All Forum Posts by: Brian G.

@Sherry G., what @Hanna Edwards said is pretty spot on. I am no expert and don't work in the RE industry in any capacity, but it is an interest and I have a few close friends in the fold that do it for a living and, from talking with them, I'm agreeing with Hanna about how we might be topping out and the market doesn't likely have much more appreciation in store. Tacking on that, if you are hoping for further appreciation here in NYC, you're also going to get it for the property you're looking for in SF, so it might be a wash with both cities being the highest markets in the US.

Rents are also flattening or actually dropping from what they were last year. My wife works in a luxury rental building on the UWS and they've been lowering rents like crazy to attract tenants. As those lower, the rents in other buildings will begin to drop. Since you said that you are even (or negative with the assessments), you might be in a bit of trouble if your tenant moves out and you can't find anyone at the current rate. 

I would probably look at selling options if I were in your shoes. Again, I'm not you, so my advice affects me zero, and I'm in no expert. But, that's my .02.

Good luck either way!

You're welcome, @Genesis Pacheco! Feel free to reach out if you run into any issues and I'll help how I can.

@Moshe H., thank you for the insight on the area! I meant no insult by my post and my apologies for any offense from incorrect terminology. As I said, most of it comes from articles I've read and anecdotes I've heard from friends that live up in different areas of Rockland. It's a bit of telephone game, of course, but the stories passed along from them about their neighbors' interactions did seem to contain some pressure to sell properties or face consequences, or stories about issues with school districts. Now, I'm sure a lot of it is perspective, miscommunication, misunderstanding, and differing goals and expectations for the area on all sides. And I'm also sure there are positive and negative actors on all sides. Everyone is human and we all come with our imperfections.

My words of caution were only to alert an out of area investor to what I've heard of the potential underlying neighborhood dynamics. It's my just my anecdote and not meant to denigrate the area or its inhabitants. Their due diligence should be the deciding factor; not what any one of us say on the internet. Haha.

@Steve Kontos, thanks for the wishes of luck! I have already invested out of state for the last 4 years in an area I know and have connections, so I definitely agree with what you've said. We've currently got 6 doors that we BRRRR'd and are very happy with. We're just at a crossroads of whether to continue that path, step up into something/somewhere different, or hold our chips and see what pans out.

@Genesis Pacheco, LLC filings are drastically different between states and, whelp, the publishers lobbied for the LLC publication requirement and ensured a much higher cost here/more income for them because you HAVE to publish to finish your filing. I mean, you could skip that step, technically, and it wouldn't catch up to you until someone takes your LLC to court, but that's not really a risk you want to take with hundreds of thousands of assets at stake. At least I wouldn't take that risk.

Anyway, what @Thomas Franklin said is pretty good info. HOWEVER, if you're operating in NYC, talk to a CPA versed in real estate before you pick your type. Mine advised to stick with an LLC if it's single member, as the S Corp would have a higher tax rate due to city taxes. I'm no tax expert, so make sure you talk to your guy or gal first. I've actually caught mine in a slip or two, so he might not be as sharp as I'd hoped and could be missing the bigger picture. They are a lot cheaper to file for, though.

@James Taylor just be careful up there in New City/Nanuet. This is just my input and may not apply to where you're looking. But, there's a bit of a battle going on up there between long standing residents and the Hasidic population that's moving in heavily. Here's one article or you can google and find some other articles about it too, if you'd like, but it seems that the Hasidics are taking over the school district boards and diverting a lot of the funding for religious schools, which is hurting the regular public schools' funding. It is driving a lot of people out of the area as the Ramapo schools continue to decline.

I've heard stories of strongarm tactics to acquire new homes, too but they are more anecdotal and I haven't seen articles about it. And I say all of that with no personal issues with the Hasids but, as it applies to trying to be in the housing game there, you might have some deep-seeded community issues that could derail you, on top of our normal expensive repair obstacles, or deter renters/buyers.

Also, lemme know if you have any other questions or are looking for any freelance help. I've got a Master's in Real Estate (investment/analysis/development/construction) from Baruch College here in Manhattan and I interned putting together request for financing proposals for a pretty large investment firm (a few billion in assets) here in the city in the past. I have a full time gig I love already and have no plans on quitting, but it gives me free time to have some side-hustles in there.

@Charlie Miller Sounds great, Charlie! I'm always interested in talking about real estate. I actually lived in Florida for awhile (got my undergrad at Florida State) and just got back from a trip down there last week. Where do you invest at? 

I have set up a couple LLCs in NYC (not for property, but it shouldn't be any different). First question is how many members will you have in the LLC? If it's just you, as @Steven Stokes said, an umbrella policy might be fine if it's just you. But, if you have multiple people, it's potentially better to go the LLC route and have a solid operating agreement set up between you and the partners.

To file, you can just go to the Dept of State Website and file online. The link to file online is in the righthand column (LLC Formation). It'll cost you $200 to file online and it's really a pretty simple process. Second step is a (very costly) pain: publication requirement, which is north of $1000 to have done in New York County/Manhattan. Honestly, it's worth going to a company to just have them do it, as they're only $50-100 more than you'll have to shell out to the papers, anyway. I used USA Corp and it ran me about $1150, but you can use most that come up with a google search. There are a few that will mess around a bit and get you published in another county and change your address around for a lot less, but I didn't want cut that corner. If you do, it'll save you a lot, but that's your road to walk down.

Another positive of opening an LLC is that you have the ability to get credit in the LLC's name that won't usually show up on your personal credit report/DTI ratios (unless you default). You'll have to back it by your own SSN (so you might get declined with bad credit), but I've got tens of thousands of dollars in credit line on credit cards in my LLCs names and that debt doesn't show up as open accounts on my credit reports or affect my FICO score.

Good luck! Feel free to ask any other questions you may have!

This is all personal opinion, but I would not go this route. While the luxury market is, usually, a little more adept at weathering potential storms, I think there has, and will continue to be, a glut of luxury residential development out there. More and more comes online each day and there is plenty still due to come online over the next year or so and, from what I can tell, the market is starting to soften noticeably. 

I have friends and family in the industry that I like to talk to about the business, just to pick their brains. I'm nowhere near capable or comfortable messing with the current NYC market personally, but I'm intrigued by it. The one marketing luxury condos has noticed a softening in the market. A stronger American dollar has hurt foreign investment (says most new luxury buyers are Americans, over the Chinese/Russian/Brazilian majority from a couple years ago), developments that used to pre-sell are not doing so as rapidly, and you have a lot coming on line Downtown, LIC, Downtown BK, and in Midtown. New product will make your slightly-less-new product look a little less desirable. You might be able to swing these in cash, and so could many other luxury buyers, but there's a chance rising interest rates put a dent in things. 

And same goes for rentals. Friends in that industry have noticed a softening in luxury rentals due to saturation and concessions are being given. You have a lot of new product coming on line in this market, as well. Couple that with a saturation of and cracking down on AirBnB, which has dominated a lot of the rental market by driving vacancy down, and the ability to rent your condos might be tough, too.

Your big caveat is no financing required, which will obviously keep your monthly expenses for the units down to common charges, taxes, utilities, and minor repairs. But, in the end, you're hoping for price appreciation, which, in my personal opinion worth exactly what you paid for it (nothing), is a long shot with the storm clouds I see brewing.

Then again, I know little about the rarified air in 2 bedroom condo market, so I could be totally wrong. Either way, best of luck! Having that much capital to deploy is never a bad thing. Haha.

Thanks for the warm welcome and replies, guys! @Shawn Ackerman It definitely is much easier to put NYC higher income to work in Midwestern properties with a lower point of entry; especially when you can't find much that makes sense or doesn't have a ridiculous cap rate.

@James Taylor Glad to meet another city-bound investor! I'm down in Financial, but I spent quite a bit of time bouncing around the UES bars when I was younger. Haha. It's definitely nearly impossible to find anything reasonable within the 5 boros anymore. I keep an eye from time to time on what's for sale around town and am always amazed to just see prices skyrocketing. I've been here in the city for over a decade and realizing how far it's come in that time is astounding. $500k brownstones in Bushwick/Bed-Stuy were still seen as too high for the crime rate; now you can't find $500k homes in East New York. Honestly, I think something is screwy and this could end up crashing here pretty badly.

It was crazy to hear people talk when I was getting my grad degree in RE at Baruch or interning at a fairly well know investment firm here in town to see how little the returns were that people were willing to accept. Sub-5% cap rates were fully acceptable, and that was back in 2012-2013. Now, it's even worse.

I've heard some rumblings about Orange and Rockland, for sure. Are you guys doing SFRs or multi?

Hello, all! Nice to "meet" you! My name is Brian and I'm new to the BP world. Been listening to a few of the podcasts and it's re-started my interest in real estate, so I figured I'd jump in with both feet. 

A little about me: I live in NYC and have a full-time job that I love. That said, see the first part and you can understand my interest in earning more money! Over the past 4 years, I've invested with a friend back in my hometown of Dayton, OH. It's a mini-Detroit type market, where population declines due to the auto industry's flight have hollowed out the city and left a devastated housing market with more supply and demand. However, the low cost of the homes, the demand for rent, and the resurgence of certain neighborhoods has provided some great opportunities. We have 6 doors now that are pretty honed-in and stabilized, so we've finally reached some smoother sailing. That said, there were plenty of bumps along the way felt by most investors: expensive repairs, bad tenants, and even a family member or two lining their pockets with our money. But, we've gone through the Andy Dufrense (All these years and I didn't know that's how it was spelled!) crawling through the sewer pipe and things have gotten better. Major repairs have been made already, most of the renters are multi-year, and we financed out at amounts that are all above money invested in the properties, even at 75% LTVs, so we've got the value-add working well! All notes are covered by rents with room to spare, so we've been pretty happy as of late.

But, we're looking to move into something different. We're both a little absentee (my buddy is much closer than me, but still an hour or so away), so we'd like to consolidate our operations under fewer roofs over buying more SFHs and having more separate issues, yards to mow, and neighbors to keep happy. We're not actively looking, but we have a reasonable chunk of change sitting in our current business account to deploy and the potential for north of 6 figures if we both go into our personal pockets. It's starting to burn a hole, which has brought both of us to BP (he's still in podcast land only) in search of inspiration.

This certainly seems like the place to get started and I look forward to digging into the site more to learn as much as possible! Thank you guys for making this a great resource!