All Forum Posts by: Pete Fiannaca

Hey BP -

Looking for some group wisdom... especially from those well-versed on tenant law.

We have a month-to-month tenant who just gave notice, on 2/12, of his intention to leave the home. We collected security and last month during lease signing.

My understanding is that since notice was given mid-month, the tenant is not free of obligation on 3/12, but actually the end of March (as partial months do not count). In this situation, the tenant would pay ALL of February’s rent and be all squared up for march, as it was collected at lease signing.

The tenant’s understanding is that 30 days is 30 days, so his obligation ends on 3/12. Therefore, he insists that his last month is the time between 2/12 and 3/12 and wants his February payment prorated to reflect that.

thoughts?

Best -

Pete

Don't have to sell, but testing the waters in the event that someone is trying to pick up a triplex in the WNY area. 

LOTS of deferred maintenance done.

New Boiler - 2013

New Tear off Roof - 2018

New vinyl Siding - 2018

Full Renovation Apt #1 - 2018

Full Renovation Apt #2 - 2018

Full Renovation Apt #3 - 2017

Great money maker with an NOI of $21K (self-managed). Gross rents at $3200. Please DM with questions.

Best,

Pete

Hey Folks - Looking for some advice here...

I have a property with a single steam boiler and three apartments spread out on three floors of the building. I currently pay for the utilities but, without fail, I'll drive by the house during the winter and see windows open because the tenants are too ____________ to bend down and adjust the individual radiators in their apartments. There is currently one thermostat for the whole building located on the ground floor in apartment 1.

I know there's no good way to split the gas utility in such an old house, so I was exploring the idea of installing electric baseboard heaters and simply splitting the electric utility for the tenants to pay for themselves. I realize that gross rents would likely fall, but I would also stop paying the stupid gas and electric bill that comes every month!

Looking for some general thoughts. Bad idea, good idea. Worth exploring? Can I cut costs by approaching my steam boiler with a different strategy? Wifi thermostat? I'm open to new ideas!

Thanks,

Pete 

Hey Anne Cantwell ! I’m typing from my phone so apologies in advance if any of this sounds short. Not my intention! Rochester is a great area to invest in (don’t listen to the haters). There’s an excellent diversity in suburban areas, with often a few hundred yards meaning the difference between a $95k property and a $295k property! Definitely need to keep this in mind. I would HIGHLY encourage you to start with a SFR if that’s what you think you’re prepared for. You likely won’t be able to cashflow well in the higher end neighborhoods of Pittsford, etc., but SFRs are an excellent investment in up and coming areas like North Winton, or established blue collar suburbs line E. irondequoit. I’ll outline numbers for you on my most recent deal in E. Irondequoit... 3/1 SFR, 1,400 Square feet Purchase price, $71,500 Put down 20%, mortgage was roughly $57k $18k rehab Waited 6 months and completed cash out refi Property appraised at $128k New loan at 75%LTV was for $96k Cash in was $14k + $18k, or $32k. Cash out was $36k after closing costs. Not a huge profit, but the point was to recover our capital through BRRRR, not make a ton of money. Monthly PITI is now roughly $900 and the house rents for $1,400/month. COC return is.... Infinite! There are deals to be had. Even with SFRs. Keep your eyes open and feel free to reach out if you have any questions. I’m a born and raised rochester native and can give you my 2 cents on specific areas you might be looking at. Best Pete

Hello BP -

I'll keep this as concise as possible. Please feel free to DM for additional info.

Wonderful opportunity (foreclosure) just popped up in an area that I invest in (Rochester, NY). It is a single family home, currently listed for $59K with an easy ARV of $140-$145K. The property is only open to owner occupant bids for the next 14 days and I am in a position where I would be able to take occupancy of the property and reside in it for 1 year to satisfy the sale requirements. Gives me a leg up on getting an offer in there before most local investors. All offers must be cash only.

Funds are tight on my end as I recently purchased a 3-unit across town that required quite a bit of rehab, so I'm directing most of my available assets in that direction. 

I'm looking for a private money partner who is either interested in one of two scenarios...

Option 1) Straight private loan with fixed terms for repayment. Looking for roughly $85K to cover acquisition and rehab. Could offer 12%, amortized over 30 years, interest only payments, with a balloon after 12-18 months. No pre-payment penalty after 9 months. 

Option 2) Someone willing to loan the $85K for acquisition and rehab at 0% and 6 months no payments. I would put a mortgage on the property, after the 6-month seasoning, based on the new appraised value and repay the $85K, plus offer a 50/50 split on any excess over the $85K. I have a lender on board that offers 95% LTV with no PMI. If the property appraises at $140K, I'd put a mortgage on it for $133K (95%), leaving the difference of $48K ($133K - $85K). A 50/50 split would yield, roughly $24K per person. That's nearly a 30% COC return with a timeline of 180 days.

Option 2 clearly assumes more, but offers a higher ceiling in half the time. Option 1 is a bit more standard and offers a solid 12% gain. 

Shortest Bio Ever: I'm a Rochester, NY, local with considerable knowledge of suburban neighborhoods surrounding the city. Investing in RE for the last few years, and owner of a small portfolio of <10 units across 3 properties). 

Let's chat! Looking forward to making some money together! Hoping this could turn into a successful long-term lending relationship when this goes well. 

-Pete

Hey BP -

Thank God we have people in this community who eat, sleep and breathe taxes, because this stuff is going way over my head. Couple quick questions regarding being a small time landlord, the new tax plan (TCJA) and starting an LLC...

I currently run a small operation (<10 units across 3 properties). I do not have an LLC set up, but rather elected to get an umbrella policy when I started out. Here we go...

1) Without having a business entity in place, would I qualify for the new 20% pass-through deduction for net rental income, or would I need a business entity (LLC, Corp, etc) in order to take advantage of it?

2) Looking at section 179 expensing, would creating an business entity such as an LLC now (in Feb 2018), have any implications on major purchases made at the end of 2017 (heavy truck used 75% of the time for rental activity/property maintenance, applicances, etc). Would I be able to take advantage of the 100% bonus depreciation?

3) Are there any lesser-published notes or important things to consider with the new tax act that should give me second thoughts about putting my properties into an LLC and creating an actual business entity moving forward?

Thanks in advance for the wisdom, BP community!

-Pete

The grandmaster, @Scott Trench, hits home on this notion in his book "Set for Life" (which transformed my worldview). It's so simple too... You can really only influence two things in this situation, 1) Money coming in & 2) Money leaving your possession. 

Since it sounds like you've got a pretty good handle on the outgoing money part (budgeting, etc), I would highly encourage you to refocus on the money coming in. Some initial questions I have...

1) Can you negotiate a raise?

2) What else can you do for a living that will pay you more than $13/hour?

3) If there's nothing immediately available at more than $13/hour, where can you go that would offer overtime?

4) If there's nothing immediately available at more than $13/hour, can you pick up a second/third job?

5) Why can't your wife work? It doesn't have to be glamorous. Minimum wage is still better than no wage. 

6) Why can't you charge your aunt rent? Even $100/month. Heavily discounted. Still doing her a favor.

7) Have you called every bank in your county to see who's offering special mortgage programs for low-income earners? Sometimes it's easier to get a a mortgage when you DON'T make a ton of money. Pursue these programs to acquire a 2-4 plex in order to live for free.

8) What personal property do you own that can be sold/bartered to put some money into savings and provide a cushion/peace of mind?

Just some thoughts...

Hello BP Folks -

I am currently seeking a private money loan in order to do some large-scale work at a newly acquired property. Roof ($7500), Siding ($10,000), and 26 new windows ($8500), need to be done over the next 12 months and I'd prefer to do them all in one shot. I am fully employed in education and work for a union with full employment protections. Currently own a portfolio of 5 units and am much more interested in letting the tenants pay this work off over time rather than tying up a huge amount a capital upfront. Though I'm proposing this as a 10-year loan, I'd be open to a balloon due after 5-7 years if that makes the deal work for a potential investor. 

Proposal

Loan amount: $28,847.50

Rate: 8%

Term: 120 months

Monthly Payment: $350.00

*No pre-payment or early payment penalty after 12 months

Look forward to hearing back soon!

Best,

Pete

607-382-1247

Hey BP - 

Don't have to sell, but figured I'd put this up here just in case someone was looking for something in the Rochester market. Full transparency, but I purchased this place about a month ago. Appraised for $178,000 and then had some work done after we closed (roof repairs, electrical repairs, plumbing repairs, and full interior painting). Boiler is only 3 years old. Lots of charm with original hardwoods through all 3 apartments. If I were to hold the property for 5 more years, I'd consider doing an exterior paint and starting to replace windows.

Great opportunity for cash flow at nearly $3,000/month for a property under $200K. Fair market rents should be raised when bringing new tenants in. Gas and electric are included in the rent (not separated). Rents should be $850/$1050/$1250. Taxes AND insurance are roughly $650/month. I currently have a mortgage on the property for roughly $155K. 

Looking for something that would be a cash deal. All tenants are on month to month leases for maximum flexibility for a new owner. At least 2 tenants highly desire to stay on for a 1 year lease.

Feel free to reach out via cell if interested. 

Pete

607-382-1247

Many good things have already been said so I'll keep it brief. I think you overestimate how much time it takes to run a small real estate venture. I am a buy and hold investor with 5 units. Am I the Warren Buffet of my own tiny universe? Of course, but I realize what it actually is; simply a mechanism to replace one of our household incomes. The 5 units average (net) $600/door, or the $3000/month take home my wonderful wife makes as a K-12 teacher. Total time commitment... maybe 2-3 hours a week. So, for what it's worth, 2-3 hours a week of work has replaced 40 hours/week of work for my wife. Compounded with the fact that all of these properties are leveraged and required minimal initial capital investment, I'm not quite sure how would would've replicated our success via stocks.