All Forum Posts by: Matt A.

Im in agreement with Simon W. on the war-zone comment. Landlording in Allentown proper is a nightmare with all the city codes, fees, tenant-friendly crap. I dont do anything there. Look into Bethlehem or anything that's OUTSIDE Allentown proper. 2-3% is harder to hit, but there are solid deals to be had

John - Reach out to Tim Mittl @ atlantic Home Loans. He just helped me with a duplex, non owner occupied.  His contact is http://www.timmittl.com/

Let him know I sent you!

Matt

While looking for a potential flip candidate we came across a fantastic deal on a 2 unit conversion - built in 1920, 3k sq., that was previously converted to a physician's office 30 years ago. This was subsequently converted to a 2 unit about 4 years ago and the owner who occupied the downstairs unit was moving out-of-state. This property is in fantastic condition - move in ready! listed for $179k the numbers worked - albeit they weren't stellar. after finding the tenant occupied upstairs was almost $300 under market (currently a section 8 tenant) we decided to proceed as upstairs was month-to-month and will be terminated next week. After some negotiation our offer of $163k was accepted. I always use an appraisal addendum - and for good reason.... the appraisal came back at $145k (and no way was I going to pull another $18k out of my pocket to close this). THis appraisal is low - the comps were horrible, the selling agent just didnt fight it or help the seller in any way, and we simply 'waited' till timing was critical for the seller. The net of this was I ended up offering another $5k to bring me up to $150 "take it or leave it" under the threat of the seller walking, which I highly doubted as they needed all proceeds to close on another property they were under agreement on.

Bottom line is $150 was accepted in the 11th hour (pretty close to what time I got a signed extension on the appraisal addendum back as it was expiring the day I made the $150k offer), the downstairs unit is listed and being shown, upstairs is being served notice next week and the property  will be "officially" mine Monday!

Purchase $150k / Loan $108k / Rents $28.8k / Tax $4700 / Ins $1200 / Misc $1200
Projecting Net ~ $14k annual

Looking for the next one now!

I just had that happen on a property I had an offer on, sale price was 163k for a duplex and it will easily cash flow here in the northeast. The appraisal came in at 145k. At this point the seller is distraught as they believe their house is worth more (probably is, but nothing I can do). I agreed to bring 5k more to the table, but that's my best and final. They obviously dont have enough equity to get out and are seeking the agents to take a hit on their commissions (and want me to bring more cash)... I dont see that happening. My real issue isnt the price but the CoC return, if I add another 15k to the deal (over appraised value) my CoC is better suited to stay in the securities market for now. They aren't open to financing the difference over 48-60 months or so (one way I could make it work) so Im going to let this one go. My appraisal addendum expires Tuesday evening (was already extended by mutual agreement) to attempt to find resolution, so looks like my cost is just an appraisal.

I feel bad for the folks as they are looking to move out of state and have a deal going at their destination... sure hope they had contingencies on closing this sale so they aren't loosing their earnest money, although by the tone of the sellers responses it sounds like they are getting hammered on both ends. This is just a business deal, no emotions for me... there will be others and its just how it works.

Also found they have a section 8 tenant on a month to month (that I was going to remove anyway) that has been in violation of section 8 rules (additional occupants)... the Housing Authority has been looking for proof adn now I have it (the seller said in writing that they have been doing this for at least two years). Now Im REALLY torn as to what to do with that information (meaning I pay taxes and I know this tenant is gaming the system... and Im supporting that by not letting the Section 8  folks know about it? They have indicated that there are several complaints on this person but they just haven't been able to get the proof to terminate them from the program... so what does one do with that information).

Good luck.

My wife and I have an LLC that was created 8+ years ago, used for one purpose - re-characterized and used for another a couple years later. We then did nothing other than file RCT-101 (state informational returns) for several years, and recently started using it again. Its my understanding from our accountant that RCT-101 are now a thing of the past as well! In our particular case the accountant gave his thumbs-up per-se.

Id suggest a call to your accountant for the "official line" on that one. If its a S_corp you might be okay, C-corp Im pretty sure would require a separate annual (even quarterly) return.... Im not tax expert (rather an investor that also doubles as an engineer for a very large computer manufacturer) so take that with a grain of salt.

I tentatively have an offer accepted (still waiting on a signed acceptance from the seller) both sides of a duplex thats used for student housing. I put a few conditions in the offer, one being that this MUST be a legal two unit (its titled on a single lot, but does have two addresses, and the township has issued two occupancy permits for years), and several other items. I also submitted the offer in my wife's LLC along with an approval letter in my name personally. Fall semester starts in a month and as these are 9 month leases, I dont want to miss ANY of the rent on these.

A few hours ago the lender called as the listing agent has called them 4 times this morning regarding the financing! In full disclosure Im pursuing a commercial note to title in the LLC from the start, and also a personal note that Id prefer to avoid from an ownership liability perspective. While the personal note is better terms (cashflow, interest, etc.) I was initially told that I wouldn't be able to transfer this to the LLC untill the loan was satisfied - now the lender tells me otherwise (different issue, but not a hangup for me).

So other than simply smacking the seller and sellers agent and telling them to wake up, how have you handled an issue of "where is the money coming from" i the past? I put a very aggressive closing date in the offer and they appear to be dragging their feet, causing delays for me to get appraisal, inspections, and du-diligence completed. I could simply write a check for this one as well, then refi cash-out but that would take me out of contention for another lower cost deal Im considering buying tomorrow (Ill need cash for that one).

Im open to suggestions... thanks!

Louis - Welcome! Im new to BP myself and live in the Allentown area... albeit Im not investing in the city (really a large town - although it IS the 3rd largest in PA) per-se. There are plenty of communities around Allentown that I personally prefer, but like anywhere I would caution you on simply buying something without doing some due-diligence. How 'hands on' do you want to be? do you have any connections out here (realtors, contractors, etc.) or a feel for the neighborhood? I have been putting lots on miles on the cars the last few years as its "my investment" and I want to be darn sure that they are profitable.... you might want to schedule a day or two to get to know the area.

In Allentown there is an entire NIZ going on - its not an area that I would invest in for many reasons beyond the scope of this discussion (mainly lots of code and regulation). On the other hand you being from where your from may find the area ideal (possibly lots less regulation and code to follow) - I prefer the areas where the government isnt involved in my business other than collecting taxes.

If you do look out this way you might want to consider anywhere from Phillipsburg, NJ on west... lots of areas in that 30 mile or so stretch between Rt22 and I78. PM me if you want to chat, and take your time - dont take forever, but educate yourself on what your getting into.

Justin, had similar things happen here a few years back... The assessed values changed to be more reflective of the actual values, but also the millage was adjusted downwards to keep 100k new assessment equal to the old 40k or so assessment. On the other hand if the millage is the same as before then you did get hammered and I would start appealing that.

I've been to the auction at the courthouse and those are the rules, have your funds ready in advance as you will loose your deposit (and that must be in certified funds) if you miss the deadline. You'll probably be blacklisted from future participation as well I'd suggest going to a few auctions to get familiar with them. They are competitive as well, especially the lower end properties. Watch out for land lording in Allentown, lots of red tape and you might be in for a surprise if you don't do your homework.

Closing went great. Check is now in the bank, and (some) profits are going into marketing for the next deal that Im already looking for. Im trying to learn as much as possible as I go - the construction / rehab part is easy for me... its finding the deal that is proving challenging at the moment. I dont see realtors as a good source to BUY at discounts, so Im working on getting in front of what should be motivated sellers, although Im finding that challenging. Not giving up in any way however.... I WILL get there and quickly.