All Forum Posts by: Brian Ploszay

Real estate is expensive, and most of us do need leverage to purchase properties.  Correctly used, it can amplify your returns.  Leverage is always cheaper than having a partner.

Paying cash for me is important when:  Paying cash gives the seller confidence in my ability as a buyer.  Especially in the days of buying foreclosures, cash deals was a key to winning contracts.

Paying cash also has flexibility for value add deals, where after you reposition and retenant the property, you will seek a mortgage.  For those who don't have cash, an interim lending product, hard money, can accomplish the same results.

The top investors in my market are not Realtors.  Being a Realtor, by the way, is defined as being a member of the National Association of Realtors.  Having a real estate license, does not make you a Realtor.

Top investors spend their time, and make most of their income from their real estate investments.  Not selling real estate.  Not being a Realtor.

Quite often, the work history of successful investors does start with selling real estate.  More typically, the larger players come out of commercial real estate sales or apartment sales.  Other common professions that lead into real estate investing are tradespeople and lawyers.  The skill set needed is varied including real estate market knowledge, but also construction / maintenance experience.

Anyway, for smaller investors (under 20 units), being a Realtor makes sense.  You can take advantage of your market knowledge and deal flow.  Plus Realtors have flexible schedules, where they can tend to their properties when needed.

Keep in mind, if you successfully grow your investment portfolio, you can make more money than being a Realtor.

In my market, tax lien buyers make the majority of their money on interest rates / penalty fees they receive when someone redeems.  A good chunk of the properties that do not redeem are very inferior properties.  You can argue that the property is worth less than the back taxes.

There are properties that no one wants to bid on at the tax lien sale.  Every two years, these leftovers are then auctioned off at something called a scavenger sale.  The previous owners almost never redeem these properties.

I am not a fan of these investments, and have posted some critical thoughts on this niche.  In a nut shell,  many of the properties are in mediocre areas and the true expenses are understated.  And the liquidity (ability to resell) is poor.

I'll focus on the expenses.  You buy the property, it has a cash flow, all is good.  Until the tenant leaves.  The turnover costs are expensive for rental houses.  Also, the maintenance cost per unit is substantial, compared to the cost per unit of an apartment complex.   

All is good if you know what you're doing.  But I've seen some serious abuse where "turn key" providers were selling very very mediocre investments.  Especially midwest properties in declining areas.  

The mortgage documents probably say that a property cannot be transferred unless the mortgage is satisfied. Yes, you can transfer it still via a quit claim deed, but the mortgage is still in place. Your goal seems to be to try and negotiate a short sale. But the Bank has lots of requirements to do this, and they probably won't even deal with you because you are not the borrower. The requirements for a short sale probably will include putting it on the market (MLS). A better strategy is to do a short sale, in conjunction with the current owner.

The chances this happening are unlikely.  There usually is a very long waiting list to get onto the program.  But sure, sign her up.  

Agree with @Nicholas Mann   This is a temporary slowdown for Manhattan.  Landlords can lower their rent somewhat, which is already happening.  I'd bet less than 5% leave the City.  You can argue that there was a housing shortage anyway, so this will nicely alleviate it.  

@Soh Tanaka   Hammond is the place to be.  The City appears strict.  I am interested in venturing there as well.  What is your experience with the City?

@Soh Tanaka   Not much in NW Indiana, except for Gary.  And a bit in East Chicago.  Decent properties in Hammond are over 50K.

@James Hamling   I've read your posts and most on this thread.  I have some different conclusions. ==As a listing Broker/Agent, we have 0 duty to a buyer==   Actually, a broker does have duties to provide disclosures for 1 to 4 unit properties and not withhold pertinent information.  A broker also wants to sell properties, so providing requested information is good marketing.  Also, certain states have very strict dual agency laws and may require the dual agency relationship in writing, which would include non representation. (unrepresented buyer).  Most brokers seem to love a dual agency situation, despite some potential conflicts.  If he was a dual agent, then he represented Lenza.

==I don't believe you have much experience in MFH acquisitions==  Maybe not, but his inquiries were within reason and the product that is being sold generally is bought by smaller / beginner investors.  I always believe selling properties should include high customer service.  Some people just need everything explained to them.

My interest in this post is not to question the business integrity of Mr. Wise who seems extremely knowledgeable.  I think his home market has some great returns.  But I like to mentor and defend new investors - as I've seen lots of abuse in the turn key property "industry."   And I think Lenza was within reason for asking for the documents.  James Hamling is ultimately correct, just don't buy the property.