All Forum Posts by: Natalie Schanne

Lucas Carroll - in your basement, I'd be most concerned about adhering to life-safety code for your local egress rules for bedrooms. (Windows of certain size within x height of floor.) Most houses technically have unpermitted construction. Minor upgrades to plumbing (like a double sink vanity or replacing a water heater) and electrical can require permits. I had a very painful experience with a local township inspector asking me to fix issues for crawl space as-is plumbing in a 1950's house adding $2-5k in cost to a thin deal. I'm all for safety because insurance will not pay out if they can prove a loss stemming from unpermitted construction. Some inspectors are nitpicky and mean, especially if you ever say you constructed it ignoring their rules and fees. One told us to move a gas hot water heater ($1200), then the other said we had to recertify the chimney liner, change the vent, and add a special drain line to the black catch basin rubberized pan under the heater ($1000 more) because somehow standing water in the pan with a water alarm wouldn't be obvious that the hot water heater was leaking. In shows like Flip or Flop you can watch where whole additions have to be demolished or all the drywall / tile removed to take the construction back to the framing stage / open electrical / plumbing for thorough inspection. Are you ready to do this? This is what you should have done in the first place according to the inspectors for safety and tax assessment purposes. Note: under no circumstances if you're selling should you claim known unpermitted construction as permitted.

Chris T. - Some great advice here. One thing to consider is potentially losing your personal insurance (including umbrella) if there is a black swan claim stemming from business/llc activities. Another thread mentioned a guy who had trouble getting insured on his personal residence after having 5-6 rental property policies (in his name) and 3 claims in a short time (stolen pipes, flood, etc.) . I had business owners insurance ($200/mo) for a store LLC and had two claims within a year related to theft from the business. I don't know if I would have been dropped or my rate would have gone up because I closed that business before the policy renewed. I have 0 claims in 9 years despite experiencing several marginally claimable events (damage greater than deductible) on my homeowners policy because I didn't want to lose my no claims discount.

@Frank Ruopoli - if you're really interested in diving in and learning from experienced property owners who love to share, come to SJREIA's next Princeton or Middlesex (On the Border in New Brunswick) meeting. They're once a month and you can find friendly people to answer many of your questions. 

If you want to invest in real estate, just do it. It'll make everything you hear click much faster and the downside is limited. Some people buy a 2-4 family house, get great 30 year financing, and live in part and rent out the other units. Some people buy a too big house and rent out rooms. Some people buy REO / short sale / sheriff sale / online auction properties and fix up and either flip sell or rent out. NJ was hard hit by foreclosures (underwater mortgages) that are still being sold after first defaulting in 2013-2014. I've seen a lot of homes that have been abandoned for for while, vandalized, etc. PM me for a referral to an investor friendly RE agent in your area. Many Residential RE agents don't get it - because for most people, real estate is a personal consumption purchase.

@Odie Ayaga - Thanks for looping me in.

William S. - when there's NO cash flow, the deal can be pretty tight. Sometimes it's just not worth it. You're paying yourself $x towards your mortgage monthly, so you're getting like $200-400 in principal paydown monthly. You can't spend this created value / money unless you sell or REFI. Whereas cash flow builds up your bank account monthly and gives you a cushion towards lumpy expenses.

Gregory Schwartz - Consider taking it over initially yourself (decide: can you show it? rent it? Repair it? On an ongoing basis. I learned MUCH more by being my own PM). You should also interview more than 1 PM. How long has it been vacant? What is their performance record? What's their markup on repairs? The properties I manage are never vacant for more than 2 weeks because I get a deal done. I'm comfortable with the tenants I choose. I keep that 10% for myself and use it to teach myself how to upgrade the property (painting, tiling, etc.) or pay for more RE education (in my REIA). After I know how to do a particular repair, I feel more comfortable after I hire it out because I understand quality and cost.

Rodney Marcantel - Looks beautiful. Can you post the before pictures too?

Logan Bartlett - several potential options: if you didn't give formal notice you're leaving your NJ apt (for the upstairs one), you should have the right to stay in your current apartment despite her wishes to renovate it. Pay current apt rent on June 1st and don't move. Look up NJ tenant rights. Did you sign a new lease? Tell her she has to change the carpet and fix the door or you won't move. (Hardball - with unknown consequences if you did give notice). Say the property isn't in the condition you initially toured it in and signed the lease for... If the carpet is 15 years old, it's fully depreciated so you shouldn't be liable for any stains, rips etc. to it during YOUR tenancy if you keep it. If you wish to be liable for it, then by all means ask her to replace. If you can, try to take photos of black light or similar showing 'invisible' bodily fluids and ask the landlord to be reasonable. If it really really bothers you, get a quote from Home Depot and ask the landlord to split the cost to replace the carpet. It's about $2 PSF + $0.50-1 if you replace the under padding. So a 1000 sf apt might be $3000. Just replacing the carpet/paint in that room should be much less. (Under $500 perhaps.)

Ellis Moore - sounds like a conundrum. If they need more house (SF) but to pay less $$, they'll probably have to move to a less desirable neighborhood. If they have equity (the house sold today, as-is or with limited repairs, is worth more than what's owed to the bank) then they have the option to list the house and sell it. If they're behind on payments, they probably don't have cash to pay at closing if they have no equity. You can't help everyone. Good luck.

Vincent M. - the owner expects to pay you (PM) or a real estate agent to find a tenant for the property. This amount is whatever you agree - often 1 months rent. If a RE agent lists and rents the house, they will share 1/2 month's rent with the tenant's real estate agent (if there is one). So, $1000/mo rental - owner's RE agent gets paid $500, tenant's RE agent gets paid $500. All this comes from the owner's first month's rent from the tenant. (So the owner gets $0 for month 1). If you as the PM rent the house directly to a tenant, you coordinate screening & leasing and will save the owner some or all of that fee. (Hopefully you've got a written agreement about getting 8-10% of monthly rent or whatever). You can offer 1/2 month's rent to a real estate agent as a referral for bringing a tenant who signs the lease. It sounds like you're being called by agents who want the listing (where they advertise it on MLS and get paid when it rents regardless if they themselves find the tenant.) Either way - the owner pays to get the tenant (at least outside NYC) unless the owner rents the property himself. Good luck.

Rene Alvarez - lesson learned for you here -- make sure to get a signed exclusive buyer agency agreement (at least for the day or that property) with your potential buyers before investing your time. I've met many buyers who will use an agent's time and then write up a BUY offer through a different discount brokerage (or friend) in order to get a commission rebate. This sucks and is unfair but that is how it is. It's a tough road to get paid if you only showed the house. If you didn't submit the offer paperwork and/or get an agency contract signed... I think your broker will say oops and not pursue.