All Forum Posts by: Matthew Drouin

@Matthew C. sounds like you bought in a low demand neighborhood.  But I can see your dilemma, it looks ( at face value) that the area is starting to gentrify.  And you don’t want to sell after going through all that trouble and miss opportunity.

Here’s my take.  Check with some of the people that commented here about the specific location.  “Is this really in the path of progress?”  Urban areas can definitely be tough to gauge from a google maps search because environments are street by street, block by block.  One area can show great signs but literally cross the railroad tracks and it’s a different world.

Be aware of these types of physical delineation.

If you are getting no demand from qualified applicants then I would say it’s not in a margin of a gentrifying neighborhood.  Qualified applicants that get priced out of rapidly improving neighborhoods will move into these areas but it seems like they aren’t biting.

High quality, lower income applicants aren’t stupid and they won’t settle.

If you think this area is a losing proposition, I would think about selling and not banking on hope.

In regard to vacancy, I don’t consider any area that has average occupancy (economic and physical) below 95%

You might pay more for a better area but time will treat you right and you’ll make a ton of money in equity over the long term.

@Kendric Buford to better answer you.  What’s your ultimate goal?

Anyone can invest in where they are familiar.  It just might be a different strategy involved.

Cash flows through refinance or sale or operating cash flow is the same in my book.  it doesn’t really matter.

In my experience, cash flow will never make you rich.  Which is why I pay more, for less cash flow in highly desirable areas.

In high income areas, rent is a lower proportion of income so therefore your tenants have a higher capacity for paying higher rent because rent is less than 20% or even 10% of their income.

@Account Closed I have had tremendous success using direct mail and mailing the owner of record where the tax bills get mailed to.

Generally, property management companies don’t pay the real estate taxes so this gets me right to the owner.

Targeting wise, I would just do a zip code filtered by unit count using a service like listsource.  And then use a direct mail service like Yellowletter HQ and select the smaller envelope.  My conversion rate was higher because they kind of look like a wedding invite.

In regard to lenders, join meetups and local facebook groups and ask for referrals.

I’m doing larger commercial deals now and found I wasted a Ton of money on direct mail.

@Gabe Goudreau how big of a deal are we talking about here?  One of my clients had a $1M deal under contract where they needed to do a $300k raise.  A syndication was way overkill because there were only 5 capital partners so they customized an operating agreement with their attorney that outlined roles and responsibilities, distributions, membership interests, etc.

And you don't have to have all this stuff figured out right now; it's very customary for us to assign the contract to whatever customized entity we end up forming.

Just one caveat.  Make sure you know where the guard rails are with your bank.  If you give someone over 19% membership interest in the deal, the bank will usually require a personal guarantee from that individual.  If they are the one providing most of the cash, they might not want to carry that liability, but you've already negotiated with your partners on this and then the bank isn't cool with it, you could be in a pickle.

Greg,

What type of mentor are you looking for, in terms of where do you need the most help right now?

Update to anyone following this thread. Our local REIA is hosting our next meetup on January 9th and we are bringing in legal experts to help investors better understand the implications of Good Cause Eviction.

Here's the link to register for your seat:

https://www.ffreia.com/Events.aspx?ID=Legal-Update-Save-Mone...

Looking to buy your first or next investment property in 2025?

You won’t be able to do it alone…

Nor should you.

There’s an entire community of people that are exactly where you want to be that are right in your backyard.

Get around them!

On January 9th you’ll have the chance to not only surround yourself with the key players in our market (who actually want to help you)

But our Premier Chapter Sponsor Marchioni and Associates are going to be sharing tips and tricks on how to save thousands and also be in compliance with new rental laws coming down the pike.

FFREIA (Freedom First Real Estate Investors Assocation) is a nonprofit trade association whose mission is to help people just like you build wealth in real estate and also provide the community to help support you in your journey to building your empire, so you'll never feel alone.

@Henry T. its like despite what these policy makers do, housing costs and homelessness sky rockets.

In NYS the HSTPA got passed.  Eviction costs surged and so landlords needed to increase rents to deal with vacancy and collection loss and increase their screening standards.

Then the eviction moratorium.  Landlords eventually evicted and then this units were trashed so they ungraded them and increased them up to market rents.

THEY are causing the problem

@Coty B Lunn seeing Rochester pass it will only further their resolve.  In impoverished cities like Rochester and Binghamton there is an income problem, not a cost of housing problem.

@Stephanie Jacobson it will only encourage and reward slumlords who don’t put a dime into their properties or properties they buy because they charge cheap rent.

These properties usually become so untenable that they become vacant and boarded up.