All Forum Posts by: Llewelyn A.

I have to say that sometimes, we should think a bit outside the box.

During the time when the Spring Breakers were doing their thing, AND we knew they were spreading the Virus.... What do you think was the WORST thing to do?

SHUT DOWN the spring Breakers at the time that they had all passed the virus to themselves and tell them to go home to where ever they came from.

Imagine you had 50 Petri dishes.

One of those dishes, call it Florida, had a spreading red spot and all the others were very clear and stable.

Then you took a drop of the Florida dish and put a tiny drop in all the other 49.

I think we can clearly see that this is probably the WORST policy one could have imagined to have done.

The BEST policy would have been to just allow the Florida dish to turn red and then after two weeks, turn back to Clear.

So, if you think about it, instead of spending several TRILLIONS of dollars to try and contain 50 dishes from getting to a red state.... it would have been much better to spend less than a Trillion to let the Spring Breakers enjoy themselves for the 2 or 3 weeks locked down in their party place while they developed the HERD Immunity.

In fact, I don't even think you would need more than a Billion or even less to make these Spring Breakers Happy and keep them contained for 3 weeks!

You would have contained the virus and made a whole bunch of Spring Breakers happy... and probably got a few babies out of that as well.

The Funny thing about this way of thinking is that if you had thrown MORE money to let the Spring Breakers have MORE freedom to party, we could have actually slowed down the spread of the Virus much better than forcing them to go home to the other 49 Petri Dishes.

In this way, I agree with Bryan. Thinking to shut down everything when we knew the Virus was spreading only made it WORSE, not better.

Allowing the Party Animals to Party, giving them Money to continue under the lock down in those areas, seems to be a WIN-WIN scenario. The Party Animals win as they are happy to Party on our dime... the nation wins because the Party Animals develop Herd Immunity BEFORE they go home.

Or am I way off here?

BTW, there are lock down related deaths that are NOT being counted. For instance:

1) Increased Child Abuse deaths due to the fact that School closures resulted in higher cases of Child Abuse

2) Domestic Violence Deaths as Families are force to stay together without respite generally from going to work

3) Increased Suicide from the Stress of losing jobs

etc.

Count ALL the deaths... not just the Coronavirus related deaths. The lock down related deaths should be compared to the Coronavirus related deaths. If it gets close in comparison, then you have to wonder if the lock down was worth it.

@Jack Fernandes

@Jay Hinrichs

Hi Jack!

I am very similar to yourself, getting my Broker's License and bypassing the Salesperson Requirements as I qualified via other means. Iin my case, 2 decades of building up a NYC Real Estate Portfolio was good enough for NYS, after I demonstrated I had enough points to meet their qualifications.

I also opened up my own Brokerage Firm, Work Hard Realty, for the purpose of buying to add to my Portfolio of Properties AND saving the Buyer's Commission.

It turns out that for my situation in particular, there was a lot of things I did NOT know which became a hinderance, until I got around them.

The most important was that if I was NOT part of the local NYC MLS, I was not able to get the Buyer's Side Commission info. In other words, for a particular Listing, what was the Buyer's Side Commission? That kind of info was only available on the NYC MLS's (there are actually multiple MLS's for NYC) privately and shared amoung members. It was NOT publically available.

Joining a NYC MLS is costly, as I found out, as a Brokerage AND a Broker. It was upwards of several Thousand dollars with many different fees.

Since I'm buying at a similar price range as yourself, around $1.5 Million to $2 Million, I wasn't sure if I should just suck up the fees or try to buy it without joining the MLS as there are other options like a Website that already aggregrates the Listings of all the MLS's called StreetEasy.

What StreetEasy could not do was get the Private Commission Splits for the Buyer Side Co-Broker.

HOWEVER, I decided to see if not being a Member of the MLS was going to be a problem.

I started calling Listing Brokers to introduce myself as a Broker from my own Firm looking to buy their Listed property and also save the Buyer Side Commission. As soon as I asked them what is the Buyer Side Commission, they knew I wasn't a MLS Member. Because I wasn't a Member, the Listing Broker could negotiate a different Buyer Side Commission than what was privately put into their MLS of choice. In some cases, I was offered only a 1% commission on a $2 Million Listing.... and I'm buying ALL CASH!

This is apparently legal because the 50% Split of Commission is really an Agreement that cooperating Brokerages agreed to via contracts as members of the MLS. If they are cooperating with a non-MLS member, they can negotiate the Buyer Side Commission legally.

It was apparent to me that for highly desirable properties in NYC, I needed to force the Listing Broker to split their commission evenly.

That's when I joined the MLS (REBNY in NYC).

REBNY has a Universal Co-Broke Agreement that All Members must sign and Abide by. Without this Agreement, it's the wild, wild west here in NYC. That agreement specifies that Listing Bokers and Cooperating Brokers split the commission 50% even.

I spent the several thousand dollars to become a member and from that point on, there was nothing a Listing Broker could do but to split the Commission evenly with me. If they refused to give me a 50% Split of the total commission, I could take them to Aribitration through the MLS.

Again, I don't know how different it is elsewhere, but I will tell you that in NYC, if you didn't know the rules of the game, you would get a lot less than the 50% Buyer Side Commission.

There are other issues that I won't get into right now. I'm just pointing out that in NYC, it wasn't as straight forward as would seem to be when starting out.

Now that I'm ready and knowledgeable, I found a property for $1.7 Million, negotiated it down to $1.5 Million.

The Listing Broker and I worked out the Paperwork (What we call a Deal Sheet) that specifies the details of the transaction including the Commission splits. The Deal Sheet would be giving to both Seller's and Buyer's (my) Attorney so they can then draft the Contract of Sale.

As Jay Hindrich mentioned, there might be advantages to having the Commission credited towards the Purchase Price rather than receiving it as a Commission to your Firm or yourself. You basically are deferring the Tax Obligation of the Commission to the date where you will sell the property.

As a result of doing all the above, I reduced the purchase price of the $1.5 Million Purchase by 3% or $45,000.

So, not only did I beat down the price by $200k ($1.7 Million originally), but I received a Credit of $45k for a total savings of $245k off the original listing price.

I'm not sure if any of the above will be anything but Entertainment, but I thought I would mention it since I went your route and acquired my Broker's License without being a Salesperson.

I found myself swimming with the Sharks! What the Sharks found out was that I was a bigger Predator than them!

@Jonathan Valdes

Hi Jonathan! In your case, If you have decided NOT to rent your Apt, that does not mean you should do NOTHING.

You SHOULD advertise your apt. HOWEVER, you should STRATEGIZE on getting the highest rent with the most qualified tenant so that when it is time for you to get a Renter, you have already done your leg work.

For instance, let's say you believe the top of the market for your Apt is $2k per month. Advertise it for at least that.

Gauge the number of applicants. If none, obviously, you missed the market or the current COVID-19 has affected your ability to rent at that price.

Make adjustments either by increasing amenities (for instance, adding a Dish Washer or Laundry) or by decreasing the price.

When you do get applicants, you tell them that you are gathering information for now, but not a full application. Ask them to send you the info via email. Let them know that once you are ready to rent, you will then give them a full application that needs everything.

The documents you can ask for is:
1) Credit Score - ask them to send you proof of their credit score. If they have it on an online bank account, Credit Card or even just using Credit Karma, it gets them ready for a future application. They can send you screenshots on their phone or on their computer. Every applicant that contacts me in the last 4 years has been able to do this. Hopefully yours will as well.

2) Proof of Income - ask them to send in their last 2 pay stubs. This will be incredibly helpful as you will know if they are working during this time and WHERE they are working, which could be important.

3) Ask for their profession - Again, knowing what they do will be helpful. Are they Essential workers, do they work from home, etc. Very important.

4) Do they have Pets? You really need to know this before they move in.

5) Bank Account Statements - ask them to send you bank account statements so you can see if they have any savings. If they don't have savings, in upcoming situations like this, they will get into trouble.

You can tell them that because this won't be an official application, they can wipe off any kind of identification info like SS#s. However, when they fill out the actual Application, you will need to see everything for verification purposes.

While deciding NOT to rent at this time is a good decision, doing something is better than doing NOTHING.

You will also see that the time that you are taking to get a great tenant will train you to be a good Property Manager/Landlord. You are putting someone into your Home. Make sure you get the best qualified and a tenant that will fit with your ideals. You have the time to do this.

The absolutely worst failure that a Landlord can make is putting in a bad tenant. Use this time to find the very best.

You will learn a LOT during this process and you will wind up with the best tenant.

I collect about $75k per month. $60k has already been collected and the other $15k will be collected in another week at most.

That being said, a few of my Tenants are in the Gig Economy.

One in particular is Canadian and in the Gig Economy.

Those who I know lost their jobs, especially where they won't even get a Stimulus check or unemployment, I'm giving them a small rebate on their rent.

That will amount to about $2k.

So, to put it in percentage, I am sure to collect $73k/$75k = 97.3%

HOWEVER, I'm renewing leases without any rental increases this year.

So there will be a downside to this as I will absorb the increase in expenses like Property Tax, etc.

Over all, this has ZERO effects on my lifestyle. If anything, I will still do well enough to collect enough cash flow to throw it into the Stock Market while it's still around 20% below peak.

I consider any rebate of rent is small stuff compared to what I will make in the Market from the Cash Flow I will invest.

I always believe that a little Charity will pay off in the End! This is certainly one of those situations!

Win-Win for all!

What Mr. Salerno did was helped people regardless of how much they really needed it.

The Article mentions Mr. Gentile, an Attorney who was just let go but will be rehired when the economy bounces back. He also has a Fiance, whom I speculate to be someone who may be doing well herself.

Regardless, he Father owned a Auto Body Shop since 1959. He himself bought properties in 80s and in the 90s turned all of the lots into Apt buildings.

In other words, the guy was really wealthy and go lucky to be in Williamsburg, one of the highest appreciating neighborhoods in all of America.

This is more analogous to the Billionaire Robert Smith who paid off all of the loans for Graduates from Morehouse in his class, including their Parent's loans.

Personally, I think if you are going to give Charity, give it to those that are struggling or at least give a Means Test to distribute the money so that you don't give it away to people that really don't need it as much as others that are struggling.

Better to donate the money to a good cause than to arbitrarily give it to people whether or not they need it.

@Yvonne Shui

Hi Yvonne,

I own 3 Buildings in Bed-Stuy, All 3 Family, 2 are Brownstones and 1 is a brick building.

The one closest to where you are buying is probably going to be on Hancock and Thompkins or on Greene Ave and Throop.

I think the most important thing about buying in Bed-Stuy right now is to make sure you get a professional tenant with high income and high savings to weather the Coronavirus Storm.

Last Month, one of my tenants at the Greene Ave/Throop location gave me notice as she closed her Williamsburg restaurant and needed to leave, moving in with her bf.

Her apt is a Garden Apt, Large 1 Bedroom with a Laundry in Unit.

I decided to get a quick renter that has been qualified and I advertised the apt for only $2,500 per month. BTW, I know a lot of people on here would not think that $2,500 per month would get a quick renter, but this is Brooklyn.

Within 6 days of ads, I got 40 inquires, 5 applicants and I took the best one which was a YOUNG couple that made $200k combined income plus had $200k in savings or an IRA.

I don't really have experience with a higher priced apt like yours around the $5k range, but maybe my rental is annedotal.

It seems to me that there are a lot of people who are considering low density buildings like ours to be highly desireable because of the Pandemic.

It makes sense because you can pretty much isolate yourself and you don't have to go into an elevator, potentially breathing in someone's germs who may have just sneezed or coughed while you are within 6 feet of each other.

For the Garden Apt, it's exceptional to have at this time of year as well. If your apt is like the one I just rented, it will have a separate entrance where no other tenants come in or out.

To me, I'm very lucky to have such an extraordinary portfolio of properties that are attractive to tenants that now want to be in low density buildings.

I suspect that this trend will continue and I certainly don't think that this will be our last Pandemic.

Also, when I look at price point, while the current comps are important for the Mortgage you are looking to get, I generally care about what the price will be in 10 years from now.

Who cares if you buy a property for $1.6 Million if it's worth $3 Million in the next 10 years?!

Looking back at hindsight, I bought a small 2 Family building 1 block away from Prospect Park (near the lakeside) in the year 2000 for $140k.

Today, that property will sell for over $1.1 Million.

In my mind, once I get an idea how much the property is worth in the future, does it matter if I bought the $140k property at a $10k discount when I already make close to $1 Million in apprecation?!

Now, there are a few caveats, of course.

The future is risky, but mitigating your risk by using your intelligent is important.

There are things going on that may affect your property. For instance, if the Mayor continues to release prisoners who then congregate in areas of the City including Bed-Stuy, this could cause crime to spike. That will then lead to lower appreciation if your area does not have enough development or if there are too many projects and protected class buildings.

Safer Streets in Bed-Stuy that are away from low income buildings and projects might be able to capture the future appreciation or at least get higher income tenants.

There are a lot of things to think about when you buy. BUT, if you are not thinking of the future, you won't bother looking into your neighboring properties to know if they will affect future apprecation.

Anyway, something to think about.

Originally posted by @Patrick M.:

3 months ago I could not have imagined that a national movement for a rent strike would take hold in the minds of tenants and the national public, fueled by the press and landlords who have taken to the airwaves to gain the admiration they lack at home. That through no fault of their own, landlords; not credit cards, not obscene car payments, would be targeted as fair game to be stiffed, was not even on Bernie's platform.

I have always maintained in my posts and in my professional life that I do not need to "be loved" by my tenants. My tenants appreciate me and I am the best landlord, hands down. I fulfill every aspect of my lease terms and when there is an issue I address it immediately. I appreciate that my tenants fulfill their requirements. As I have often said, I am so very grateful for my buildings and the financial opportunities they give me.

I am not a king- I am not some benevolent sovereign who looks down upon his subjects and decides that I shall bestow onto them some gift and trumpet it from the hilltops so that all shall know of my goodness.

I am not in need of love- I have family, and as such I know the strength of that bond and the unconditional love that goes with it. I would never in a million years look at my best tenant as family nor would I seek to love them or be loved by them.

What I find hypocritical and unprofessional is that under the surface of all of this benevolence is some sort of a cockamamie business model. "If I do this then I can secure my rent earlier." "If I do this then I shall be loved! And they shall always treat me as the benevolent sovereign that I fancy myself." "If I do this then they shall testify on my behalf." (really?)

I must keep my buildings. I must keep my buildings up to the high standards I set for them, forget about government standards. As such, in these unprecedented times, my responsibility to my tenants is to provide them the shelter and services outlined in my lease. 

"I feel like the 2008 financial crisis was just a dry run for this,” said Kenneth S. Rogoff, a Harvard economist and co-author of a history of financial crises, “This Time Is Different: Eight Centuries of Financial Folly.”

“This is already shaping up as the deepest dive on record for the global economy for over 100 years,” he said. “Everything depends on how long it lasts, but if this goes on for a long time, it’s certainly going to be the mother of all financial crises.”

I prepare for the worst and hope for the best. As such, my "cash flow" will not be squandered on rebates or gifts that make me feel good. Instead it will be held to be used in the event this drags out... In the event that there is no or partial rent coming in the months ahead... In the event there is a likely moratorium on evictions for a year or more, be it by executive order or by activist court.

10% of my rents is +$1400, that money can go a long way if your back is against the wall 6 months or a year from now. The love of your tenants will not pay a mortgage. I suppose having a tenant testify on your behalf holds some value, but my tenants  are vetted, law abiding citizens and would testify to the truth when subpoenaed or presented with an affidavit anyway... so not really sure of that whole bribery scheme.

I stand ready willing and able to assist my tenants during this national emergency when they require assistance.

I will not compromise my business or my buildings during this crisis. Whether it last 3 months or 24 months.

Patrick, I think you are mis-understanding what some of us are saying. Each Strategy is a BUSINESS Strategy.

In the case of my Benevolent strategy of helping needy tenants, I am using the "Customer first" Business Strategy.

This may work for me as my properties are in NYC in Class B or better neighborhoods.

But it may not be YOUR strategy because your Customers maybe different than mine, and in fact, they are.

I do question the strategy of working a job as a Landlord and not enjoying it. Seems like there are better ways to make money and enjoy the work.

The advantage us Landlords have is that we get to investigate and know the tenants financially while they do NOT know our financials.

90% of my tenants are doing well and I would say quite well. They would probably qualify for the to 10% of Earners.

10% are NOT and I know who they are.

If one of the 10% who are not wealthy are struggling because they lost their jobs in the Gig economy where Tips are probably the bulk of their earnings, I will give them a rent rebate of about 10% to 20% of their portion of the rent (most of these non-wealthy tenants have roommates in their apts).

I do NOT lower their rent. I give them a gift of money AFTER they pay their rent to help with their struggles.

3 of my tenants are giving birth within the next 2 months. They did not even ask for a handout, but I want to give them a gift of money just to help them considering how overwhelmed our NYC hospitals are AND how scared they are to give birth here.

In a time of crisis, not every Landlord has the means to help.

BUT, if I have that means, I will help the ones who are struggling since I can verify that they happen to be struggling during this time.

I don't see my tenants as only tenants. I see them as residents and neighbors. In fact, I see them as family.

While I don't share the same ideology as the Progressive Left that wants to give free rent to EVERY tenant, I firmly believe that if there is free rent to be given, it should only be given through a Means Test where it is verified that the tenant is actually struggling.

I am in the best position to determine that. Therefore I help those that I know need it most.

Also, I see great benefits to Landlording this way.

If tenants hate your guts, it is most likely the tenant will be looking for anything that you do wrong to sue you.

If tenants love you, they will stick up for you and support you in case others try to sue you, for instance, a person who supposedly slips on your property. I expect my tenants to support me with an affidavit testifying on my behalf. And I'm sure they will from experience.

I don't look at these gifts or treating the tenants well as giving them some advantage. I look at it as extra liability protection.

I also look at it as a job where I love the people I work with. After all, what's the point of being a Landlord if you don't like the job?

@Robyn Henderson

I have used this site to walk me through creating the LLC while publishing in Albany:

LLC University

You WILL save a lot of money.

I also think you will learn a lot by going through the ropes.

Frank, as a NYC Landlord with Properties in B Neighborhoods, 90% of my tenants make over $100k EACH and couples make over $200k per couple.

Many of my tenants will have over $100k of Savings.

There is no MEANS TEST on the proposal.

There is a reason why Landlords like me have required criteria when we approve a new Tenant. It's because they have the MEANS to support themselves should they lose their jobs, even for a prolonged period of time.

Part of accepting a low CAP Rate (5% or below) on NYC Properties is to balance it out with Quality and consistent income stream.
While I don't mind helping Tenants that are NOT WEALTHY.... I absolutely mind helping tenants that would otherwise be in the top 10% economically.

Why isn't there a Means Test in this proposal?

In fact, it should be done with all Rent Stabilized Apts as well. We should NOT be subsidizing Wealthy people just because we collect their rent.

Does this make sense?