All Forum Posts by: Anthony Marin

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Newark.

Purchase price: $340,000
Cash invested: $60,000

This was a turn key 3 family property to get my investing career started. I wanted something that would be cash flowing immediately.

@Theresa Harris I agree, if they refuse to communicate then you should evict immediately.  The issue is in my market (New Jersey) the landlord tenant courts are still closed with no opening date in sight.  If you file for eviction now then offering cash for keys is off the table because they won't be able to get another apartment with the recent eviction on their record.  

Being a rental property owner comes with its challenges. Filing an eviction on a tenant that is behind on their rent is the only way to be successful as a landlord/manager, BUT....this time it’s different. This is a once in a lifetime occurrence that will make or break landlords, managers and companies.

Attorneys advise that you have to treat every tenant the same. You must have policies and procedures and stick to them no matter what. I agree with that most of the time. Still, if you expect me to treat a tenant that has paid rent on time and taken care of our property for 5 years the same way as a tenant that is habitually late and not communicating with us, I will tell you that is a bad long-term business strategy. More importantly, it’s not how you build lasting relationships with good tenants. Prior to this pandemic we have always worked with our good tenants during tough times and this extreme situation is no different.

My conversations with our property management clients have been consistent during this tough time and it comes down to a few basic questions. Were they a great tenant before this happened? Are they communicating with us? Are they trying to get on a payment plan? Are they maintaining the property? If the answer is yes to all these questions, then I firmly believe we as landlords and managers have an OBLIGATION to ride this out with them. If the answer is no to all these questions, then you file for eviction immediately. If the answers are mixed, then we have to use empathy and do our best to work with them. Especially if questions 1 and 3 are yes and the reason they are not communicating is because they are embarrassed.

As I’m writing this, I can hear some of my fellow landlords saying, “If they are living in my property they should have money saved for a rainy day.” My response to them is, we as landlords should have capital saved for a rainy day as well. But this isn’t a rainy day, this is a Hurricane and if we stop pointing fingers and work together then we will all get to see the sunshine after the storm.

Do you all agree or am I being too nice?

@David To

It sucks that you're going through this but right now there are a lot of owners in this exact situation.  This really comes down to what it says in your property management agreement.  Owners should NEVER sign a PMA with flat fees.  It should always be a percentage of the rent collected.  The property managers most important job is to collect rent and keep the apartment occupied.  Collecting a flat fee every month doesn't align the interests of the property manager and owner.  

We are in this together with our clients and wouldn't feel right collecting full payments while our clients are really struggling.

@Travis Oakes Congrats on getting your first one!!!  We'll take these one at a time.

How should I introduce myself to the tenants?  I am a big fan of in person introductions, with covid ifs difficult but under normal circumstances I like in person.  I like to see how they react when we discuss the new management guidelines.

Should I send a letter, phone call, in person or all? What should I say?  Go over the basics initially, you don't want to overwhelm them too soon.  How to pay rent, dates to pay, late fees and how to put in maintenance requests.

If they have any problems/need repairs in unit, how should I have them report issues?  Give them your contact info or the contact info of who will be taking care of the issue.  Let them know they will be taken care of in order from highest priorities to lowest.  Also let them know you may not be able to afford everything now but you will do your best to take care of everything.  This let's them know you're not rich.  Tenants always think the owner is loaded.

What if there’s a possibility that tenants are not tech savvy, how to take rent?  In my opinion you have to work with them at their level with this.  The most important thing is to collect, be flexible initially then work to show them a more efficient way that works for you.

Good Luck!!

@Henry Lazerow

You are already a proven commodity in your market.  if someone doesn't want to work with you because you have a full sleeve then you don't want to work with them anyway.  Do whatever makes you happy.  I deal with a lot of agents and professionals in general and I don't care about anything except if they can do the job we need them to do.

@Kristen Williams

All of us in the property management business know where you're coming from because we are all trying to build.  After a while, we realize the value we bring and we can pick and choose who we want to work with.  If this owner doesn't appreciate the value you and your team bring to the table then you should fire them.  Let them take care of it, I'm confident they will be calling you back and thats the best feeling when an owner calls you back after telling you they can handle it themselves.  Good luck and keep us posted.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Newark.

Purchase price: $70,000
Cash invested: $60,000
Sale price: $237,000

This was my first deal with a significant renovation. It was a duplex that was vacant for over 2 years but in pretty good shape under those circumstances. I cash flowed it for almost 4 years making over $1000/Mo. Sold it because it was in a tougher part of town and I used the proceeds to buy properties in better areas.

What made you interested in investing in this type of deal?

The numbers were great!! In 2014 hard money was super expensive as we paid 14%, 4 points and we had to put 20% down of the purchase price, we got 100% of the renovation funds. We put about $20k down after everything was settled. Cash on Cash return was 60%.

How did you find this deal and how did you negotiate it?

I got this deal through a wholesaler and negotiated directly with them.

How did you finance this deal?

I used hard money to acquire the property and get renovation funds. We finished the renovation and refinanced the property about 7 months later. We purchased the property and refinanced it in an LLC.

How did you add value to the deal?

We added a bedroom to the 2nd floor apartment and renovated using nicer finishes usually used in that area.

What was the outcome?

Over $12K a year in cash flow and when it was sold I realized an almost 6 figure profit.

Lessons learned? Challenges?

Always use a good contractor. We did have a good contractor on this renovation and it made all the difference while we owned the property. I also learned to do background checks on Sec 8 tenants while owning this property.

@Leonel Vanegas @Joseph Gordon

I've been investing in Newark, NJ for the past 7 years.  The market has increased a lot since then but I think it still has a long way to go.  Newark is receiving a tail wind right now due to investors leaving NY.  Depending on what type on investing you plan on doing you should really do your homework on the different areas.  We focus our investments in the East (Ironbound section), North and Central parts of the city.  Prices are higher but the tenant profiles and access to major transit hubs are in those areas.  Hope that helps

@Jamie K.

The fact that your putting in offers and got one accepted shows that your ready.  My advice would be to look at cash on cash return instead of specific cash flow returns such as $200-$300 a month.  If you put $10K down and your getting $300/month in cashflow, that's great at a 36% cash on cash return.  If you put down $35K and getting $300/mo in cashflow, I wouldn't do that deal at about a 10% cash on cash return.  Good luck with your accepted offer!!