All Forum Posts by: Lesley Resnick

Buying anywhere in the TRI-state area is tough.  It is expensive and the rent multipliers are typically not very good, it is a highly competitive market.  NY housing laws are not landlord friendly.  The one think it does have is scale.  If your looking to put $250 m to work, there are not a lot of cities that have as many deals at that size.  For the rest of of us, I recommend looking at growing second tier or third tier cities.  Typically less competitive and often more landlord friendly.  I recommend Florida.  I would stay out of Miami and Orlando at this time.  They are both overheated.  Depending on the economy it may be a year or two and they will be more reasonable.  I recommend Jacksonville, growing city with lots of strong opportunities.  Appreicating property values and rising rents and not a bad place to visit in the winter either.     

My first RE deal was a house hack.  I rented out my primary home and moved into a duplex.  I went from zero rentals to 2 overnight.

Residential funding is the cheapest money around.  I recommend getting as much of it as you can.

I want to all at once:

Wholesale

Flip 

buy and hold in town and out of town

House Hack

commercial - triple net and active management

multifamily

redevelop open land

Get my real estate license

start a property management co

quite my job

Squirrel.... 

I have no credit, cash or experience.  What is the best way to do all these at once?

Focus on one thing you can be successfuk at doing!

The answer is it depends, risk is a big factor in pricing.  The wall mart is a low risk rental and they sign a 20 year lease, thus the pricing.  Buying in a war zone represents another level of risk and the market prices it accordingly.  It is almost impossible to compare 2 properties at any given moment.  However there are assumptions you can make about asset classes.  

I question the basic assumption that large projects are a profitable as small.  As the project gets bigger the cap rate falls.  If you look at an extreme example like a wall mart on a triple net lease, you would be lucky to be in the 5% annually range.  Granted it is not a like for like comparison, but it makes the point.  There are sfh that you can find cap rates in the 12-24 range.  They require more work, and exit strategy is better.  In a weak economy a sfh has the advantage of owner occupied or investor.  It can always be sold, the selling price may be low, but there is exit strategy.  A vacant commercial property in a weak economy may have no exit strategy since there are larger fixed costs and a limited market.  To plan for the long term one must also consider the down side risk and exit strategy.     

Unless you are a large scale investor 1000 plus units, NYC is a tough market.  The laws slant to the tenant, since as a percentage home ownership is among the lowest in the country.  As a result the city has stepped in and created rent control.  Look for more of the same as places like park slope continue to escalate in cost.  

At $4k a month for an $800k place you are underwater every month.  Assuming 20% down 640k assuming 5% mortgage will cost you at least $3200 a month plus tax and insurance.  I am not sure the cool factor is worth losing money every month.  For $800k, I could generate anywhere from 8k-16k a month gross, taking off half for expenses, a cash flow of $4-8k a month.  I am not sure the appreciation in NYC can keep up with that for a sustained period.    

 I am selling a product and I must be competitive in my market.  I provide a great value for a safe clean place to live.  In exchange, I constantly find and keep great tenants.  I wish to be as passive as possible.  Chasing the last dollar is the most expensive.

I only raise rents when the property turns over.  I maintain almost a zero turn over rate.  Granted I could get a few dollars more for the units, but it would take me the rest of the year perhaps longer to recover. (repairs, vacancy time).  In calculating returns there is always a percentage for vacancy.  I rarely see it addressed as a value add opportunity rates vary from 2-5+% a year.  What if that number was cut to zero.  The update cost is typically part of maintenance?  What if you could get another year or two out of the paint and flooring, etc?  Turning units is a low value activity.  I make money when I sell a property or rent a new unit.  An existing unit re-rent is only a loss.  In a best case scenario, you could raise the rent at the rate of inflation.  Anything beyond that and you will be priced out of the market.   

If you are willing to go into the urban core as a property manager there is business.

There is a lack of quality management in those areas.

The other challenge is scale.  If you have to do everything and can not hire some help, you will run your self ragged for very little money.  

 St Augustine is a good investment area.  They have a mixed economy, some industry, some tourism.  It is 20 miles south of Jacksonville and 60 miles north of Daytona.  People make both commutes.  St Johns county is highest ranked school system in the state.  

I have looked at properties there, but decided on closer to home.  I could find a similar quality investment in Jacksonville.  

The key to investing outside you market is develop a team.  It should include an investor friendly realtor, property management, local attorney.  If you have those couple of pieces in place, the rest will come as a result of the other members of the team.  Walking the property can be done virtually via face time video etc.  Part of any purchase should be n inspection, which will provide insight into all major systems age and condition, roof, ac/heat, etc.