All Forum Posts by: Joe DiGirolamo

Hi @Stephanie Salters !  Welcome to BP. I'm in your local area, so I thought I'd say hello! Setup keyword alerts for the type of investing your most interested in and/or areas you're interested in. That is how I found you. I also got a RE license to begin investing and am now a full time agent. Feel free to connect with if you have any questions. Happy Investing!

@Joseph Tarallo congrats on moving forward on your purchase. As @Jim Viens said it's all about comps! In the real estate business, closed, recent comps are your most reliable source for value. A 3 family is an income property though, the value is a function of what an investor is looking to get out of it. Look at the comps for what each unit will rent for. By figuring out the income potential and return, you can figure out the value. Think of ways you can add value to get a higher price too. Having tenants already in place and paying is always good. Vacancies cost money and take time to fill. If you are rehabbing and put in all new mechanicals, that's good too. It means less maintenance expense and more efficient utilities. Good luck!  

Welcome to BP @Carlo Santarelli ! I'm sure will get a ton of varying answers on this.

I am a landlord and a realtor who assists people with rentals on a regular basis. I'm not sure if you will be using the services of a realtor or renting it on your own. If you do use a realtor they can help you with the screening process. They also will assist you with showings, negotiating and drawing up the lease. You asked about avoiding legal issues, that's what a good lease is for, to protect you! Either way you will still ultimately be responsible for choosing your tenants. My offices use National Tenant Network (NTN) to run credit and criminal background checks (we only have them run the criminal if they meet the credit criteria). They have a simple one page application we have the tenant fill out. We charge for the application to cover our costs from NTN. This tends to discourage some potential tenants that know they have criminal history and/or bad credit. NTN scores the tenant (0-100) for you based on the information they get back. I still advise all my landlord clients to judge for themselves. 

So learn how to read credit report and background check. Ask for pay stubs especially if they are salaried employees. Check out what they make and what kind of monthly payments they have on their credit report.  Definitely call and verify they are in fact employed. I always encourage my renters to save their cancelled rent checks and never pay in cash. If someone can show you a year or more of rent paid on time, I take that as a good indicator they pay their landlord first! Any way they can show a paper trail to prove they pay in full and on time is great! Sometimes their credit may even be a little dinged up. I just want to know as a landlord or the landlord's representative, that the rent is getting paid first!!! Personally think that is one of the best indicators. You can also check references but I don't think that is the most reliable.

It sounds like it's your first time as a landlord. It may not be such a bad idea to have a realtor assist you. Just make sure you ask questions about what you don't know and that they keep you in the loop as you move through the process. Yes, it will cost you a little money, but there is value in having the help of a professional. In real estate, mistakes are costly, there is no shame in paying someone to help you avoid them.  The next time around if you feel confident, then give it a shot by yourself.

Good luck!

Hi BP commercial investing community!

I am a commercial real estate agent. I have never done a deal like this so I am looking for some input. I would like some opinions on options to structure a land lease for a client. I represent the owner of the land and another agent in my office is representing the potential tenant. I hope this is not too vague but here are the details.

It is a parcel of raw land, zoned highway commercial, in a high traffic area. It needs to be cleared. There are no permits filed yet.

The potential tenant wants to build and operate a car wash on the land.

What is the best way to calculate the value of the land for the lease? Is there a typical percentage of the value that the land owner should expect? What are the possible options for ownership of the structure (building)? Typical length of the lease? I have heard no less than 10 years. Possible lease option? Opinions on what each party should expect for a return?

I'm sure people will ask "what is the land worth?" The owner wants about $2M (typically he wants an outrageous number but backs off of it once there is offer on paper. I'm sure I'm the only one who deals with someone like that! ;) ). It is realistically worth $800k-$1M.

I apologize in advance if there isn't enough info here or these are not the best question to get to the answer. I'm just looking for typical structures and percentages. Let me know what info is needed to clarify.

Thank You!!

@Jay Lozano Reading @Andrew Cordle 's post reminded me of a GREAT resource that I didn't mention. You should start attending your local REIA! That is a great place to find out what the rules are for your state and start building your team. They will know which title company's or attorney's are investor friendly (I don't know how you you close in Texas). There will be other wholesalers there to network with. You may be able to JV with one of them on the first deal or till you get more confident. If you get a lead, find someone with experience, share the deal. Doing deals the right way from the start and successfully closing the transaction to me is worth it. It's also a good place to find rehabbers aka cash buyers. My local REIA lets you post deals and there is a deal review table to help new investors. You can probably pick up a good investor friendly realtor too. You will need one to help you with comps.

Thanks for the vote and good luck!!!

@Jay Lozano getting educated is the first step! I am not familiar with those books specifically. They sound to me like books you would need if you were trying to become a realtor. If they are, you will probably be bored to death reading them! You most likely will not find the information you are looking for in that type of book. I would stick to searching the forums on BP and setting up your keyword alerts for wholesaling. Start with "Texas wholesale" or just "wholesale" Read as much as you can until you understand the process. Then if you have a question about a component, modify your keyword alerts or post a question. Examples for good keywords might be: "marketing" "bandit signs" "yellowletter" "assignment" "double close" "making offers" "calculating ARV" "calculating MAO" "negotiating." I think you get the idea. I learned a ton from podcasts and BP has some great ones! Dig in and don't be afraid to give it shot and learn as you go. Fake it till you make it!!

Good Luck!!!

I agree with @Darren Sager about checking with your insurance company. I'm currently working on a sale of a SFR and during inspection it was brought to the buyers attention the house has knob and tube. The buyer is unable to insure the property, at least here in NJ. The electrician we consulted about repairing it referred to it as "a nightmare job." Even if you could get insurance today, consider your exit. When you are ready to sell it, will it have a negative effect? Will the insurance or other regulations have been changed? Will you have to credit the buyer and take a lower sale price? Will some buyers pass on it, not wanting to deal with making that kind of repair? With all that uncertainty, especially on your first investment, I would say move on.

At one time I had a Nevada LLC doing business as a foreign entity in NJ, for asset protection purposes. As I recall, it was just a matter of paying $125 to the state of NJ and filling out some paperwork. This link should be helpful: http://www.state.nj.us/treasury/revenue/gettingregistered.shtml

I agree with @Colleen F. it depends on the comps. If all the properties similar to yours in that neighborhood rent for $2500 and have central air then go that route. However, with rentals, as @Bill S. mentioned, I see most people pass on properties based on the condition of the baths and kitchen. It's a rental, baths don't have to be high end just simple and CLEAN.

It does get hot in NJ in the summer but really only for 3 months or so. I am a realtor and deal with lots of rentals. I have found people who rent think of central air as huge plus but most are fine with window units for those few months.

To recap...look at the comps and to me a bathroom is a necessity, central air in a seasonal climate is not.

From what I have seen, lower income areas work better for bandit signs. Bandit signs are great ways to find wholesales because you get distressed sellers and thus a nice discount. If you are looking to wholesale, it has to be a cash deal. The higher the price the shorter your buyers list becomes. You will find more rentals in lower income areas with owners just want to get out and will sell at a discount if you can close quick and make it simple. In areas where home values are high people tend to have more resources available to handle a situation if they get into trouble. They tend to use realtors and try to sell. Nicer communities are more proactive about tearing signs down and trying to find out who you are too.