All Forum Posts by: David Ribardo

@Rachel Hong Where was the corrosion and leak? Do you have any photos? 

I would not imagine corrosion is caused by improper venting. Typically you want to see at least 1/4'' in rise per linear foot to provide proper draft. If you can't get this done, you may need a model with a draft motor. Improper venting would probably not  directly cause corrosion, but could cause exhaust gasses to build up in the structure - a very dangerous situation. 

We commonly see corrosion on either the tank or plumbing supply lines. Most Allentown rentals have the water heaters in the basement. If this has high humidity, this can cause them to corrode much faster than expected. One of the best thing that you can do to help prevent this is put a dehumidifier on a continuous drain setup. This will keep humidity down, and preserve the life of your electrical, plumbing, and hot water heaters.

What are your metrics you have chosen to use when evaluating markets? 

Overall, I like to take an approach driven by Ockham's Razor - the simplest approach is quite often the most effective. What is your purchase price to market rent ratio for a duplex? What appreciation has been taking place in the investor market? Are large companies investing in the area, creating jobs, that will allow for rent increases? You will find that the markets with these desirable characteristics are all competitive, and that's okay. Jump on the bandwagon!

As you analyze the data, keep in mind that real estate is an interpersonal and relationship driven business. When I got started, I thought I was going to conquer the world with my excel spreadsheets. Unfortunately, I quickly learned the hard way that an ineffective property manager can render even the best projections completely invalid. I would much rather have a rock-star team (agent, lender, inspector, property manager, and contractor) in an average market, then buy something in the best market without the right people to support it. 

@David Cabañero Vazquez Welcome to the forum! Assuming that you are working with an agent, I recommend you get their recommendations. Most of them have good relationships that will provide you great customer service, smooth closings, and reasonable rates. 

Last year I worked with about fifteen different lenders. There are some FANTASTIC local banks, credit unions, and mortgage brokers in the area. When working with any of these I had consistently good experiences. I also had consistent issues with out of state lenders, to include: refusing to fund the loan on the closing date, not delivering documents in advance, not allowing rents / security deposits to be prorated on the closing documents, and sticking in additional fees / rate hikes just prior to closing. 

The right lender depends on a few things: Are you local, or out of the area? Some community banks only lend to residents. Will you be buying in a LLC, or your own personal name?

Hi Linda, thanks for posting! Full disclosure - I run a property management company as part of my team, but here is some general guidance that should help you get started.

Here in the Lehigh Valley there are two main things every management company will charge. The management fee is a percentage of collected rents, and most new investors should expect to pay 10%. This covers all administration, accounting, rent collection, and maintenance. As you build a larger portfolio, you may be able to negotiate this down. The next is your tenant placement fee. Pretty much all companies here charge one months rent for this, which includes turning over the unit, marketing, showing it to tenants, collecting applications, background checks, lease signing, and move in. Each company will have their own other costs, to include lease renewal fees, maintenance fees, setup fees, and eviction / legal fees. 

PLEASE - When you sign your management agreement, ensure that there is a maintenance threshold specified! This is a specific dollar amount that gives the PM authority to make repairs up to that point, but requires your approval for larger expenses. I had a PM company charge me $1,000 to chase a squirrel out of a garage. They had a pest control specialist drive up from Philly instead of using someone local! Because this maintenance threshold was left blank on my management contract, I had no recourse. (Side note: That's the story of why I started my PM company)

If you have other, more specific questions, please post them! I'd be happy to help with any answers you need.

@Evan O'Brien welcome to the community! If you are interested in the Lehigh Valley, I run a sales team and property management business there. I'd be happy to answer any questions you have about the market or getting started.

Overall, the market is very competitive, with lots of out of state investors driving up prices across the Lehigh Valley. This has been across all asset classes - small distressed properties, large multifamily, and even warehouse spaces. It's been great for appreciation and this has led to rents increasing rapidly throughout this past year. We typically are seeing single family homes being sold for $95,000 and renting for $1,400 per month, with low taxes and favorable landlord / tenant laws. 

@Joseph Godio Hello, and nice to meet you. Great introduction!

I'm a Lehigh Valley investor and agent. My team provides agents to work transactions, property management services, and private lending. I'd be happy to talk, answer any questions about the market, and see if we would be a good fit for working together. 

This is a pretty exciting time in the Lehigh Valley. The downside is that prices continue to climb from demand coming out of Philly, NYC, and Jersey. The good news: with the employers increasing wages in the area, we've been seeing some very strong corresponding growth in our rents. The 11 leases we renewed last month had an average increase of $121!

Hi Tuna! I'd be happy to discuss my past experiences with KPMM, Empire, Lot 74, Cassidon, SlateHouse / Home365, and Spade property management. 

My overall words of wisdom for any investor: fire your property managers early, and fire them often! It's about finding the right fit for your level of involvement, management style, and asset class. All companies change over time, and it is important to find one that will grow with your portfolio in a balanced and sustainable way. In one week, I had one client fire Cassidon to switch to SlateHouse, and another who fired SlateHouse to switch to Cassidon. Both of them are still satisfied with their decisions.

In the end, I decided the best fit would just be to hire my own PM to work directly for my team. Good luck figuring out what the right fit is for you!

@Santiago Martinez Hey - looks like we both have scaled up our business since we crossed paths back in 2017. Nice work with the portfolio, it's good to see you are still at it. We might be a good fit for working together as this next year kicks off. 

Nice work on having your own construction side. That's quite often the biggest headache I find with deals, and the missing piece that most often can cause a new investor to get out of the game.

@Jonathan Davalos I've closed deals with a few wholesalers over the past years here in the Lehigh Valley. Overall, my experience has been mixed. There are some skilled wholesalers delivering a reputable service in the Philly markets and throughout NJ, but I have not found anyone who consistently can deliver good customer service in this market. You see lots of posts on forums and facebook groups about wholesaling, but ultimately most of them have not closed a deal. The most common challenge I encounter is a wholesaler who is not entirely forthcoming about their strategy with the seller. This creates friction when they try and hide their profit margin. The ALTA statement at closing will always show where each dollar in the transaction goes to, so that just results in a frustrated seller who feels wronged. 

Regardless of what your mentor or guru class tells you, you should always be 100% honest about what is going on in the transaction. This will put you in the top 50% of wholesalers in the Lehigh Valley. 

@Eric Clinton Some stats from the area: Last year there were 9,714 total properties closed throughout the Lehigh Valley (Lehigh / Northampton counties). 1,885 were closed with cash, so 80.5% of buyers had a mortgage. There are still deals to be had as a buyer with financing. Some of my clients buy cash, but many of mine are buying with conventional lending products or other peoples money.

@Armando Lopez welcome to the area. The Lehigh Valley and Allentown are an excellent market with some great appreciation, favorable landlord tenant laws, and adequate availability of deals. 

Be careful - there are lots of predatory individuals selling off-market deals to new investors in a way that could get you in trouble. Lately I've been seeing a trend of properties that were listed on the MLS, didn't sell, and a wholesaler is now promoting them as "off market opportunities". One of these we had under agreement for $530k with the seller paying all agents commission, it fell through because of maintenance issues. Now a wholesaler is now promoting it for $600k, plus the buyer paying a $18,000 commission on top of that. Some of my clients got real excited about this as a potential opportunity, but they had quite the shift when I told them exactly how low the seller was actually willing to go!

Make sure you choose experienced professionals when you build your team. Your agent needs to have personal investing experience with the types of deals you do - this is specific to flips or buy/hold properties. I highly recommend they are local to the market you choose, and have closed at least 20+ deals in the past year. Welcome, and good luck!