All Forum Posts by: Chris K.

@Jesse Hodges

That's a good question. Maybe @Adam Guiffrida or @Marc Winter could comment on the history behind it. But the current status is that Scranton has significantly higher liabilities than assets. There were discussions about whether Scranton would become the next city to file for bankruptcy. 

But note that the high taxes are restricted to the city limits. The surrounding suburbs have the usual level of taxes. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Jesse Hodges

Those numbers sound about right. A lot of property in the Scranton and Wilkes-Barre area will cash flow. But there is no meaningful appreciation. And poor management can always derail any investment. 

I'm a firm believer that you can make money in real estate in any area. The only question is how you go about doing it. What works for Scranton/Wilkes-Barre may not work for investing in NYC. You just have to explore all your options and decide what investment strategy makes sense for you given your strengths and weaknesses. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@LaJon Dantzler

What area of Pennsylvania are you looking for? I think narrowing down the area would help others provide you with better information. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Ben F.

Yes. Credit Unions also come in different sizes. Smaller the union, the more likely you could get hold of some person with decision-making powers. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Ben F.

When it comes to asset managers, you could probably find someone you can talk to in your area for smaller banks. You need to network to find out who lends in the area and go from there. With larger banks, it's probably impossible. Many of those banks have hundreds of millions (if not trillions) in assets. They are way too big to deal with investors who do not buy in large quantities. 

You can also find realtors but they often don't have much information. Many of them simply list the property to help the bank comply with Fannie/Freddie regulations. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Ben F.

It depends on what you mean by a "foreclosure" specialist. Most major banks have their own REO department. Due to the volume that they handle, it can get convoluted to talk to any living human being that has the authority to "make a deal" with you unless you are an institutional buyer. Many of them just post their REO inventory for auctions.

There are also many foreclosure mill law firms in Pennsylvania that post all the details of their foreclosures in Pennsylvania. Some of them are more streamlined than others. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Chris Blackburn

Yes, so the finish level is different. But your design looks nice as well. If you decide to venture out to the Northeast, I'll be happy to make connections! 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Jennifer Ward

It honestly depends on what your contracts say. For larger projects using the AIA system, the contractors generally can receive half of their retention about substantial completion and the other half after final inspection/funding from the lender. 

For smaller projects, it's like the wild west. I've seen every kind of payment schedule that you can imagine. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Chris Blackburn

Those are pretty good numbers! What is your SF pricing for the building alone? What's the finish level? 

My guess is that the pricing difference has to do with the finish level. Again, there is no shortage of housing in our area. $800 to $900 a month will get you an "okay" 3BR to rental in a school district where multi-millionaires send their kids to school. We do have a ton of low-income housing in our area where people live there while waiting to win the Section 3 lottery. I don't know if the developers and eventual owners made money on those projects. But they have done one in decades. Not sure if that is because of a lack of profits or lack of grants/tax credits available.  

Most new construction projects in my area for Class A/Class B Buildings even if they go modular. Those units rent for $1400 to $1500. Typical renters there are younger doctors/dentists/lawyers/CPAs, temporary workers for oil & gas industries, and non-tenured college professors. 

We do have a nice development area where the modular buildings are selling for around $170 per SF. But that's after two former developers went bankrupt on the project. The first went bankrupt around 2008 and the next one went bankrupt about five years later. So the current owners/developers bought the entire development at a fire sale price. My understanding is that the original developers were looking to sell for around $250 per SF. That obviously didn't pan out.  

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Chris Blackburn

I'm a big fan of modular buildings. My glass & glazing company worked on several large construction projects that use them. That includes some of the companies that you named. In that realm, going modular is not always about cost. I would say it's more about reliability. There are still a lot of kinks to work out but it's getting there. 

When it comes to affordable modular units, we already have those products. $120 to $150 per SF for the building is easily doable. The problem is that a construction project involves more than building costs including land costs and other items that @Evan Polaski mentioned. When you add those costs, you are in the $250 to $350 per SF range in my area if you are doing a smaller project. And that's for a relatively small, tertiary market in Pennsylvania. 

The prices get better if you work on a larger project. But our area doesn't have a housing shortage as the major markets do. For the project like that to "go" in our area, you probably need at least 100 to 300 units. Now if you are an average home buyer, why live in those if you could just buy a renovated 2000-2500 SF home for around $200k? 

So I would say your idea is good and you can surely make improvements to the existing models. But the biggest roadblock I would say isn't construction. It's everything else that goes with a new construction project. The other aspect is that while there is a housing shortage in US, it's not in areas like ours. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.