All Forum Posts by: Solon S.

Thanks all. That was really helpful and clarified quite a bit. Now I have a better understanding of how cap rate works as I always had something different in mind. I always took financing in consideration, when I guess it shouldn't. Plus, a lot of these agents/brokers are making out their listings as being a lot juicier than they are.

I've been going around a lot of sites, including Loopnet, and have been looking at the Cap Rates that agents are claiming their listings are providing. They'll claim that a property has a 5% cap rate, priced at $1M, with annual rents coming in at $64k. It appears all they calculate in the expenses are taxes and operating expenses (11k total) and come out with the calculation. (Keep in mind, this is a Brooklyn property, hence the inflated numbers).

I guess my question is, should that be the only thing calculated in the expenses? Are the real estate agents presenting these cap rates in their pro forma's portraying them accurately? It seems like they're all doing the same thing. They're not considering the cost of financing, vacancy, or maintenance as applicable expenses. I wanted to get this clarified as I feel like hammering this out will help in negotiating deals with certain agents/sellers. Also, I don't want to enter an overpriced deal.

Thanks in advance for the feedback.

Thanks for the feedback.

@Lisa D'Alessio I'm going to be at the Bronx Courthouse this Monday to bid on a house that I want, perhaps I will see you there. Thanks for confirming what I thought. It's helpful to get feedback from someone familiar with the process.

@Mateusz Prawdzik Great feedback. I can imagine that the higher end market is sitting for a while. I follow a lot of the properties in the Bronx, and houses that are being listed at $400k-600k are sitting for quite a while. The thing is that a lot of these agents are just putting houses on a ridiculous valuation to inflate the market. Then their contract expires, and the house is relisted with someone else for $25k less, by which time the market has risen a bit making it a little more reasonable.

I agree with you that banks are ridiculous in their asking prices. Some shortsales that I've seen, the banks want near full ARV despite damages and sometimes having delinquent tenants still in there.

Also, what counties/courthouses are you mainly in? I know for NY, it's 10% down and the rest up in 30 days. I may also likely venture into NJ where my uncle is already flipping lower end properties due to affordability. I may want to pick your brain on NJ.

Last, out of curiosity, do you think higher property taxes would incentivize banks to offload their inventory faster as they wouldn't want to keep paying high taxes on their inventory? I would've thought turnover in Jersey would be quicker as taxes are among the highest whereas in NY, taxes are lower in high population counties and banks can afford to hold onto their inventory for longer for a bigger payout. Not sure what your take is on this.

Hi all,

I live in NYC and wanted to see if there were any experienced investors on here who have firsthand (and even secondhand) experience with auctions in and around New York City. I've checked some of the properties on the Bronx, Queens, and Brooklyn county courts and they seem to be much more reasonably attainable than those listed on the MLS.

As for procedure, I know that I need to do my due diligence. I'm going to check out any property that I am going to bid on in person to see the damage and also if there are any residents. I'm aware that some people recommend a title search, but would it be necessary if I purchase title insurance and check Acris as well for any liens. When a property is sold on auction, aren't all secondary liens removed other than mechanic's liens (and shouldn't I have picked that up by checking Acris)?

Last thing, the 10% deposit is due up front, but then I have 30 days to secure the other 90%? I intend to use a hard money lender for the acquisition and repairs, so I want to make certain. I've read on some places that other auctions around the country, the balance is owed the following day, but I'm sure that NY State is 30 days. I just wanted to confirm.

Also, please feel free to include any other information or nuances in the post that you believe I should be aware of. I'm sure that there are some things about the process that you don't pick up unless you have done it before. And if you're active in other auctions in Nassau, Suffolk, Westchester counties or New Jersey, please let me know. I'd love to pick your brains.

Thanks again.

Thanks @Jacqueline Mann. I was able to get in contact with Tim and he provided me with the preapproval in under 20 minutes of submitting my info which was significantly faster than I expected. It's also on great terms. 

Thanks for all the help

Thanks @Jacqueline Mann. I'll give them a try

Thanks @Kerry Boyle and @Copelon Kirklin. Do either of you have any recommendations for HML's who do business in the NYC/NJ areas. I contacted one who I previously interacted with on this site, but then when we were discussing everything, his rates and points were at a premium and wasn't willing to budge on the preapproval letter. I worked with another person in the past, but he's no longer lending which is inconvenient since he was an easy person to work with. Any recommendations would be helpful.

I wanted to see if there is anyone that knows if hard money lenders provide pre-approved loans or proof of funds for investors, similar to how traditional lenders provide pre-approved mortgages which are pending final approval. 

It seems as though I am in a catch 22 as we are currently in a competitive market when it comes to finding deals and that would provide a good return. A lot of the good value deals are major fixer uppers, foreclosures, or short sales which would not be eligible for conventional mortgages and the brokers require proof of funds before even considering your offer. 

I wanted to see if anyone had a solution to this problem or if anyone knows of a hard money lender which can provide a pre-approval letter or proof of funds letter to facilitate a deal. Thanks all

Thanks guys. I spoke to a couple of attorneys and they confirmed that it is roughly a 2-4 month process if it's a private house and no extenuating circumstances.

When you get into rent controlled properties, elderly people, children, and unkept properties then issues arise and it will take longer.

They also discussed initiating a surrender agreement (cash for keys) which they can manage.

@Krystof Pilisiewicz Love the answer. Thanks a lot!