All Forum Posts by: David London

Seem to me they did you a big favor...better someone else getting a bad deal...

In the crazy market I follow (managed to buy 1 SFH only so far) I see 2 interesting trends in the last few months:

1. Investor who bought in 2006-2008 finally manage to match the price they overpaid then and bail out with 0 appreciation.

2. Realtors using the 1% rule to price properties...practically Rent x 100 = Price.

The way I am going about my search is analyzing the houses I got over bid on with the final purchase price to see if they would have made sense and then comparing new properties to the few which pass this test.

Another thing to keep in mind is that as you hear a lot in the podcasts not all sellers are driven by price alone...the house I finally closed on was owned by Out of State owner who inherited the place and just wanted to get rid of it after a bad eviction...I made asking price offer 2 days after it arrived to market and she agreed immediately...if you follow your market all the time you know if the price s good.  

Better luck next round!

You can pay your broker their would be commission from your own pocket...just need to factor that in the price you offer.

Coops can be painful...I live in one...love the place...and would love to leave it at the same time...will think twice before buying another one...that said in NYC and around they are hard to avoid.

Like any property if you find value it can probably be done, but there are some serious pitfalls you have to watch:

1. Some coops have flip or sale tax which if you ignore or miss can cut deep into your profit.

2. Most NYC coops have restrictions on renting/subletting units so in case your flip take too much time or market conditions change you might not have an option B of renting it out and will get stuck with high holding cost for a vacant place.

3. You typically need approval from the board for everything such as getting finance...renovating...selling...furthermore your buyer will need to be approved...so expect everything to move slow...definitely not a quick flip...when we bought our place it took us about 5 month to close...(seller losing coop stock...management being unresponsive...coop board interview...etc..). 

4. Most coop (and that particularly true for non Manhattan coops) are practically companies ran by unpaid volunteer amateurs...a coop is a company which own a building and then lease it's unit back to shareholders...in many case you'll have a school teacher board president with an art director as a treasurer...great people with very little experience in running a company...

5. And last...avoid small coops as things can get very emotional...

p.s - There are few coops which allow subletting from day 1 but they really hard to find...Came across some a while back in the UES and Inwood.

Hope that help.

@Kim Alvarez One other thing came to my mind while reading Matthew Forest post above...Lehigh does seem like a great school...beautiful campus...rank #30 academically...and...rank #9 (last year) #2 few years earlier as best party school...

@Matthew Forrest Where do the graduate student live? Going around campus it seem most student housing is for undergrads...Is my impression correct? If so are there any area which the graduate students prefer? Does any students live in Fountain Hill or for that matter cross Wyandotte?  

@Kim Alvarez Short answer is all of the above ;) ...with the students it seem you can go many ways and adjust course as you go. From my research into various student areas and Lehigh in particular:

1. It can definitely be worth it...rent can be up to double for students...on the flip side houses close to college are much more pricey and you have to move very quick...few weeks ago as my agent opened the door for us to check a house she received a message from listing agent informing her that house (which was overpriced and less then two weeks on market) got an offer...houses close to campus move fast.

2. Good question...calling Monday to make sure I am covered.

3. In most cases it seem it is payed by tenant...some landlords seem to have it on their name then add it to the rent.

4. Seen both...nice thing with students is they are there for max 2 years so if you decide you want to change from All House to By Room you don't have to wait much.

5. It seem you need a rental permit in Bethlehem (not only for students)...I think it is 150 every time house become vacant...so with student its about 1-2 years.

Few other observations:

- Make sure you factor management in your calculation even if you plan on managing it yourself...most students will require more attention then other tenants and you might get tired from tending to them..

- Turnover with students is high so you need to factor new tenant placement as it can be a significant price tag.

- If you buy few blocks from campus make sure number will work with regular tenants as well...and those rents seem to be quite low...just in case you don't find students...with students vacancy = 100% if you miss the academic year.

Hope that's help,

Hi Eric,

How many students/rooms in total? Seem to me your numbers are very tight.  

From your description it seem like 8-12 students...in my mind $400 a month for handling this is very little money for quite a bit of effort. 

I think many of your numbers are very optimistic:

Repairs/Renovation: What condition is the property? Is that $500 for unit or the whole thing? Seem very low.

Closing costs: 4000-5000...they add up very quickly...

Interest  rate: Are you pre approved for 5%...I would use 5.5-5.75...and if you get a better rate by buying points that's add to closing costs.

CapEx: At least 10%...you have 2 houses...2 roofs...2 boilers...etc...many things will need attention sooner or later.

Repairs: Again depend on the number of students but with many units it mean you have lots of fixtures, toilets and sewer line to need repairs.

Management: With student housing there is a high turn over (new tenants every 1-2 years)...unless you plan to stay in Bloomsburg for long time you'll have to pay placing fee of half or full month rent every year or two.

What is the price x sq.ft or per room? How is $350K compare to other houses housing same number of students? 

Why is the investor thinking of selling this property? Is it performing less then his others? 

Hope that helps

The place in Texas have Quartz countertops 9' long for $300. If the layout of the kitchen allow using straight pieces or you are dealing with small kitchen the precut can really save a lot of money.

In my particular case it's Lehigh Valley and surrounding counties.

Does anyone knows a place in Pennsylvania or New Jersey which sell Precut Quartz or Granite Countertops?

While googling I found a surplus building material store in Dallas TX area who sell it and it seems like a great resource for any investor who tries to stay within budget. Practically 25"W and up to 108"L slabs ready to be installed. Cost is about $16 x SF a considerable saving on one of the most expensive items in any kitchen renovation. 

Look for BP podcast #140 all about student housing...one of the best podcasts.

One of the first RE agents I called told me..."Great idea...you know that you are not the first to think about it"...it can be a difficult niche to get into since there are usually many established investors there...that said...I just closed on my first student housing so with enough persistence it is possible for sure.

Way I went about finding my market was to make a list of all colleges 2-3 hrs from where I am and focus on those with the highest number of students...Wikipedia have those statistics for every state...then you start eliminating them until you find the one you are most comfortable with.

One big thing to watch out for is that some colleges are entering into the student housing business and since they can force their undergrad to live on campus they can eliminate large part of the market if not all of it over time...That is probably less of a concern with larger universities.

Good luck!

@Adam Rudolph

Start slow and small...but start! like many other said before it is probably the best way to go if you have concern about the market being too hot. 

It is for sure harder to get good deals then couple of years ago but right Buy & Hold are still possible...BRRRR is almost impossible but BRRPR isn't (P for partial rifi)...and personally I would avoid flipping for sure.

For the past 2-3 years I was convinced that the market will start changing direction any moment which obviously didn't happen yet...This week I am closing on my first out of state deal...the key is focusing on a market and research it as thoroughly as possible until you get confident on which deals have enough margin of error to weather a potentially likely market storm. I probably analyzed about 20 different cities in 150 mile radius from NYC until I found a market I had a good feeling for...in my case I was lucky to find a tired landlord that just wanted to get rid of the house after evicting a tenant...having analyzed so many houses in the area I saw immediately it was priced well and was able to make an offer within 2 days...appraisal came couple of Ks higher then accepted offer...

Bottom line it is a combination of luck supported by lots of education and preparation.

Good Luck