All Forum Posts by: Angelo Mart

Do not get "homeowner insurance" or insurance for a secondary home. You will need Non-Owner Occupied landlord insurance with an Agreed Upon Value. If multiple properties then commercial lines insurance 

There is no Equity Spread observed in this report, Not even 10%. Therefore, this is NOT a Flip or BRRR deal. This would be a typical investment property that needs repairs. As long as it Cash Flows and has a decent ROI then it looks good as a rental but not a BRRR

Separate LLCs for each property

LA like New Jersey is a Tenant friendly state. I would take the advise of your attorney since that lease holds strong weight

You have to play the market at the current time. There are still deals in some areas just not priced as low as before. When the Great Recession hit I was looking into purchasing REO sales every other week but could not get money and sat on the fence. Now I have access to tons of lenders and no deals. This is how the game works. Find a deal now and lenders will be knocking at your door. There are always challenges in the investment business regardless of the time. I purchased my properties with good cash flow assuming that if a major recession hits and my property values drop substantially I will still have long term income while being locked into a solid rate. However, I am seeing major over inflation in markets that were Historically distressed with values exceeding the 2005 bubble. Something is not right and a market correction could happen as the affordability is no longer available in lower income areas with more people opting to rent vs own.Long terms historically low interest rates have pumped too much air into a bubble that has the potential to burst

Invest for cash flow first, tax advantages are second, pay down of loan is third (increase equity = over time) and appreciation is just icing on the cake. As an appraiser and investor I currently do not see much room for appreciation here in my New Jersey. Sorry, but I have a strange feeling that this over inflated bubble will come crashing down since the government is pumping too much hot air into the bubble. With that being said I currently do not anticipate any of my properties increasing anymore in value and if they do it will be a home run. Fortunately I purchased below value a recession prices and values in my area are HIGHER than the 2006 market. However, At the present time the last thing you want to do Is overpay. As long as you are not overpaying and all the numbers make sense in regards to sufficient Cash Flow and management of said property then don't even think about appreciation. If you hold for a long period of time like I plan on doing its completely irrelevant. Appreciation at times is subjective and shaky. Even If all my properties were too drop substantially in value due to market crash. I still have all of the aforementioned benefits because historically rent prices will not decrease AND I am still locked into the loan based upon the current market value which made sense in regards to cash flow. If all people do I bank on appreciation to rip money out of a rental then they put themselves at high risk

Have that lawyer that understands the laws on speed dial 

Purchase books from BIGGER POCKETS. Learn the crap out of the market you want to invest (which should be free) Use remainder advertising of place in bank to start saving for down payements

Great question. Is this lot on the same Block / Lot as the subject property or it a separate lot that is deeded and taxed separately. If it is in fact a part of your lot just be sure that it meets the 4 Principles of Highest & Best Use:

1) Is it legally permissible 

2) Physically possible

3) Financially feasible 

4) Most profitable

Cash flow is King but keep in mind that the appraisal will be based on sold comparable sales in your market and written on the FNMA 1025 Form. This means that the actual Cash Flow will mean nothing to the appraiser as the value is structured solely on sales. Cash Flow is your benefit all in all but not to be relied upon for a higher value necessarily. This is only the case in commercial properties which are 5+ more units or mixed use. When rent increases, thus, value increases in apartment buildings. Now back to the 3-Family, if it was me in my market I would definitely do it. However, if you are taking out any money loans etc, please make sure you have valid SOLD 3-Family homes in your market to support whichever value you think or need. Believe it or not 3-Families in my city at one time were selling less than 2 families. This is due to the fact that in the state of NJ has a law which states that any property with 3 or more units is subject to NJ GREEN CARD INSPECTIONS. 3-FAMILY homes being sold without the Green Card or failed inspections could result in lower sales price. My point being just pull every 3-Family comparable in the town and examine them thoroughly 

Being I am a state certified appraiser and investor i can tell you that:

1. Appraisals are an estimated opinion of market value as per USPAP

2. The banks have STRICT BRACKETING guidelines which could skew values

3. How did you know what the ARV actually was before hand?

4. "When reading the comps the houses it’s being comped to are 99,119 and 97 years old. They list the age of my house as 129 but it’s 62 years old with an effective age of 15" I have no idea where you are located but here in my market in NJ when I appraise a home of that age, the bank is very strict on bracketing. The majority of homes in my home town were developed during the 1950's and 60's. I was once hired to do an appraisal on a home built in 1850 which is RARE in this town. The house also had an effective age of 15 Years (this is typical effective age if the home was renovated like your home). The bank had strict directive to BRACKET the age with comparable sales. They did not car that I had homes even on that street that sold. It seems that your appraiser has selected homes which were close in age which he or she was probably directed by the bank. The lender can still argue the appraisal with the appraiser that he has not provided a sale which BRACKETS the age "older than" the subject. Strict lender guidelines are a nightmare for appraisers. Some banks ask us to go into different neighborhoods and even back more than 12 months and then apply an adjustment to that comparable. The problem is the adjustments applied to such a comparable still does not support the value. 

5. Due to the lack of comparable sales within your immediate area the appraiser had no other option but to extend the guidelines into other neighborhoods for comparable sales. Just hope that he applies a market adjustment. In addition, a market location adjustment has to be supported by data analysis. You can ask to see if they have applied adjustment for difference in market area.

6. Before I purchase a rehab property i pull EVERY sale in the area. That way i have proof without any doubt what the ARV will be. Investors have to be very careful with the AS IS value to buy in at / Cost to Cure / True ARV

7. Send some comparable sales to the lender to dispute the value

HOPE THIS HELPS