All Forum Posts by: Bin Chen

I am looking into purchasing a short term rental but I am a bit stuck on which market I want to get into. I've done research on some possible locations and just wanted to see if I can get some input.

When I say booming markets I mean: Joshua tree, Poconos, smoky mountains. These are the locations that everyone thinks about when they are looking to invest into strs.

Pros:

Established rules and regulations 

Tourism Driven markets so they won't ban Airbnbs

easy to find cleaners, handymen, managers,etc

Cons:

Highly competitive. hundred of listing to choose from and more are coming

Everyone wants to look there for STRs so the price is skyrocketing lowering returns

New money means new renovations, will this mean 5 yrs down the line you will have to do a lot of work to update?

If the market crashes wouldn't these be the areas hit the hardest? 

Lesser known areas locations by universities and small getaway towns.

Pros:

Maybe just 30-40 active listings so low competition. People aren't optimized so you can go in there and become top tier relatively easy

According to airdna the returns are better.

Cons:

No regulations or regulations that are subject to change so str might be banned.

Am I missing anything? What would be a better choice in todays market?

Thanks

I think it depends on the tax class. I don't have experience with condos but I've done it for a house. 

There are instructions on how to appeal on the notice. There should be a market value and an assessed value on the notice of property value. They will only lower your taxes if the actual value is under the assessed value.

not sure if this is the same for condo's but for houses they can only increase the taxes 6% a yr with a cap of 20% in 5 yrs unless an improvement was made on the property. If it's a new construction maybe last yrs tax was still based off the pre improved market value. It should say what value the taxes were based off of last yr on the 2nd page

In terms of cap rates The Bronx is still higher than the other boroughs and there is still a lot of room to grow. Ive been playing it safe and investing in riverdale but its really slim pickings up here. 

If more than half of the basement/cellar is above ground its classified as a basement which has a possibility of being used as livable space. if more than half is under ground then its a cellar.

It also gets a bit more complicated when it gets close because technically when they say above ground they mean 50% above the base plane. So you would also need to look into where the base plane is. Generally it is the sidewalk level but it may not always be.

Basically you will have to go by what dhcr's records are if they have any. You can also check with DOB to see if they have any blueprints in the archive. Maybe you can get lucky and they have the original prints. That way you can see how it was originally set up.

If you're not getting this at a significant discount I wouldn't bother since if there are problems you'll be the one on the hook for them.

You are buying all the issues. If you close today and get sued tomorrow for overcharge, you're responsible for up to 6 years of overcharge (need to double check this number).

You will be responsible for all work done before you since violations and debts are linked to the property.

Basements can have kitchenettes and bathrooms but make sure its a basement and not a cellar.

You can sub meter which is just installing meters after the main DEP meter. You would still have to pay the bill but then you can charge the tenants using the sub meter reading. I just don't even bother doing it unless its a huge issue because if you tell the tenants they have to pay for water they will factor that into the price. Lets say there's a similar unit that rents for 2500 near you and they include water in the rent, you would have to charge less than that so what's the point? Its not like youll be making more money by sub metering. 

The only scenario I would see sub metering as something that you would want to do is if the tenants have running up the bill like crazy. Filling up pools in the backyard or having more people live there than they told you etc but then again in most cases you can just resolve that between you and the tenant.

So the question is what are you trying to do? If you're just remodeling and not changing the structure of the house you don't need an architect. You usually would only hire an architect if you're planning to file some changes with the DOB. What is "some potential areas of the home that may need more substantial work" are you talking about foundation work, lead paint or asbestos remediation, water service issue? Your approach will be very different depending on what you actually need done.

As for the contractors, you can just let them know you're planning to rent the apartments out so you're looking for rental grade work. Also if you have the time, its better for you to just ask for a quote for labor and you handle the materials. The price range is huge because the contractors might not be clear on the level of finish as well as materials. You can be looking at 2$ porcelain tiles or 10$ Spanish tiles. If you want high end finishes vs decent finish the contractor will have to take more time to complete the job which adds to the price. Its important for you or whoever you're working with to walk the job with the contractors and tell them exactly what you want and what you're expecting.

211k does not sound like minor cosmetic repair 500k sounds more like you're trying to rebuild the place lol

If it was built before 1938 then the house does not require a c.o but then you need to be careful with what is the legal use. Check the department of finance's site to see what the owner has been paying their property taxes based on. Check with the department of buildings to see if they have the blueprints in their archive. If they have any records then that is what the legal use has to follow. If theres no records and the property tax is based off a 2 family house then you can use the house as a 2 family house and as long as the rooms in the attic follow the specifications of a bedroom you can use them as bedrooms

You should be able to see in the certificate of occupancy. It would also have to follow the rules for what is considered a bedroom. I believe its 80 sf minimum where the shortest wall needs to be 8 ft or longer and the average ceiling height is 8 ft. Also everyroom needs to have a window that is 12sq ft or10% of the square footage of the room which ever is larger. so for instance if its an 8x10 room the window needs to be 12sq ft. 200sq ft room requires a 20 sq ft window

You can definitely get them out 100% its all about how long it will take. I had a tenant bring in a roommate, then moved out after their lease ended. The roommate refused to leave and refused to pay rent. Its a very similar situation to you. Person I don't know living in my house without a lease. The lawyers said yeah we can get them out np but were 11 months in and still not court date. She will get evicted for sure once we have the court hearing but the question is when. 

If you do end up being able to work something out make sure you don't give them anything until they're out then change the locks and set up security cameras. If they break back in you can call the cops and have footage