All Forum Posts by: Nik Moushon

lol investing PTSD. Thats a good one. 

I don't think we will see another 08 for a long time either. What I do think is that we are headed for a correction. That graph doesn't show home prices and would be an interesting statistic to compare. I think the every climbing prices is whats going to cause the next correction. Its at an extremely unsustainable climb right now, both SFR and MF rent prices. Between trade wars and politics going crazy right now my bet is the next election cycle is going to shake things up. How much? Who knows. Not even going to try and guess. But I'm not going to wait for 2020 either.

Though I agree with never trying to time a bubble or try to predict it and keeping your money on the sidelines is not the best move. I do caution using SFR permits as the basis is not a good idea IMO. Unless everyone is completely stupid and didn't learn anything, the situations that caused the 07 bubble are not whats going to cause the next one.

Without going into a history lesson, the bubble burst in 2007 was more or less caused by the HUGE construction boom of SFR. Banks lending with 0 down and other stupid practices also added to this. Contractors and developers where building spec homes left and right and not waiting for someone to buy them first before building because they would get sold the second they where finished. Most of this is not happening today. Banks are not doing the same shady stuff they use to do. Developers are doing very few spec houses. MF is in huge demand right now compared to what is was pre-burst. Because of the pre-07 building rush and now the good economy of the last 5 years or so has made develop-able land very hard and very expensive to come by. I would love to see a graph like you posted but for MF.

I'm not saying this isn't useful information; it is. But if you only look at the data that caused the last crash as an indicator for the next one, it will blind side you. 

Try Carl Pires at Caliber Home Loans. Not sure if they can do exactly what you want but I used him before and was great to work with.

 That contract is only good until they break it. If they break a part of it then it doesnt matter what the other parts say. It gives you a good chance of an out. But you have to weigh everything, of course, to make sure its worth it. Wish you the best of luck. Hopefully, you can buy the tenants outs. If you can't I would go talk to a lawyer because, technically, they signed you into a contract without your permission. 

I technically  had a month-to-month lease that had a 6 and 12 month clause in it. If I where to leave before 6 months there was a penalty/fine and same if I broke it before the 12th month. The later was a larger penalty. After that it was strictly MtM lease with no penalties for leaving. Basically it was ensuring at least a 12 month tenant while providing the owner the benefits of a MtM. 

As a tenant I hated it because I bought a house and needed to move out before the 12th month but what ever.

 Theres the problem right there. You have a developer that is use to thinking at a very large scale and not a three unit scale. He is use to the extra expense of doing a condo but the rewards are far greater and thus make sense in the end. He's not use to, at least any more, thinking on a micro scale in comparison. Nothing he said is technically wrong, its just not the best practice for the scale you are working at.

I'm not saying he isnt smart or that you should find someone else to get advice from but I see this happen very often. Especially since I deal with it on a daily basis in my profession. Not all rules apply the same when you are changing scale in developments. This goes both ways. Thats why large companies have smaller per unit returns than smaller ones. It works for them because of scale but it would not work for the smaller company. I can't take the same logic I use to design a small 1200 sf SFR and apply it the a mansion that is 12,000 sf.

Arch fee wise you are not getting ripped off. You could probably go cheaper but at this point its not worth it. Youll spend more in the end.

I'd be cautious of whoever suggested doing you to condo it. They clearly don't know as much as they think they do.

I grew up in Illinois and most of my family still lives there. I wish I believed in the government and the economy there but I don't. Taxes are very high and will go higher. You're going to have to pad your numbers for the guaranteed tax hikes. And if they're anything like they have been they aren't small hikes. 

I'm an architect. 

Condos have the highest amount of law suites of any field by a good margin, even more than medical suites. At least in dollar figures; not sure about sheer number. Not only does our professional insurance go up but so will yours, by a lot. This is because the odds of there being a law suite sky rocket. So yes this is very normal. And really a lot of architect plain out won't do condos even though they do large MF buildings because of this very reason. And its also very common for developers who build new condos to turn around and sell them within a couple years because they don't want to keep that kind of liability on their books. Plus once sold they dissolve the LLC that built it and then all the condo owners are out of luck when they want to sue, regardless if the reason is justified or not. So if the "owner" who built it isnt around anymore who do you think they target next? Yep, the architect and builders who conveniently, for them, dont get to change or dissolve their LLC or company after every new construction.

Besides liability there also the problem of selling and zoning. Instead of selling a single triplex you are now selling 3 condos. Then you have to set up a condo association (HOA), your taxes are different, your insurance is different, etc. There are way too many things that are different from a condo than a traditional MF. Granted I know you can still treat it similar by you owning them and renting them so in the end there might not be that much different but would you really consider selling one off while you keep the other two? To sum it up I don't think a condo is worth the effort for only 3 units. Especially when its a conversion of a SFR like this situation.

Stick with a traditional triplex and skip the extra head ache for no extra return. 

Is having a tenant in the rental property really that bad of a thing? 

Unless you are wanting to sell it as a true SFR and not as a duplex/rental property.

As for the PM I would think that you could probably take them to court for damages but you would have to take them to court. You'd have to talk to a lawyer about the specifics. Have you tried talking to the PM about it?