All Forum Posts by: Noor B.

I was doing a similar search and found your post and the article in the same google search :)

Glad I could help.

According to this article, if you have 80% of the units vacant and do significant capital upgrades, you can destabilize the building.

https://rew-online.com/how-to-...

That is, if 75 percent of the building-wide systems (i.e., there are a total of 17 building systems, including, among others, plumbing, heating, fire escapes, elevators, kitchens, bathrooms, pointing or exterior surface repair) are completely replaced when the building is 80 percent vacant, units subject to rent stabilization can be deemed permanently exempt and converted to free market status.

In addition to at least 13 of the 17 building systems that need to be upgraded, all ceilings, flooring and plasterboard or wall surfaces in common areas must be replaced; and ceiling, wall and floor surfaces in apartments, if not replaced, must be made as new as determined by DHCR.

From a valuation perspective, buildings that are at least 80 percent vacant will likely begin trading at a significant premium if they can qualify for the building-wide system improvements.

For example, a six-unit building with five-vacancies is 83 percent vacant and an investor would likely go through the Substantial Rehabilitation process to deregulate the vacant apartments. This building would trade for a significant premium to a comparable six-unit building with fourvacancies (i.e., 67 percent vacant and not eligible for the Substantial Rehabilitation exemption), as a purchaser in this instance would have to underwrite based on cash flow from the existing legal rents.

Is it a crazy idea to consider renting studio apartments in Brooklyn and then furnishing them and listing them out on sites such as air bnb?

Would I need to get permission from the landlord to do this?  Would any landlord be willing to give permission?

Any thoughts, feedback would be greatly appreciated!

Thanks,

Noor

thanks so much for all the information!

@Ned Carey the rents are being compared to places that do not have utilities included, so raising rents might be an option, but to completely transfer all the utility costs back to the tenants, we would need to raise the rents on average $300 per unit or about 40%. Even if this is possible with the rental market, there would probably be a lot of immediate vacancies after we would close on the property.

In terms of paying what the property is worth currently, based on income and expenses, even if we paid $100,000 there would still not even be $100 per door in cash flow.

@Roy N. thanks so much for the very detailed response about splitting the utilities on such an old building. This seems like way to much to take on for a first property and is probably not a very good deal unless we make a very very low offer.

Hi,

We are in the process of looking for our first deal in the CT area, and I came across this property on craigs list:

asking price: $229,000 7 unit victorian built in 1880, in broad bank, CT (small town near hartford)

some seller finance: 60,000 @6% 15 or 20 years (which would be great since we do not have a lot of capital to start with)

Gross rents: 59,700

Here is where this does not appear to be a good deal:

electric: $6,390

oil:11,167.31

water: 1,825

trash: 2,562

snow 510

sewer 2940

taxes 6497

insurance 4000

and i would also add in property management: $450

and repairs: $450

the tenants are month to month and rents are somewhat below market

and there is laundry in basement for extra income.

So basically the owner pays ALL utilities on this property.

Question is though, how difficult would it be to change the electricity and oil to separate meters and how difficult would it be to start passing that on to the tennants? This seems like it could be a good deal for the person that can lower these expenses. Or should we pass since this may be tricky for a first investment? any input would be greatly appreciated!

thanks,

Noor

Thanks everyone for all the feedback!

@Winston S. I will look into Harford and New Britain. Yes, we were thinking the same thing in regards to the cost of living and taxes in FL vs CT. If we lived in a less expensive area, we could save faster and reach our real estate goals much quicker. Good luck with your move to Jacksonville!

@Marco Santarelli thanks for the advice. I didn't mean to knock turn key investing. Here are some of my concerns:

Buying in an unfamiliar area, perhaps not knowing which neighborhoods are "too hot" vs finding an area that is stable and a little more under the radar. I guess the fear would be following the herds and buying in an area that has already been sought after by investors and then having the market go down and vacancies go up.

Not being able to make money when you buy (by buying below market) or have opportunities for some forced appreciation. This would give less of a cushion if we needed an exit strategy or if something unknown happened.

Also, once we reach the 4 mortgages rule, wouldn't it be more difficult to figure out financing for future purchases after that? But if we lived closer we could do our own marketing, find our own leads and find other ways to finance a property directly with the seller and also pay a lot less for the properties which would give us more forced appreciation and cash flow? Though turnkey would definitely be easier and more passive.

@Phil Z. I noticed that you are a broker. If you don't mind my asking, where do you find most of your deals? From the MLS or do you do your own marketing as well? Also, which parts of Bridgeport and do you look? single family or multi? We have been looking mostly in the North end and yes, the taxes can be pretty high! Have you had any tenant issues with regards to the tenant friendly laws etc?

@William B. thanks for the info on Jacksonville and Orlando. This gives us something to think about.

Thanks,

Noor

Hi everyone. My husband and I are just starting out and are reading bigger pockets, learning and trying to save for our first buy and hold property. Bigger pockets has been an amazing resource so far and I am obsessed with reading all the articles I possibly can. This is my first post.

We are in the Fairfield, Connecticut area and are not sure where to start looking for a good cash flow area that is not too expensive to start out in and that cash flows. We have looked at the Bridgeport, Norwalk and Danbury areas but are not really sure if CT is our best option. Also concerned with the fact that CT has tenant friendly laws and some areas such as Danbury have had population decreases in recent years. Isn't that what investors generally try to avoid? We would prefer to manage our own properties at least in the beginning and the idea of buying turnkey out of state seems too good to be true in terms of returns and risk. We have been meaning to go to the CT REIA meetings but just have a lot going on with 2 small children and my husband's work schedule. (I'm home with the kids). But hopefully this fall we will make it to one.

We are not totally against the idea of moving to a less expensive area that is better for investors and my husbands job could be transferred to Orlando or ft lauderdale.

Our goal is to buy cash flowing SFR and multi family properties for passive income.

Would love to meet and/or hear from some successful investors in the CT area.

Thanks,

Noor