All Forum Posts by: Jason Lee

@Raymond Y. yes there's an opportunity cost to house hacking but your numbers which suggest investing out of state is better probably isn't taking into account any appreciation. You typically get good cash flow or appreciation, but not both. The areas where @James Smith is looking are experiencing pretty rapid appreciation which doesn't appear to be slowing down. Median sales price for 1-4 family homes in JC Heights increased 40% YOY in Q4, 18% in Journal Sq, 15% in Bayonne, 22% in West Bergen, etc. If you're looking for your tenant to cover your carrying costs then these areas aren't going to work, but if as James asked, you're looking for someplace easy to rent and with growth potential, then Hudson County looks pretty good to me.

Then the question is does it cash flow? If taxes are high and there's still a sizable mortgage what do the numbers look like after you take into account any rehab, cap ex, vacancy, property management, etc? If you can get on the rental property calculator here that might easily clear things up for you. If the numbers work, you could maybe take out a heloc now while it's owner occupied and use those funds for investing somewhere else. If the numbers don't work then you could flip and put that equity to better use somewhere else.

How much would the house sell for renovated? If there's enough meat there and you have the stomach to renovate then maybe it's worth it to flip. If you were able to rent it would it even cash flow? How many agents have you spoken to? If they're discouraging you from renovating and discouraging you from renting it out, I'd probably want to verify that with a couple other brokers in the area.

Also, it's not clear what you mean when you say your mom is letting you just take the house. There could be some big tax consequences with any transfer into your name so I would suggest you speak to an account or estate planner if that hasn't been figured out already.

With your budget I'd look in JC Heights and Communipaw areas. I think there's still a lot of room for growth, particularly in Communipaw, and there's good and relatively quick access into the city. 

You need to ask about any upcoming capital improvements that could lead to assessments. When was the last time the roof was replaced? The boiler? Elevators upgraded? Facade repointed? Lobby and hallways renovated? Any of these could lead to an ongoing assessment that could kill your cash flow. You also want to find out the percentage of owner occupied units vs those leased, and the number of sponsor held units if any. If any one owner owns more than 10% of the units (depending on the total number of units) the condo could become non-warrantable. Same if the number of renters goes over 50%. You can probably refinance a non-warrantable condo but at a much higher rate which could also hurt your cash flow. Then there are other things in the condo's finances that could change which could make it impossible to refi altogether. I'm not saying this is a bad deal, but you just have to do the proper due diligence. Here in NYC all I do is deal with condos and co-ops and I wouldn't hesitate to do a BRRRR on a condo (if I could only find something where the numbers remotely worked).

There are something like 20-30K brokers in NYC. As you guessed it's pretty stiff competition just from shear numbers. Many are probably part-time and produce little to nothing. Those starting out typically focus on rentals as it's easier to break into and find clients. You can also get income faster that way since a sale could take anywhere from 3-6 months to close, if not longer. Tough to do part-time as you're having to hustle to find clients and show apartments when it's convenient for tenants. If you just focus on sales then that could work part-time, but how will you get your clients? No one is going to give you leads. You need a network of friends, family, etc that are in a position to buy or sell AND will use you (over the other brokers they know in their network of friends, family, etc). Many start out by joining successful and busy teams that need someone junior to hold open houses and do showings, but that's going to be tough for someone wanting to do part-time, let alone someone with a full time job. 

Unless you're an attorney, in NY you'd be getting a real estate salesperson license starting out, not a broker license... maybe that's what you mean by provisional? You need at least two years of sales person experience (and accrue enough points) or three years of general RE experience to even apply to get the broker's license in NY.  Also, NY has no reciprocity with NC. Even though there's no reciprocity, some states (like NJ) will allow you to waive the educational requirements and you just have to pass the state tests. Not sure about NC. If they do, you'd still need to accrue enough points to qualify to get the NY broker's license. You can find the requirements online but it's a pretty high amount of volume to do in two years, especially if you're just starting out.

Interesting discussion and viewpoints. I just want to bring it back to @Chuck Kramer’s original questions and add my two cents.

If it’s customary in a certain area to submit offers on standard forms but one chooses to do it on their own forms because that’s what’s convenient for them, then how should a listing agent and seller interpret that? If that same buyer makes many offers and only a small percentage are accepted, presumably because they’re low offers with inferior terms, then how should that be viewed? When I represent sellers and I expect or ask for offers to be presented in a certain way, and they aren’t, then I interpret that as the buyer might not be that serious or doesn’t want to follow instructions, etc. If it’s accompanied by a low offer that looks like it can’t get to a done deal then that only adds to it. In a sellers market or even one in equilibrium, that offer probably isn’t going to get a positive response.

As for the extinction of agents, all of the disrupted industries mentioned: retail, taxi, hotel, etc are all relatively simple transactions. It doesn't matter if my toilet paper gets delivered one-click by drone, it's still a simple transaction. There are many investors here who have closed tons of deals and can do it in their sleep. That's great. In this case, I can easily see how the agent can be viewed as an unnecessary middle-man. But for most, who have never done it before, or did perhaps once decades ago, or will only do it a handful of times in their lifetime, real estate is a very complex transaction. Most of those people are happy to have a middle-man guiding them, holding their hand, doing the things it takes to buy and sell a home that they themselves don't have the time, energy, interest, or skill set to do. For those that don't feel that way and feel the middle-man is making the transaction more expensive, they can go the FSBO route or alternative brokerage route. There's room for everyone. The 38% FSBO stat sounds way way high to me though. In the NYC metro area I regularly follow all closed transactions and anecdotally FSBOs look like a tiny percentage… I'd guess much less than 5%. I'm sure in higher net worth areas at higher price points you'd see fewer DIYers so would expect higher percentage in the burbs but 38%? I can't imagine it.

I know others touched upon it, but Zillow's income comes mainly from agents. Here in NYC where there is no MLS, Zillow is the defecto MLS and so that's not going to bring an end to the agent in the rest of the country if Zillow takes over everywhere. All of Zillow's content comes from agents and their revenue comes from selling that content back to agents. Regardless of where the one-click house buying goes, Zillow is the last to want to see agents disappear. They want more agents, making more money, and spending that money on marketing.

I’m pretty confident good agents who net the most for sellers and find and get great deals for their buyers aren’t going away anytime soon.

I've handled co-op estate sales and happen to be in the middle of two right now. When it comes to co-ops it's best to try to follow their instructions... even if what they're asking doesn't necessarily make sense. They tend not to be very flexible and the managing agents/transfer agents you're dealing with may not know enough to go off script or think outside the box with more complex transfers (estate + out of state, etc). Let me know if you need any NY attorney referrals.

There are roughly 25,000-30,000 agents in NYC and roughly 10,000-12,000 sales per year. You think someone can move here, quickly establish expertise in the local market and build a network of buyers and sellers, and then 10x their income?