All Forum Posts by: Dave Versch

Thanks to everyone who responded so far. I'm actually not too concerned about the furnaces and water heaters since even if these go, at least I know how much it'll cost to replace them. The scary part for me is what if the plumbing and/or gas lines have leaks? I have no idea how to account for that possibility in dollars and cents. Any rules of thumb?

FYI, this is a 2-family house that's bank-owned and has been on the market for about 2 months. Originally listed at 150k, it's now down to 99K. I've gotten estimates averaging 18K to get the place in shape. Gross rents will probably be around $1500 per month, and taxes are about $300 per month (not bad for NJ, believe it or not). I'm figuring if I can keep my total outlay to around 75K, I'll be cashflowing positive with room for reserves, etc. That leaves me with less than 60K to offer on the house. Any opinions on how likely the bank is to accept a 60K offer on a 99K listing? (I'm planning on putting the entire down payment of 20% in with the offer as earnest money to make it a little more attractive.) Any other suggestions that might make this more appealing to the bank?

Hi. I'm considering making an offer on my first REO. I'm having a contractor come out to take a look and give me an estimate of what it would take to get the CO and make it tenant-ready. If the numbers are reasonable, I'm planning on making the offer. Once we're under contract, I'll have an inspector look at it also. The problem is that the water, gas, and electricity are all shut off. The listing agent doesn't seem to know what she's doing, because she's telling me that the bank won't have the utilities turned on. She says she's already tried with a prior interested party. Obviously I need to know what shape the furnace, water heater, plumbing, and electric are in before taking the plunge, which can't be tested if everything to the house is shut off. What are my options, and how do I execute them? The property is located in NJ if that matters.

Just wondering if I can get a ballpark percentage here. If a short sale is listed on the MLS, what's a reasonable percentage of the listing price to offer for the property? Same question for bank-owned properties. In both cases, assume there may be minor repairs needed, but not full rehab jobs. I know there are a ton of variables to consider, but I'm just trying to get some idea of what to offer.

Hi. I'm considering the purchase of a couple of rentals in Buffalo. At first glance it appears that rents in the area will support positive cashflow, based on home prices, taxes, insurance, etc. (Even using the 50% rule!) Any opinions about the market there from anyone with experience in the area? How does it compare to Rochester and Syracuse? Thanks.

Dave,

Changes in the federal funds rate generally have no bearing on mortgage rates. That being said, if the fed funds rate was 7%, as opposed to 0.25%, I'm sure mortgage rates would be higher than they are now. :D
I've found that a better indicator of the direction that mortgage rates MAY go is the 10 year treasury bond. Mortgage rates tend to move with it somewhat.

Rich,

I have enough assets to where it's a cause for concern. Does it matter whether I incorporate in NY or NJ or any other state?

Hi. I live in NJ, and I'm looking at buying a rental or two in upstate NY. I haven't formed an LLC yet. I think it'll be best to form one per property owned, but does it matter which state I incorporate in, NY or NJ? Should I maybe incorporate in a different state altogether?

Also, I can either finance or pay cash and then refinance. (I would consider the second option just to make the transaction go quicker.) If I finance, should I form the LLC and then apply for the mortgage as the LLC, or should I get the mortgage in my name, make the purchase, then form the LLC, and transfer title? What about the second option? If I pay cash, does it matter whether I form the LLC and then refinance as the LLC, or should I refinance first, and then form the LLC?

Sorry if I seem confused. It's only because I am.

And finally (for now), can I have the property in the LLC name and the mortgage still in my name? Is that advisable?

This is easier said than done and an over simplification, but how about some sort of forced merger of the Big 3 into one streamlined entity? They could get rid of TONS of redundancy, and to the workers who will be fighting to keep the jobs that are left, welcome to the club! It's time that workers at these companies start actually working for a living like the rest of us.

Are there any figures available for SFR's? I suspect that expenses would be more than 50% if apartments are 50%, no?