All Forum Posts by: Jonathan Sowinski

The City of Buffalo is holding their In Rem Foreclosure Sale in a few weeks (Oct. 3-5) and I am hoping to get a better understanding on the potential deals. Or better yet find someone who has any personal experience with the COB Sale, or anyone who may be interested in a joint venture.

As I understand it these properties will be sold free of any outstanding liens, for the greater of 20% or $500 down and the balance due approximately 6 weeks later.

I have completed some research/due diligence on the properties that are in the neighborhoods that I am most familiar with and there looks to be some nice ones still on the list (owners have until the last week in Sept. to petition the City to remove their property from the list).

Things that I have completed in researching the properties have been:
• Current owner(s)
• Property class
• Tax Value
• Last sale price & date
• Drive-by/visual inspection

Is there anything else that I should consider trying to determine before the sale? I was planning on contacting some of the owners in order to see if they are looking to sell or work out some sort of deal.

Unfortunately for me this is coming at one of the worst times as I am about to have the majority of my liquid assets tied up in a purchase that is in the process to close….taking forever going on 4 months since the initial offer.

Besides the aforementioned research I have approached my banks to see if I may be able to apply for a general pre-approval for a maximum amount so that if I was to jump on a deal I could get the financing hammered out in the time before final payment is due (waiting for a call back).

I am half anticipating that there may be some issues in that I am in the middle of this other deal and traditional financing might not be that easy to guarantee.

Any suggestions, comments, questions, tips or potential investors are welcome.

Additional Info...

Link to the Memorandum of Sale: http://www.ci.buffalo.ny.us/Home/City_Departments/Assessment_and_Taxation_Department/Inrem45/Memorandum_of_Sale

Link to the listed properties: http://www.ci.buffalo.ny.us/applications/ForeclosureInremListing/default.aspx

Brian,
I live in the City of Buffalo, have owned our house (3/3 dbl) for just over 4 years. I think that we are in one of the best rental markets in the City (Elmwood village) it was selected in the top ten APA best places to live 3 years back, Forbes listed it recently in a list of something good I forget what it was now…

Anyway, I am in the process of closing on an 8 unit a few blocks from my house now and am making an effort to ramp up my investing in the near future. I have been farming my area since before we bought our place and think that I have a good feel for this area (City). If $50k is you total purchase price your options would be limited to the West and or East sides. I myself would be more comfortable on the W. side but that is solely based on familiarity with the area and demographics. You could expect to get ~$450 for 1br or $600-$675 for 2-3 on the W.S. (just a broad idea obviously.) I am familiar with the suburbs as well but have been mainly focusing in the City for proximity.

What are your plans for management?

I would love to learn how things turn out for you, and if I can help you out in anyway…shoot me a msg if you have any questions.
Best of luck,
Jon

J brought up a point that I was questioning myself, what is the timeline for the project?
If there are discrepancies with the date of completion between your contractors, that would have a big influence on who had a better price…even though the project will inevitably run longer than their estimates.
Price seems reasonable though…as long as he can meet your schedual.

Are these SFH that you are buying? if not is your $200-400 cash flow per door?

Chris,
Disclosure: I am neither a lawyer nor familiar with the details of the Ohio tenant rights…
However, I believe that as long as there was once an agreement to lease/rent the house between the landlord (owner) and tenant the issue of adverse possession would not apply. The property must be held hostile to the owner’s rights, meaning they couldn’t be there by permission of the owner.
Also, they would have to be there for something like 5-15 years depending on the state law.

Uwe,
Found this general guide if it helps…
http://www.tenant.net/Other_Areas/Ohio/tenant_l.html

Yep, have them in there, I figured X amount set aside per month until I hit the estimated replacement cost by the time I anticipate having to do the work. I just wanted to see if anyone factors these larger individual expenses differently in their analysis.

Yep, every unit has its own separate gas meter and in unit furnace/heater one has a fireplace that is rated for use as a heating device. So they pay their gas bills that covers heat, cooking, and hot water.

Jeff,
NY taxes gotta love them; this building's tax rate will be 31.65%.

Kevin,
It seems that we would have cash flow but not near the $100/door goal that I have seen mentioned on other posts.

The #s start making more sense ($100+/door) if we get into a longer term loan 20-30 yr. I have a broker friend looking into finding a longer loan terms.

Question for anyone, as I mentioned I know the roof will need to be replaced within 10 years(ish) I have an expense category to save for this roof. Should I be including that in the total expenses in my calculations? I have been but wanted to know how others might handle things like this.

@ Kevin

The $23,712 comes from the 50% rule (half of income will be spent on expenses) this is an estimate…However I have seen the actual bills and the owners P&L for the last three years (whatever that is worth), from the bills and my estimates my expenses are actually slightly less ~$20,000.

I am not sure why our #s do not match $175,000 @ 6% for 15 is P+I of $1,476.75/mo and $17,720.99/yr, unless I am missing something? If so I should really reconsider…

@ Joel

It is 100 yrs old, I have policy lined up that will be costing me $1,750/yr as is, if I upgrade the electrical service it will be closer to $1,100. (That is upgrading service not replacing existing wiring I have looked into that.)

The seller has let the property go in the past few years and has had horrible management. However, after our inspection we are confident that there is nothing structural/mechanically wrong, just aesthetics need to be improved. The only thing major that we are planning on defiantly is a roof in the next 10 yrs +- 3.

Have not seen the Schedule E yet it has been requested though. It is a very strong rental market however and from what I can gather 7% is not far off of what is to be expected.

We are anticipating cash flow will be put back into the property for a while in order to bring it back to its potential.
Yes, I do need a partner and am looking...know any?

We will pay common area electric and water…both are ~ $100/mo each.

I hope that this is not a dog, I knew that it is not going to be a cow anytime soon, but now it has me thinking again…

Actualy i have been using 7% vacancy in my calcs...cant say why i put 5% here.
Thanks, yes i agree my time us worth $$ as well.