All Forum Posts by: Timothy Smith

You just did. 

@Nicholas Bossert congrats on your discipline and jumping into this with your eyes wide open. You have some great questions here, and hopefully we can meet at one of the upcoming BP events here in town. Some quick thoughts for you:

I'm not crazy about the "per person" rental idea. It's a lot of turnover, and then you get to deal with the issues of tenants not getting along. For some LL's, this works out really well, but I just don't want to be bothered with it. If you want to be more hands-on and manage the turnover on a yearly or more basis, go for it. 

You won't be able to get an FHA loan with an LLC. Once you use an LLC you are into commercial loan territory, with higher interest rates, usually 20-25% downpayment (or more if you are getting into 5+ unit buildings, depending on the lender), and the loan will be approved moreso on the income approach of the building than on your personal financials. Granted, each lender is a bit different. If you use the FHA, I believe you need to live in the property for 1 or 2 years before moving out and turning it into a total rental property. Plenty of info out there about this.

Regarding the house-hack, I think your numbers look pretty good. Remember, house-hacking isn't necessarily meant to turn a profit, but cut your expenses considerably. I have a significant mortgage payment on our SFH, but we also have a garage apartment that cuts that in half. I'd call that a successful house-hack. 

My advice on what you should do? Explore residential construction loans and buy yourself a "fixer upper". You get a taste of the renovation process, and the bank will evaluate your ARV based on your scope of work. If you're in over your head, they will let you know. A few banks around here offer this product, including Alden State, Lakeshore, and I think Bank on Buffalo. You will typically need 20% down on the purchase price and 20% of the construction/rehab costs. For example, you find a $100K property that needs $50K in rehab. You bring $20K to closing (plus closing costs if the bank doesn't wrap them in) then put $10K of your own cash towards the rehab. If you do it right, you will have equity left in the property when you are done. So using the same example, let's say that property is now worth $180K after you rehab it. You are into it for $30K of your own cash, and you have a $120K mortgage. AND you have $60K in equity. Plus (what I think is especially important in the current climate) you are only leveraged at 66% which is not overexposed at all. 

Just my $.02

Same here. Just refi'd our primary with 1st Priority Mortgage and it was a disastrous process. We did our first investment property with them and it was rough, but for some reason I went back to them! The rate was great, but almost not worth the headache and 1,000,001 verifications they needed from my employer. 

Look into Lakeshore, Alden State, and Upstate Bank, for starters. The bigger banks are not as flexible (I'm looking at you, M&T) and don't seem to care as much about building a long term relationship.

I’m living and investing in Buffalo. Total sellers market right now, so be prepared for bidding wars and lower returns unless you’re willing to rehab — and even then you’ll be in multiple offer situations. 

Best recommendation is find an agent who has access to off-market deals, like @Matthew Irish-Jones and @Khaled Morad

@Matthew Irish-Jones I'm going to start looking into this for two of our  properties that used to have rear houses -- one we just demolished in March. Do you have any contacts that would be good to discuss with? I was thinking Bernice as she knows the zoning laws quite well.

@Shawn Michalski there is actually a monthly meetup already. Traditionally, it’s been the second Wednesday of the month, at Thin Man/Tappo on Chandler St. However, we’ve been doing Zoom sessions since March. I missed this last weeks meeting, but the group size was starting to dwindle on the Zoom sessions. Live meetings were getting up to 50 people. They are posted under the “Events” tab when scheduled, and if you set a Keyword alert for “Buffalo”, that will also trigger a notification for you.

Anyway, I’d be interested in further networking. Personally, I’m not really into an in-person gathering at the moment unless it’s few people and we have space.

There is also a BP Buffalo Facebook group for chatting, and can also have breakout sessions if you want to start your own meeting.

Hope this helps.

@Wesley W. I just did some digging and quickly found this link, which I've copied the pertinent text below. https://www.dos.ny.gov/licensi...

2. CAN A LANDLORD’S AGENT COLLECT AN ADDITIONAL SECURITY DEPOSIT FOR PETS OR MOVE IN EXPENSES?
No, Section 7-108(1-a)(a) of the New York General Obligations Law (NY GOL) states, in part, “No deposit or advance shall exceed the amount of one month’s rent under such contract.” A deposit is intended, in part, to reimburse a landlord’s costs “beyond normal wear and tear, non-payment of utility charges payable directly to the landlord under the terms of the lease or tenancy, and moving and storage of the tenant’s belongings. The landlord may not retain any amount of the deposit for costs relating to ordinary wear and tear of occupancy or damage caused by a prior tenant.” NY GOL § 7-108(1-a)(b). A broker acting on behalf of a landlord and who collects an additional pet deposit or move in fee can be subject to discipline pursuant to Section 441-c of the New York Real Property Law (NY RPL)

OK then, can't collect any pet fees/deposits! I see they are just lumping it in with the "security deposit no greater than 1 month rent" rule, but anyone I've consulted with does not consider the pet deposit associated with the security deposit -- a slippery attempt to disassociate the two deposits. 

What about increasing rent for allowing pets? How do you word that in your ads and pet policy?

Did anyone else catch that the referenced article is from 2004? I wonder if those numbers have shifted at all. I don't expect the outcomes would be that much different, but it would be informative to see an updated study. There is good money being left on the table by not accepting pets, and many responsible, caring people have them. Ideal tenants, in many cases.

I've been leaning towards this approach for some time now -- my last round of vacancies were open to dogs but it just so happened that no dog-owners applied. Damage to flooring and nuisance to others are my two main concerns. Most of our units have tile or new LVP, with only a few having original hardwood floors, so I think most of the floor concern can be mitigated.  

It still comes down to tenant screening. You can't blame a dog for poor behavior if the owner shuts it in a room all day. My old landlord allowed me to adopt a dog, primarily because I had already proven myself as a good tenant, and I do not work traditional hours so I was away from home for no more than 3 hours at a time. 

@Wesley W. I am also in NYS and consider myself well-read on the updated LL/Tenant law from last summer. However, not being able to charge pet fee or pet rent is news to me. Where in the legislation (all 55 pages of it) can one find this?

Hi Mike, hope to meet up someday when that sort of thing is possible again! Are you strictly bidding on MLS, turnkey properties? That's what my first impression was after reading your post, as after taking with several of my agent contacts, that is a similar story with what I've been told is happening in the local market right now. Selfishly, I like hearing this as my flip gets closer to market!

Without knowing more of your search criteria, I’d propose a few things:

1) Search for properties that need considerable work. If you don't have a reliable contractor in place now, spend your time/energy finding one. The distressed properties on the MLS are still going high, but this will eliminate some of the competition.
2) Network for more off-market deal leads. Call more agents whose signs you see in your desired area and tell them what you are searching for. Often times the best leads never make it out of their office. Most of my properties were found this way, and I have secured contracts more times than lost bidding wars. 
3) You can’t win a bidding war against someone bidding with their heart, not their brain. If the house is going to be someone’s HOME, emotions run high. Let them do their thing and find better leads. 
4) Direct mail/cold calls: I bet you’ve seen a few properties that you’ve though, “Huh, I would like that house and I could clean it up nicely.”  Well, send a letter or knock on the door. You may just find someone who’s been considering selling but hasn’t reached out to an agent yet. 
5) Wait for the foreclosures to start. No one knows for sure if this will happen, but there has been plenty of speculation on these forums and others. I don’t think the situation in Buffalo has become dire due to COVID (yet), but those tax assessments last year were murder for many owners. Research the neighborhoods hit hardest with increases and target those.

6) Search for apartments for rent that don’t look great. Reach out and see if owner would be interested in selling. 

Just some random thoughts that came to mind. Good luck!

Tim

@Mark Navarrete absolutely. Send me a message and hopefully the app alerts me!