All Forum Posts by: Josane Cumandala

If he's planning to live in the property maybe he could qualify for an FHA loan? FHA loans are designed for people with lower credit or different sources of income.

He could also ask the owner if they would be willing to accept payments each month for their equity (seller financing). If you structure the deal correctly and the numbers make sense it could be a win-win for both of them. 

I'm in the NYC metro area, not Rochester but as far as I'm aware there are no state licensing requirements for landlords per se. Property managers should hold a real estate license as they are collecting fees relating to the leasing of real estate.

As a rental property owner you should be more concerned with your property's certificate of occupancy and making sure the building is safe and sanitary. Anyone working on your behalf as a contractor, electrician, real estate agent, or property manager should hold the necessary license.

It depends on your appetite for risk. Some people like the 1% rule meaning it's a good sign if 1% of the asking price is equal to or greater than one month's gross rent. BUT you are inheriting long term tenants in a "low B" area so I would definitely go by a 1.5-2% margin at which point that price no longer works. 

Taking over a property with tenants in place is inherently more risky as you have not vetted these people. Do they pay on time every time? Do they call and complain for every little thing? I see contractors and repairs etc in the budget but no property management fee. Do you plan to manage this property yourself? How much then is your time worth to you? 

I also don't see debt service factored into this budget so a lot will depend on the lending terms. Do you know how you'd finance the deal?

This deal could work but right now there are still too many variables to tell. I wish you luck :)

I have not dealt with this situation personally so take my advice with a grain of salt but I'm an appraiser by trade and I would never go into contract with someone who will not allow other real estate professionals into the property. On some level I understand not wanting to deal with a broker, and it appears to me the majority of sellers who try to side-step the realtor do so because they believe they are the experts and that their property is worth a whole lot more money than it really is.

If the seller will not grant access to say an appraiser or a home inspector as part of your due diligence I would have serious reservations about buying the property. If you are not a seasoned contractor or home inspector yourself a video or photos are not going to tell you the whole story about the condition of the property. Even your contractor if he suspects there's an issue somewhere in the home won't be able to fully assess the situation and the cost associated until they go behind the walls or under the floors and see what's going on - which of course won't be possible until you've already closed on the property I take it.

Do you really want to take that risk? How do you really know the numbers are great if you don't have the pertinent facts? The seller has little incentive to tell you about deferred maintenance, liens, title issues, or other problems associated with their property. Just like a realtor, their goal is to sell for as much as they possibly can.

As others have said, the true answer to your question lies in your contract. Maybe the seller has the right to back out and find a new buyer, maybe not. I would think that it is in the seller's interest to close with you if at all possible as they have already lost time going into contract with you. 

Your realtor or attorney should be able to explain all terms and contingencies of the contract to you in plain English. Now that the contract is signed whatever terms you and the seller agreed upon are pretty much set in stone. Really, in my opinion you should have been fully informed about what you are signing before you signed the contract.

As far as the appraisal itself it seems to me like the seller already knew the property was overpriced and might not appraise for what they want since they set up so many contingencies for that situation. That's a red flag to me but you seem okay with this so I will give you this advice from an appraiser:

One thing you can do to help support your contract price besides providing a list of comps (which most realtors already do when they meet the appraiser to give them access to the property) is show them active listings or listings currently in contract. Lower days on market and multiple offers on properties leading to contract prices that exceeded asking price indicate to the appraiser that the market is appreciating quickly and housing is in high demand. This may help them justify a higher price by making a market conditions adjustment to older comparable sales. A realtor is the best source for this kind of information and as an appraiser I often find myself contacting local brokers to confirm market trends I am finding. See if your realtor is able to find information like this. Good luck!

As an appraiser myself if I'm looking at an updated property I always try to ask the owner what if any improvements they have made to the property recently and at what expense. Usually I am working with owner-users who may or may not be able to give me an exact figure, and they are usually putting money in to improve their own quality of life primarily and only hope after the fact that it will increase their property value.

Not all appraisers are equally thorough unfortunately. An experienced appraiser can probably judge the quality and age of your finishes at a glance, but I always feel it is best to ask so that I am being as fair and confident in my value as possible. Why leave something to chance? 

Now, you can try to get another appraiser, but the fact that you acquired the property recently for a certain amount is on public record and the next appraiser will know that going in as well. Knowing your market and what buyers are looking for is crucial to a successful flip. Cost does not equal value.  

Good luck to you!

My hat is off to you. I like your attention to detail with your spreadsheet.

Have you explored investing out of state? I'm not suggesting a turnkey operation unless that's what you'd feel more comfortable with. Just start tracking employment numbers, vacancy rates, and property taxes (among the myriad other details that go into real estate investing) and start figuring out if another market might be more likely to deliver the cash on cash return you're looking for. 

It's also important to remember that sometimes the best deals aren't on the MLS. I find that it's rare to find anything listed that even conforms to the 1% rule, so even something in a promising location is probably over-priced in relation to what it can rent the expenses you'll incur for so you need to get creative with your offers. Make offers you find on the MLS that are more realistic and that hopefully can provide a win-win for you and the seller. Start networking in your community and tell people about your interest in buying properties and see if you can find someone thinking about selling but who has not engaged a realtor yet. Just get out there and talk to people and making offers!

Another option for you since you have some cash on hand is becoming a private lender. If you haven't found a winning deal for you yet maybe someone else can and just needs some capital to make it happen? You may be able to lend money with your cash reserves or your IRA and get a better rate of return than letting it sit there in a savings account or CD. Of course you'll have to analyze the merits of each investor and their particular deals with the same rigor as your own deals but the payoffs could definitely justify the risks. I first heard about this concept through Tyler Sheff's Cashflow Guys podcast and I'm sure a quick Google search on the topic will provide a wealth of information to get you started.

These are just a few ideas. Good luck to you and much respect for your effort so far. Well done. :)

It sounds silly but I've turned performing the tasks I need to advance my goals into a game. 

I use a mobile app called Habitica to track progress on daily and weekly tasks I need to perform. Habitica gives you sign in points and tracks your daily log in streak and gives you points for completed tasks. Your avatar takes damage when you slack off on your tasks. It's all wrapped in a goofy 8-bit video game aesthetic so if you're a nerd you will like. I find it a lot more fun and motivating than looking at my spreadsheets. 

I'm sure there are tons of other apps out there that will do the same thing. Fitbit is popular because it follows a similar process. Making tasks into a game will take off the pressure and stress while still incentivizing you to be consistent.

Sorry to hear about this smelly situation. :(

Yes, it sounds like you need a good real estate attorney who knows how to handle the eviction process. The last thing NYC courts want is another elderly person on the streets so it will not be easy. As a renter, I love how tenant friendly NYC is. As an investor I wouldn't touch this place. You aren't a bad person for feeling this way, it's the way of the world. 

As to what your rights are I am not an attorney and therefore I can't interpret the law for you. From what I've heard from landlords and property managers out here the eviction process will be time consuming and costly. If you don't take action however, he could negatively impact the marketability of your other units and end up costing you even more money in added vacancy. Your alternative to that is to talk to the tenant and work out some kind of arrangement. Tell him he's in violation of certain clauses in his lease (is there a lease?). Tell him you are getting complaints from the neighbors and you as the landlord have to take action and fulfill your obligation to your other tenants. Resolving the situation outside of court will save you the most money but it will take effort, sensitivity, and persistence to make it happen. And it's still a longshot. 

Good luck.

Can you be a little more specific about the property and the type of rent stabilization program? For example I know a lot of older apartment buildings are rent stabilized by default. And then there are new programs. My apartment building is stabilized under the J-51 program which is an incentive for landlords to update older buildings as long as the keep the rents stabilized for a certain number of years. More information on your specific circumstance will help those knowledgable give you the best advice. I'm not an expert in the legal nuances of rent stabilization however as an NYC appraiser I have to tell you that rent stabilized tenants are a huge hindrance on the value of the property. You have to buy the tenants out of their lease and some will not move for any price. Even if delivered vacant it can take a considerable amount of time to legally de-regulate a stabilized building and it mostly requires you to have the units vacant for a period time (no cashflow). I could definitely see this being an obstacle for lenders and investors. Good luck!