All Forum Posts by: Benjamin Molnar

@Caleb Heimsoth I think we missed the boat by about a year.  If we had started a year ago, I think we would have been fine with valuations where they were.

It's not that it's only $1000, it's that it's the best remodel I've seen in the area and it's significantly lower than the average price per square foot for that area.  Based on comps that are currently asking $160-170K which are nowhere near as good, it should have gone for $5-10K over asking.  It should have been one of the anomalies ($110-120) in the chart below but, instead, was much lower.  I agree there may have been any number of reasons for this but, I'm looking at the last three years for homes over $100K in a subsection of East English and Morningside and I'm not seeing a strong uptrend - for this area anyway.  Maybe I'm wrong?

I'm not worried about Detroit either, it's just that we're likely going to be changing to a BRRRR strategy and not trying to immediately flip. The asking prices for homes that need heavy rehab is putting too much risk into the deal unless we significantly reduce our rehab budget. The number of sales are extremely positive but, there's not a significant uptrend in price per square foot even for a stellar rehab. Going into an election year with a recession looming, we're not going to bank on a flip unless we see better numbers.

So my wife and I were about to submit an offer on a property in a great neighborhood - Morningside/East English - in Detroit.  We had two different HMLs lined up to do the deal and we were about to submit an offer when we saw a nearby comp that we were tracking convert from available to sold.  It was one of the best remodels in the area (that we could see) and it sold for $1000 less than asking.  We though that would go for well over asking and when it didn't, our rehab model was blown up.  Is anyone seeing the same?

Also, based on recent news, I'm thinking that Detroit and the market as as whole isn't great for flipping right now:

https://www.marketwatch.com/story/5-signs-that-home-prices-could-be-rolling-over-again-2019-06-17?mod=mw_theo_homepage

https://www.marketwatch.com/story/home-flipping-rate-hits-9-year-high-and-that-could-foretell-troubles-in-the-housing-market-2019-06-07

@James Marshall I've never had an appraiser have an issue with me suggesting comps and I've even had one appraiser ask me for the comps I had in mind. They can't know every possible area and house so, as long as your comps are reasonable, you're helping them out and yourself as well.

Hi,

My wife and I currently own a two-family in NJ near New York City.  Due to its proximity to the city, the property value continues to increase.  The downstairs apartment generates enough rent to cover about half of our mortgage but we're also spending a lot of money on repairs and renovation as the house was built in 1900.  I've listened to some of the podcasts from people that live in the surrounding areas who invest in older (and expensive) homes but, I've never heard anyone talk about the property tax implications.

It's not quite June and I've already spent close to $7K in property taxes which, combined with the depreciation, make for a nice deduction at tax time.  We would like to look at adding additional investment property in our area but we're not sure it makes any sense because of the high property taxes and there's only so much I can write off.  Does anyone have an opinion on whether it makes any sense to maintain investment property in a high property tax area outside of value appreciation?

We're going to Fort Lauderdale this weekend and, eventually Arizona, to look at lower cost properties with a lower tax rate.  We're thinking from a cash flow perspective, we'll probably net the same amount - maybe more - from multiple smaller properties but it's unlikely we would have the same value appreciation.

Has anyone else gone through this same exercise?  All opinions would be appreciated.

Thanks!

Benjamin

Hi Eric,

I used to rent in Paulus Hook and, while I wish I still lived in that area, it was too expensive for me to buy anything but a one bedroom. Thankfully I found a great realtor and broker that steered me towards a multifamily in Weehawken. It was still very expensive and I grossly underestimated the amount of rehab that would be required in my unit (the house was built in 1900) but the "rental" half was mildly remodeled enough to do AirBnB. Due to the proximity of the property to bus, ferry, and tunnel access to NY I'm almost at or above 90% occupancy and I make well above market rent for the area. Most of my guests are one to two weeks and almost exclusively from another country which is some protection in and of itself. They bring wine and other gifts and clean the apartment when they leave.  Aside from the regular cleaning, it's a good gig especially once you factor in your write offs and depreciation at tax time.

The only time I've had problems is doing a short term rentals to U.S. guests. Even though it's through AirBnB, they start making a lot of demands as if they were a regular tenant. In NJ you do have some protections to choose who you rent to when you live in the same property so avoid the auto-book option and screen your guests.

If you can get something in this area I highly recommend it. Just make sure you get short-term renters insurance and you'll be in a good spot. When you're ready I can refer you to my realtor and broker who are both investors and will keep your interests first.

Cheers!

Hello, everyone!

I need some help. After being inspired by BP, I purchased a multi-family in Hudson County, NJ close to NYC. I used my VA entitlement to purchase my home. To be honest I probably pulled the trigger a little early as I didn't have a lot of cash on hand when I purchased and the rehab on a house built in 1900 can be challenging. As the rehab I'm doing will be wrapping up soon, I'm now in a position to purchase a second home and I'm wondering what restrictions there are for purchasing a new primary via my remaining entitlement or a 203K loan.

Do I need to show a need to move?  Can I move down the street or do I need to move the next county over?  The next state?  Any advice and/or experience would be helpful!

Also, I'm not looking to bend or break any laws/rules; I just want to know what my boundaries are so that I can move - legally - within them.

Thanks!

@Account Closed Thanks for the advice! I'm moving away from the flip idea, it's in a great location so I don't think parting with the property is a good idea for the time being. I am just now finding out about the VA streamline refinance so that opens the door for me to purchase a new property with my VA entitlement without selling.

Thanks!

Thanks to BP's podcasts and forums, I'm currently under contract for a two-family home in Weehawken, NJ. It's my first home purchase and I'm very excited. I've got a great view of Midtown at the end of the street and I have easy access to the Lincoln Tunnel which I need to use to get to the office and to customers when I'm not working from home. That being said, if you know the area you know that I'm breaking every rule I've come across since joining this site. I'm also going VA so my LTV is probably going to be a little north of 100%

Despite this, the downstairs unit has been rehabbed to about 80% and is currently bringing in around $100/day on AirBnB according to the sellers.  Just a private room goes for about $80-130 a day from what I've seen so that may even be low.  Based on the rental comps in the neighborhood, I will be able to rent long-term or do AirBnB and still end up paying less for the mortgage than what I am currently paying in rent.

The only issue that remains is that there is some hair on it.  The structure and flooring is solid but there are smatterings of asbestos pipe insulation and knob and tube remnants in the basement.  I've got multiple drywall repairs to do.  Sub-standard fusing and non-compliant outlets.  The roof is new but I am working on getting a credit from the buyer to fix the roof overhang that is leaking on the steps.  I need to do a new bathroom and kitchen upstairs where I and my girlfriend will be living.  All of this with the exception of the roof overhang and the step mortar, I can do myself.  I mostly work from home so this grants me some flexibility on what I work on during the day versus what I do at night.  If you knew me you'd know that I've been living the 10X rule long before I found out about Grant Cardone on the podcast.  I will get this done - keep my job and my girlfriend - and it's going to be amazing.

So.  Based on this information, should I try to go for a quick flip in a market where there is very low inventory?  I should add that there are a number of rehabs underway on the same street/block.  Or should I fix what I can, raise the value of the house and take out value to purchase another property where the numbers make a little more sense?  I have to be close to the city so there's no way I'm getting around paying a lot for rent and it pains me to pay what I'm paying in this area but it would be great to increase my working capital from a flip.

I have pretty much made up my mind on what I'm going to do but I always appreciate the colorful debate on BP.  Any and all advice is very much appreciated!

Benjamin

p.s. I will be starting a blog to document the rehab process.  I'll be updating my signature with that once I've closed.

For GC, that's probably true.  Home Improvement appears to only require proof of incorporation and the appropriate level of liability insurance.  I haven't been able to find anything in the application requiring experience which is a little odd.