All Forum Posts by: Colleen Sheridan

I agree with Mark, you don't have to time the bottom, just make sure that the deal works today. Having said that, I would stick to stable neighborhoods with a good mix of long term owners. This hopefully insures that will not have a lot of close by vacant properties to compete with you when you have to lease yours. Steer clear of new track developments where everyone bought their house at the same time, you could end up with every other house on the market and these neighborhoods will take a longer time to stabilize.

Exactly Just Don!
What will happen is that the sub tenant will get kicked out by the lender when they foreclose and you will get sued because you signed the lease with the sub tenant. And what happens if the sub tenant doesn't pay the rent, then you are out of pocket for payment to the owner without the sub rent to pay you. Then what happens if the roof or something needs to be replaced. If you have a lease option, and for some reason you can't close, then you are out all the capital improvements you may have made to the property.

I think there must be deals out there that give you control of the property without putting you at such risk. Keep looking.

You said you were going to "switch to a 40 year mortgage" So my question is how long have you had the 30 year mortgage, what are the terms and where are you in the payment schedule. If you have had it longer than 5 years, you are probably paying down a lot of principle and less interest and this continues to improve as time goes on.

I don't look at a cash flow "loss" as necessarily a bad thing if the negative cash flow is going primarily to paying principle. You will end up owning the condo debt free and then your return is very good.

You need to look at the deal at the end of you holding period to see if you are actually doing OK. If you plan on holding it for a long time, you could find that even without a lot of appreciation it may be a good investment in the long run.

Ditto for adding me, plus I can add some investing experience in commercial real estate that might be useful for the group.

Guys,
I think the use of an LOI is more regional custom than anything else. I sold CRE in NYC where P&S agreements are over 100 pages of itty-bitty print. The LOI is ALWAYS used to hammer out the business points like price, deposit, due diligence period, etc. so you don't pay an attorney $400 a hour to mediate things that you should be able to do yourself.

Roger, your broker should have LOI templates for you to use, and should be helping you with the preparation. If they do not have experience with this level of property acquisition, I would be suspect.

Finally, I would add language about the information you ask for such as "due diligence items shall include, but not be limited to (insert the stuff you want to see). This way, if you miss asking for something you don't need to obsess and can easily ask for it later.

Also, I think you need longer than 30 days to close since the speed of the lenders today is going at a snail's pace. I doubt you could even get a committment letter in 30 days today, let alone close and get the money on the wire.

Mike,
I think the first thing you want to do is narrow down your field of vision. You should start by selecting a neighborhood you want to be investing in, then learn everything about it. Why is it a good neighborhood, what are the values of the properties, what is a good deal and what is a bad deal in a given neighborhood market, is it up and coming or trending downward, are the schools good, is it near public transportaion (which I find particularly important for residential rental properties). You know what they say,...location, location, location...

To be a successful investor, you need to do a LOT of homework. You should know more about a neighborhood than the people who live there. Once you know that, then you will be able to spot a good investment in a NY minute. Don't let yourself get scattered, it is really easy to be snowed if you do not understand the market within which you plan to operate. If your property stands alone on it's own value, you will have a better opportunity to obtain financing. However, I agree, with questionable credit, it will be difficult...but not impossible if the deal you select is good.

One of the things you also need to study is your "exit strategy". Simply put, if something in your life went terribly wrong and you were forced to sell the property again quickly, could you at the very least get back what you paid for it.

This seems to be a pretty thin deal to me. Have you factored in all your closing costs, such as transfer taxes, attorney's fees, title search and insurance, etc. Are you sure you have all the expenses? I didn't see trash removal, snow removal/landscaping if required. Did you check if the real estate taxes are coming up for revaluation anytime soon? Sometimes it is hard to pass along all the expenses that go up, so your net actually can go down. I agree with Will too, sellers ...well I won't say lie, but they have selective memory when it comes to the warts and wrinkles.

Think about looking at commercial real estate. A small office building on a main street can sometimes cost the same as a house, but frequently do not have the same headaches.

Please excuse and ignore my constant postings, I am just trying to figure out how to get a signature at the bottom of my forum comments... Indulge me, I am a novice techie...spent too much time selling real estate to learn about all this. Josh, if you are following this...perhaps a preview button somewhere might be useful. Sorry, but here goes another try.

Well, I guess that did not work... back to the instruction manual.