All Forum Posts by: Joshua Lupo

@Jamie Brayton can’t wait to join!

@Elizabeth Holloway @Jamie Brayton great choice for markets to be interested in. My wife and I began investing in South Troy in 2018 and have been building our portfolio since then. Troy has seen immense interest from local, state & even international developers over the last 18 months. Over $100 million worth of large, multi unit projects have been completed with a total of over 300 new units. 

Recent, a private equity firm firm China was in the area, paid cash to acquire 250 units with the intention of coming back in the spring to acquire another 600-700. 

Troy in some instances can still be very much block by block & for us, we own and an operate a portfolio near HVCC which is seeing considerable development as well.

would love to find ways to collaborate with others interested in helping contribute to Troy’s Renaissance!

@David Kiszka. The Capital District is a very hot market right now! A lot of out town, out of state and international money is flowing into the region and sometimes buying hundreds of units at a time. There is still room to run I feel as rents are competitive and the labor market being diverse. Local landlords have been impacted by COVID-19 and rent collection seems like a hit or miss depending on who you speak with. We personally own and operate a small but growing rental portfolio in Troy which is right near the top of the list in terms if cities seeing a lot of development and interest. 

Hi @George Samios! The Capital District is full of viable investment options with more than reasonable price to rent ratios. The local economy is a strong, diverse and growing one and rents have steadily risen as well. Popular cities are Albany, Schenectady and Troy however places like Cohoes, Waterford, Watervliet and Colonie are also very popular. I know you mentioned Schenectady and it is worth nothing the taxes in that city are the highest in the capital district which can definitely be a barrier for some investments. Schenectady is gradually improving but in my opinion, depending on your criteria, theres really only a select area I would consider investing ( close proximity to Union College). Albany has a very strong rental market with several colleges, universities, hospitals, state jobs as well as other strong industries. Valuations in Albany are a bit high in my opinion which means tighter margins between price to rent ratios. Overall if I had to grade Albany I would give it a B+. Troy has seen a lot of institutional investment in the last 2-3 years with a lot of higher end units and also bolstered by colleges and variety of employers that have come to the county. I personally own 2 units in Troy and would give the city a B- as there have been improvements with pockets of higher quality but still a lot of rougher areas. I do a lot of deal analyses and so please feel free to contact me directly and I would be happy to get more specific about properties currently available!

@J Scott Based on our current income and expenses (we are house hacking a duplex) I do believe we could have the necessary capital (~$35k) in 18 months to secure conventional lending but global markets could shift. That being said, I would want contingencies in the contract to account for this possibly not happening and extending the balloon out.

-In our market (Albany, NY) average mgmt is 8-10% of gross rents. From what I can gather, average vacancy is 7-9% and in terms of condition of property, seller notes it's "turn key" with new furnace, newer roof as well as updated ammenities.  We are estimating that we would put aside $400 per month or $4,800 per year to account for vacancy and repairs. 

Comparable sales in that area are typically around $175-180k and were currently at 160k for this as there are no realtor fees with being a private deal. For the seller financed portion of the deal, I do believe it's a break even however being that we will be managing the property and collecting rents and handling any issues, could the $188 mgmt fee built into the analysis count as ROI for us? If so that would be approximately $2,256 annually on a $10k investment leaving approximately 22% cash on cash.

Once we refinanced into a 30 year conventional loan product, I estimate that our mortgage, including taxes and insurance would be $1,100 per month. On top of that assuming $590 per month for mgmt, vac, repair and cap ex, and $230 per month for utilities, our monthly NOI pencils out to be roughly $352 per month or $4,230 annually against the approximately $36k to get into a conventional product producing around a 12% cash on cash.

From what I am reading, when doing seller financing the benefit is lower cost to entry and more flexible terms but lower initial ROI but I am wondering if there should still be more of a spread?

@Danny Randazzo so this is where were at:

$160 sale price

8% interest

150k ammortized over 20 years with interest only payments

18 month balloon

$2,350- gross revenue

$2,335- All expenses

$15 net +$230 monthly mgmt fee were able to collect for managing the property until we own it.

230 x 12 = $4,140

$4,140/10,000= 41% cash on cash

Thoughts??

@Greg Scully @Danny Randazzo So basically this is what's been offered to us:

$165k sale price

$10k down

Private mortgage of 155k at 8% on a 20 year am. Monthly revenue is $2,350 and expenses are $2,030. We would manage the property  over the next 2-3 years, collect rents and any cash flow and at the end of that term, we would refinance the property into a conventional bank loan.

Both units are leased with one being annually and the other on 3-6 month short term leases and usually to congress or other political people. Again Monthly revenue is $2,350 and expenses (not accounting for vacancy and maintenance) is $2,032 leaving an NOI of $318 per month so in essence it's roughly break even. I like to take gross rents and then back out 25% for mgmt, vacancy and repairs and then from that number back out PITI and whatever's left I see as being NOI. Im estimating that once we refied into a bank loan the monthly expenses would be down to around $1,900 giving us an approximate monthly cash flow of $385 with about $35k into the deal which works out to be around a 12-13% cash on cash return. As an investor, what am I missing, What should I asking or considering and does this sound like a decent opportunity?

Hi All! When it comes to multi family seller financing, who collects/uses the monthly rent during the term of the seller financing? For instance, if a buyer and seller agreed to owner finance $40k for 36 months and came up with an interest rate and subsequent monthly payment. During those 36 months, the buyers would pay the seller whatever the monthly payment was but in exchange, would the buyers then be able to collect the rent from the units and use the cash flow as they see fit?

I am a long term, buy and hold multi family investor in the upstate NY market and specifically Albany,Schenectady, Troy area. I analyze dozens of deals per day using the following formula. Gross annual rents-25% (vacancy, prop mgmt, repairs, maintenance)- annual taxes- insurance= NOI. If anyone thinks that formula needs tweaking please give me input. Using that formula, I find that around the Troy area I see 8 caps with 1.4 price to rent ratios and in the ball park of 13-15 cash on cash. Albany the numbers are compressed and I see roughly 1-1.2% price to rent, 6-7 caps and around 9-10% cash on cash...And then theres Schenectady...Time and time again I analyze deals and the numbers are cartoonish. For instance, 185k, 5 unit fully rented with 3,600 a month gross rent and $1,470 PIT. We are talking like 34% cash on cash, 13% CAP rate, and literally 3.5% price to rent ratio. I have driven past this place and looked inside and seems overall pretty solid. I am consistently finding 13% cap rates in Schenectady around Union College area and have not come across anything like this in other, NY markets. Yes taxes are egregious thats for sure but when factored into the proformas, deals still pencil out consistently with ludarcis numbers. I get that Schenectady has it's rough patches and not as strong of an economy as Albany but is there something HUGE I am missing or has anyone found the numbers to actually be this good? Anyone actually buy and own in Schenectady?

Hi @Kevin Marcucio. I think Albany, Schenectady, Troy get a lot of attention because they are more centrally located and bigger markets. That being said, I have family in Gloversville and often analyze deals out there. The local economies in Fulton/montgomery county have a ways to go and still high poverty and crime rates. There are not as many "economic engines" or development happening however there are absolutely still deals to be had. As someone who lives and invests in Troy, I can tell you that the inflated prices here do make your location somewhat appealing from an ROI perspective. If you are living out that way I would suggest driving and analyzing deals and I am confident you can find something that will work well.