All Forum Posts by: Michael Lettieri

@Alexandre Marques dos Santos

Thanks for the advice. It’s a 6-unit property in good condition. Could you explain the 1% calculation. I’m not sure how to do that.

I'm interested in a house on the market for $1,500,000 with the following monthly numbers;

 rental income of $9,000

property Taxes $1588

Insurance $400

How do I estimate the other expenses such as utility bills (sewer/water/gas/electric), maintenance, vacancy, etc

Once I have these expenses I can calculate the property value based on NOI/CAPRATE. Would utilizing the 1% rule for maintenance be correct? ($1,500,00 X 10%/12 = $1250 monthly)
If there is a guide anyone can point me to I would appreciate it. Thank you in advance.

@Charlie MacPherson sorry if I offend agents in this forum. I have used them in the past and do not believe they provide the value that they cost.

I’d prefer to keep the 2.5% and take my chances that I don’t make a mistake worth more than that. The only way to learn is by doing.

@Jim Pellerin I would have to offer $37,500 to make my offer competitive with someone who is utilizing an agent. Or I would have a $37,500 advantage over others that are utilizing an agent. This money comes out of my pocket one way or another. It doesn’t disappear with accounting tricks.

I would like to buy real estate without an agent. I'm looking at properties around $1,500,000. With the standard 2.5% commission that is a savings of $37,500. 

1. How do I make the buyer aware of the savings they would realize if go with my offer versus a standard real estate agent?

2. Are there standard forms I can utilize for my initial offer and the contract?

3. What is the best way to notify a listing agent that you do not plan to use an agent? Whenever I contact a listing agent they try to act as a double agent and get double commission. How do I make it clear that I am not interested in utilizing them as my agent? Thank you in advance.

I’m interested in a multi-unit property but for one of the units the floor plan is all wrong. The right thing to do is to reconfigure the floor plan from a 1 BR & 1 BA to a 2 BR & 2 BA. In order to do this I need to take some space from the common area/hallway. With square footage around $500/SF this extra 100 SF I would take from the hallway would add at least $50,000 value to the home. I’ve never done major renovations before and am nervous about the time it will take to get approvals from the city to reconfigure the floor plan. I’m already short on cash and am considering renting it as is, a poorly laid out 1 BR and 1 BA. I’m thinking this will then give me time to save up for the Reno and get approvals from the city etc.

Does anyone have experience with this type of Reno? I’d appreciate any advice.

Smarter, Faster, Better - Charles Duhigg

Deep Work - Cal Newport

Any plans on where you want to go to college? I would start planning on how to house hack and live rent free in college. I’d pick a school in an emerging market with a robust off-campus life.

Thank you for the help. Very healthy discussion. These tenants have been in place for a while so I’m leaning towards keeping them there. I will do my due diligence and vet them though.

@Tom Wagner I’ve been mostly looking for properties within walking distance of the PATH. There’s not much on the market now but I’m wondering if that will change with people moving out of the market. I would also consider anything near the Rahway train station. Are there any stations in particular you were looking at.

@Artie Butcher

I think this is unanimous that it’s a terrible idea. If you would’ve bought at the bottom of the market in March maybe this would’ve been a good idea. Very good chance we will hit those March numbers again after we get a second surge which is almost assured with people ignoring distancing measures. You also want to buy stocks and hold for 5 years, if you hold for any less time that is speculation and you’re not smarter than Wall Street.

In order for it to make sense you need a guarantee that the market would beat your mortgage rate of say 4%, which the market does not beat anyway. Otherwise banks would just invest in stocks and not back your mortgage.

This is before factoring in the mark on your credit others note.