All Forum Posts by: Evan Thomas

Hey Marc, I actually just got my real estate license in NY. Let me know if you need any help looking at places. 

If you could ask a FSBO seller 3 questions, what would you ask? I'm trying to figure out the best strategy for calling someone who's selling their own house, and I don't want them to get angry or annoyed or put off. But I'd also like to get as much information as I can about their motive for selling, the condition of the house, and what they want for the place. Any suggestions would be greatly appreciated.

I ended up buying a studio co-op apartment because it was cheaper than my other options at the time. It's also less than a mile from my office so I have much more time to work a second job. The taxes are so high it would have taken a few renters to displace the cost of taxes AND housing costs.

So until I have the funds to rehab/renovate a house and reap the rewards of that instant equity I'll settle for saving 50% of the costs of living in NYC. I guess it's my own form of house hacking for now. 

Why are there currently only 8 tenants when you're expecting 28? How are you going to finance down payment closing costs, the $30k for repairs, and how are you going to bridge the gap of months (in terms of holding costs) it will take you to make the repairs?

Unless you have a decent reserve pre-built, that sounds like you might need investors or a hard-money lender. 

It would be great if you could start a Real Estate News email where you send out a newsletter detailing broad law changes and what they mean, things like FHA loan limit changes, a few stats on housing starts and construction. Just general market data like that that could give investors more broad knowledge of the market as a whole.

@Christopher Blanco has a good point. With limited experience and little capital it is very tough to invest in NYC/Nassau. 

The city is full of full-time investors who can buy and sell for cash and who have been doing it for years. Plus these advanced investors know the best markets for appreciation, which is the key in NYC as opposed to cash flow in other markets. It's virtually impossible to find deals at 1% in NYC, I would advise looking at markets along the Metro-North or NJTransit lines which don't necessarily have the squeeze of the NYC market. 

It might be worth your time to stay in the forums, ask and answer (learn the answer if you don't know it) forum posts, read the blog, listen to the podcast, and set aside some money so that when you want to really jump in you'll have a good base of knowledge and capital. And then look in other markets that can offer cash flow or cheaper appreciation.

Sounds like a good first step. I've heard that diversifying geographically and investment-wise (not all SFR, not all 4-flats, not all commercial) is a really good way to invest since you can weather lots of different storms. Sounds like you'll have a good investing fund once you sell the property you inherited.

Do you have a timeline to sell your current holdings, and a goal for when you'll own your first rental property?

If you have no money the best bet would be to approach a few hard money lenders. At least one in your area should be willing (if it's a good deal) to fund not only the purchase price, but the renovations as well. After a seasoning period (time between the first time you buy the deal using hard money and the time you re-finance with a bank, usually 6 months - 1 year) you can re-finance with a bank, pay back your hard money lender, and then you own the property and the rents should pay off the bank's mortgage that you re-financed into. 

@Reggie Burnett I believe that most of the larger banks want to see 2 years of income before they will let you count it as your income, but some smaller banks do not require that buffer period. There are a ton of forum posts about this topic, people seem to have varying degrees of luck with rental income affecting their DTI.

In terms of amortizing the loan, I've recently noticed a trend of investors who, rather than buying as many properties as they can as quickly as possible, are buying cash-flowing properties with traditional mortgages (typically from the big banks: Wells, Chase, etc.) until they meet their DTI. Then they use each of the cash flows (if you bought 4 duplexes you should have 8 streams of cash flow every month) to pay off one property at a time until it is paid off and they can buy another one. This strategy not only cuts out a lot of interest on the loans (while letting you keep a low interest rate anyway), it also gives you a highly cash-flowing property that counts only as income and not as debt which can help you pay off other properties even quicker.

It seems that for traditional lenders the DTI is very important, but once you get to the level where your DTI is an issue, you can branch out into creative financing like portfolio lending, private investors, etc. who care more about the property than your personal finances.

As Zach says, most of the apartments in Westchester are co-ops which require you to put down 20% and occupy them for a year or two before renting them out. 

And you might also want to find out if you need board approval for every tenant, that could seriously increase your vacancy rates.