All Forum Posts by: Chris Schmitt

Interested to see if anyone here has experience buying and LTR within NYC.  I have looked all over the country for rental property and finally found some positive cash flow in properties in my own backyard in solid A/B neighborhoods.  My question is - everyone gets scared off of NYC because it is so tenant friendly and you often hear horror stories of being unable to evict people - is the risk worth the reward?  

@David Ribardo I see a lot of 3-4 br townhouses in the area around Muhlenberg.  Is there good rental demand for those?  Would probably prefer a long term tenant than college kids who might destroy the place.  Other question is it appears many of these brick homes were built in the 1920’s.  Are there a lot of maintenance issues?  TIA

I am looking for a long term passive investment LTR strictly for asset diversification. Wife and I both work good w2's with pensions, an almost paid off SFH on Long Island, and plenty of retirement accounts, annuity's, 401k etc. I've initially started looking at condos in Myrtle Beach, Adventura and Orlando but just can't make the numbers work. Just recently pivoted to looking at SFH. New builders are offering big discounts on rates and closing costs and I figure a new build will require little maintenance (more passive). I am looking at some outside Orlando/Tampa where I am more familiar, but am also curious about Austin since it is a growing/thriving city and prices seem to have come down a bit but long term should appreciate. My question is will there be rental demand in a new construction area and how do you determine comps?

I was wondering if anyone has experience with LTR is Kyle, TX.  I was looking at some new construction with big incentives (lower rates, no closing costs) and it appears with a larger down payment on a townhouse I could provide decent cash flow at market rents.  I am totally unfamiliar with the area, however (been primarily searching FL and SC).  Statistics show it is growing but I don’t know if it is an ABCD area or what the rental demand is for new construction townhouse.  Any advice would be greatly appreciated!

I also just learned something the hard way but I’m glad I learned something from BP books and podcasts.  Was just about to make an offer on a place only to find out the taxes listed at 1258 a year are actually 3100 after speaking to the county.  Totally turns cash flow numbers upside down.  Always verify!

I was hoping to get the condo at a discount for that very reason, figured this may be a short dip, but the condo at a discount and then take advantage of the appreciation.  I have looked at some SF and multi family in other states that cash flow better, my issue is I am looking for a passive investment.  I feel like the potential maintenance headaches are far less with a condo.  At this point, I would trade a little return for peace of mind, however I also don’t want to force a bad deal when I can get 5.7% compounded sitting in an annuity.

Looking for some advice if this is worth it or not.  Looking at possibly purchasing a LTR condo in Florida.  Something turnkey in an “A” neighborhood as a passive way of diversifying assets.  Not looking to expand to multiple doors or properties.  Wife and I both have good W2 jobs (with pensions), almost paid off primary residence in NY, and majority of assets are in stocks, annuities, funds etc.  After much searching this is what I found:

685 sq ft condo in Orlando. Condo associations has good financials and "big projects" already done on the building so likely no HOA or assessment surprises for awhile. Unit is in good shape with solid existing tenant paying market rent. Rent will cover HOA, taxes, management fee and mortgage. (1650 rent) (1584 expenses). This is with 40% down (76k) and (115k) 30 year mortgage at 7%. Seller is asking 215, market value is around 205, I would only do the deal at 190. Assuming I could get it under market value, does it makes sense to do the deal? The Down payment isn't a big deal and doesn't effect me otherwise and I don't need monthly cash flow. Logic is that if I can buy under market while things are tight and not many people are making offers, and I can break even on the property monthly, I can build equity, refinance later and rent/appreciation should occur in A neighborhood. Unit itself is small, in good shape and won't require much maintenance. Eventually sell or cash out refinance later and use it as down payment on personal second home 10-15 years from now. Or is this all just a lot of work to achieve similar results as an annuity (81k down payment and closing costs) getting 5.7% guaranteed compounded the next 7 years with no headaches? Figure there can be tax savings on the real estate deal if I can do a 1031 down the line into the vacation property. A lot to unpack. TIA.

That’s exactly why I asked the question, great replies, thank you.  Essentially what you’re saying is the time involved and risk wouldn’t be worth it for a hypothetical 7% return.  Well thought out replies.  I actually have never pulled the trigger on a deal like that but I always wondered why there is so much negativity towards it.  I am not someone looking to own a large portfolio, and have most assets in other investments while working a good w2. Real estate investing, for me, is more of a diversification/tax tool that I would prefer to set and forget long term.  Still, that doesn’t mean I don’t want it to be profitable.  

I understand not wanting to have have negative cash flow and the idea of leverage, however I don’t understand the idea that a big down payment is always bad and someone please explain if I’m wrong.  Even in today’s high interest rate market - say there is a condo listed at 200k.  If you put down 100k and take out a 15 year mortgage for the other 100k at 7%, principal and interest would be 890 a month.  Say all other costs are 500 a month and it rents for 1400 a month so you break even monthly.  (Keeping it simple regarding other costs, repairs vacancy etc).  Assuming the property appreciated about 3% a year, after 15 years you would own a 300k property outright and tripled your initial investment, and written off the whole thing in taxes.  Doesn’t seem terrible if just looking for a way to diversify and have other investments and streams of income.

Planning on using it as a long term rental.  Seems most of the units are owner occupied or LTR.  Just had the realtor check with the association and apparently a new assessment was voted on “last week.”  Waiting to get the particulars.