.
Electric
$3600
Water
$3992
Trash
$940
Insurance
$6600
Property Tax
$3800
Oil @3.59
Oct
$538.50
Oil @3.59
Nov
$897.50
Oil @3.59
Dec, Jan, Feb
$1615.50 (each month)
Oil @3.59
Mar
$897.50
Oil @3.59
Apr
$538.50
$23419.50
P&L, T12 and other Financial Considerations.
I keep ledger style budgets for each year based upon the last years expenses. During these years of fluctuating oil prices, last years oil prices has not always reflected the coming years prices. Still I use the document for a budget for the upcoming year, a P&L for the last year, and a T12 for the last year.
The first ledger compares rent @ $625 and @ $700 for the year. The rent is currently $625 per unit. This ledger answers the question, "What if I raise the rent to $700?"
The second ledger is the same minus heating and water costs. This is assuming your using mini-splits to heat the individual apartments and individual water meters. This offloads these costs from the landlord to the renter. This ledger answers the question, "What if I make the investment to individual water meters and install mini-splits to offer individual heat and air-conditioning per unit?"
Each ledger is otherwise the same. There are 12 months and tables for debits and credits. To know the profit and loss - or T12, simply look at the 12th month yearly totals. There are columns for each budget scenario - rent 625 and 700. These columns allow you to compare the scenarios side by side.
Gross Income:
7 units rented at $625 = $4,375 * 12 = $52,500
7 units rented at $700 = $4,900 * 12 = $58,800 (potential)
Net Income:
With the rents set at $625.00, the net income is $29,080.50.
With the rents set at $700.00, the net income is $29,719.50.
Cap Rate:
With the asking price of $225,000, the cap rate is %10.45.
GRM:
4.28
GBA:
6886 sqft. (approximate)
Land:
.25 ac. It is likely more. All lots regardless of actual size is listed on the plot map as .25.
Parking:
2 garage.
5 parking lot. (seven can fit)
2 off street. (behind the garage edge of road)
1-2 on street (front).
Unit Breakdown:
2, 2 bedroom apartments.
5, 1 bedroom apartments.
1, 2 space commercial sized garage.
5 of the units are turnkey.
2 of the units are the owner/operator suite. Can very easily be converted back to 2 rental units. 1-2 days work.
Property Values:
Property values are high and remain high in Bedford County. They always have been. There are a few reasons for this. One, Bedford is a very desirable place for Washington D.C. and Baltimore residents to go and retire. Two, there is a lot of hidden wealth here. Long term investments through generations of ownership, farms in particular, has made more millionaires than most other places. Pennsylvania is a great place for generations to build wealth and Bedford County residents have been able to take advantage of this. Bedford County has historically had wealth, for example, the Bedford Springs and other properties built around the springs reputation as a desirable place of healing. Bedford, in the early days, was a popular retreat for the wealthy in Washington D.C. and Baltimore. This tradition continues even though the springs are no longer desired for healing.
Everett is just a few miles south of Bedford. Everett also has quite a few millionaires and hidden wealth. Everett is seen as more blue collar. This is where the working stiff calls home. And while they earn a living wage and can afford their rent, their families are generally more than comfortable through long term generational property ownership. The values are only going up. Bedford and Everett both enjoy higher than average stability in property values.
Property Restrictions:
There are no restrictions on the property. It is a historical property and should be treated as such as much as possible. I have information on the history of the building toward the bottom.
Unit Condition:
All apartments were reconditioned 18 years ago and look the same today as they did then. In 18 years, some carpet could be updated, though not required today. All of the carpet was new during the renovation. I would install two shower faucets for 2 of the claw tubs to replace the bath faucets. I installed one to see how it would perform. I recommend the showers sets for the other two.
In the owner / occupied units were renovated for the owner. It is 2 units. You will want new carpeting and other flooring. While it was new when I moved in, I will remove it all when I leave. As well, you will need to add a kitchen. Everything is there, you will need cabinets and a sink for 1 unit (currently used as a laundry room), a stove for both units, and a refrigerator for both units.
Mountain City cabinets is just around the corner and cheaper than anyone else. Mountain City is a manufacturer and produces cabinets for some of the name brands we have seen. It is Mennonite and locally owned with a store on Rt26. Carpeting can also be rather cheap. I buy my flooring from Steve Imler on the mile level just down the road. Many landlords are using vinyl plank flooring instead of carpeting. It is cheaper and lasts longer. Tenants can be hard on carpets. I personally prefer carpet because it is warmer in the winter and more luxurious than vinyl. Vinyl plank flooring was not available during the renovation or I would have installed it in some areas instead of the fake wood planks that was available.
Building Condition:
The building is solid. It is in great shape. It is time to paint the exterior doors, windows, porch rails, and trim again. That should be trivial. There is one piece of wooden facia that needs to be replaced. Again trivial.
All door locks have been changed again since the renovation. All but one refrigerator has also been replaced since the renovation. It seems as though you only get 10 or so years out of locks and refrigerators these days.
The boiler is regularly serviced. The burner has been completely rebuilt. It works reliably and always has.
The hot water heaters (2x50gal) are in great shape. I change the heating elements and thermostats regularly and at the same time. These water heaters perform well and there is no need for a third.
The wooden door way over the basement stairs needs to be rebuilt. It was rebuilt during the renovation. This is trivial. I would get a custom steel set of doors just so that you would not have to think of it again. Otherwise new wooden doors would take no time at all.
The plumbing is in great shape. It is all copper for the water feeds and galvanized for the drains. One 8 foot section of soil stack does need to be replaced, it is holding itself together with the Lexel and ring clamps. This is a simple repair job but could still take up to a full day. You can use PVC or iron. PVC is faster, lighter, and cheaper. I sill prefer iron though I would not recommend it.
I cleaned the exterior with water using a pressure cleaner every year except last year. It is time to pressure wash the building. It would take me a few hours on a warm afternoon. It will come clean very quickly. We get dirt from the road.
Roof Age:
I bought the building from Pam 18 years ago. She and her husband put the roof on the building during the 9 years they owned it. I do not know the exact age of the roof. It is asphalt shingle and still in great condition. If the time came to update the roof, I would put a metal roof on the building with a 60 year warranty. A metal roof is pretty standard round here and much cheaper than asphalt shingles. Metal roofs already exists over the porches and garage.
Yard Condition:
The yard does need some work. I have not been able to work on it like I normally would. I did begin cutting down the hedges this spring in time to pave the side street. The hedges were well known. They were 80 years old, 8, 10, and 12 feet thick in places, and hung over half of the front sidewalk. The township would receive one complaint from one person each year which the township would pass along. The truth is, the township did not care about the size of the hedges and in fact, did not really want me to cut them down. The fact of the matter was that they had gotten too large regardless. One alpine has been removed except for the base of the tree which is out of the ground. It just needs to be cut up into more manageable pieces and hauled away. The smaller alpine has died last year and needs to be taken down. It is small enough that it would not take much work to remove. I will continue to cut down the hedges when I can.
Appraisal:
This building should appraise for $250,000. Two appraisals not paid for by the owner confirm this.
This apartment building is a money maker for any investor of rural rental property. There is more room to raise the rent further increasing profits as well as renting the garage.
Rental Rates:
My rent is the cheapest in town. The reason is simple. For a long time I was too busy to raise the rent. This could be easily understood if I were to explain it. I did raise the rent $100 almost 2 years ago and plan to increase the rent $25 each unit on the one year anniversary of the tenants lease until competitive. I currently charge $625.00 which may not seem like a lot. Since all the utilities are paid, I could easily charge $700.00 today. I just do not want to drive away my good tenants. They are longer term tenants with one having been here about 19-20 years. While the rents are low, the cost of operation is not high either.
Background:
This is an archaeological find. A rare Federal I House architecture, this building may be the last of it's type in Pennsylvania. It is one of just a few linchpin properties used as an example to register Everett Pennsylvania as a Historical Place. The property was a residential home built one year after The Patton House in the 1700s. It shows up in the historical records in 1920 as an apartment building and as a "structure" before that. More research still has to be done. You can see the stone foundation and hand hewn logs in the basement. The building was lovingly restored in it's current configuration in 2006 by myself. Extensive work took place to make this one of the nicest properties in Everett.
Location:
This building sits on Main Street across from a doctors office (just closed) and the Food Liner (IGA) grocery store, and down the street from hardware stores, pharmacies, a Rite Aid drug store, and popular dinning. Everything you need is in town within just a very short walk. Everett sits at the intersection of historic Rt. 30 Lincoln Highway and Rt. 26 between the Breezewood and Bedford interchanges for the Pennsylvania Turnpike and close to Rt 99. The town is in the mountains with biking and walking trails, along the Juniata river and railways, and a center point between Philadelphia, Pittsburgh, Baltimore, and Washington D.C. All just 2 hours or less away.
Culture:
This is largely an agricultural area with some manufacturing close by. There is plenty of work here for everyone. Everett and Bedford county despite the wealth, is considered low income, however, the cost of living is extremely low. After Walmart raised it's hourly pay rate for all employees, many others were forced to also raise their pay rates to compete. Most people earn enough to easily pay their bills. Though it is no longer necessary, most people have a side hustle or a weekend job that makes people very interesting due to their creativity.
Everyone knows everyone else. Gossip is rampant. They are ready to help neighbors, friends, and complete strangers. There are Amish and Mennonite farms in the area and most people in town are a descendent of one or the other. Morality is high and most people go the church. These are traditional people and family and faith comes before all else. There is also a high number of veterans where service never stops. Most people are trustworthy and renting in the area is easy. The people are used to making deals on a handshake and can be trusted to keep their promises. There are always, like everywhere else, people you do not want to rent to. It is easy to tell who you should not rent to. There a few very simple tricks that work for screening the good from the bad. Success here means choosing good people first. I spend time to get to know them, asses their values, and find out what motivates them as people. Fortunately, this works a treat! I am willing to share my secrets. You will find it amusing.
The Building:
The building is a very solid wood frame structure built before 1920 over an existing foundation. Part of the first floor is original work. 1920 is when deeds began to account for buildings on properties. Building plans did not start till years later. I do know that when the town of Everett began to organize with plots and streets, the Patton house was the first plot sold and the first house built. My house was the second. The foundation is original except where the building was expanded. It is possible that part of this structure you see is original. The first "floor" certainly is, built as a floating platform over stone. The 1920 structure was an apartment building with four units. Each bedroom had a connecting door between the bedrooms and also a door to the back hall. The traditional Federal I structure has center halls connecting living areas and this building has two, though the rear center hall has been converted to closets. The front hallway and a back hallway do not connect to each other. It is easy to get confused as to where you are in the building - a source of entertainment for me.
The building is very homey with several porches and many entries around the building. All apartments have immediate access to a porch to enjoy in fine weather. The west side enjoys plenty of sun and heats the building even during the winter. All apartments have between 2 and 3 entry doors. Many upper floor apartments connect with both of the first floor and second floor hallways. You can see the original structure of the building when I explain it during walkthroughs. This helps to understand the building twists and turns. Something that is easily apparent. At some point you will say, "I get it now."
The building was built with a gravity fed coal furnace. This was replaced with an oil furnace not too long ago and two large circular pumps to heat the building, one for the west side of the building and the other for the east. Mini Splits can easily be installed. The 220 volt outdoor units can easily be wired but may require an increase in the service. You also can have 110 volt outdoor units along with 110 indoor units if needed though they are less efficient. This could easily be wired to existing circuits and would not need a service increase while the 220 volt units would require an upgrade from 400 to 800 amps. I would retain the boiler for emergencies.
Each tenant pays for their own personal electric in the apartment. The water is master metered. This can easily be upgraded and would require additional meters installed. This is not as difficult as it first appears. It is daunting, but simple none-the-less. I currently pay for all of the utilities except for the personal electric. This can all be changed so that the tenant is responsible for all their utilities.
The Renovation:
The building had been owned by two slumlords when I purchased it. It was in extremely poor condition, however, it had great bones and could be a lovely place if the right owner came along. I was that right owner. I began renovations within one or two days of its purchase in June 2006. A crew of four, ten months, and $85,000 later, I was ready to rent again.
Here is an example list of the renovation items from off the top of my head at the time.
Screen Doors
Replace Aluminum w/Wooden Doors
Replace Missing Doors w/Wooden Doors
Remove Modifications and Repair Existing Doors
Scrape / Paint
All Externally Visible Wood
All External Doors and Screen Doors
All External Wooden Windows
Hallways
Apartment 6 and 3
Touch up apartment 4 and 5
Porch Apt. 6
Replace / Repair Decking
Remove Blocks
Replace Rails to Match Existing
Add Porch and Steps on Rear Entrance
Rear Porch
Remove Carpet
Repair Collapsed Corner Support
Replace Decking
Remove Rail and Replace to Match Existing
Remove Aluminum Panel and Replace to Match Existing Siding
Front Porch
Add Sophet On Porch Ceilings
Paint Front and Partial Side of Stairs to 3rd Floor Apartment
Rear Stairs
Cover Fiberboard with Siding to Match Existing Siding
Rework Stairway Roof Support to Remove Sagging
Repair Roof to Include Roof Support
External 3rd Floor Access Stairs
Brace
Install Lag Bolts
X Brace Stairs to 3rd Floor Apartment
Paint Section Visible to Street
Replace Locks
Replace Locks on All Apartment Entry Doors
Replace Original Locks w/Quickset (or better) Locks and Retrofit Kits and Decorative Panel
Remove All (some exception) Internal Door Locks
Make Work All Original Knobs
Add Lock to Basement Door
Realign Doors and Latches
Remove All Barricades, Latches, Chains, etc.
Remove All Excess Locks
Inventory Apartments for Defects
Replace or Repair All Old or Non-Working…
Lights
Outlets
Switches
Smoke Detectors
Lights
Replace All “Bare-Bulb” Lights
Replace All Old or Non-Working Lights
Replace All Living Room Lights w/Ceiling Fans (some exception)
Repair or Replace External Lights
Explore Adding Spot Lights for Parking and Security
Cover All External…
Switches
Outlets
Heating
Evaluate Current Thermostat Configuration and Modify
Clean and Make Boiler as Efficient as Possible
Clean Boiler
Clean Filter
Clean Valve
Adjust Street Pressure from 8 Pounds to Minimum of 18 Pounds
Bleed System
Validate Temperature and Proper Heating in All Apartments and Rooms
Explore Options for Rezoning Existing System
Explore Options for Alternative Fuel Options to Include Possible Electric Baseboard
Doors
Replace Hallway Entry Door Apt. 7 and Frame Properly
Repair or Replace Basement Door w/Steel Torsion Spring (if possible)
Clean Out Debris
Trim Bushes Clear of Doors
Replace Missing Wood
Replace Roofing Shingles
Paint
Repair All Doors, Trim, Repair Excess Lock Holes
Add and Replace All Door Draft Gaskets and Sweeps
Add Stairs to External Doors Where Missing
Remove Concrete Block Rear Door Apt. 6 and Install Wooden Stairs (Porches)
Toilets
Replace All Non-1.6 Liter Flush Toilets
Repair Floors and Leaking Toilets (from inspection)
Apartment 6
Remove Thousands of Nails, Screws, and Staples From Porch and Apartment
Empty Trash
Research and Repair Sagging at Hallway Doorway
Remove All Cabinets And Shelves (except closets)
Remove Appliances (save refrigerator for Pam)
Clean Floor (with scrubber)
Apply Natures Miracle
Remove All Wall Paper and Borders
Replace Bathroom Sink and Toilet
New Medicine Cabinet
Replace or Add Bathroom Accessories
Replace Stove and Refrigerator
Measure, Acquire, and Install Kitchen Cabinets
New Carpet for Living Room and Bedroom
Pergo Flooring for Dining Room
Vinal Flooring for Kitchen, Hallway, and Bathroom Room
Repair Leaking Toilet (Toilets)
Repair Plaster
Replace Fiberboard Wall in Bedroom
Paint with Sealing Primer
Paint
Apartment 3
Replace Carpet in Livingroom and Bedrooms
Add Pergo Flooring in Entrance Way
Replace Vinyl in Kitchen and Bathroom
Replace Stove, Refrigerator
Repair Broken Cabinet Door
Replace Bathroom Sink
Replace Tub Surround
Replace Tub Faucet With Shower Set
New Medicine Cabinet
Replace or Add Bathroom Accessories
Replace Back Bedroom Window Latches
Add Closet Doors Where Missing
Remove Weird Little Window in Hallway to Livingroom and Make into a Shelf
Apartment 4
Remove Borders in Kitchen, Bathroom, and Bedroom to Facilitate Repairs or Paint
Repair Plaster In Kitchen
Add Additional Kitchen Cabinets
Replace Trim Around Kitchen Floor
Touch Up Paint
Add Carpet Trim
Replace Sink
Replace Medicine Cabinet
Replace or Add Bathroom Accessories
Apartment 5
Remove Double Doors and Store for Reuse
Repair Broken Plaster
Touch Up Paint
Hallway
Remove Fiberboard From Floor
Repair Plaster
Replace Lights
Replace Door Knobs
Add Screen Doors
Paint
Replace Rubber Stair Treads
Add Carpet Runners and Trim
Plumbing
Repair Leaks in Water Pipes In Basement
Repair All Leaky Faucets, Toilets, Bathtubs
Clean All Drains, Traps, Waste Water Plumbing, etc.
Add Sink in Basement
Add Shutoff Valves Under Sinks, Tubs, Toilets Where Possible
Replace Any Severely Worn Sinks, Toilets, and Bathtubs, etc.
Repair Floor and Replace Wax Rings Under Toilets Where Leaking (Toilets)
Electrical
Clear Brush From Electrical Meters
Replace All Outlets, Switches, Old Lights
Add GFI Outlets in Kitchens and Bathrooms Where Possible
Add Switch to Apartment 2 Bathroom Light
Reconnect, Relocate, Satisfactory Lights
Add Large Ceiling Fans In Living Rooms
Relocate or Add Smaller Ceiling Fans to Bedrooms
Replace All Exterior and Hallway Lights
Remove Garage From Meter
Add Apartment 7 to Meter
Relocate Basement Circuit Boxes to Allow Block Wall
Vinyl
Replace and Missing and Damaged Vinyl Siding
Add Sophet to Front Porch Ceiling (Front Porch)
Add Siding to Cover Fiberboard on Rear Stairs (Rear Porch)
Add Siding to Replace Aluminum Panel
Replace Sagging Sophet on Porch Ceiling Apartment 3
Windows
Remove, clean, Repair Windows
Replace Cracked or Broken Glass
Replace All Glazing
Paint to Seal Windows and Cut to Allow Opening
Repair or Replace Screens Where Possible
Remove Air conditioner From Bedroom of Apartment 3 and Replace as Window
Wood Trim
Replace Cut, Broken, and Rotten Trim
Replace Missing Trim
Pests
Spray and Fog to Remove Roaches
Remove Food Sources for Rodents
Remove Rats and Rat Holes
Remove Bats
Garage
Add Side Door and Roof for Alternative Access
Add Cabinets and Work Bench
Yard
Remove Poison Oak
Remove Volunteer Trees and Other Plants
Kill Weeds to Regain Control
Trim Hedges, Cut Grass, Cut Back Overgrown Shrubs
Plant Grass in Bare Spots
Cut Out Dead Shrubs
Place Stepping Stones Between Hedge Openings
Remove Post In Back Yard
Rework Existing and Add Bird Feeders, Baths, and Houses
Mulch
Television Equipment
Remove Satellite Dishes
Remove Dead Cable Wiring
Rain Gutter
Clean and Repair Rain Gutter
Fire Extinguishers
Check, Repair, Charge or Replace Fire Extinguishers
This is the philosophy I took while renovating the building.
Philosophy
Quality tenants want a quality place.
Solve as many problems up front as possible.
Leave each apartment as I would want it for myself.
Details are important.
Proper repairs are preferred.
Make it a clearly quiet and calm place.
Quality of life is important.
Be a good neighbor.
Make it sought after as a place to be.
The standard operating procedure around Everett is to spend as little money as possible. This is taken to the extreme. Anything for free or near free. Landlords take pride in how they are able to get things for as little money as possible. They often recycle previously used items and bought products well below what they should cost.
This means that the general quality of a rental is poor and the reliability of services in an apartment also poor. Pam said to me, "The tenants are going to call you all the time at 3 in the morning because something broke." I said, "No. They are not." I could guarantee this because I had been renovating rentals for a long time already. I knew the gotchas and how quality matters. I never bought cheap stuff. I spent real money on items that I knew would not fail easily. In 18 years, no one has had to call me for an emergency repair at night or even during the day. I know how long things last and preempt their failure. I had certain things I would do each spring and each fall to ensure a seamless regiment of repairs and upgrades for the tenants. I would do this at 10 years as well. Again, quality matters.
