All Forum Posts by: Joe P.

@Marcus Auerbach thanks for sharing the story. It never ceases to amaze me how...I'll use the term "inconsiderate"...people are in certain situations.

I would think -- and this comes from someone with zero experience in law OR apartment buildings, that the sale of the property would be outlined in the existing leases, as well as the options thereafter for the new lease-holder; and this would be trumped by landlord/tenant state law.

Given it is such a large purchase and you could potentially be disrupting what is a relatively stable situation, I would consult with a lawyer to determine your options. I'd also see how much this would impact your existing tenants. Change is tough -- this might be something you can implement over time, or implement only with tenant turnover. It'll take longer to hit your numbers but the disruption and potential litigious or tenant-PITA issues that'll come up will be minimized. Just my $0.02.

Thanks Chinmay, but I respectfully, and strongly disagree. I'd almost say your logic is beyond faulty -- its dangerous.

Rather -- and I would not say this applies to Dante, specifically -- but the habits we take going into a deal mean far more than the deal itself.

• You cannot make money if you cannot align your income and expenses properly.
• You cannot make money if you overspend/spend more than what you make.
• You cannot make money if you are undisciplined in financial and operational matters -- you may be able to show short profits, but I think long-term success is highly predicated on proper planning, forecasting, adjusting, and action.

To me seeking out a profitable deal to "right the ship" is like buying an advanced set of lottery tickets. The odds are more in your favor than the MegaMillions, but you're still banking on a heck of a lot going right. If Dante, or anyone, is not disciplined enough (and even the most disciplined investors will run into issues), banking on an investment to solve a discipline or knowledge problem is backwards thinking.

@Dante Foreman I hope this doesn't qualify as a rude response, but is your own financial house in proper order?

I personally wouldn't want to invest in something until I was in a stable position myself. You've declared bankruptcy, your credit score is not good, and you're using your tax return as a real estate investment vehicle, and won't have enough to cover rehab costs.

Do you have outstanding debts? To me, getting those under control should be priority #1. I don't know other specifics about your financial situation, so I'll withhold more pointed comments; while everyone here is encouraging you, I would take a pessimistic view and really look at your financial house with great scrutiny. If you can't sustain your own finances, how can you accurately control your RE finances?

Bingo - I'm accounting for it but I'll get a better/faster return early on, as I don't plan on hiring a management company anytime soon. But the numbers still work to $200 per month net cash flow even with the management company.

@Ryan Knott sounds like you work a ton - 70 hours a week is a long time. Given your available time I would imagine that house hacking is best for you since you would be present at the property. Its awesome that you have the experience on construction work as that will no doubt serve you well.

If you have the available funds (3.5%-25% of a down payment) I would start looking for multi-unit properties to live in and rent out other units. Ideally the rent from the other units covers your monthly mortgage costs, and hopefully other expenses as well, but every area and deal is different.

I would then do a secondary exercise on how much money you can save each month (regular savings, saved mortgage payments, etc.) to determine how long it would be before your next down payment on an investment deal. This should give you some sense of if your plan aligns with your goal.

Hi @Ryan Knott, welcome and good luck to you!

For investors starting out, a lot of folks like the concept of house-hacking. Depending on your available funds and goals, you can start with that, and the money saved from someone else paying your mortgage can be allocated to the next deal.

Ultimately I would tell you that some goal-setting, planning, and forecasting is paramount to any investment you get involved in. What is your goal? How will you achieve it? I say this all the time, but figuring out the goal and then working your way back into it is probably the best way to determine your next course of action. Be conservative of your numbers to find the best possible deal as well.

@Kate Gagnon some good advice so far. My mother in law is a renter and she just replaced all the carpet on the 1st floor in her place at her cost. She never bothers her landlord and always pays rent on time. We should all be so lucky. :)

I agree with others that you've potentially got a long term tenant here interested in improving the place. I would treat it no differently if you were getting the work done; I would want to know who is doing the work, they're ensured/licensed, and have a good track record. I'd also make sure that the work gets done properly so be present as part of the process.

@Thomas S. thanks for the insight. Only thing I can say in response is that in Philly/NJ the property owner MUST pay water/sewer, since its tied to the property and not the unit. Wouldn't a clause in the lease protect (in theory) a landlord? E.g. we cover your water bill up to X dollars, which constitutes part of your rent? I just don't know how any area investors are NOT able to get around that, and clearly people are investing.

I would say the same about common electric, and what is a fixed/locked heat cost. Not arguing with you, but if I've included them in my CF analysis, and I have, and the property still cash flows $200 per month with the potential for more, I'm curious to know if that changes your mindset or not?

Sent you a PM, Jason.

Hoping others will chime in -- wisdom of the crowd never hurts! :)