All Forum Posts by: Michael Gansberg

@Hani Alomar - go ahead and buy something. If you buy well, and the market "corrects" by 10% over a year, and your cash flow is pretty positive, well then you've gotten an almost free education and you can now collect checks while the market marches onward. 

I've found that employment and population growth tend to outweigh the direction of local and national real estate markets. If you invest in a place with good population and employment growth, as long as you've paid a fair price, you'll be fine. If you invest in a place that's on its way to becoming a ghost town, nothing will save you. While watching the flight to the suburbs in Detroit decades ago, I would've guessed that investing there was a bad idea(and I'd have been right.) Same goes for Harlem in NYC in the 60's and 70's. Owners let(caused?) their buildings burn. Of course if they'd held through those decades, they'd have made a mint, but I doubt the years of problems would've been worth it. 

A great trend right now is urbanization, which dovetails nicely with the graying population. Future retirees want to be able to walk to amenities. Large towns, small cities, and large cities usually offer that ability, along with generally having good healthcare options. Try to have that trend as a wind at your back instead of seeking an apparently cheap rural property and fighting the trend. 

@Bob Prisco - I respect your decision to stop doing business in NY, but please refer to my earlier post. My evictions have been taking roughly the same amount of time you refer to in your post(you state 45 days, mine have been taking approximately 50-55 days.)

I'd frame this more as- the Upstate NY investors had a tremendous amount of power before, and now tenants have more than they once had, but it isn't apocalyptic. NYC is a whole other ball of wax. If a tenant there stops paying, the investor takes a gut punch.

@Holly Williams - to your point, the landlord-tenant laws are much more landlord-friendly in "blue" downstate areas(the NYC region) than they are in "red" upstate areas. So if it's a liberal-conservative thing you're referring to, I'd suggest the liberals are certainly eating their own cooking when it comes to landlord-tenant laws. 

For the whole thread- I continue to agree that these laws suck. but I just don't have my hair on fire about it. And honestly, that I even have hair after landlording for 16 years speaks volumes. It's probably a combination of good genetics and stress management, but I won't kid myself, my hairline hasn't just receded, it's galloped backwards. To put this in context, eviction costs may have once been the 10th or 11th most important factor in profitability when investing in Upstate NY, that's probably moved up a notch to the 9th or the 10th most important factor. Things like the local economy, the national economy, good management, smart expenditures, good capital allocation, more stringent tenant screening, reducing utility costs, all of these are more important than the silly extra few weeks added to evictions. Cheerio!

Hey @Blake Hulett - what would you say is the hardest part of working with Morris Invest? Is it realizing that you’ve overpaid for a house by a factor of 10, or figuring out how to extricate yourself from the massive Ponzi scheme? Thanks!

@Zoe Lee - fire your PM.

MG

@Chas Noren - check the vacancy rate in the area. If it's under 7% or 8%, then move on to step 2, which is compare the location, amenities, curb appeal, and layout of the units under consideration. If those factors compare well with your competition, you'll be able to rent the units. If those factors compare poorly, you'll have difficulty renting the units. 

Even if the factors compare poorly, you may still be able to rent them if you adjust the price accordingly. However, if this is your first investment, I'd avoid challenges like that. Get a house which is appealing to tenants. That recommendation will be as good at the beginning of your career as it is at the end of your career.

@Julie Walker - I'm going to recommend a few low-tech solutions not yet mentioned. First and most effective, I recommend a nice floor fan. If the resident spends most of their time in a single room in the late afternoon, there are some very inexpensive and effective floor fans that can make 78 degrees feel quite comfortable. You can add on a table fan if they want a second somewhat cool area. Honeywell makes a small black fan that is highly effective, I think it's under $20. I have two of them in my country place(which had no central AC, window AC, or any AC. I also have a big floor fan. The fans work well for all but the nastiest heat waves, but I live in the Northeast.)

Second, I recommend making sure all the bulbs in the house are LED(stick with 2700K color temperature and a CRI above 80. If you hit those two stats, everything else should be fine.) If your tenants keep 5-10 incandescent bulbs or halogens on when they're home, it can be like having a small space heater fighting your AC. I'm in agreement with the earlier recommendation of closing the drapes/shades for windows which get plenty of afternoon sunlight. 

I have a BA in psychology(a.k.a a BA in BS Detection,) but my real educational background is in chemistry, physics, and math, which I’ve taught for 20 years at the high-school and college level. The science and math has helped me understand which energy-efficiency projects make sense, and I’ve applied that broadly to my portfolio as well as the condominium building in which I live in NYC. Other than that, working in education and real estate simultaneously makes for an interesting life 👏 

@Robert Collins - I view war zone properties like high-yield stocks or bonds. The market is flashing a warning sign when cap rates(theoretical cap rates) are very high. When you're right about the high-yield stock and it soars, you do very well, but when you're wrong, you get clobbered. Being right about a war zone property usually means that the neighborhood is improving. If you're right about that, and you can hang in there through the tough times, you can reap a solid reward. But if you're wrong, it's just years of misery before you sell it at a loss or a small gain.

I've moved on from the war zones as I've become a more conservative investor. I probably should've never wasted time on the war zones earlier in my career, though I'm not complaining(see: Hudson, Buffalo, and Troy, NY.)

The results you've been eagerly awaiting are in! It's a small sample size, but here we go. I started four evictions in NY State(3 in Troy and 1 in Waterford) on July 12th. By "started," I mean on July 12th, certified letters went out and process servers were sent.  

Tenant A was gone by July 20th- he knew which way the wind was blowing and decided to get outta Dodge. And can you blame him? When a tenant owes me rent, they think that the courts are a light at the end of the tunnel, but those lights are an oncoming train. [8 days]

Tenant B was tossed today(August 29th.) [48 days]

Tenant C has the marshal coming on September 5th. [55 days]

Tenant D, who got a trial, has the marshal coming on September 13th. [63 days]

Including the guy who bailed(an outlier, admittedly,) the average time to apartment reclamation was 43.5 days. Excluding the quick jumper yields an average time of about 55 days. So let's not get our knickers in a twist, this is basically business as usual.

cc: @Joseph Firmin, @Wesley W., @Cody L., @Holly Williams, 

@Llewelyn A.,  @Wy Kay, @Alan Grobmeier, et al.   

@Wesley W. How was housing court this morning? Any statistics for this thread? Thanks,

Mike