All Forum Posts by: Joe P.

There is an investor who I follow on IG - "youngretireeby33" - who has a mix of SFH and I think a few vacation rentals. Once COVID hit, the HOA on his vacation rental, by all accounts a poorly constructed group with limited legal knowledge, tried to enact a no-AirBNB bylaw as a means of enforcing health and safety of its other residents. It was a fiasco to say the least.

The vacation rental industry, which is an old dog, and the AirBNB-insta-vacation industry, which is DISRUPTING vacation rentals, are at odds. Always trying to get their piece is the government, which in NJ has an AirBNB tax of 6.625%. Disruptors are great in many ways, but they anger folks who perceive or experience impact to their business -- you can call us a capitalist society if you want, but this country has industries which are anything but capitalistic in nature. You can expect more oversight, more taxes, more laws, and more headaches.

But, that can be said for all of our investments at this point.

In general, I think knowledge and experience is key. You can start with a vacation or AirBNB property, but that's a niche start. Demand can flux, some of the disruption is creating a lot of moving parts (read: costs and oversight) that might be difficult for a newbie investor to handle.

My recommendation -- assuming your wife are on the same page -- is to start with a duplex or househack situation. If you can reduce, remove, or even profit on your main living expenses (which for 99% of us, is our biggest expense), it'll teach you every aspect of the business, a lot of headaches to deal with, all while improving your financial situation to help springboard into more investments, or just live more comfortably and not deal with the largest expense for the general population.

I have no doubt that there are multiple factors at play, as others have eluded to:

1. COVID has shut down several industries, including real estate. Folks are "staying put" unless they can't out of necessity. "New leases dropped" -- yeah, no kidding. No one is moving, landlords aren't trying to rent, things are very much status quo for a large portion of what likely compromises the "norm" in the thick of quarantine (May).

2. There are folks who are very much interested in leaving the city. Some folks will be scared to be so close to others, breathing in recycled air, having proximity in a pandemic, etc. Some folks will have had enough of the city, and this is the straw that breaks the camel's back. Some folks will have lost their jobs, sadly, due to the pandemic, and need to leave the city for cost reasons. Some folks will tire of city life with their family and opt for land, quieter streets, quieter neighborhoods, etc., as they head into their 30s and 40s. These are all valid and contribute to what is likely a larger than normal exodus of people from NYC.

3. NYC is NYC. For every person wanting to leave, ostensibly, there is a young professional, young couple, young artist, young performer, young someone...looking for city life. That was me to Philadelphia the moment I turned 22 and had enough money to leave mom's house. That's a lot of young folks -- the allure and excitement of city life. If you are counting on a downturn of folks entering a city, this probably isn't it, but given folks are staying put, I'm not surprised of the very temporary drop in new leases.

If these cities start to lose their vibrancy, their arts, their social constructs, become too high on crime in a widespread manner, et al, you may see the "exodus" that some folks are decrying. But honestly, look at the youth of today from a general standpoint -- they're pissed, they're tech-savvy, they move "fast" in many aspects of their life, the trend is to "work from anywhere" and to "side hustle", and they put heavy stock into social constructs. Does that sound like what Lakeville, PA or New York City, NY has to offer?  :D

Yeah, and my apologies to other agents, but most of them are simply not knowledgeable on extraneous factors outside of the standard purchase and sale of real estate. Nor would I necessarily expect them to be.

I found out about NCIP vs. NFIP policies when I went through underwriting on my duplex in Gloucester City. My agent wasn't sure if flood insurance was needed, but my original mortgage guy kept telling me "you don't need it, don't worry about it, I'll get this through underwriting." News flash...he couldn't. So we had an 11th hour problem in underwriting because the underwriters didn't agree with the mortgage agent. Long story short, this company (BIG BANK) wouldn't accept anything other than a NFIP policy.

My agent, to her credit, had a mortgage guy with a smaller mortgage-only company who she put me in touch with. He checked with his underwriters and they would accept a NCIP or NFIP policy. Well, that's the difference of $680 annually, or $2400 annually. I chose the former; if the city floods (and it is prone to do so at times), the impact to my property would be basement water damage. Chances are, that's being pumped out mostly by the sump that exists (upgraded). All mechanicals are approximately 3-4 inches off the ground (probably because there was a previous flood/water issue). Now, I can't speak to the differences in a NCIP vs NFIP policy, perhaps naively, and I hope I never have to explain the nuances to someone, but as an investor, the costs certainly make a difference.

This small-bank mortgage guy is now my go-to; he's refinanced my personal home, he checks in on cash out and better rates on my duplex periodically for me, I have pushed folks to him, and hopefully we have a good relationship that benefits us both.

Let us know how your search goes -- my insurance company could get you a quote if you need it for a NCIP policy, and you may want to check with your current mortgage company to see if you can have a NCIP policy. If they can't, you might want to see if another mortgage company would accept it and maybe give you a better rate all around to refinance with them -- saving you hundreds each month! 

@Emma Fitzgibbon preferably both -- that's the ticket to self-sustaining properties. I'd very much like a duplex that could cash flow enough to cover all key expenses. A beach house "for fun" is just another super large expense that will drag you down -- it literally will be your largest expense with a mortgage, insurance, maintenance, taxes, et al. But if you could get a duplex or multi-unit property that could sustain itself, either with one of the units being rented or a portion of it? That's the dream right there. Over time, you can accumulate more wealth with the option of buying more properties, maximizing your returns. Unless a beach house is handed to you via inheritance, or you are wealthy with extreme means, why give yourself a potential financial headache?

AC seems pretty reasonably priced. There may be other locales dotted up and down that have pockets of reasonable pricing, but I'm not aware of those. I think the best option for me, personally, if I needed to get involved quickly, would be to work with agent with good awareness of properties off-market or on-market longer than 150+ days (ripe for an offer), multi-family, and perhaps even look to partner with another investor with a similar goal. There are many 3-unit properties that would be great for a rental in one unit, and owners quarters that could also be rented out throughout the summer and offseason when demand is there.

@Jessica B. I suspect you know more than you think, haha.

I wonder if you have a FEMA-backed policy it is considered a NFIP? I got a NCIP-backed policy on my duplex in Glocuester City, no joke, which is 4x less expensive than a quoted NFIP policy. Typically it could be a requirement for underwriting, but maybe not post-underwriting, so check in with a carriers and maybe your mortgage company? I have the guy I used for NCIP if you're interested.

I'm following this post because I am too interested a house at the shore...AC seems reasonable. My wife wants Ortley/Seaside. :(

@JD Martin can't wait for my next rent increase >-D Thanks, needed a good one on this Monday...

I love that idea, I may steal it! AND, oddly enough, I was thinking of replacing some of the existing contractor grade fixtures with pullstring ceiling fans; I've installed two from Hunter and they are EZ and look great.

@Jon Kelly I really like that idea, curious what other investors (@JD Martin would you weigh in, my friend?) think of it.

I think that's a win-win financial incentive. I've actually thought about replacing my existing exterior doors and light fixtures to something a little bit more modern/inviting/exciting. Why not tie it to a re-sign or good rent payments (give them a carrot) if you can, on top of providing good maintenance response.

Looking to speak with an advisor about financial planning with knowledge of PA/NJ laws. I live in Philly and invest primarily in NJ and would like to do a "check up" on finances, LLCs, tax info, etc. Any suggestions of folks within your networks is welcome!

"I don't know exactly what I am doing, but I have 4SFH and would like to get a 5th"

Whatever you do, don't lead in with that on a job interview >-D

There's always risks and rewards with your rentals clustered. Rewards are you have people like yourself who know the area, and information is everything. You know how long it takes to rent, how much it costs to turn, rehab, perform maintenance, you know slow periods/busy periods, good knowledge of the town/city and local ordinances/people, et al. The risks are no different -- if you get a reputation, a bad one at that, it could cost you financially. Microeconomics play a role, e.g., if a big employer leaves town or there is a massive flood. But I question when diversification may need to start. 4 units? Probably not. But if I started getting into big money that's when I'd look to diversify.

Bottom line when you start -- a good deal is a good deal. They don't come around often.

The most important aspect of any electorate is the education and knowledge of said body. The fact that we are here freaking out about an act that won't pass the Senate and won't be signed by the President is astounding.

We have two key bases in this country -- liberal and conservative. There isn't anything inherently wrong with either of these bases and what they believe in, its just belief. The liberal establishment in this case is saying "we need to take care of everyone" in pushing forth the HEROES act.

Ultimately, the Republican-controlled Senate will have their own ideas about how to approach this. That will be forthcoming if and when the conservative-led Senate determines we have reached critical mass and there is more aid needed. They will then, likely hilariously to their chagrin, work with the Liberal house to reach an appropriate bill that will be a good solution for all, not a great solution.

There is a cost to society of people being out on the street, evicted or foreclosed upon, without the ability for recourse. These people go somewhere, whether its the street, care houses, emergency assistance setups, hospitals, family members, et al. The government is seeking to avoid mass-scale loss of shelter for citizens as every percentage point of unemployed and/or not-housed individual has an inherent cost elsewhere. It is a massive system that we have procured and built over time, and I do believe both bases want to protect it.

Liberals wish to do so via covering non-payment of rent with rental assistance; the way I interpret the language is voucher programs and non-eviction for 12 months -- e.g., if you can't pay, you get a voucher to cover, and you can't be evicted for 12 months. As a landlord, that's guaranteed federal money like section 8. You may not agree with the approach, but the liberal side of the government is trying to protect citizens from losing their home; more specifically, low-income residents. Which, makes sense, as there is a big difference from a medium-to-high income individual being evicted and losing their home, versus a low-income individual. Where I am concerned is that the act itself says it can be used to cover rent OR other expenses.

The HEROES act has low-cost loan assistance to cover landlords as needed -- personally, I'd like to see the system temporarily changed to have the following steps:

1. Proof of hardship - apply for assistance with the new program
2. Landlord/owner contacted, agrees to federal assistance program for X time
3. Those payments are made direct to landlord to cover rent

(I should caveat that my understanding of the language -- WHICH WILL CHANGE ANYWAY -- is non-legal, uneducated, and my opinion only. Someone who has knowledge and experience should be providing their legal take on the document as constructed. Many law firms do this and publish for the sake of informing the public aaaaannndddd advertising their services those potentially impacted and in need of consultation.)

I have no problem taking care of people in times of need; in fact, I think the hallmark of any good government is to care for the masses when it is called upon. We are part of the masses. We are part of the same boat as our renters. I believe the verbiage used by the Liberal House is a means to be talked down on; I expect no difference in a Republican House in the same situation, perhaps achieving a similar goal with different methods.