All Forum Posts by: Hong Yang

Quote from @Matthew Irish-Jones:

Quote from @Timothy Smith:

@Matthew Irish-Jones I definitely agree with you on all points, and would advise our friend the same. The one thing a mentor can provide is objectivity, since they do not have anything to gain (unless it is a paid mentorship or quid pro quo situation). On many occasions, I’ve found myself just needing to commiserate and bounce ideas off of other investors without feeling like I am leveraging an agents time. ESPECIALLY without the promise of a transaction. But I’m also the kind of person who is very conscientious about wasting other peoples time, so I probably stifle reaching out when I shouldn’t!

Another upside to a mentor is that you never know when it will lead to a partnership or private money. My mentor never lent anyone as much as $2 for a hot dog, but when he saw how my properties were turning out, suddenly he was offering me the opportunity to borrow money — at very generous terms, I might add.

End point is you definitely need an investor friendly agent, but you also need a wider network and relationships that are not necessarily transactional. 

 My bad Tim I didn't see your first comment.  Yeah I agree, there is a time and a place where a trusted individual is going to help you keep all the vendors you are using honest.  I use coaching myself. 

@Hong Yang if you are going to use a mentor, Tim is a great guy and well versed investor.  He is well known in WNY and has a ton of connections that would be helpful to you. 

I met @Timothy Smith in person today and I agree, great guy. If you're interested, I'd love to get coffee sometime and expand the network. 

Hi I'm Hong and I'm looking to invest in rental properties in Buffalo. Also, I'm a Canadian finishing up my PhD in Rochester.

I've saved up about $70k which should be enough to buy a duplex with 25% down and provide a decent reserve. I'm close to making an offer on a property and I've figured out the financing. However, I'm not too familiar with the city and I was wondering if anyone would be interested in mentoring a new guy starting out.

If you're interested, please reach out.

An electronic lock sounds like a good idea

@Bruce Woodruff yep I am convinced. It is not worth the headaches. 

So I'm trying to figure out the best return from these two mortgage options. Option A is 15 years at 7.5% and Option B is 30 years at 8.0%. Assuming that your monthly cashflow can cover either option, which option leaves you with more cash if you refinance at 3 years? Also, we would refinance back to original mortgage amount.

So for a 100k mortgage, you would pay $33,372.36 in cash and have a $87,849.63 balance on 15 year 7.5%. For the 30 year 8%, you would pay $26,415.36 and have $97,280.15 balance. So you would pay $6,957.00 more in mortgage payments over 3 years with the 15 year mortgage, but you would be able to refinance out $9,430.52 more than the 30 year mortgage.

Suppose we had a $2,500 refinancing cost, then the cash position is about the same at the 3 year mark if we refinance option A and choose to not refinance option B. If we had to refinance both options, then option A would be better because you would have
$2,473.52 in more cash.

From this analysis, I would conclude that Option A is just better than Option B, assuming rates do not rise. If rates stay the same, then we can refinance and get the same cash position as option B. If rates drop, then we would refinance both options and Option A would be ahead. If rates go even higher (oh boy), then refinancing is not worth it and option B would have a better cash position. However, in the scenario where interest rates go up even higher, I doubt that I would want to invest more cash into real estate. Its also unlikely that I would find anywhere else to put the extra 7k in cash from option B that has a guaranteed return of 7.5%.

Does this analysis make sense? What could I have missed?

Has anyone tried installing wifi locks and security cameras for their long term rental? I know its pretty common in short term rentals, but I'm not sure about the legal implications. 

I assume you have to give your tenant a physical key.

However, it seems like a major convenience because you can remotely unlock the place or show it to future tenants without being there in person. Also if the tenant locks themselves out you can easily let them back in.

The doorbell camera can't monitor the inside of the rental unit, but it can capture funny business. Like if the tenant brings in an AC when the lease explicitly states no AC.

Quote from @Theresa Harris:

Talk to a contractor that fixes basements and get an idea of cost to repair.  It is a matter of regrading the yard, extending downspouts or is there a crack in the foundation or do you need a French drain?

It also sounds like your agent is viewing the properties, not you.  If you put an offer in on any house, you need to go there and see it before conditions are removed.

Definitely I'll go see the place in person before the offer. Its just easier to schedule video call viewings instead of driving 2 hours to see a house that is probably not that great.

Quote from @Matthew Irish-Jones:

Quote from @Hong Yang:

So I'm looking at duplexes in the Buffalo area and I found one that hits all the boxes. Its vacant, its turn key, its in a pretty decent area, its competitively priced, and should rent pretty well.

However, its been on the market for a long time and I suspect that is because of the leaky basement. My agent inspected the place on a dry day and the basement was wet (not flooded, but definitely wet). They do have a sump pump in there, but it seems like the basement leaks when it rains and all the electrical is in the basement so....

Is it worth it to buy and fix the basement? How bad can it be?

Is this like a $10k fix or is this a black hole that will consume my life.

 I don't like basement issues.  They can be foundational, ground water, etc... and they can lead to bigger issues like mold, tenant complaints and more.  They are also notoriously hard to diagnose and fix.  Why buy this property when there are more opportunities available?

Good point. It is not the only property for sale. 

Thanks @Peter York for the insightful comment. I'll ask if the foundation is stone or block or concrete. My agent did not like the property because of the leaky but he didn't specify what type of foundation. 

That seems like a very reasonable approach, but it sounds like I would have to foot the bill for the due diligence process. I am concerned that the seller may simply refuse to give concessions after the due diligence. 

Is it possible to negotiate a contract with the seller before due diligence that binds them to give concessions based on the outcome of the inspection?