All Forum Posts by: Stephen E Drew

Good Morning Marika. I think a smart move with your 135k would be to first have a conversation with a CPA. See what your tax liability is on the money and what you should set away for Uncle Sam. I could connect you to mine if you would like.

Then I personally would diversify those funds into a few different areas. Maybe chat with a financial advisor and have them help you set up an IRA and throw 25k directly into that on a high/medium/low-risk level and watch that slowly grow as a slush fund for further investments.

Then I would take the remaining money that you have and invest that into a multifamily building if you are inclined to put in the work. With 50-100k you would have the down-payment for a nice 3-4 unit building with the help of a bank. Buy it right... buy low and put in sweat equity. Clean up the building and have yourself some cash flow.

And reach out if you would like to chat it over. I am a licensed agent up here in Albany and I also own a few properties myself in Schenectady. Happy to help where I can.

1 Vote

Quote from @Todd Bailey:

Considering STR, would like to speak to a STR-friendly CPA in NY, preferably in the greater Albany area. Anyone know anyone?

Thanks, Todd

Good morning Todd. I work with Mike Lurry and I have for 7 years now. He’s a solid partner to have on your team.

https://www.luriecpas.com/

1 Vote

Albany, New York

Quote from @Mateo Way:

Just wanted to thank everyone for the suggestions on this deal!

We closed on the 10th of the month and are officially moved into our first home.

I was able to pay off 10k in credit card debt to lower our DTI enough that we could set up a monthly payment agreement for the back taxes with the IRS. This monthly payment came in slightly lower than the CC‘s monthly payment and was okayed by the lender.

Final numbers on the deal:

Asking price: $350K

Purchase price: $345K w/ $20K in seller concessions.

Appraised at $410K

3.5% down - closing costs put us in just under $19K total including the home inspection and appraisal fees.

Based on the current market the ARV on this property is in the ball park of $700-$800k.

We are looking to reach out to local banks in order to tap in to the 65k of equity to fund part of the the renovations but I think to really bring up the value of the home we may need to borrow more to make this place a real show stopper as a short/mid term rental. Ive got 2 contractors coming to do estimates before the end of the month to get a better idea as to the project costs.

Between AirDNA and Rabbu we are looking at a potential average monthly income of $8-10k.

Does anyone have suggestions as to the best route to take? Private money with an equity stake perhaps?

We would like to keep this property long term as a premium short term rental based on its location and gorgeous surroundings, flipping it seems possible but we would definitely wait until the market takes a turn and will definitely hold it as our primary for at least 2 years to avoid the capital gains costs.

Any insights would be helpful!

Also, if youre in the Capital Region of Albany, NY let me know!

Mateo, I read through your whole thread just now and there was so much to learn here! I'm glad you made it happen and closed on your deal.

I am from the Capital District. I currently live in Schenectady and my partner and I are investing in Ballston Spa, Colonie, and Albany. I primarily work on the acquisitions and dispositions and my partner has a great STR/Airbnb business already built. Were hoping to grow the portfolio this year.. have 2 properties under contract right now.

If I could ever help, please reach out!

Best of luck to you and yours

0 Votes

Quote from @Don Konipol:

Quote from @Stephen E Drew:

Good morning from NY;

My scenario for the day is this : I have been speaking with a highly motivated seller. We had an great connection from the start, we like each other, and he needs help right now. He owns 2 homes that are in rough shape and have tax liens, and one parcel of commercial land on NY Rt-7 valued by a broker at 800k-1.2m (unknown about liens). He is asking me to help him sell the first of the two homes. I have a multiple buyers who would pick this up quickly but my question lies in what to do about the delinquent taxes.

Schenectady, NY. ARV 190k.

190k x .7 = 133k - 30k (repair) - 5k (wholesale fee) = 98k MAO

What does this look like if I lock up a contract with him at 98k ? The end buyer essentially has to pay the back taxes right?.. therefore I must reduce the PP by the delinquent tax amount.?

I would be happy to pay somebody in this group a fee for the knowledge on how to get this deal done.

The seller told me that he wants 140k cash, or he would hold a note for 100k with a 50k downpayment... being newer to the game.. my assumption is that I can only offer this gentleman 98k cash.

Much love.. enjoy the

Whether the property is delivered free and clear of all liens and encumbrances or as is where is is a matter of agreement between buyer and seller. Most buyers want free and clear, the buyers willing to take a property with liens are more sophisticated, and receiving a below market price. A further consideration with tax liens is the sellers ability to deliver an insurable title. If there are Federal liens against the seller he may not be able to get a particular property released of those liens unless the entire amount owed is paid, which may be significantly greater than the sale price of any single property, or even of all his properties. In this case negotiate with the lien holder may be necessary. I’ve experienced many situations where sellers were surprised to find out that they could not deliver a marketable title.
Where inexperienced real estate operators screw up the most is the numbers. They see fix up and improvement costs of $30,000, where the experienced rehab er knows it will cost $50,000. They don’t account for hidden defects at all, where an inspection by a licensed inspector finds $10,000 in code violation problems. They don’t account for the cost of capital or the time involved in doing the rehab, or the GC profit. They use pure price per square foot comps not accounting for inferior location, smaller lot size, obsolete layout, or non optimal room size/bedroom count.
The inexperienced operator is super excited when a potential seller seems amiable to a deal. The experienced wholesaler will realize that there's probably a reason the seller is not working with an experienced licensed real estate broker with access to listing on MLS to people willing to pay the highest prices; that title reports need to be run to see IF the seller has the right and or ability to sell and deliver clean title; that sellers often hide pertinent facts like that their in bankruptcy, the property has already been foreclosed on, or that they own the property WITH someone else, who hasn't been seen in 10 years.
If you’re a bird dog getting a $500 fee then just providing the lead to an end buyer is probably sufficient. But if you’re operating as an intermediary between buyer and seller than the buyer is going to expect you to research title before presenting the deal so that he doesn’t waste his time on a deal in which the seller doesn’t or won’t deliver.

Don, thank you so much for the response and information. I will refer back to this post many times to remind myself of what to look for when investigating properties with liens to purchase. There's so much to learn and so little time!.. I thank you.

As well, I spoke with the owner again today. He said that he was meeting with an agent this afternoon who believes the property will sell on the market for 135k with ease. I hope he is right.

0 Votes

Albany, New York

Quote from @Chris Seveney:

@Stephen E Drew

Taxes will need to be paid but also the days of 70% of value are long gone. Just wanted to comment on that.

What is your take on the 70% ??

0 Votes

Albany, New York

Quote from @Ray Hage:

It will go a lot easier if it is a cash buyer. the buyer will get stuck with having to pay the property taxes so you will want to reduce by that amount. However, make sure there are not other liens on the property like mechanical, IRS or code violations.

Thank you Ray

0 Votes

Albany, New York

Good morning from NY;

Schenectady, NY. ARV 190k.

190k x .7 = 133k - 30k (repair) - 5k (wholesale fee) = 98k MAO

What does this look like if I lock up a contract with him at 98k ? The end buyer essentially has to pay the back taxes right?.. therefore I must reduce the PP by the delinquent tax amount.?

I would be happy to pay somebody in this group a fee for the knowledge on how to get this deal done.

The seller told me that he wants 140k cash, or he would hold a note for 100k with a 50k downpayment... being newer to the game.. my assumption is that I can only offer this gentleman 98k cash.

Much love.. enjoy the day !

0 Votes

Albany, New York

Quote from @Jay Sausmer:

I am sure people will come up with multiple strategies, one would be taking it over 'subject to' the existing mortgage until you're able to buy it from them. Give them a down payment, pay their mortgage, charge market rent, etc.

From a renovation angle, the standard math would look like this: ARV: $265,000, so 70% of that is $185,500, minus the $80,000 rehab, giving you a max purchase offer of $105,500 to the seller, AND you need to consider what you want your wholesale fee to be. Remember you have to explain the effort and expense you have to go through to to get that property up to 2023 standards. I use hard money lenders, and they all have had a 70% max loan of the ARV.

From the renting angle, some people want to stick to a 1%-ish rule - can the rent be 1% of the total price? Here, your 2-unit exceeds that. Don't forget though to account for vacancies, capital expenditures, maintenance, whether you pay any utilities, etc. That $500/month can shrink pretty quickly.

Thank you Jay! That was very helpful and some good insight for trying to come with an angle to buy these properties from them

1 Vote

Albany, New York

Hello Everyone.! I have been keeping in contact with a motivated seller for over a year now. They own a vacant single family as well as a newly renovated 2-unit. They are elderly and the husband does have health issues. He has been renovating the 2-unit himself and they have been through hell with their subcontractor's help. The 2-unit is a huge stressor for them. The vacant single family is not a large stress. They told me to give them a number.. money talks and they would be willing to negotiate a deal.

My goal here is to purchase and hold the 2-unit. I would like to wholesale the single family home because its in a great school district and would be desired. It is a flippers dream. The single family also has a vacant lot beside it which could be built upon.. another great potential with this property and opportunity.

I'm wondering if anyone would like to chat about this deal and run some possibilities for creative financing. I don't have any capital for this purchase but I would really love to "know how" to fund this deal, or what options there are here. Even though I don't have the capital, I fully believe there is a way to help this couple and create a positive outcome for everyone involved.

Greatly Appreciated! Enjoy the day

Single family

-ARV $265K

-Rehab ~80K

2-unit

Market Value $175K

PITI~$1,600

Rental Income-$2,100

1 Vote

Albany, New York

Good Morning Everyone. I have a lead here in Ballston Spa, NY which interesting and I am wondering if anyone has ran into a situation like this before. I am speaking to an owner who owns his property outright. This property is a beautifully kept 3/2 with a large double garage and it is zoned mixed use, with a great location for commercial use.

The owner is soon to leave the country. He said that he would be willing to talk terms on the property but he wants to leave the country without having "business behind him".

Is there an option to owner finance this property and pay this gentleman as he moves out of the country. I would love to create terms that make both parties happy.

He is asking for 369K but he had it posted it on the MLS on 4/5/22 for 329K and then took it off the market. He told me that he will soon post it again.

I do not have much money for a downpayment to this owner, but I am 100% willing to JV as the management aspect of the partnership if anyone is interested in this deal.

Thanks so much in advance

0 Votes

Albany, New York

All Forum Posts by: Stephen E Drew

Stephen E Drew has started 10 posts and replied 35 times.

Post: What would you do with 135k?

Post: STR-friendly CPA in NY

Post: Tax debt pay off prior to closing

Post: Motivated seller with Delinquent Taxes

Post: Motivated seller with Delinquent Taxes

Post: Motivated seller with Delinquent Taxes

Post: Motivated seller with Delinquent Taxes

Post: Structuring A 2for1 Great Deal

Post: Structuring A 2for1 Great Deal

Post: Possible Owner Financing with owner out of country