All Forum Posts by: Nick Ferrari

@Mike Buckley I am hearing a lot of things on this thread, some of which I agree with and some I think would be a very very bad move.  Go with what the majority of the people are telling you...give him a copy of the lease.  

When you boil it down you are a small business owner and you have a customer asking you for a very simple basic request.  Look forget about the lease it's not important you are being tested by them or their lawyer to see if you will produce the lease.  If you don't produce your lease agreement or even worse try charging them $200,000 to produce the lease you will give them the ammunition they need to come after you in court.  Plain and simple.

Imagine what a judge would say if you attempted to charge a tenant $200,000 for printing a piece of paper...which they have a right too by the way...I am legitimately concerned for you if you try doing that.  

Play their game, it sucks I get it, but that's the situation you're in and one that we all have to go through.  Do not something like saying no I won't give you you're lease and if you want it i'm going to charge you an absurd amount of money to get it.  Honestly that's inappropriate behavior stepping dangerously close to criminality...

...I swearsome of the things said on these forums, I hope they're just bad jokes going over my head.

Rip off.

Take it from someone who has spent their whole life living in Philly. There may a real estate boom but it’s not everywhere, select neighborhoods you have to buy well in advance before it gentrifies to make your money and that is still a gamble. Many of the neighborhoods we thought would work out didn’t. Only a select few like Northern Liberties, Fishtown, etc turned out to be sound investments; granted there’s still time and other neighborhoods can still flip but it’s no guarantee.

If you really want to invest in the inner city. Find a neighborhood where young people with money are moving too.

Look for Cafe’s and cool bars.

Talk to local cops and find the districts with less crime. Notice I said less crime...you won’t find anything with no crime. That’s just the risk you’ll have to take.

Pay attention to the architecture the cooler more vintage looking homes the hipsters go nuts for.

Schools in the inner city aren’t as big of a deal as you think. Hipsters have kids later in life and would send their kids to private school anyway.

In the area I rent it’s very difficult to not allow pets in the units, nearly 50% of my Potential tenants own a Dog or Cat, so I feel your pain.

With that being said pets can be a nightmare that we have to manage but it is manageable. Here’s what we do:

1.) Screen your tenants and get someone who is a clean FREAK. Our current tenant has a dog but as soon as you meet her you can tell not a single thing is out of place in her life. This woman couldn’t live in filth if you forced her too.

2.) Create a monthly pet fee. If you do this it shows that one you’re willing to work with your tenants instead of saying no I don’t take animals (which they appreciate dogs are some people’s children) and two if something happens you’re already ahead of the game for cost in damages.

3.) Force a higher security deposit. I usually do about 30% higher in a security deposit for pets that seems fair. If the unit is entirely carpets than I do 50%.

4.) Pet proof your home. I replace most of my carpet with laminate flooring. It’s cost effective, it’s much easier to clean then carpet, and the stench doesn’t soak into the fibers. There are some things you can’t do but taking that extra step will go a long way in not only improving the look of your home but also protecting wallet.

Bonus Tip: Dont discriminate against the animals. Some people charge more for large dogs. Guess what a small cats urine can make an entire house wreak for weeks. Unless you’re concerned about the large dog biting but that’s a whole other can of worms we can talk about on a different forum. A pet is a pet is a pet. Unless they have a small fish you charge them a flat fee. You do the things I mentioned above and in most scenarios you’ll be fine.

I don't believe you can but I wanted to confirm with everyone else before I give advice to a friend.  If you own multiple rental properties and they are not your primary residence you cannot claim your mortgage interest as a write off correct?

It's a guideline.  Not a rule.

What would it take to transfer ownership from myself to an LLC? Here is my current situation. On our first few investments we purchased a few properties that should have been purchased as an LLC or S Corp. At the time we didn't because we never expected to rent them out long term, we were just expecting to live in them and eventually move out & sell.

Now our dilemma is my wife and I are saving for our forever home but as you can imagine our DTI is quite high as individual's, we own two properties with the next home going to be much more expensive. My fear is if we over extend ourselves by purchasing the final home...which is likely going to be much more expensive than the others we likely won't be able to get the mortgage we are looking for and/or future loans will even be more complicated given the fact our DTI will be as high as it is.

I believe if we transfer ownership to an LLC this should help side step this situation but I'm not even certain of that. Any help that can be given would be greatly appreciated.

@Zevi Arem I don’t think it’s so much as an ‘If’ but a ‘When’. Once again look at this website as your first key example. There are tens of thousands of people chomping at the bit to find a silent investor to finance their deal. What value would this middle man bring? Also You would have to have a humongous Rolodex of silent investors in order to accomplish this which is not an easy task. And how would this middle man get paid? Finders fee? Maybe, but I don’t see enough turnover on deals to turn that into a sustainable model.

@Justin Johnson I don’t know where you live but invest most of your time in researching the rental comps in the area and see how much you’ll cash flow monthly. Overall the Math is pretty easy calculate your mortgage or whatever method you’re using to finance. Add in what your projected rent will be and see if that satisfies you in whatever goal you’re trying to accomplish. I don’t know what numbers you’re trying to hit but I will say the deals are often found when you put in the sweat equity and fix them up. It’s very difficult to find a desirable deal for something that is turnkey Especially when the market is reaching its peak.

@Zevi Arem I wouldn’t say it’s impossible however I would consider it very difficult and unlikely. You have to consider what you as the middleman bring to the table. Why wouldn’t the silent partner go directly to the source and work with someone who could do it for them. There are thousands of people...many of them on these forums searching for ways to finance their deals, already looking for these ‘silent partners’. In addition to that what exactly is your cut and how would you get paid? We work in a razor thin market where $100 cash flow a month is enough for some people to back out of a deal. So where would you factor in and would it be worth it to you. Lastly whose to say that they couldn’t just cut you out of the deal? Truly what value are you bringing? I don’t doubt that this could be done once or twice; But I question how many silent partners with deep pockets that you can acquire which could create a sustainable thriving income stream.