All Forum Posts by: George Ortiz

I am in the process of looking at a deal on a multifamily in NYC outside Manhattan.  It is a three family home my question is should I bypass this home if the tenants do not pay their own seprate utilities.  

The home is worth about 560,000 in the nieghborhood it is in, but he is willing to give it to me for 530,000 for an all cash deal.  It has a 3 bedroom over a three bedroom over a one bedromm each having a full bathroom.  And it has a basement with two rooms and a bathroom that you could rent out and also they made a garage into a studio apartment.  Before he put it on the market he was making 5,050 per month in rent roll.  1,500 for the third floor 3 bedroom, 1, 500 for the second floor three bedroom with bathroom, and 1, 250 for one bedroom with bathroom, and 800.00 for the studio efficiency with bathroom (used to be garage.)  

The garage studio was made illegally without permits.   That concerns me if I later have to turn it back into a garage.  Also what concerns me that the tenants do not pay heat or water they just pay for electricity in their apartments and the gas for stove.  Every other utility expense would be paid by me from the rent proceeds.  

I did the numbers its seems like a good deal based on what the rent rolls were but as we speak the garage studio is vacant and the first floor is vacant as well.  The only rents coming in is the 1,500.00 for the third and second floor.  The real estate guy says he can get tenants no problem.  and that I could raise rents eventually on the people paying 1,500.00 and raise it eventually to 1,700.00.  However, taking into consideration I have to pay the water and heat for the tenants it doesnt seem like a good deal. 

The area I am looking at is called Clason Point in the Bronx, NY. I thought it was a good deal because it was close to the one percent rule in terms of rent which is hard to get in NYC. Also, the average cap rate in NYC in this area is 5.0 if the rent comes in at 5,050 then it would be at 7 percent cap rate. The GRM is 8 which is good if the property does go back to making 5,050 a month and I can get it at the price I want at 523,000. However, these are assumptions. Bottom line the fact the apartments do not have separate utilities and the garage studio is illegal has me thinking of not even giving a counter offer. Need some advice from people who have invested in the NYC area, on if I should overlook all these red flags especially about the tenants not paying all of their own utilities within their apartment.

I mean Wayne! Not Andrew!

Thank you Andrew! I asked them for 107,000 loan to cover the closing cost and to pay off rest of the coop mortgage. Grateful for your help and the BG community!

I might have done my calculations wrong I did the bigger pockets calculater and I downloaded the results if anyone is interested in seeing it I am willing to share my initial calculations.  I did put in 7 percent cost for property management eventhough I would do the management myself.  Perhaps the rate would go higher if I exclude that.  Also, I put in 100,000 fixer up cost just to be conservative in my calculations.  From what I saw in realtytrac it looked like it didnt need a gut renovation at most paint job, maybe redo floors.  perhaps bringing that number down would make the cap rate up more also.  learning so I appreciate all the input.  

Thank you all for replying I will continue my search! 

Hello BP community,

I need some advice not the best at math.  I had bought a coop in Manhattan from a friend it was appraised at 190,000 got a real good price at 150,000.  We did a deal where I got a loan from the coop for 105,000, since I put down 45,000 dollars.  

The mortgage agreement with the coop was for 105,000 over 30 years, at 5 percent.  I would pay a maintenance coop fee every month of 612.00 and the mortgage payment was 579.50.  They gave me a ballon payment option if I didnt refi in a year and a half.  I have paid for 19 months now since December 2014.   So I applied to Amalgamated Bank three months ago and they approved a refi at 2.85 percent for 15 years.  

I am closing on Friday and I had asked for a 100,000 loan since that is what I estimated that I would need to cover remaining balance and closing cost.  However, the bank called me today and said that the pay off amount for the coop loan is 103,044.00 dollars, and not 95,000 like I estimated.  That my loan will not cover the closing cost and remaining balance.  I called the coop board president and asked him why my payoff only went down from 105 grand to 103 grand.  He told me that the first year 90 percent of the mortgage payment that I paid monthly(579.50) went to interest alone.  

I called the bank they said they could take the loan request back to the underwriting department and ask for a 108,000 loan to cover all the cost but that I might lose the 2.8 interest that expires this Saturday.  The closing is this friday.  The bank officer said I could either come to the closing with 7 grand or ask for an extension of the interest rate maybe pay a fee to hold it another 15 days and close next week.  I need some advice on what to do should i wait till next week or go to the closing and try to get 7 grand by Friday which I doubt I can do!

thanks for your advice BP community.

Thank you Charles awesome advice!  We were looking at properties in a B plus nieghborhood in the Bronx called Riverdale.  However, now that you gave me some ideas I am going to look at some brownstones actually not far from our brownstone walk up we are selling.  i live in a gentrified area near Columbia University, called Hamilton hieghts.  before it was called West Harlem.   Eventhough they are way more expensive I think its worth using our 1031 exchange cash and financing the rest.  I can give you detsails on the numbers when I call you thanks.  

Thanks for the advice! on using OPM ...still wondering if 3 percent COC is low for nyc RE market?

Excuse he typos meant to write checked similar comps of roughly equal properties. And that I did check county records.

I am selling a property and I am going to do a 1031 exchange in process of looking at multi families in Nyc specifically in the Bronx. I was looking at a property that was listed at about 831,000 dollars not a fixer upper but not spanking new. It's a 1920 multi 4 bedrooms over 4 bedrooms and finished basement. Each with 1 bathroom. It also has a finished basement. It's in a b neighborhood and I did a quick comp comparison with other properties of sinker value and dos check county records. Zillow gave me a rough asking price of 731,000 that I should offer. I am new to REI so I need help. I did the calculated in Bigger pockets I included 7 percent property management cost even though I will do the landlord management. I am planning to pay all cash and at the end of the calculation the Cash on Cash return rate was only 3.6 percent roughly. It seems like a bad deal but it would cash flow like 48 percent a month after expenses. Is this bad or good considering its New York specifically the Riverdale/Kingsvridge section of the Bronx. Nyc. Or should I pass it over. Also is it better to by all cash or leverage OPM.