All Forum Posts by: Foti Karastamatis

First of all, THANK YOU for your service! Depending on your risk tolerance, I would also look into syndications. Cardone Capital, Ashcroft and so on offer a place to park your investment $$$ with lower risk. Look for ones that have a strong track record and solid returns. Not all offer the same deals. I would also look into the option of converting your TSP into a Roth IRA and self directed. The power of those options are fantastic. Many syndications will allow you to roll your IRA or 401k into their portfolio through a 3rd party like Equity Trust.

If you are more hands on, look at joining your local NREIA or investors group. These groups are filled with like minded people and you can really get a lot of great information from them. 

The most important thing to remember regardless of where you are investing is that if its easy to buy, its hard to sell so look for location along with ROI not just ROI and that the more doors you buy in the same location, the lower your costs per unit, the easier to manage. For instance if you have 40 units and 6 units are vacant, 85% are still paying and you can still cover all your expenses whereas if you have a SFR and its empty that's 100% vacant. IMHO multi family is the way to go. Probably the biggest problem with RE investors (me included) is small thinking. Its easier to get debt for a larger MF deal than SFR's because its based on income (NOI) not on the real estate or your FICO and if its a large enough purchase, non recourse loans are the norm. You do not have to do it alone either. IF the deal is solid the money is easy to raise. Learn to underwrite MF deals, walk a bunch of properties, talk to (or take to lunch) as many MF brokers that will take your calls and get a feel for the area your are looking at.

There are exceptions to every rule but these are pretty solid. 

DON'T DO IT! For every reason stated above and a lot more... If you need more reasons NOT to buy, hit me up.

Quote from @Anne W.:

@Rick Albert  some of the $15K comes from seller agent's commission. In addition, I got $6K from my own agent. Cosmetically the house is ready to rent. $3K/month.

1) sewer line: we are having sewer root blading and re-scope again, then decide if we need a replacement. 

2) plumbing: main shut-off is copper, visible plumbing in bathrooms are copper.

3) electrical:  electrician coming tomorrow. Electrician panel is 100 amh. On the phone he said 100-year houses in NY don't need rewire the whole house. but do need to make sure all outlet grounded and GFCI.  

4) HVAC: furnace from 2007, ducts, too. AC from 2021

5) sinking concrete sidewalk: I am going to see if polyurethane foam can lift the slab.

$21k credit is great. Congrats on that.

Copper pipes are great EXCEPT houses that old used LEAD solder. That's the issue because it leaches lead into the water.

100 amp elec panel might be ok if everything is properly grounded BUT grounding outlets isn't always easy or inexpensive even with copper pipes too use for ground. If you rewire you will be forced to update to current code. New panel will usually be 225 amps. A modern kitchen, depending on size, can easily take 15 circuits. That's probably close to the entire house as is. GFCI outlets don't always fit into old elec boxes because the GFCI are physically much larger than regular outlets and old boxes are usually very small. Boxes can be replaced but it can add significant cost. Hopefully you don't have fuse type panel. I have seen insurance companies drop policies unless elec system was certified and or panel was changed to breakers. 

Make sure the heat exchanger is inspected in the furnace. One from 2007 probably wont have cracks like the old cast iron ones but they do rust, or burn out. 

I don't want to sound like I'm beating you up. Everyone here wants you to succeed. We all know that if you have a bad experience, it'll probably be your last. RE investing is the best way (IMO) to create and keep real wealth. The fact is, you already knew it was a bad deal but you tried to justify it to yourself anyway. A VERY expensive mistake that most here have probably made. Learn from others mistakes without having to pay for them.

Quote from @Joe Villeneuve:

Sometimes the best deals you make, are the ones you don't.

 AMEN BROTHER!

$15k from the sellers is a red flag in todays market. If it was a "deal" they would NEVER of done that. They would of gone to the next buyer. However, $15k still won't be enough to make it a good deal. Don't let emotion or the feeling "of I'm never going to find a deal" let you make a BAD decision. EVERYONE on this forum has said to walk away from this "deal". It's no deal. Lead paint and probably water lines, asbestos, clay pipe, old wiring and plumbing not to mention everything else you mentioned and everything you haven't seen.  I've been a hands on general contractor for over 35 years and a RE investor longer than that. No matter how much you "wish" a deal to be good, it wont be. "Not sure what's behind the faux wood" is just another HUGE red flag... if it looks like a duck and sounds like duck, it's a DUCK. Don't get DUCKED! 

Walk away. Too many issues and not enough upside. There are always deals. Finding them takes time. Start looking for wholesale properties and or wholesalers. Foreclosures are coming . Be patient. Stash your cash. I'm not a huge believer in "saving your cash" but a bad deal is much worse and will cost you more than just money. 

I would add that if you are planning on investing out of your area:

1. Find and join a local RE Investors group (online) ie: NREI. These groups are very helpful especially with out of town investors because they can tell you what to expect in a specific neighborhood.  

2. Only use realtors that are also investors. Not all realtors understand investing in RE and if you may be able to joint venture with one and know the property will be looked after by someone local that has vested intrest. 

Quote from @Alci Martinez:

Quote from @Cristian Toaca:

Thank you friends!  If anyone else has anything to add - please do :) 

 Hello Cristian, 

I am an out of state investor as well. I am currently investing in Miami and in the west coast of FL. Having a management team that you can trust is key, you can find deals but I suggest you get a realtor that has been doing business in the area you're looking to invest, and have him send you the deals. if you're willing to be more aggressive with your offers I suggest you have them send you off market deals, although those are really hard to get in todays market. Finally if you want something close to the water try looking in Fort Myers, area is booming now. I am currently building a SFR 20min from Fort Myers (Lehigh Acres) to rent it out.

Hope this helps. 

Cristian,

I have been underwriting MF properties in Fl and most if not all have the same issues to keep in mind. Since Fl is a non income tax state, property taxes are higher than most people expect. Also I found that the closer the property is to the water, the higher the insurance is especially if that area was significantly affected or damaged within the last 5 years. Those 2 line items are enough to make a good deal go bad, quickly. Another thing to keep in mind is being an absentee owner.  If you are new to the rental game, this  can be especially tricky. Management will generally run 10% of your collected rents unless you use a real estate agent/ leasing agent at a cost of 6% of your gross per year, due  at lease signing. The latter does not usually include management. It is usually a way to get tenants screened and the property shown since you are an out of state owner. Regardless of the route you go, dealing with tenants, maintenance and repair issues can be quite challenging from a distance and can be quite costly.

My advise would be to partner with others and get into a larger property that can afford to pay a larger property management company.  You might also consider a syndication deal where you invest your money, collect a quarterly (non accredited) or monthly (accredited) check and not worry about toilets, tenants or turn overs. If you own 1 unit and its vacant, that's 100% vacant whereas if you own a part of a larger, say 20 unit, it would equal 5% vacancy. The cost of management also goes down per unit and the more units the less they charge. Apartments can go from 7%-10% for a few units down to 2.5%-3% for large complexes. 

I hope this helps.