All Forum Posts by: Steve B.

Just to update I've decided to sell and it will be on the market after next weekend. Good news is all the agents I interviewed said activity has been better this January than years past, almost exclusively from military buyers new to the area.

The consensus seems to be to sell, and I am starting to agree as well. @Joe G. definitely made some good points, I can take the profit from the sale and buy another property in my area, which is a much tighter rental market. One thing is I've been claiming depreciation since 2008, is it worth it to try to do a 1031 when selling? Has anybody been successful in doing so? From what I understand this all has to be facilitated by a 3rd party, which comes with a cost as well.

Also do I wait to sell until the spring or list it now? Any ideas on how to find the best agent to work with?

@Elizabeth Colegrove going to Commanders for military tenants that don't pay rent doesn't work like it used to, they think its a civil matter, and I know others in the area have expressed the same opinion. In this particular case the tenant taking over the lease that ended up disappearing was a Captain, go figure...Deadbeats come in all different ages and income brackets, and if they are military just because they are high ranking doesn't mean they pay their bills and fulfill their contracts.

I need some help in figuring out whether to keep renting this house out or sell. Here are the numbers, if I left anything out or you want more information let me know:

Single-family home

Original Mortgage = $114,500 VA Loan @ 4.00% (no PMI)

Mortgage Balance: $104,000

Conservative Market Value = $130,000

Mortgage payment+Insurance+Taxes $756/month

Rent: $1300/month

Property Mgmt = 10%

Vacancy: 15% (military area)

Maintenance: 5% (everything is brand new inside)

Yearly NOI = $3400

A little about this house. I purchased it in 2007 in Watertown, NY as an owner-occupied. I moved away to the Albany area a year later and decided to keep the house as a rental. It is worth mentioning that the Watertown market is heavily dependent on what is happening with the Army at nearby Fort Drum.

At the time of purchase, Fort Drum was rapidly expanding and the entire area had a severe housing shortage. It was so bad that people were living in Syracuse over an hour away because they couldn’t find a place to live nearby. The market has since corrected itself, with the base building thousands of new homes on base and numerous apartments being built off base. Fort Drum has also experienced a reduction in personnel, resulting in less need for housing. Further cuts could happen depending on what Congress decides on, but nothing is official yet.

People rarely stayed for the full lease term because they would get military orders to somewhere else or deploy. Fort Drum was the most deployed division in the Army, so what would happen is most new Soldiers would cycle in to a brigade as they were gearing up for their next deployment to the desert. Soldier deploys, wife/family wouldn’t want to stay in Watertown for a year, so they would go back home. Until last year this wasn’t really a problem, as I would always find a new tenant right away. Then in January of 2014 my tenant moved out. Watertown received over 200 inches of snow last winter and is usually frigid cold, so absolutely nobody moves in that area unless they just got orders to Fort Drum. Even then, most military members move in the summer as well. This tenant was renting the house for $1450.

Then in April 2014, (still vacant) my property manager was showing the home and walked into a waterfall. Apparently a pipe burst in the upstairs bathroom and inside the basement. Still unsure how as the heat was on. Water literally got everywhere; there was over 2 feet of water in the basement as the sump pump went out too. Long story short, insurance paid out and I completely gutted and remodeled the entire house. New kitchen, new bathrooms, new flooring, the works. I also paid almost $5,000 out of pocket for a few other things to be done. The house is almost 100 years old so it made a significant improvement to the home as I opened everything up and made it look more modern.

Now the real fun started. Lease signed on September 2014 for $1350. Yes rent declined $100 after a complete reno. Tenants wife decided the place was too small so they wanted to break the lease. Property manager said no way but you can find a suitable replacement. They did, didn’t pay October rent, so kept security deposit instead. Replacement tenant signed lease for November, pays rent, and never moves in. Literally disappeared off the face of the earth. Did not realize this until I never got paid for December and talked with the neighbor.

As such house is STILL vacant, asking $1300. I would say a bit below market rate but there is a TON of homes and apartments on the rental market. Plus its winter. House is getting showings but everyone complains that its too small, its 1200 sq feet for a 3 bedroom. Complete opposite of just 2 years ago. This is why I am considering selling and getting out of this market all together. Also because I had a significant loss of income last year. However with the market primarily tied to Fort Drum, I don’t think too many people in the military are buying homes since they move frequently. This is really a hard decision to make, so any advice is appreciated.

Thanks

@Alicia Maloney 

Welcome to the site! I'm just east of you in the Albany area and its nice to see fellow Upstaters joining up. I own a rental up in Watertown and am pretty familiar with the Syracuse area as well. Property taxes are killer everywhere in NY and can really vary from town to town and even within the same town with different school districts. If Syracuse college rentals are getting expensive, perhaps Oswego or even around OCC might work better.

Thanks for the welcome everyone!

@Linda Crandell @Vince Futia 

Glad to see that there are other local investors with the same goals. 

@Kyle M. @Stephen E. @Nancy L. Some very good points on the downfalls of offering a free months of rent that I never thought of. I have a single-family up in Northern New York state has been vacant since beginning of December. That is pretty much a death sentence for a landlord because frigid temperatures combined with FEET of lake effect snow all the time does't motivate anyone to move. My only hope is someone who is being transferred to nearby Fort Drum, but usually the military moves people in the summer months. 

I started to advertise the property in mid-December with the first month of rent free, thinking that people only have to come up with the security deposit in order to move in. I raised the rent $100 to cover that, has been lots of interest, but no takers so far. After reading this stuff I think I will not offer the free months rent anymore and charge market rate, in a soft rental market I don't think the free month works, and will just attract deadbeats that will cost you more anyway.

Welcome to the site Dave! I am in a similar position as yourself, as I rent out a former primary residence and thats my only rental at the moment. I've never purchased a home for the sole purpose of renting it out either, so hopefully we can learn from each other as we get closer to that real first deal. 

Welcome to BP @Paul Burbank I'm just down the road from you in Nisky, and is nice to meet someone else from the area with similar goals. A lot of great things in favor for the Saratoga market, with the track, Global Foundries, Skidmore College, and the Navy. Best of luck to you, I'm sure our paths will cross some day!

Hello biggerpockets community! My name is Steve and I live in the Albany, NY area. I work full time as a machinist, and although it provides me with a very good income, its still a job that requires my time in order to make money. Long hours with an abundance of overtime are great until you barely see your family anymore. I have always had a passion for real estate and would like to turn that passion into income. My long-term goal is to purchase enough rental properties in the greater Capital Region of NY that provide enough passive income to replicate what I make now. I am also intrigued by flipping just because of the short-term cash that can be used to acquire more rentals.

My real estate experience is purchasing and refinancing the current home I live in and one single-family rental in Watertown, NY that I purchased in 2007 as an owner-occupied house. It became a rental when I relocated out of the area a year later. I will make a detailed post on this particular house later on as it has been quite the learning experience!

What I hope to gain from biggerpockets is to learn from other investors and apply their strategies to make me successful. I have read a lot of posts and blogs over the past few months and this site is a wealth of information, much better than some hyped guru. I also have listened to some of the podcasts and find those to be very educational. My favorite books are probably Rich Dad Poor Dad and The Millionaire Fastlane. My Amazon wishlist is pretty long, but I am always open to suggestions on reading that helped you. My short term goal is to spend the first half of 2015 learning as much as I can, and by summer I should have enough capital to go ahead and purchase a rental.

Best of luck to everyone else out there!