All Forum Posts by: Ahmad H.

@Marco Morkous - I would first call a reputable plumber to run a camera down the main line, and if all clear, then your issue is from the city sewer main. I had a property with repeated back ups because city sewer was partially clogged and when it rained or there was heavy usage it couldn't keep up, and flowed back into my property. The resolution was complaining to the city, which made them jet the entire sewer line on that block and cleared the clog. No issues since.

@Yonia B. This is a 6-unit, so I would think you'll have to go with a commercial mortgage, which is not going to be 30 years fixed. You're probably looking at a 20 yr mortgage at 4%+, fixed for first 5 years, at around $1200/mo. 

@Eric Schultz This seems wishful & biased. 

Even if you got 3% appreciation, you would need to pay 8% just to buy and sell the property, besides the 2-3% to get the financing. 5% tax savings from depreciation, but don't forget recapture taxes upon sale. Your ROI calculation is extremely simplified, and frankly, inaccurate. For RE, you're better off doing IRR calculations to take into consideration the costs I mentioned.

Low-cost index funds from Vanguard that trace the S&P 500, have an expense ratio of less than 0.1% and if you have over a certain amount, you pay 0 for buying/selling and automatic reinvestment of dividend payouts. ROI from a low-cost index fund is 8% on average.

@Neil Fanstone If you have the savings/income buffer, don't turn down money at an interest rate (assuming 5%) lower than average stock market returns. If you park the 300k in a low-cost index fund averaging 7% annual return for 5 years, you will come out ~30k ahead. Of course you want to invest in RE, so while the money is an index fund earning its keep, you'll look for value-add deals to flip to others or the bank (BRRRR). 

Having 300k seed money is a good thing!

@Chris Gawlik Your plan seems like a knee-jerk reaction to the realization that you're spending too much money. I would leverage the enthusiasm to take a deeper look into your spending habits and cutting down on unnecessary expenses. Having a decent house for your family falls under the necessary category in my book. 

You could use a HELOC or refi to get access to your 250k equity and use that to BRRRR or just put it in an index fund and that return should make your primary a little cheaper to keep. Other ideas would be to consider downsizing or even house hacking into a duplex in the same/similar neighborhood.

Make a plan to lower your expenses/increase savings and proceed gradually, reassess, and adjust as needed just like you would in building a real estate business. There's too much at risk for a rushed decision.

Best of luck. Keep us posted on what you end up doing.

@Ross Melby I am assuming you'll net 95% of sale price since you're an agent and will only be paying half the commission. 

Let's say you sell it for 430k, 95% of that is 408k, minus the 310k loan and you'll be left with 98k. You're 98k right now is making you 5k/year, a measly 5% return. Even if you include mortgage pay down, likely 80% of your mortgage payment is interest, so still abysmal. 

Unless there are strong indications of serious appreciation in that area, selling is a no-brainer. You're better off parking the money in an index fund and not dealing with property maintenance & tenants.

@Chris Seveney I'll have to get more info on foreclosing on a commercial note in NY. 

Sorry, I should have clarified that the new business is a grocery store and deli.

@Danny Redding Thanks for sharing your experience. They probably didn't believe that you held the note for $0 and at such a low rate of 4%. 

@Jay Hinrichs Lol. You're operating on a whole different level, my friend. 

@Jay Hinrichs 

Nice explanation of the technicality of why deeds in lieu don't work. That answers my follow-up question to Chris. 

The property is zoned commercial and was last used as a bar. It's very obvious that it can never be used as a residence. Nonetheless, having the buyer sign a document restricting it to commercial use & loan wouldn't hurt.

@Chris Seveney Is the deed in lieu moot in all states or only in VA (probably worse in NY)?
I had suspicions about the effectiveness of deed in lieu although I've read many BP posts about HML and having that be part of the agreement.

Thanks for the input! Much appreciated. I'll be having a conversation with my attorney.