All Forum Posts by: Mike H.

Marie I have checked and the property is not rent stabilized but thank you for making sure to point that out to me because it would have been a huge issue if the property actually was rent stabilized and I didn't know it. In a nut shell we are going to offer cash for keys to the tenants and adjust the numbers accordingly in our analysis. We will be able to start rehab sooner this way and avoid extra headaches. We're submitting our offer Monday. Worst case scenario we will wholesale. I'll be sure to include more details soon as well as my full analysis on the property. Thanks again for all the support!

Hey everyone, thank you for all the responses! I am sorry I have not posted earlier! I am meeting with my partner and consultant today about the property. I was able to get more information. As of right now the structure is an illegal 8-family which is only approved to be a 4. It also wouldn't be a bad idea to do a condo conversion during the rehab phase. The house is "liveable" but the electrical and plumbing aren't up to code. The tenants apparently are on a month to month contract paying about half the current MV price. To whom they are paying to I do not know. Any kind of eviction wouldn't be able to start until April considering NY laws particularly in these winter months. The best route I believe will be either:
A. Pay off tenants
B. Wholesale
C. Make an offer contingent upon tenant removal

I will let you know how the meeting goes today. There is money to be made but as you all have said there are so many things to consider and extreme due diligence must be done. Asking for this property is $350k and ARV is $1,075,000 which is an conservative evaluation. Rents for the area increased 6.5% in one year and median sale prices for 1-3 family homes increased 14.8% in a year. The property is a block from the closest metro station and my most recent and best comp was purchased for $530k and in three months sold for $1.3M one block away. With these kind of numbers my desired exit strategy would be to purchase all cash, refi, and hold but with the tenant issue I've got to be real careful with my numbers or just go for wholesale.
I will be back on tonight to discuss. Thanks again for all the feedback!

Thanks for the feedback guys. I think the best route is to make an offer contingent upon state removal of tenants and see what happens. Otherwise we would have to wait for a sheriff and with NY laws that could take awhile.

Marie: The building isn't up to code and lawfully is not liveable. It is foreclosed and I do not know who this "landlord" is or his relation to the tenants. I think the tenants were clueless that they are living there illegally.

I will keep everyone posted.

Hey everyone! I am in a bit of a tricky situation and wondering if anyone has experience in dealing with a situation like this...

So I am looking to purchase an 8/3 REO in Brooklyn, NY. The numbers are great and I have a private investor lined up willing to lend on the property. Now to the problem. The structure is not up to code and has illegal tenants living in it. There are actually 8 units with 8 tenants. Illegal tenants have rights and you cant just force them out. Eviction would take way to long. Its freezing cold in New York, the tenants claim they are paying rent to a landlord and had suspicion of the home being in financial trouble. Obviously whoever the landlord is, is pocketing the cash (the home is foreclosed!). Not sure what the best strategy is to move forward... Paying off 8 tenants wouldn't be cheap and I'd have to get them all to agree. Time isn't on my hands. I want to make a "blind" offer to the bank before they show the home to 100 different investors creating a huge bidding war (seriously). The home needs $150k - $200k in repairs but there is amazing potential. All ideas and experiences to share are well appreciated!