All Forum Posts by: Mike Adams

Quote from @Tom Wagner:

I saw some interesting data on Twitter recently used as the basis for an argument that rising interest rates will not necessarily cause prices to fall:
https://twitter.com/NikhaarSha...

I tend to agree and think that the only way prices substantially adjust is if inventory/supply increases.

 If the buildings bring in no profit after expenses, not sure why people would still buy.  Appreciation only?  Esp. in New Jersey, one cannot remove a tenant after the lease expires and can only increase the rents 3% or so. NYC is even worse. Hence, I am not sure how people can buy negative or near negative properties as rates rise.

Quote from @Russell Brazil:

Quote from @Mike Adams:

Originally posted by @Russell Brazil:

Yet somehow not that long ago we seemed to make the numbers work on 6 caps when interest rates were 5% 10 years ago.

 Yep, but prices were a lot lower then too.

How exactly does price play a part in the equation when we are talking about the relationship between a cap rate and an interest rate? We could be talking about a $200k property, a $2 million or a $20 million. Each will have identical returns at the same cap rate in the same location. 

Has a lot in the NYC Metro market. 

Originally posted by @Russell Brazil:

Yet somehow not that long ago we seemed to make the numbers work on 6 caps when interest rates were 5% 10 years ago.

 Yep, but prices were a lot lower then too.

Has anyone in the NYC area been able to lock down decent mort. rates? I'm seeing 4.3% - 4.6% for 30 year am.  When the house has a 6% cap, it is becoming harder to find numbers work with the .5 - 1% increase in rates.  What are you seeing and doing with the rising rates?  

Originally posted by @Scott Wolf:

@Mike Adams, are you looking to collect a commission in some form when you buy?  

When I bought my property, on my LOI, I put in that commission was due to me in the form of a credit at closing. As long as you disclose, and put your offer in writing, they have a fiduciary duty to present the offer. If you're waiving your commission it's even better usually. I found putting the offer in writing forces their hand.

Yes, we'd prefer to receive the commission, but a credit is fine too. It just seems the agent representing the seller doesn't seem too keen on negotiating with us on the price at all. On agent we had to run after consistently to just receive an acknowledgement of the offer being received.

Possibly a particular request, however, my partner and are licensed brokers in New York and Connecticut. As some may know, we already run a property management company for our own properties and have started to add outside property owners now that we're licensed.  We are looking at a few properties and since we are licensed, we do not need to use an outside licensed real estate salesperson or broker.  We've been submitting a few offers and disclosing that we are the interested party in making the acquisition.  The real estate sales persons on the other side do not seem to like to negotiate on the price since we're basically the broker and investor.  Any suggestions on how we can make this go smoother? I'm sure we're not the only one's who've experienced this before.

We gave every tenant a $25.00 American Express gift card as a token and for the hard times everyone has experienced over the last year.  Out of 90+ tenants, only one reached out and said thank you.  We will not be doing this annually moving forward.

We purchased a 3-unit multi-family in 2019 which have two HAP tenants who've been there for 10+ years. We fought to get a rent raise last year since it was about a 120.00 jump per unit, which we finally received. Believe it or not, the HAP rep. was about to throw both tenants out due to the rent request; but decided against it during COVID. We are now having to go through recertification in about a month, but there are two issues. One, the previous owner, the genius that she was, leased both units as two bedroom, when each have three.  The second issue is that we cover the utilities for both units.  The bills for November and December are pretty high. We installed Ecobee thermostats and had the utility company conduct an energy audit, but there's really nothing else we can do.

We are receiving around $2325.00 per unit per month. The utilities for each unit run about $250.00 - $300.00 per unit until around April. It then goes down to $120.00 - $150.00 per month.

It was great to have the HAP contract through the moratorium, but with the increased utility costs, our hands are tied. I do not believe they will agree to another 125.00 a month increase to that helps to level out the utilities. We really need around $200.00 a month increase to cover the utilities in both units. The tenants can sign up for utility assistance and have that covered separately, but do not want to do so.

What do you think the best course of action is? We'd prefer to keep them, but the utility spike in Connecticut has been around 15%.

Originally posted by @Yoon Seokwoo:

I am trying to think of the best scenario to get maximum tax benefit for rental property in the following scenario. 

Say that I have a house that is paid off and I want to convert it to rental property. If I take cash-out refinance (e.g. 80% of equity) for this house so that I can use that money in some other investment, would it result in same (or simlar) tax benefit as like I have a refresh mortage on this house? 

Why not just get a HELOC for the appreciated equity?

By yourself or join a company?