All Forum Posts by: Josane Cumandala

We just don't have the data yet to know what the impact of all this will be. NYC has been losing residents even before the lockdowns due to the cost of living. Despite that the local economy is very strong and it's hard to see the real estate market declining as much as the overall country. But anything is possible. I've been thinking about leaving the city for the first time since I came here 10 years ago. But it will be very easy for my landlord to replace me and I don't think enough people/businesses will leave to harm the overall economy. 

Keep in mind an appraisal reflects one person's opinion and is valid for one day, and only one day known as the effective date. The market could have changed since the seller had their home appraised. Every appraiser is different but I personally hate it when appraisers quibble over such small differences in value. Your price is seems to be within range of the appraisers $350k so why cause a headache over $10k? I would say if cashflow is positive and your criteria has been met I wouldn't worry too much about the appraisal. Oftentimes banks shop appraisers by price and the job goes to the lowest bidder. Not a great thing for appraisal quality. I say this as a residential appraiser myself haha.

@Nicholas Aiola is a great CPA in NY focused on real estate and can definitely be of more assistance to you than that real estate agent.

Any real estate transaction has tax implications. If you aren't knowledgeable enough or do not have the right team in place yet for a commercial property you may want to rectify that before you pull the trigger, but certainly don't let bad advice from a real estate agent deter you.

It's not your fault that the seller/listing broker is using the seller's buy-in price from the top of the market to justify their selling price. That is not how real estate works. The market does not care how much you paid for the property or how much you overspent on the renovation. It's about what other people in the market are paying currently for a similar property or how much income the property can produce right now. 

Honestly, I don't understand why the seller's agent is disclosing how the seller overpaid on acquisition. Is that a guilt trip on you? Agents are supposed to honor their client's privacy and work in their best interests. Telling the potential buyer that the seller made a mistake in the past seems silly to me at best and potentially a breach of trust at worst. That said, it wouldn't be the most egregious thing I've seen a New York real estate agent do.

Whether or not the seller can back out depends on the contract you signed but honestly it's a free country and it's still their property, no one should force somebody to part with their property if they don't want to. The question is how motivated is the seller? No need to beat them over the head in the negotiations. Try to build rapport with the seller and the agent as much as possible and come to a win-win. But definitely do not feel obligated to overpay because boo hoo the seller had to bring cash to closing.

I'm a residential appraiser and in my market the general rule of thumb is a bedroom has to be greater than 100 square feet, has at least one window and closet, and isn't located directly off the kitchen. Sure, sometimes people use non-conforming rooms as bedrooms, but in my appraisals I designate such rooms as "sleeping areas," offices, or dens. 

I hate to say it but appraisers are notoriously dumb sometimes and it doesn't surprise me that she took a listing as gospel truth. The assessor and common sense should guide an appraisal, not a listing agent. I don't know what your assessor would make of that appraisal but yes, generally a three bedroom would be seen as more valuable than a two bedroom. However if there are specific codes or regulations pertaining to the definition of a bedroom then they would most likely dismiss the appraisal as erroneous. 

Keep in mind that high-price markets like Seattle, San Francisco, and NYC are extreme outliers in relation to the country at large. High-price markets tapering off is not indicative of a bubble bursting. The U.S. has an affordable housing shortage. When the demand is concentrated in the entry-level and median price ranges it stands to reason that the luxury market which has an over-supply would contract proportionately. 

You have already come farther than most people who express an interest in real estate. You got over your fear and took action. That alone is huge and I applaud you. Mistakes are part of learning and with real estate things tend to right themselves in the end. 

I would look for mentors in your market who can help set you on a better path. A good real estate agent might also be able to help you unload your inventory so you can buy a better property. When the going gets tough having a good team around you is so important. 

Stay strong! :) 

Should you invest in the stock market? It depends. What is your risk tolerance like? Where are you in terms of your financial education? 

I personally have a Vanguard 500 Index Fund but I do not think that means I am "investing" in the stock market. I say that means I am exposed to the stock market. Any idiot can sock money away in an IRA or index fund. However investing in the stock market (in my opinion) takes more sophistication than just "saving" money in a fund managed by someone else. Really investing requires you to learn how to study the technicals in order to determine the financial health of a company and make an informed decision about whether or not to put your capital at risk there.

Putting your money away in an index fund exposes you to the stock market but offers zero protection against systemic risk. When the the S&P crashes, so does the value of your mutual fund. It's alright for me right now because I need to be getting some kind of yield on my savings to stave off inflation. However, if the S&P falls too much I know when to get out. Paper assets also are not very tax efficient . You can argue that IRAs and 401ks are tax deferred but why defer taxes when with real estate you can basically eliminate them? 

I would highly recommend The Intelligent Investor by Benjamin Graham. He was Warren Buffet's mentor and the book is a timeless classic on the stock market and value investing. It was and still is an eye-opening read that I return to periodically. I think there's definitely a lot of money to be made in the stock market but whether or not it's a fit for you depends on your specific financial goals, temperament, and frankly -- intestinal fortitude.

How are you all getting good property management from such a distance? Initially I was gung-ho about investing out of state but now I'm not so sure. I just don't know how good the property management would be for a small multi-family. I saw enough slum lord property management right here in NYC to know that's not my brand. How are you all managing it?

Originally posted by @Tom V.:

"I was invested in all solid low-cost Vanguard funds and yet the returns were garbage." 

I don't believe that Vanguard low cost funds underperformed the market for any meaningful time.

They didn't. Hence why I'm not using my company's 401k plan. I don't blame Vanguard, I blame my company and their poor taste in financial planners. :)