All Forum Posts by: Robert Chen

HI All, this is an open question to the BP community as I have never dealt with corporate rentals but got an interested company recently. I have a multi-family in Westchester NY and I currently live in one of the units. I listed my unit for a regular rental and was contacted by a secretary at a company asking about a 1-year lease for the company. The company intend to use it for their employees and perhaps traveling workers. 

I am thinking right now the lease is going to be very similar to a regular lease and the only difference is that the lessee is a company? 

Thanks for any feedback!

I wanted to give a final update on this thread. So I moved out of Providence and after stabilizing the property I decided to sell it as the market was quite hot and I could make a fairly good return. During the selling process, all this issue with the building in the town and tax record came to surface because the appraiser was VERY diligent at his job..

So anyway I had to correct the records. It wasn't as bad as I had thought and a few lessons learned here I hope to help someone else out. 

First is that the tax records and building department don't talk to each other. It is actually really easy to get the tax record changed. All I had to do was call the tax department and tell them that the record is wrong and have them come take a look. The tax assessor came the same week I called and did a 10 min walk through to confirm this was just a 4 family and changed it that day. A month later it showed up online too so everything there was all set. If I had done this earlier the appraiser wouldn't have seen any issues as he initially just wanted to see the tax card.

Second is that the building inspection is willing to work with you but there are a lot of red tape... The building inspector was sympathetic to my issue and agreed that it is weird how the city has 5 units while the building is just 4. He came for a walk through pretty quick and confirmed. However, after that he needed me file a permit, provide a floor plan, and get electrical, plumbing, mechanical, and fire department signatures. I drew the floor plan myself with a software and he accepted it. Electrical, plumbing and mechanical signatures were very easy as they understood the issue and signed without coming to the property as they know there were no work done. However, fire department wouldn't sign off until a full fire alarms inspection was done. Being a 4 unit, it is also a different procedure than the regular smoke cert for 3-units or lower. After all that, new CO for 4 unit was finally given. 

Through out this entire thing, everyone, including the city and the tax assessor were surprised the appraiser had such issues. They actually told me the appraiser should just go by what he sees because they admit the city records could be wrong.. I am not sure what to make of it but I am glad at the end it is done. 

Not a bad idea either. Definitely buy in a good location. In the most recent episode #293, even Brandon mentioned some of his best deals were in good areas that didn't seem much of a deal at the time of purchase but over the years just got better and better. So maybe getting a C class property in a B or A class neighborhood is the way to go so you can over time improve the property and raise the value. Cashflow is great but the real money maker of real-estate is still appreciation.

Another big help is to change all the door locks to key-pad locks. I use the schlage key-pad. This way at least you won't get called for being locked out. Over the winter I had a water pipe burst and if you need to do the 1hr drive at night to turn off the water and deal with the issue in the morning, even that isn't that bad. 

Hi Joe, yes the first one was a house-hack but now I have moved so my properties in RI are under property management. In your cashflow, did you plan for property management? If you planned for 10% property management and 10% repairs and you can get 600 after that it's not bad at all. Otherwise, make sure the property is in a good location and you spend some money/time to really clean it up initially and find good tenants, being 1 hr away isn't too bad. 

Real-estate is a long-term investment. 4-6years later you would have paid down the loan and you can re-fi to lower the monthly payment further and probably increase the rent at the same time. I think with every house there is initial 1 year of pain but it will get better. 

Hi Joe, is this property in Providence? don't be scared of older houses in Providence.. Actually don't be scared of older houses in general. Do look at if you have updated plumbing, heating, wiring, insulation. Most older houses actually are more structurally sound due to higher grade of lumber that was typically used back then. Also, you most likely won't need contractors for most of the repairs and if you do, a few phone calls will probably lead you to someone good. And after that, you got a great plumber/electrician/handy man for all your future investment needs. Without the first one, how else do you do it? 

I bought my first duplex in Providence the year after I got out of college and it was the best decision.

I went through a refi myself last Sept. The bank incorrectly ordered 2 appraisals, one each from 2 different companies. One came back at 250K and the other came back at 210K.. Even the bank was confused how they can be so different when they were done at the same time. At the end they just used the average. I'd go for a different bank if you aren't getting the numbers. Based on your income, you might also want to consider a business loan by packaging these 2 properties together. You should be able to get the numbers you are asking for because the cashflow is so strong and business loan would be based on NOI.

Hi Jacob. There are so many good advice here already. I have only invested in a few multi-families and here are my top rules now (may change later.. who knows).

1) Always assume current rent is the best rent the place can get. The previous landlord is just like any of us and got the best rent he/she can. So unless you plan to spend a lot of money upgrading the units or the area is turning fast, rent will stay the same.

2) Don't inherit tenants if you can. If you do inherit, get the leases earlier and confirm their identity and payment before closing. I ran into an issue where after I closed, the person living there isn't the one on the lease and I couldn't even serve eviction papers because I don't know their names. 

3) It's OK to pay for good neighborhood, good bones, good layout. Even if it seems high now, as long as the cashflow is positive, the price of the house should rise or at least maintain over the years. 

I looked into Woonsocket a lot when I was buying and honestly feel like the good areas are worth it. Especially if the Worcester-Woonsocket-Providence train line opens up, it should bring life into the city. Good luck and keep looking!

@Eder Aldana Thanks for the advice and that would definitely be my first course of action too. I would like to include this cost in my financial projections though. Unfortunately I had to deal with multiple evictions already and I don't expect evictions to disappear in real estate investing any time soon. Congrats on working it out with the tenants, it's definitely the best way. 

Hi Biggerpockets. I am about to close on a small multi-family (2 units) in White Plains and I just wanted to know how much average lawyer cost, court fees and how long evictions in the area would be. Thanks for any feedback!