All Forum Posts by: Llewelyn A.

@Justin Thorpe

That's EXACTLY the way I think it will unfold.

The Young will stay in the Cities and the old will move to either areas in the City that are very less densely populated, for instance, Ditmas Park in Brooklyn, or will move out of the City entirely.

That actually NEEDS to happen. Older people will need to work more remotely so as to NOT take the Subway.

I think the smart Investor will realize this if they don't already.

@Linda King

@Kevin Priester

I have been thinking of a way to help people who just collected Cash and not reported it.

That's a very difficult situation and I only have a few tenants that are in that type of sitatution because generally they have to be employed to qualify to be one of MY tenants.

The only reason why I have a few tenants that generally collect Tips in the Gig economy is that they "snuck" into the Apt through a Sublet or other kind of situation by the current or former tenants.

Tenants who generally don't qualify for an apt tend to look for "rooms" that are for rent by tenants. The tenants sublet illegally to help reduce their share of the rent.

A lot of Tenants don't even know how to sublet appropriately, for instance, using a Sublet Agreement Lease. So they then get themselves in trouble as they are now a "Landlord" for the Sublet.

While I try to rent only to families, I also have rental near Universities. One of my Apts has 3 Bedrooms and a very large walk-in closet.

The young people who rented that apt converted the walk-in closet illegally to a bedroom. Over time, I discovered it. Now I am bearing the burnt of that action as most of those young people worked in the Gig economy as a 2nd job (waitress, baby sitter, etc.).

The person in the Closet was a friend of theirs and has lost all of his jobs (he had 3 different gig jobs).

I told the tenants that they are responsible for that person, not me. You are THEIR landlord. HOWEVER, I am helping them by forgiving 20% of their rent to compensate for the loss of their 2nd jobs.

Given this scenario, this plays out even worse in immigrant neighborhoods. I have Landlord friends that have rented their apts where the tenants, over time, bring lots of people, their 2nd or 3rd cousins who came over and over stayed their VISAs now they are undocumented workers, etc.

These poor Landlords find it difficult to go to court to throw them out because it will just happen again and the Laws and Judges are completely pro-tenant here in NYC.

These Landlords are TRAPPED for the most part. They are Entrepreneurs, trying to do a good business, but the Tenants snuck in more people.

When the Landlords confront the tenant and their extra sublets, it's always a sob story and the Landlord just tells them to pay a little extra for the increase in costs like Water Bills, etc.

What sometimes happen is that the tenant then moves out and the Undocumented Workers stay, but continue to pay rent.

That happened to a number of Landlords I know in Queens where this has devastated that community.

The real issue is the Strong tenant laws and the sneaky tenants that allowed the situation to become so much worse for the Landlord.

This doesn't happen in higher priced Apts. This is VERY normal in lower priced Apts in immigrant neighborhoods.

What happens is that they Landlords then are accused of being the Greedy ones, seen as charging more rent (because of the increase of utilities), allowing undocumented workers to live there in large amounts to have more rent money!

It's a scenario that unfolds NOT because of the Greedy Landlord, but of the Greedy and sneaky tenants.

This is one reason why I don't buy Buildings in these areas. I know exactly what's going on. And even I got caught with ONE of my apts!

Tenants want relief from Rent from the Landlords. I get it.

BUT, Tenants need to understand their future when they decide to collect Cash and not save for times when they are NOT working.

For instance, if you are a Nanny, getting paid cash, you are not adding to your qualification to Social Security or your retirement. Why are these people so unconcerned about their future?

If we were to go to the Individual Tenants situation and really look into their history, I have a feeling that there would be a very high percentage, maybe 90% that would have been able to take Unemployment and get the Stimulus if they actually got paid legally.

A friend of mine that was one of these Undocumented workers said that there is a long road ahead but if you truly loved America, you do it.

When he was Undocumented, his got a Federal Taxpayer Identification Number (TIN) and operated throught that, paying Taxes. Over time, and it was more than a Decade, he finally was able to apply and get his Citizenship, claiming that he was paying Taxes for all this time as well as a good Resident of the US.

That's the proper way to do it. He said to me that those receiving Cash in the Gig economy, while he's sympathetic, hurts both America AND themselves in the long run.

I'm saying that Landlording is not so easy. We HAVE to think of the future when some of our Renters don't pay the rent and so we have Reserves.

For Tenants, don't think they are not part of their own problems. THEY ABSOLUTELY ARE.

I'm not trying to point the finger of blame here, but tenants that are NOT receiving financial help from NYS nor the Federal Government maybe a victim of their own past history as well as circumstances beyond their control.

That being said, I believe there needs to be a better way to help Undocumented workers. My friend who started out as Undocumented suggested that the Government give money to those with Taxpayer Identification Numbers (TIN).

His thoughts are that everyone else shouldn't get it unemployment benefits. This is America. If you are here to take advantage of a cash job without paying taxes, it's questionable if America should then help you.

He's now a Landlord. He knows the situation more than anyone else. And he REFUSES to rent to tenants that sneak in others. But it still continued to happen. He throws them out if they do.

I tend to agree with his general sentiment.

If we are to help those that can't get benefits, then give it out to those with TINs.

But forcing Landlords to support a system that's broken is completely unfair and can lead to Landlords losing their business, which then leads to the tenants losing their Apts anyway.

This is much more complex than anyone can imagine.

I have a feeling that after this Pandemic ends, Landlords in immigrant neighborhoods will crack down on over-crowded apts. They need to do this regardless of the strong Tenant Laws.

That will be bad for those tenants.

In the end, some Landlords will lose their business, but most tenants who can't prove their income and sneak in their "relatives" will just not be able to find an apt. Landlords will figure it out and will choose better tenants.

That may accelerate Gentrification as Landlords start feeling that these immigrant tenants can lead to these situations that can hurt their business financially.

@Victor O.

I'm not an Attorney but I think I can help a bit.

First, make sure your Attorney knows this. Basically, from what I understand, if you sell a building as a particular Occupancy and the CofO is different, the Contract of Sale can be canceled due to mis-representation.

In my experience, I was the Buyer of a buildings which was a 3 Family building but the CofO was for a 4 family building here in Brooklyn (Clinton Hill is the neighborhood).

I fully believed I could have canceled the Contract since it said it was a 3 Family, but I purposely did not because it was to my full advantage to buy it with the CofO of a 4 family as I wanted to convert it back to increase the rental income.

BTW, once I bought the building, I immediately knocked out a staircase to the apt with 2 floors and installed another kitchen to have 4 total kitchens in the building on each floor. I then re-appraised the building for $250k more than the purchase price 3 months later.

In your case, it's a one Family with a CofO of a 2 Family. Sometimes One Family buildings can be more valuable than two Family buildings. Just make sure you do your own valuation to make sure that's the case.

I personally don't think that the CofO will be an issue. Generally, it's an issue when you have more apts than the CofO but now the other way around.

As far as work without permits, if Mortgage banks in NYC didn't finance those, at least 20 to 30% of all buildings would not be approved! Probably even more than that!

If you want, just call a Mortgage Broker and ask them if this is a problem. However, I personally don't think so.

Hopefully this helps.

@Diane G.

Although I'm in Brooklyn, NYC, I thought I would share my experience on a re-rental I had done for a Move in Date of May 1st.

In late March, just a week before the lockdown, I placed an ad for a 1 Bedroom Garden Apt in Brooklyn's Bed-Stuy neighborhood for $2,450. The rent was just $50 less than the current tenant, but I wasn't sure what the Covid-19 was going to do to rentals.

Within 6 days, I had to pull the Ad off the listing as I got overwhelmed by over 40 inquiries. I normally tell people to apply ONLY if they had greater than 700 FICO and income of over 45 times monthly rent which would be $110k annual salary.

I had 5 inquires and choose a couple whose combined income was over $225k and had over $250k cash in the Bank. They moved in a few days ago.

I thought the experience was unusual because it looks like the rents SHOT UP.

In fact, I firmly believe that it's true that rents for that particular apt in my buildings are much higher now in the Pandemic.

I think this is that case because most of the buildings in NYC happen to be high rise buildings with Elevators. You can imagine that if you are trying to be cautious from getting Covid-19... riding in an Elevator where anyone can pop in and sneeze basically passes it on to you.

Most management of these larger buildings also prohibit the moving in and out of Tenants at this time. They don't want movers and other strangers in the buildings. That eliminates competition for available apts. Even physical showing are prohibited.

My Garden Apt has it's own entrance and I saw many people who are in sky rise apts with dogs in particular. You MIGHT be able to self-quarantine in an apt if you don't have a dog. BUT, if you have a dog, you MUST walk the dog. Therefore, any apt with outdoor space is incredibly desirable.

Regardless, in regards to Covid-19... my bet now is that you can advertise your apts as being "Pandemic Resistant" if you are surrounded by Sky rise buildings with Elevators.

I'm not sure of your particular neighborhood, but I find this to be the case with NYC in general.

If you are in a high density area, which I believe SF is... AND your apt is either isolated or in a non-elevator building, it may actually be very desirable during the Pandemic (and I fully believe beyond the Pandemic because these thoughts will linger).

Hopefully this translates to SF and helps!

@Linda King

I would like to give an example of a person who loses his $30k per Year Job.

This person will apply for NYS Unemployment. They will get $288 per week.

See snapshot:

On top of that, this person will get $600 per WEEK from the Federal CARES act.

The combined weekly will be $288 plus $600 = $888 per WEEK.

Compare it to the situation where the person WAS employed at $30k per Year. Take $30k and divide it by 52 weeks. That comes out to $577 per Week GROSS.

In other words, the SINGLE unemployed $30k worker who used to make $577 per week GROSS is now bringing home $888 per week CASH. That's an increase of $311 per week!

Now let's take the $311 per week increase and multiply it by 4 to get a rough monthly increase = $1,244.

Now, imagine that it's a couple who both make $30k each AND are now both unemployed. Their Monthly NET income increases by $1,244 each or a total of $2,488 per month!

In fact, because of this situation, a few friends told me of people that they know who had begged their employers to lay them off. When the employers chose to keep them, they called the various City departments ANONYMOUSLY to get the businesses to close down!

In other words, instead of wanting to work to keep the business going, because they were making more money in Unemployment they chose to force the business to close so that they can just get better pay.

This is CRAZY but it's actually happening.

What's even WORSE is that there are rumors the Advocates who have sponsored these Bills seem to be the ones that are showing them how to do this.

NOW, throw on top of that the Unemployed Tenant Couple who is now making $2,488 MORE monthly than when they are working gets FREE Rent!

Something is wrong in our Politics. If we don't fix this, we are going to wind up like Venezuela.

I think what's really happening here is that the Progressive LEFT in the Democratic party is buying Votes on the backs of the Landlord.

In other words, despite the FACT that the Unemployed Workers who are Renters are getting MORE money than what they were making before, let's screw the Landlords to ensure that these same Renters vote for the Progressive LEFT (whom they call themselves Democrat Socialists) down the road!

That's what's happening. The Progressive LEFT party is at War with anyone that doesn't think their way. They don't believe in Capitalism or Entrepreneurship. They know that when people are hurting, if you give them a lot of money, they will vote their way.

It certainly looks like buying votes to me.

@Devon Keaveny

Please refer to this Spreadsheet snapshot:

This is the first time I am going to give a Math example on Class D versus Class B properties! So bear with me as I try to break it down with a Spreadsheet!

In Column A and B, we buy a Class D property for $50k all Cash. The property will require a lot of Management typically about 20 hours a Month. If we cash flow about $200 per month, that means you are making $10 per Hour.

In Class B, there are actually three ways to make Money. However, for this example, I am leaving out Appreciation. So we will concentrate on Cash Flow and Mortgage Paydown.

In Column D and E, we buy a $1 Million Class B property with a Mortgage of $800k.

You will spend about half the hours in Class B as you do in Class D. In fact, for most of my Class B properties, I barely work on it so 10 hours a month is definitely more than enough.

If you are making the same Cash Flow as your Class D property, then your hourly rate will be $200 Cash Flow / 10 Hours per month = $20 per Hour.

NOW, because we had to use a large Mortgage, we need to account for that. The Mortgage is $800k. If we take a Monthly Average of the Mortgage as it disappears in 30 years, we can get an hourly rate on that as well.

So, $800k will disappear in 30 years which is 360 Months.

If we take the $800k and divide it by 360... the Monthly simple average (don't worry, I know we should be Amortizing this, but I'm trying to give a simple example) = $2,222 per Month.

If we then take the $2,222 per month and divide it by the same 10 hours you have spent managing the property, you will make $222 per hour on just the Mortgage getting paid down!

Add the $222 + $20 per hour and you get an hourly rate of $242 per hour! NOT BAD!

Well... I don't know if this is a good way to make the comparison, but I will tell you for the hours I spend managing my portfolio of 10 Class B (and some are probably A) properties, you make a LOT of money for the small amount of time spent because of the Mortgage Paydown. It is REAL.

I would say that for me, if I'm boiling it down to an hourly rate, $242 per hour is probably under what I am currently making if I actually did the calculations accurately.

All the properties are managed by me, but they are basically self managing with very little time needed from me.

That's the first time I did that Exercise! Glad I did it though! It was fun! Hopefully it's interesting to some of the readers!

@Jordan Lucas

I'm going to try to give an alternative to setting a particular goal but to make it dynamic.

Let's say your Goal was to do the very BEST you can do with no Net Worth in mind.

If your VERY BEST is $100 Million, FANTASTIC!

But what happens if your Very BEST is $1 Million? That's FANTASTIC too! Because it was your VERY BEST!

If you set a Monetary goal, and you did your best, and it was only $1 Million.... would you be disappointed?

Think of it this way, suppose you started out and you build a small RE Empire which winds up being worth a $1 Million.

Then, for no fault of your own, you got into a Car Accident and are no longer able to go through towards your Goal of $100 Million.

Life happened, but you did your VERY BEST. If it were me in that situation, I would still be proud of what I had accomplished, even if I could not have continued further.

So do your VERY BEST until you can't. If it's a $1 Million, fantastic! If it's $100 Million, Fantastic! If it's $1 Billion, Fantastic!

To me, all of them are equal because you did your very best.

Like your Mom would say, she loves you no matter what you accomplished as long as you did your very best!

@Alan Crookham

If you want to get fancy, you can do it on a Spreadsheet like this:

Column A&B says that you paid $80k for the Investment, put down 20% which equals $16k and mortgaged it for $64k. You had to pay 5% or $4k in Closing Costs and you fixed up the property for $20k for a total investment of $40k out of your pocket.

Column D&E says that the Mortgage of $64k fixed rate with an Amortized 30 fixed rate Mortgage has a Payment of $343.57 per month and after 5 years (60 months), your balance would be $58,770.39

Column G&H says that you sell the property for $130k, paid your Mortgage Balance of $58,770... some closing costs of about $6,500... you will get back $64,730 at the Closing Table.

Column J,K,L and M tells you the return.
Column K tells you that you put in $40k and got back $64,730.
Column L tells you that in 2020 you made ZERO cash flow because you were rehabbing the Property all year. BUT, after that, you put in a tenant and received $200 per month cash flow.
Column M adds up the Total.

Cell M6 is your Bottom Line. It is the IRR which tells you that you made 17.88% Compounded Return over the 5 year holding period PER YEAR.

It is the equivalent of putting your money into a CD for 5 years where the locked in CD Rate is 17.88% that is a GREAT investment!

If you can build something like this, you will absolutely understand all the numbers!

Hopefully it's not too complicated, but I really advise to get to some sort of expertise in building out these kinds of spreadsheets!

In early March, before the lockdown, I was given notice by one of my tenants in a 1 Bedroom Garden Apt in Bed-Stuy for $2,500 for a May 1st move out.

On the 2nd Sunday of March, I put out an Ad on StreetEasy.

Within 6 days, I had over 45 inquiries and 5 applicants. I had to stop the ad because of too many inquiries.

From the pool of inquiries, there would have been much more applicants except I let people know that there were already too many applicants AND that they MUST meet my criteria of over 700 Credit Score, 45 times monthly rent AND have a healthy savings account to weather the lockdown.

I chose the best applicant who made $200k per year and had $200k in savings as well as over 700 FICO.

Apts like mine in buildings like mine are incredibly desireable now.

Basically, there's a huge problem with skyrises and Pandemics.

People are afraid that if they get into an elevator that they could be trapped in a small space with someone that has the virus, which will then transmit it to them.

Also, the management for the skyrise buildings are not permitting IN PERSON showings AND many are not allowing moving in or out of the building because of the risk of increasing the transmission to vulnerable tenants within their buildings.

That narrows down the amount of available apts.

Buildings like mine, non-Elevator walk up buildings which are low density and separate Garden Apts, are now the most desireable buildings to own in a Pandemic in NYC, as I am seeing anedotally.

However, this is only true if you are in the right kind of City, where most of the buildings will be very large skyrise elevator buildings where there are huge amount of renters.

Adding to the attractiveness of low density buildings is the fact that NYC is the EPICENTER of the COVID-19 pandemic.

Yes, this is one single datapoint. HOWEVER, you will bet that the next Rental Ad I put out, I am going to emphasize all the above points.

So far, because the buildings I own are in A or B neighborhoods in NYC, most of my tenants are working remotely. I have collected over 95% of my rents for April. I have no indication that May would be problematic either.

After I am sure that the Pandemic is under control, I will be looking to add to my portfolio with the same kinds of buildings I already own.

The only one risk I have in the future is Political Risk. It is apparent that the LEFT wants to take our Rental Buildings and add it to the pool of Rent Control across the Nation.

As long we we combat that Political movement, then I'm going to be a Buyer in the Market very soon.

@Joyce Williams

@Daniel Pessin

I use Avail.co's Website to collect rent from 25 Apts in 9 Buildings.

This is their pricing Model:

I have the bottom one called "Professional."

I pay $49.99 / Month plus $2 x 10 apts = $69.99

None of my tenants pay to send me the rent on their website.

What's amazing is that I can stop the Renters from paying if they are being Evicted. However, I have never had to use that option but at least it's there.

If you choose the $9.99 Landlord's subscription, as Joyce mentioned, it's only for 1 to 4 units and then the tenant's would have to pay to send their Rent.

HOWEVER, I would not suggest you do it that way if you don't have enough to qualify for the subscriptions that allow you to have your tenants send in the rents for free.

A suggestion, however, is that you tell the tenants you will discount the $4.95 on the rent so that it's for free.

I have to say that I have been extremely happy with Avail.co

It keeps me and my tenants informed on all rent payments. Roommates can split their rents with no issues.

I can report rents that are later than 30 days. Never had to do that either.

The Reports that are available are good.

Most important to me though is that I can download the Rent Payments so I can use it with my own custom built CRM so I can keep track of all the Tenants and their rent payment history very easily.

The Tenant's Autopay is great as well! They can put the payments on autopilot and forget about it.

I have been using them for about 6 years and I have been extremely happy with their service and delivery of Rent which is generally 3 business days or earlier (depending on if the tenant subscribes to fastpay).