All Forum Posts by: Michael Gansberg

@Wesley W. - I hear you. Are you mostly in Albany? I'm mostly in Troy- Judge Turner is as landlord friendly as they come, but now his hands will be somewhat tied by the new laws. 

I freaked out a bit when this law was passed- I'd call myself a moderate liberal. I think this will play out as follows:

1: Delinquent tenants will have more time in their apartments without paying, increasing costs to owners.

2: Owners will raise the rent on everybody else to account for the higher cost of doing business.

3: The quality of the housing stock will be worse off, because the small group of free riders will negatively impact everyone more broadly than they once did. 

4: Multifamily housing values will be negatively pressured(in a very modest way) due to the new laws.

But I don't see huge effects. Look at it this way- the cap rates of large multifamily buildings in NYC are not dramatically higher than the theoretical cap rate of an owner-occupied single apartment(were one to rent out that apartment) in a similar neighborhood. That suggests to me that the rent-control laws, which are draconian in NYC, haven't dramatically impacted values. NYC draws people in for obvious reasons- employment, entertainment, etc.

So my instinct is that stiffer tenant-protections will be only a secondary or tertiary factor in value determination. The main factors - employment, quality of life, etc. - will impact supply and demand of housing more directly.

@Wesley W. - I know that a judge can do that now, and I'm hopeful that sanity prevails(as the landlord also has the ability to claim hardship, it isn't completely one-sided,) but in Cynthia's post, she said:

"I would NOT buy rental property in NYS right now unless you have extremely deep pockets to see you through an eviction that now takes 1yr minimum and cost at least $5k per tenant."

These six evictions I'm referring to are taking place under the new laws and they're in Waterford and Troy. I'll update this thread, but I don't anticipate any of these evictions being nearly so expensive in terms of time and money as Cynthia suggests. We'll see.

@Cynthia Brooks - where are these evictions you're performing that cost $5k and take a year? I'm in process on 6 evictions right now in the Capital District(Albany and environs,) I expect in total to be out of pocket $3500 on all of them. Make that 5 evictions, one tenant saw the writing on the wall and gave us the keys. I expect one or two more to do the same. The worst ones should be 60-90 days from first notice.

@J.R. Coffin - I bought my first investment property in Hudson(16 years ago,) I still own it. The town has come a long way since then, and it's still moving in a positive direction. I think you could do well with a 1-3 year investment horizon- buy and rehab a house, live in it awhile, then rent it out to a New Yorker as their weekend home. That strategy would likely yield better results than renting to local residents. 

I'd also suggest prioritizing location(essentially unchangeable) vs. prioritizing curb appeal(certainly changeable.) Considering that you're both designers, an ugly house(with good bones!) in a great neighborhood would play more to your strengths than would a fabulous house in a so-so neighborhood.  

Let's have a quiz! Which of these questions comes up most frequently on BP? Any hypotheses on why this might be?

A) Lending: Is it ethical?

B) Making lowball offers: Is it ethical?

C) Being a Real Estate Agent/Broker: Is it ethical?

D) Buying Investment Properties and Crushing it: Is it ethical?

E) Wholesaling: Is it ethical?

We all know the answer is E). Why? My hypothesis is that since "ethics" and "wholesaling" are so frequently put together, we must know, collectively, that something is rotten in the state of Denmark when it comes to wholesaling. Just my two cents.

@Anna Catron - I'd go the property-level purchase route. Selling an LLC is too convenient a way to cover up past misdeeds. As some posters have suggested, you could try to insure against that, or research the LLC for debts other than at the property level...but what if the seller took out a loan(against the LLC) days before the closing? Sure, it'd be fraud- but that would be little consolation to you, as you'd have to go through the courts to collect. Make things simple- buy the properties, pass on the LLC.

@Calvin Thomas - thanks for pulling that from Edgar. I've been enjoying this thread for 15 minutes now; between investing in one of Cardone's offerings, or putting cash in an index fund, REIT, CD, investment property, or on black at the roulette table, I'd choose any of the latter over the former. I can't imagine putting my money into a black box investment vehicle without any control over if/when it ever becomes liquid. Yeah, I'm a skeptical, cynical New Yorker, and it's served me well.

I had a prospect ask for a 20% discount on rent because the two parking spaces were shared among three apartments.

I responded- “Why don’t I create a third parking space, cut the rent in half, and build an international airport with your name on it to boot?”

Never heard back from her, oddly. I thought it was a great offer! 😂

@Princeton Brooks - congrats on thinking about your investment journey, one more step and you’ll be fully on the road. A few thoughts for you. Robert Kiyosaki’s first book(Rich Dad, Poor Dad) got me thinking differently about investing when I was in my early 20s. A central message of that book is that your home is a liability, not an asset. While my primary residence has appreciated quite nicely over the years, I’m still in total agreement with that message. So a cash-flowing rental property(with some money on the side just in case the fit hits the shan, which it always does!) might make more sense for your nest egg.

Regarding timing, I’d refer you to Jeremy Siegel’s point in Stocks For the Long Run. I’m paraphrasing, but he essentially determined that over multiple decades, if people were omniscient and bought an index fund at exact lows in the market, they did only a few percentage points better than people who were omnisciently foolish and bought index funds at exact peaks, as long as both groups held on to the stocks. Strangely- people who bought at only the peaks did pretty darned well! (Note- index funds didn’t exist back then, but he uses the DJIA as a proxy.) The people who did very poorly compared to both of those prior groups? The market timers who thought they could time the market(they had about a zero percent return,) and the bond investors whose returns were only slightly better than inflation.

So don’t try to time the market- just continue to invest wisely and incrementally, and you’ll be right as rain. ☔️

@Chad Hrapmann - go for a camera that's battery-powered and records to an SD card. They're motion-sensor activated, generally, and I found one on Amazon that works for 2-5 months between charges. So if anything bad happens, grab the SD card and a bucket of popcorn! Go to Amazon and search for "wireless rechargeable battery camera." I've been meaning to install it at a property where a tenant(who will remain nameless, but you know who you are!) has been dumping garbage improperly, but I haven't gotten around to it.