All Forum Posts by: Michael Gansberg

@Phillip Dougher - why don't you post what your anticipated rent roll will be after plunking down the multifamily homes? Then compare that amount to what you'd receive were you to invest in existing housing. It looks like you're considering an investment of 3X$222k = $666k(an inauspicious number, I'll grant you that.) To be as apples-apples as possible, what sort of rent roll would you get with existing housing for that investment size? 

After you've answered that, you would want to compare maintenance and capex with the existing housing vs the proposed new housing. If you can get quite a bit more rent(and not dramatically more capex/maintenance) with existing housing, that may be the way to go.

Excellent question, @Pete Perez. I'd skip the Art of the Deal, as the author is about to get totally hoodwinked by another country on some huge useless construction project(The Wall,) and everyone in the world can see it but him.

There's another book by the same author entitled(or did I mean to say 'entitled author?') How to Get Rich. I'd skip that one too, as the author has gone through too many bankruptcies to trust anything he writes.

Lastly, there's a book called "The Midas Touch." It's just OK, but the problem is that the author was born on third base and he thinks he hit a triple. Reading books by delusional megalomaniacs will never amount to anything good! 

@Scott Brandt - it's a common problem you've run into. Rather than farm out the work to people you don't know, you'd probably be better off hiring management that you do know- either way, via Equity Build or a manager, you're going to be giving a cut of the rent to someone. May as well have direct oversight, don't you think?

@Scott Brandt - from the crickets this thread is getting, I think it's safe to say that not many people are taking advantage of EquityBuild(or being taken advantage of?) From your post, it seems that what you're doing is working pretty well. Why not stick to that? Continue to grow, learn, improve operations, that will probably give you your best yield.

@Ryan Lott

I'm not an expert on blinds, but if you're doing an 80 unit in Chicago, I'd suggest going with insulating blinds. It could reduce the annual heating bill meaningfully. 

Mike

@Michael F., sorry to pipe in and do some Monday morning quarterbacking here(I apologize if I've offended anyone, I don't watch any sports so I likely got this expression wrong,) but there is a pretty serious level of strange going on here. From your math, I infer that the market rent is $1250, meaning they'll cover $1100/month for six months(and counting?) So at this point, you've entrusted them with $6600. I don't trust many people with that amount of dough, unless I know them extremely well(trusted PMs, say.) 

Now should "Elite" rent the unit for $1250, they'll have $2500 in pocket(rent plus security,) at which point they'll cut you a check for $6600 I guess, netting them a negative $4100. In other words, they'll be penalized by $4100 to rent the unit, and probably more, as it sounds like they'll be paying a broker as well. So I am sorry to tell you, but at this point, you're a $5k liability to them! 

Their proper strategy- at this point and only with respect to you- is to never rent the unit at all, because then it seems they would not be forced to pay you this money. Further, I suspect they believe that you either won't sue them for the shortfall, or won't be successful in suing for the shortfall. Bolstering my argument is their apparent lack of attention to you. Are they hoping that if they ignore you, you'll go away? Or are they thinking that ignoring you might cause you to leave, which will be a pretty good payday for them? Especially since it entailed doing far less than what they've been contracted to do? 

I really feel for you- it seems you're in this bizarre hinterland where what's bad for you is good for them. I'm not in the habit of giving advice to people I don't know(though I suppose after reading your posts, we can tu/toi/tes a bit, non?) but I cannot help myself. Given this set of circumstances which appears to have placed you at a disadvantage, I would promptly seek a manager who experiences benefits when you benefit as well, and fire the old guys. And I'd demand the missing rent from Elite, then file a lawsuit as promptly as possible should they fail to come through. 

One last thing- paying past expenses(like the rent they owe you) from future income(like the rent they hope to collect) seems rather Ponzi-ish to me. I'll quote the chandelier in Poltergeist: "GET OUT!" 

Editorial comment: Upon re-reading my post for errors, I realized that Elite has a second strategy which while funny, would be deleterious to the health of Michael F. They could re-rent the unit for $50 per month, or something obscenely low like that, in which case they'd only owe .88($50/mo)(6 months) = $264.

Disclosure: I hate "Turnkey" providers, and I believe it is a flawed concept.

Hi @Moshe H. @Brian Rosher 

I'm so glad to see this post and the feedback about Troy. I've been a Manhattanite since '93, and started investing in Troy in '04. I acquired multifamily buildings there between '04 and early '06, then again from '09 to end of '14, and haven't yet sold any. Troy continues to be the epicenter of my operations, and I've leveraged my team to expand into Waterford and Mechanicville(I'm in Albany and other areas too, but Troy contains a very high percentage of my stuff.)

It's come a long way since I started there, and the rent growth has been pretty decent. I wouldn't compare it to Brooklyn just yet, and I don't think the Capital District has been sufficiently magnetic to compel the influx of hipsters and yuppies required to make it feel like the chic parts of Brooklyn. Absent proper job growth in Albany and Troy, I'm concerned that Troy's upward trajectory will not continue as it has in the recent past. But if local job growth is good, I suspect(and hope) that Troy's renaissance will continue. 

It's a fun place to be, and cost of living is quite reasonable. There's abundant industrial space for those looking to start companies, as well as reasonably priced office space, and government is generally friendly towards investors, though I've had some dust-ups with them of late. Finding well-priced real estate(relative to rent) seems to be a fool's errand nowadays- five or six years ago, I could buy a poorly-functioning two family for what a shell or gut-rehab costs today. And well-functioning two family buildings are priced such that creating substantial cash flow is challenging(although I've moved on from this type of product, it is a decent barometer.) Landlord-tenant court is very favorable for investors in Troy. I have to admit, I have a landlord-crush on a certain judge. Shh, don't tell anyone.

Schenectady has repelled many investors since I've operated in the Capital District(I won't elaborate on the reasons, that's for another thread,) and I doubt a casino will change their fortunes. If gambling were such a panacea, Atlantic City would be smoking hot by now! But even a savvy businessman like Donald Trump couldn't keep his casinos open there(I thought the house never loses? OK, that's it for politics today, sorry about that.) I also have avoided Cohoes for investments for Schenectady-like reasons. Waterford has proven rather decent, even though their local government seems to go out of their way to be difficult sometimes.  

Brian, I picked up a building in Mechanicville in '13, and I told my closing attorney(who lives in Stillwater) about the development that was going to increase values. He laughed at me, and said it'll never happen. Unfortunately, he's winning that bet! I'm still hopeful, however my hopes are fading on that point.

If anyone has Troy questions, please feel free to DM me, I could chat about Troy all day(as evidenced from the above 200 page post.)

Hi @Brett Fine - congratulations on your upcoming closing. Not having applications from current tenants is the norm, rather than the exception. Since applications are used to screen tenants, I'd have to say that that ship has sailed. If you didn't like what was on the application, what would do?

Here's my recommendation. Make sure you have all of their contact info, and vice-versa(or your management's info.) Collect rent, grow your business, ignore the missing applications, and if they stop paying rent- you know what to do!

@Christopher Silich - haven't tried it. So many of these sites attempt to automate the real estate investing process, or lower the barriers to entry. I wouldn't trust these sites as far as I could throw 'em. If you want a hands-off RE investment, why not try REITs? At least they face SEC and investor scrutiny, if they're publicly traded. Turnkey companies also try to automate the process, but starting from the markups above fair value and ending with the inability to perform magical acts, I think most "turnkey" investors end up with a raw deal.

hey guys. Sorry to burst your bubble. As a longtime NYC dweller and homeowner, upstate multifamily investor, and broker I'll tell you that playing pick-up sticks with your rump-cheeks would be more productive than trying to wholesale in NYC. Or in Brooklyn-speak: fuggetaboutit! Lawyers here would never let their clients do a deal with a wholesaler. But if anyone else has had a different experience, I'd love to hear about it.