All Forum Posts by: Hal Ennis

@Daren Wang  Good news to you and other posters.

The SEC has eased standards for crowd-funding small ventures.  Investors need not be "qualified."  Entrepreneurs can now sell pieces of their companies to anyone who has the interest and cash to do so.  Here are two a linka:

http://www.foxbusiness.com/economy-policy/2015/10/30/investor-crowdfunding-sites-given-ok-by-sec/

http://www.entrepreneur.com/article/252322

Good luck to you all!!

@ Ryan Milne  My advice is this:  It's always FREE to ask.

By that I mean:  ask for the rent roll, real income and expenses (with info taken from his most recent tax return), recent repairs, and most important "Can I come and look?"  All the metrics in the world won't fill in the blanks on getting a handle on this property.  If you're local to the property, this is the way I'd go.

I've often used a seller's own information as the basis for establishing a fair market value, and then making a presentation/offer based upon my assessment.  Unfortunately, sellers often have expectations built up in them through their agent, family, or other buildings in the area which might not be viable comps.  The seller might also be trying to get a price that came and went with the real estate bubble.  If it's been on the market for 222 days, there's an impediment.  Identify the impediment and use it to your advantage.

Hello Trevor and Travis. 

In addition to getting the blessings of the Planning Office, you would be wise to discuss this arrangement with your insurance agent.  Since you're starting out with a single family home, and then making it NOT a single family home - you need to make sure that you are protected against liability matters.

The rating of the property, the type of coverage, and the cost will be different when you introduce a second occupancy.  Don't find out after-the-fact that you're not covered.  And also be sure that your tenants carry renters insurance that names you, the Landlord, as an additional insured.

Good Luck to you both.

Hal

My wife and I decided 20 years ago that everybody in New Jersey seemed to be building for the high end, and ignoring the low end of the rental market.  Of course there's ALWAYS demand for decent housing at an affordable rate.

We found a niche in boarding houses, but we were VERY selective about our locations:  choosing solid, working-class to middle-class neighborhoods.  Each property had been severely neglected and catered to residents who blighted the neighborhood. 

We were able to buy these places very inexpensively, because other prospective buyers only saw it as it was.  We'd take possession, give proper notice to all residents of new "house rules" designed to bring order out of chaos, and start fixing the place up.  This included furnishings, appliances, improved common areas/baths, and (here was the trick) cable and internet available throughout the house. 

With better living conditions and amenities, we raised the rents, enforced the house rules to get rid of the trouble-makers, and quieted the places down.  The neighbors were happy, police respected our new style of operation, and we proved something in the process:

A property will attract the tenants that it deserves.

Our residents are decent people who are down by circumstance (lots of divorces and down-sized white collar workers), not because of bad lifestyle choices.  They appreciate what we've done and look out for our property because they really consider this THEIR home.

Planning ahead is EVERYTHING.  That includes running the numbers with lots of variation; don't assume just one number.  Inner city areas take -- you'll forgive me here -- "blind greed" to own and operate.  It has to be a screaming money maker.

With this in mind:  What's it worth as-is?  Is it even rentable, or are there housing violations?  Cold it be put to a different use within the area's zoning?  What kind of cash flow (and I mean profit) if you rent it the way it is?  Could somebody get drastically more profit if it were fixed up? If it's the war zone you describe, people might only be moving OUT. 

Realize that it's going to be hard to find a tenant, hard to collect the rents, a nuisance to maintain, and risky in every sense of the word.  If you can't show big returns, anybody who has money to invest will go elsewhere. 

But at the end of the day, there's a reason there are so many "vacants".  People walked away from their properties.  Maybe you should, too.