All Forum Posts by: Patrick M.

@James Somers contributing your maximum amount to your 401k is a wise investment. REI can be wise but it is fraught with risk at many levels.

For myself, at this moment, I have never gained so much, so cheaply and with so little work as with my retirement account. It is cheap to administer and I get a free matching contribution. I welcome the risk of equities. But that is not my money. It belongs to a much older version of me- God willing.

I have been extraordinarily fortunate in REI. It did not come cheaply or easily. I repositioned properties which are now worth far more than I paid for them, they have always cash flowed and I have been able to cash flow more. The "fortunate part" is because I was able to extract value from the sweat, money and stress I invested. Many are not as fortunate through no fault of their own.

Present me often looks at my 401k balance and max contributions and thinks, "Man, future me has the potential for a lot of fun!"

Present me looks at my business bank account and thinks, "Man, how lucky am I to put my kids through private school while all their old public school friends "lost" years. Boy, I think we should fly down to Florida for the Christmas break... Europe for Easter. New mountain bike? Regularly fund the 529's and Vanguards. Buy a second home abroad.

Yes- that is really me and it never would have come from our W2's

My only caveat is that I used loans from my 401k to help purchase and reposition my buildings. I paid myself interest. Future me may have been temporarily upset, but now my entire contribution is into the ROTH 401k... so I know he is happy! And, next year starts "catch-up" contributions, which I would never have been able to make while raising a family.

Many laws are state specific. Here in NJ the tenant is allowed 5 days. As such I have this built into my lease and if the state of extremely tenant friendly state of NJ believes it is reasonable that I collect a late fee after the 5th- then you had better believe it gets enforced. (One cannot be evicted for late rent in NJ)

There are a lot of steps between violating the terms of a lease and eviction. I removed all of my problematic, inherited tenants with notices to cease and notices to quit. I papered them to death and updated each with every new incident. They all left...

@Joe Villeneuve gives sage advice- go sit in court. I did. You will see unprepared landlords bemoaning the "tenant friendly" court and you will see prepared landlords getting what they seek.

@Max Pryor "but also for wat I paid, I need more"

This translates to - I overpaid for the property. Don't worry there is a lot of that going around. But it does give me some pause on your analysis.

1. When you are talking about a $500 market swing in comps in such a modestly priced range - It leads me to believe that you are not correctly assessing both your units market value and also its proper comps.

2. You hold in your hands the first rent increase- their water bills. How much are they and when will you be able to present them with new lease terms. Also, will they run with the land or the tenant and what does your market do with water. Mine is universally paid by the landlord.

3. Going forward you should have a set number in mind, that way you can inform any potential new tenants of what they can expect when you are vetting them. "You should expect a 3% increase in rent yearly unless inflation dictates a higher increase is warranted to keep up with costs."

Personally I am on board with @Bjorn Ahlblad. My units were under market when I bought, cash flowing nicely- but the place was a turd hole. Vacate, renovate- increase. I could say they were under market- but frankly I would not be happy renting them nor the people they would draw.

Also, get used to the idea that no one is going to "understand" why you have to increase rents, especially the tenants AND especially if you are going to require they pay water. Your costs have just gone down in their eyes. No one, not anybody, is going to understand, welcome to the club. Your job is to make a profit so that when the water heater goes out you can fix it, and the toilet stops working, and the fixtures start leaking and the snow.... The more you make, the better a landlord you can be.

Good luck

Proper insurance will protect you and your property.

An LLC will not protect your property and depending on your state it will expose you to less legal protections then a personal asset.

Example: In NJ, if I want to refinance a property in an LLC it will likely be handled commercially. A hard money lender will insist on a prepayment penalty... so if you sell the property in 5yrs you will have to pay 5% of the loan. In NJ they cannot ask for that of an individually held property.

Are you prepared to properly insulate your LLC from your person? No one knows you own the LLC? You don't use a personal card to make purchases? Bills are all in the LLC's name... etc,etc...

LLC's require a lot more work than the vast, vast majority of individual investors realize, just to confer a protection that a good lawyer will likely be able pierce.

Get proper insurance, be attentive to your properties maintenance, don't drink and drive or do drugs and screen mercilessly.

They are simply fulfilling the terms of the lease. It should not matter to you if it is early or on the day due.

The "gifts" is a horrible idea on many different levels.

Do this: when they text you with an issue, reply immediately, address any repair/upkeep issues immediately and keep them posted through out...

If you do this you will be within 1% of landlords (we here) and if you are already doing this then perhaps they are showing their appreciation with early rent payments.

I would definitely explore other opportunities. 
I really can't follow the logic of the current rental while being so cash heavy,  also not following the desire to burry the cash into it.

Personally, if I had this asset in this peak market and had such little equity- I would sell it ASAP, sounds like a disaster waiting to happen.

Future mayor of NYC*: 

“I don’t blame them for leaving,” Mr. Adams says. “New York has become too violent, too bureaucratic, too expensive to do business.”

I guess he is not a NYC landlord.

What is he going to do the day after he is sworn in? Talk to students? Celebrate with family? Talk with the teachers union? MTA?

“On Jan. 2, 2022,” he says, “I’m taking a flight to Florida, and I’m telling all those New Yorkers that live in Florida—I’m telling them, ‘Bring your butt back to New York.’ ”

Utter desperation.

But why? Because he misses all that tax revenue! NYC has gone in the schitter even with a HUGE influx of federal support... That tap is going to run dry.

Can you imagine what it is like to go from paying almost 15% in state and local taxes (NYC) to none (FL)! Don't they understand that someone needs to pay for that publicly masturbating homeless man's hotel room?

Every non-landlord that works in NYC, including apparently the new mayor, will readily tell you how it has gone in the schitter. There is massive turnover at the banks who have demanded people return... so much so that even Goldman is back pedaling on its return to office requirements.

And a lot of businesses realize that the lull in riots will end with the next presidential election.

Yet again and again... we are told how great it is by the salespeople. Even as the state legislature and governor thumb their nose at the courts and the law and enact another rent moratorium! 

Well, it sounds like future Mayor Eric Adams sees things for what they are... Hopefully someone isn't going to hand him a joint, which are now ubiquitous to NYC streets, and make him wear the rose colored glasses of those with their heads in the sand.

* All but acknowledge barring his cancellation.

In my market, if a tenant is working with a realtor, you are merely a rest stop in the house hunting game.

Based on my regular review of listings, if you list with a realtor you are likely to have to absorb more vacancy than others.

The 2nd is until recent market changes... now we all feel like pre-pandemic Brooklyn landlords- we could rent out a garbage can.

I never saw the need. Some of the ones who contacted me to try an place a tenant, refused to inform the tenant when I turned down their "shake down." Smart professionally, but real ****** from a human nature standpoint.

One who did was so delinquent in getting back to me that the tenants missed the boat.

I can control my professionalism, I can't control others. 

Not a chance... don't even entertain the thought.

If you want to do a remodel on vacancy- do it... A tenant starting to talk about moving a sewer and water hook-up from one side of the room to another is, by itself, a cost that won't be recouped in her tenancy.

You should fix the floor, laminate is an easy-peasey item to buy and work with. That is on you.

Zelle.

Venmo is a not free for business expenses, They are on the hunt for business payments... I bailed.