All Forum Posts by: Luciano A.

@Marcus Auerbach

Great post. I agree. I find it funny how someone will be willing to pay $$$ to buy and rehab but will not spend the money for a plane ticket to go look at the asset. I think IG/Facebook/Books give the false impression investing in RE is like investing in Stocks. You buy, pay others to fix and manage and you become rich. I will only invest in places I feel comfortable driving to at night or on weekends. If I am not comfortable going then not a place for me to invest in. Emergency calls/repairs dont always take place from 9am-5pm. 

Today with syndicators, crowdfunding, and such, newbies get the wrong impression. Those who don't do their homework will get crushed if the market turns. Like in CA, at the height of the market I would hear the waitress at Denny's telling me she got two rentals, losing $400 per month but plans on selling in one year and making $100k. Buying a cheap property doesn't always work out in real life as it does on paper. IF it did why aren't the guys investing longer than you the "newbie" not buying them all up themself. 

Just my two cents. From someone who chased the low-end prices but was only able to make it work as an active investor not passive. 

@Jimmy Lieu

Working with someone who knows the ropes is a great way to jump into RE and get moving. You mentioned the 4plex is in a neighborhood full of them. Might want to get a Realtor that is familiar with this area and have them pull comps. This will help you see what things really sold for. Also, check what rents are and how long they are staying on the market. In Texas, you got some neighborhoods full of the same number of units making up a subdivision. The issue I see with such a community is a high level of competition thus one owner who has owned for say 10+ years can lower their rent and still cash flow while newbies cant lower rent otherwise they will go into negative cash flow. If all the structures look the same then you are relying on the rents to drive traffic. It is like owning a condo. If the complex is full of rentals then you can be competing against others to get tenants. You can fix up your place really nice but if other owners arent then attracting that tenant that will pay for a nicer place can be hard if other landlords are taking the first person who has the security deposit to move in.

In such neighborhoods, you don't have as many house hackers thus the price another investor will buy is based on if they can make cash flow. 

Regarding Hard Money. If your partner has a large portfolio why is he using HM when he can use a local bank and get a line of credit. This way once you are all done he can have you refi to cash him out. Would save you both a lot of money and risk. 

If not check to see if HM lender does conventional loans thus getting pre-approved to roll the hard money loan into a traditional loan after rehab. This will give you peace of mind that you can get out of the hard money loan. 

Best of Luck

@Mike Hong

I'm a builder and I would suggest you first check with your HOA if you have one then with your city permit office.
To get better pricing you should drive by construction site and ask the different trades for their number. Tell them you are an investor not a homeowner. These trades work predominantly with general contractors and builders so their pricing is lower than those who provide their services to homeowners.

Another thing you can do is provide the materials and have the trades provide you quote on labor. 
Best of Luck

We have our own in house property management company and use all three big banks (Bank of America, Chase, Wells Fargo). Chase has been the best. No limits on deposits, no fee for tenants making cash deposits, Zelle, and good customer service. 
Best of luck 

@Xiaoyan Liang

The price sounds fair but just make sure they pull permits for the work. The city inspectors will look over their work and make sure they did everything correctly thus giving you the assurance you got the job done correctly without having to know anything about plumbing. The permit process can be a pain for trades but it will help you as the owner. 

Best of luck

@Alexander Schloe

Sorry to hear you walking into such issues. I stopped using inspectors unless I feel I would need a report to negotiate on the sales price. If I am not mistaken most home inspectors have a clause that says they are not held liable for any issues. Their contracts are in their favor. The seller can pretend to play dumb. As a few others mentioned I would take the hard-earned money you would spend on retaining a lawyer and put it towards fixing the issues. 
However, if you had a buyer's agent I would reach out to them and have them address these issues with the seller's agent. You might be able to get some sort of credit if the seller was not hiding anything and are moral people. BUT don't hold your breath. 

Best of luck   

@Nabeel Qureshi

Sorry, wasn't implying you are making a decision based on greed. Greed is what leads people to make bad decisions is what I was generalizing. I agree DC is insulated. If you decide to rent out a suggestion since you lived in the unit...... fix everything you already know was an issue while you lived there. This will help reduce any unnecessary phone calls from tenants. Look into a good property management company. Don't settle for the cheapest as that will bite you in the rear. Because you had not lived in the property for full 24 months check with a CPA or hit up some of the tax experts on here to make sure you can get that tax credit given you arent selling immediately. I have done a few primary residents sales but I was in it for full 2 years. 

Best of luck

@Matthew Lindsey

I have bought a few multi-family in which the seller owned for many years and tenants just got accustomed to month to month with no lease. As others on here mentioned you get estoppel but can just ask each tenant as you do a walkthrough of the unit. I would go in telling them I am the property manager for the potential new owners. Would ask for their name, number, how long they have lived there and their current rent, and if they remember their security deposit amount. 

We will normally send letters after closing telling tenants we are the new owners and directions on how to reach us and how to pay rent. We would normally do repairs and update property then go back to the tenants and give them a month-to-month lease with a rent increase. Those who see we have improved the place will be happy to sign. Those who arent leave and we get better renters in there. 

I'd sign a lease after purchasing and ask them for a copy of their driver's license telling them it is for their file.

Best of luck 

@Dan Barth 

I think your proposal is fair. Here are a few things to look at from my experience. 

Are they utilizing the vent in the bathroom. Many tenants dont turn it on because it is loud thus after a hot shower they open their bathroom door and the steam goes into the room or closet and gets trapped creating high humidity. 

Another thing is to check if they are running their AC unit or opening windows from time to time especially if they are cooking. I hear Philadelphia can get really cold so if they are taking showers and cooking with no ventilation then they might have mold but it is on the tenant. 

Another thing to look at is the bottom of your doors especially the closet and bathroom. Make sure you have enough gap to let air circulate especially if it doesn't have any register vents in them. 

As others mentioned you can check under sinks and look for water spots. You can buy a cheap moisture meter to check walls to see if there is any moisture. 

As a long-time landlord, the word MOLD and water leak have me jumping up almost every time as insurance doesn't cover this. Showing your tenant you are actively working to address their concern should make it easy to propose to them if you get it tested by a professional and comes back negative that they pay. I would have them pay the company doing the test directly versus the security deposit. If it comes out of their security deposit they might trash the place or not pay last month's rent. 

Curious how it turns out. Be nice to have you let us all know how it turns out.

Best of luck 

@Nabeel Qureshi

 I am going to assume you had a realtor do a comp to see how much equity you might have in the property. Now ask yourself this question........ We are at the highest level in RE in our history. Prices are higher than they were before the last crash. With that how do you view 2024? If you think prices will still be climbing then you might want to hold. But don't let GREED dictate your decision. Another thing....... no guarantee 1031 will be around in 2024, after all, Biden has made it known he wants to get rid of this. It might not be 2021 or 2022 but 2024 might be a different story.

If I was in your shoe, I would cash out. Hope that IRS will give you the tax-free given your situation and invest in your new local market. 
Best of luck and safe travels to your new home