All Forum Posts by: Mordy Chaimovitz

A friend of mine works for one of the  BIG banks. He told me that they are seeing that home sales are down %80 in May. Which is usually the biggest month for sales. 

Prices are expected to follow this data after the peak home buying season ends near October. 

additionally  as much as there is not a concerern about the ending of forbearance bringing about mass foreclosures. That is mainly because people still  have equity in there homes now. But when prices begin to slide more properties will be under water thus bringing up the amount of foreclosed homes in the market. This can then create an even further reduction in prices.

Add to that the potential panic that might settle in; prices can potentially tank in early november/december. 

How do i know that will  happen? I dont. 

But you might want to use that in your worst case scenerio for underwritting. And be prepared to have to hold for a while untill things straighten  out. because it's very possible 

also perhaps put aside some cash in the event there will be steep price drops and you want to buy

Hey BP community! 

What questions do you ask a property management company when trying to determine if you should hire them?

Want MORE energy? Listen to last week's BP podcast # 605. Really brilliant stuff. 

Pray tell , where exactly are you finding cash flowing small multifamily  properties? 

Here is a controversial  mindset I got from  my friend and mentor who just sold most of his multi-family properties to the tune of $98,000,000

I asked him "how can I make money in this market?"

he replied "patience. Yeah I know it sucks, but now is not the time to buy."

I asked him "so why is everyone buying now?" 

he said "there will always be buyers and sellers, and there arent a lot of smart buyers  buying"

I asked him "even though rates are going up arent they still historically below avg?"

He replied "true but the trajectory of rates now will make your property worth less tommorow."

I asked "but dont rents rise with inflation?"

He replied "maybe in the movies but in real life people only pay rents they can afford or they stop paying and then youre in real trouble"

Anyone want to comment????

I have been trying to get a handle on my local market. here is what I have been doing. Any additional ideas are welcome. 

First and foremost. 

I speak to as many people as I can.

 As far as bias. I talk to more then one broker/property manager/ friend, and get different peoples opinions. The more the better. If I am consistently getting good reviews about a certian area, thats good indicator to me to start looking into that area seriously.  and when I hear differing opinions, I ask about them. 

I also look on redfin and loopnet to learn what similar properties have sold for in different areas and what rents are in different areas

Additionally, If I see something for sale that i might be interested in, I guess what I think the asking price is.  Then I Call the broker and ask about it. Or look it up. Hopefully I was  close. Otherwise I ask myself "Why was I off? Is the property overpriced? or do I not get the market yet?"

Recently i am started to look at listing and think to myself "HEY! Thats s a real deal!" 

And then.......i scroll down or ask about it, and find out its in contract 😒  

oh well. At least i am heading in the right direction.  🙂

Good luck to you, and all of Bp!

Can someone please explain to me why people are buying 2 flats that rent comps show $4,600 a month in income for 665k+? The income doesn't really cover expenses plus debt service. 

Even if you tell me they are paying cash or very high down payments , shouldn't the price of multifily buildings reflect its NOI/cap rate?

Also, am i imagining it, or is there is no way these buildings will hold onto these values. 

Would you forecast that there will be some big discounts on these in a few years as people realize that they cant afford to hold onto them

thank you!

Mordechai Chaimovitz

My mentor in multifamily once told me the first thing he does when buying a building is change the toilets to one's with smaller tanks. 

calculate what water costs per gallon. The difference in tank size is how much less you pay per flush multiplied by the amount of  toilets. 

depending on how many units and the difference in tank size, it can have a major impact in noi and the value of the property on paper. 

keep in mind the cost of labor and materials. 

Hey everyone 

I am in contract for my first deal and i have a problem

Here is a basic rundown of the deal

2 attached vacant townhouses for 250k each. The current market value is 300k-320k each but i got a good price when i offered to buy both. Rent comps are $2,100 a month per unit I am putting %25 down at 4.5 interest. Tenant pays gas and electric. 

The seller was in the middle of rehabbing them when i made the offer and he agreed to finish the rehab before closing. The rehab is mostly cosmetic in nature. But nicely done with a little bit left for me to do (est $2,500)

The lender sent in an assesor that saw the property under construction and approved the loan at an assesed value that reflects the approximate market value indicated above; however the loan is subject to a 2nd inspection after work is completed. 

I also did a  home inspection which showed that the furnace and boiler in one of the units really needs to be replaced  at an estimated cost of $13k which i am ready to absorb because of the resale equity already in the deal

problem is I am concerned the bank will want the furnace and boiler done before closing and I don't want to do that type of work before I close

is there a way to get the seller to do it and I will pay for it after closing? Do I even need to do it before closing  ? Should I back out of the deal because of the huge repair even though the deal has so much resale equity?

any  other comments on the deal or my questions are welcome.

Thank you!

So sorry to hear about your crazy job. Being frustrated at work can motivate you to make investing decisions that are driven by despiration and emotion , , not numbers. That can have  bad  consequences. 

real estate investing is an amazing way to make money however to do it properly takes time. 

make a short term plan to cover your expenses and save money.  find a new job preferably  one in the real estate field

I taught elementary school for 12 years and I was looking for a career change while I positioned myself to get into REI.

luckily during the process of building a team to help me in real estate I was talking to a commercial lender and he offered to train  me and give me  job as a mortgage broker. Which I will be starting in  September 22

I am very excited about the possibilities this will open up to me. I am looking forward to my new job which i hope will also bring me great investment opportunities . 

All this being said i would not recommend trying to use REI as a quick exit. Rather as a long term 3-5 year goal. Maybe longer. But i would look for a new job

P. S.  Recommended reading:

rich dad, poor dad

good luck