All Forum Posts by: James Denon

what is the advantage of a WY LLC? Why not just start a MA LLC?

This is unprecedented. Once in 4-5 generation event.

I had multifamily that I was supposed to close on next week in Springfield Massachusetts. It was a great BRRRR deal given the hot market conditions. All in with repairs at 165K. It would appraise at 230K. Decent cash flow starting September after rehab. Working class/section 8 neighborhood. I was excited about it.

Then coronavirus happened. This is just the beginning.. I think it will get worse and there will be a deep depression and 60% loss in stock market. This will be an event which will be similar to 1929 or 2008. The unemployment will be 20-30%. All services jobs are already lost. I could also lose my job as well. I also have other properties with working class people. I dont think any of them will be able to pay their rent. Massachusetts and Connecticut socialist administration told them they don't need to pay rent. MA went as far as saying they will put landlords to jail if they ask for rent. Not sure what relief I will get from banks for my mortgage. This article convinced me that we will start to see 1000 deaths per day by end of the month. This will cause panic to be heightened. 

https://finance.yahoo.com/news/hell-coming-mathematical-proof-185019616.html

So I freaked out on Friday and asked for a massive price reduction or I will walk away. I am even willing to let go of $7K of earnest money. I thought the damage this will cause to US economy will be significant and we wont be able to recover from this deep depression for 2 years. I also saw this article that suggests Springfield Massachusetts is the least recession resistant city in US: https://www.cnbc.com/2020/03/16/most-recession-resistant-cities-for-2020.html The nightmare would be massive crime and drug use with unemployment of people in service industries. Springfield becoming Detroit or South Holyoke etc. Since I have been investing in class C neighborhoods, I always thought my investments will be recession resistant. However, this pandemic is unprecedented. Most working class people lost their jobs within 2-3 weeks. 

I think banks will stop lending as the recession deepens and property prices will drop significantly. So I can buy similar properties in 12-18 months at 50% discount. So I should go into capital preservation mode and have dry powder for buying opportunities. Also when I am done with rehab in september I dont know if I would be able to find qualified tenants who can pay rent. 

Am I overreacting or are my fears warranted? Am I being to pessimistic and missing out on a great BRRRR deal?

I know biggerpockets do not have any investor who lived through pandemics. They would have to be 120+ years old. However people who lived through several recessions might be able to help. Any thoughts? Am I overreacting? Does anyone think world will become normal in couple of months? I have a long term horizon but I don't want to spend my hard earned cash if the real estate market is likely to fall 50% in the next few years.

@Steve S. I will look the buy more deals. CV19 might present deals with people with liquidity.

I also expect the stock market to start to bottom after another 15% drop. I might buy some quality dividend payers.

@Ned J. The rate is decent but the cost is pretty high.. Seems like they are charging points. I wouldnt want 20yr term anyway. It would kill the cash flow.

@Guifre Mora @Stephanie P. I see what you are saying.. Maybe I will take that deal..

I am also worried about paying the mortgage now. I may not be able to collect April rent. The Housing Courts are not taking new cases.

I am getting ready to cash out refinance a property I bought all cash back in June 2018 in Springfield, Massachusetts.

I got couple of quotes. I cant find any quote lower than 4.25% with 750 loan processing fee and no points. It is a portfolio loan not Fannie/Freddie backed.

The property is not owner occupied.

Obviously other costs apply: attorney, title insurance, prepaids etc.

I have perfect credit and the property cash flows with debt.

Does anyone know any lender who can do better than 4.25%?

I was hoping for low threes in a zero FED rate environment

Rehab estimate seems low. Unless you are doing the work yourself, items listed here would probably run you up to 40-50K.

I have a small unit I am trying to fill an 3br 800sqft unit in Springfield Massachusetts.

People walk away from it because of the size and oil heat.

I cant do much about the size but I am thinking of asking for $1200 (it is currently listed for $1000) to include the oil heat in the rent.

For that size apartment, I cant imagine the yearly heating oil bill exceeding $2400. Hot water is electric and it will still be tenant responsibility.

Do you guys think this is a good idea? I know a lot of landlords pay heat and hot water.

Any horror stories of tenant leaving the window open in the middle of february?

@Michael Noto Congrats! What did you end up spending on rehab, holding and borrowing costs and overall profit if you don't mind sharing?

Were there any surprises or higher than expected rehab costs?

@Liane Cochrane

I highly recommend you go on masscourts.org and search the all of the tenant's names for non-payment issues.

I eliminated several deadbeat applicants for my properties using this site.

If there is non payment history, either ask to receive the property vacant or run for the hills..