All Forum Posts by: Freeman Schultz

You can make money in different ways. Cashflow, appreciation and depreciation. Appreciation often will exceed cash flow. Some people, perhaps foreigner buyers, will buy condos and just let them sit.

That is true. It depends on the game plan. There was a luxury boom in Manhattan where apartments were being bought by foreign buyers. However, they were not being rented out nor were they being occupied by the buyers. It is not an income producing asset. The idea is that the buyers are taking advantage of appreciation and will eventually cash out.

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In New York City a common practice among some landlords is what referred to as "warehousing" where they take vacant apartments off the market because it is less profitable to rent them out.

Another reason why apartments stay vacant is that landlords refuse to lower the rent.

How do landlords make money with vacant apartments? Rule of thumb is that apartment needs to cash flow in order to make a profit.

Are there any benefits for keeping an apartment vacant?

The only thing that comes to mind is sales. Some buyers want to buy an investment property that is vacant.

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I am looking into getting a security camera system.

My requirements are that it has night vision, high video quality that is higher than 1080p.

The one system that was recommended to me was the Lorex CCTV system.

It has good reviews, however, my one issue in order to view footage PC that was downloaded to a USB, the end user needs to download and use the Lorex app or some other video software.

1. Are there any security camera systems that you can watch footage from your PC without using additional software?

2. Other than Lorex, are there any other systems anyone can recommend?

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Quote from @Charles Carillo:

@Freeman Schultz

Process of purchasing a property
Preliminarily review a deal
Submit an LOI (letter of intent)
Negotiate the price and terms with the seller
Start reaching out to lenders
(If you are raising money and this is the first time doing so – start putting the bug in your potential investor’s ear now)
Finalize the LOI with the seller and have it signed
Send executed LOI to your attorney to start drafting the PSA (purchase and sale agreement)
If you are doing a syndication; prepare the offering memorandum and send it to potential investors
Reach out to your property manager and inform them of the acquisition
Start preparing for inspections and due diligence – reach out to inspectors
If you are doing a syndication; reach out to your SEC attorney
Start your due diligence over the next 2-4 weeks
Reviewing; leases, utility bills, bank statements, financials, etc. – review everything
Perform on-site inspections – walk every unit – w/ inspectors and property manager
Prepare the loan package for your lender
If you are doing a syndication; reach out to investors to start confirming equity commitments
Finalize the loan documentation for your lender
If you are doing a syndication; start taking backup commitments in case investors pull out
Setup your property-specific LLC
Setup property specific bank account
If you are doing a syndication; send the final PPM to your investors – have them execute and wire funds to escrow – preferably 1-2 weeks before closing
Close

Thank you so much.

As simple as this process may seem, I have been getting mixed signals regarding the terminology. Some sites say you need a pre-approval letter, the other side is the letter of intent.

With the letter of intent, is that how you show proof of funds?

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I am familiar with the stages of buying a single family home. However, I realize the process for buying a mixed use building or multifamily is different.

I have done some online research to answer my question, however, I have noticed that all of the sources use the same terminology for buying a single family home.

Can someone describe the process or at least point me in the right direction for information?

Thank you.

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Quote from @Wayne Brooks:

@Freeman Schultz It sounds like you are talking about a Pre Qualification, from a lender, that shows you are supposedly able to obtain a loan for a certain amount. A LOI is used for commercial type properties and not used for 1-4 unit properties.

Thank you for the response.

For a commercial investment, an LOI is needed.

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Quote from @Chris Seveney:

@Freeman Schultz

Are you referring to a letter of intent or proof of funds? Appears you are mixing the two

Letter of intent is a non binding document outlining terms of a potential agreement in a large real estate transaction which is the prelude to negotiating the contract

If you have never done one then an attorney should produce it for you and that would be a cost

A proof of funds letter is a letter from the bank on how much money you have available.

Thank you so much for your response.

Just to clarify the bank does not produce the letter of intent, it has to be done through a lawyer.

In terms of the proof of funds letter, that is from the bank.

In the order of operations, when the offer is made, does it accompany a proof of funds letter? If the offer is accepted, then is the next step the letter of intent?

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I have the following questions regarding a letter of intent.

1. I heard that the bank requires tax returns to produce a letter of intent. Do they need anything else?

2. What does the letter of intent entail? Does it show the amount the borrower is allowed to borrow from the bank?

3. I have heard that in commercial real estate a letter of intent is required for the initial offer. Is this true?

4. Are there any fees entailed with a letter of intent?

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Quote from @Theresa Harris:

Condo boards can't increase fees or do special assessments without approval of the condo association. Bylaws will differ as to what percent of the vote has to approve the changes. There are condos where they are poorly run and others that are well run. You can also run to be on the condo board

Thank you for your response. I assume when you mean condo association, you are referring to the owners of the units?

I guess I would need to look at records of the condo board to see if they followed their bylaws in regards and got the the approval to increase fees and special assessments.

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Out of curiosity, I have been taking a look at the condo market in NYC for investment opportunities.
Condos are attractive because of their simplicity. They are not as profitable as multifamily, but there is a level of stability.
However, I hear a lot of stories about out of control condo boards where they increase the common charges and they approve expensive
building projects. The boards are able to do as they please without the approval of the residents.

Is there any truth to that or is every condo board different?

How does an investor avoid a board that is out of control?

1 Vote

All Forum Posts by: Freeman Schultz

Freeman Schultz has started 48 posts and replied 103 times.

Post: Vacant apartment questions

Post: Vacant apartment questions

Post: Recommendations for a security camera system

Post: What are the stages of buying a commercial property?

Post: What are the stages of buying a commercial property?

Post: Questions about letter of intent

Post: Questions about letter of intent

Post: Questions about letter of intent

Post: Questions about condo boards

Post: Questions about condo boards