All Forum Posts by: Timothy Smith

Following as I’m looking for the same in Buffalo

Hi @Athena Cave, and thanks for asking, but I'm not into STRs. I may convert one this coming year, but so far all of my holdings are LTR. Best wishes!

Hi Nathan, and welcome to the Buffalo market. There's a number of active Buffalo locals on here. @Matthew Irish-Jones is a fantastic resource, and I can recommend a few others if you want to send me a note. Personally, I don't buy turn-key as I am into the value-add opportunities, preferably buying vacant buildings and bringing them back to life. I don't know if you live in NYS or out-of-state, but familiarize yourself with landlord/tenant law in NYS. Or hire a fantastic property manager. For a first-time investor in the Buffalo metro area, I would emphasize that the housing stock here is on the older side (many homes build pre-1900 or right around the turn of the century) and maintenance/cap ex is something to consider. Turnkey or not, there will be things to keep up on that you simply don't have in newer builds. If you are buying someone elses flip project, look well beyond the finishes and dig deeper. Many folks out there are cutting corners in rehabs and you don't want to be on the buying end of "lipstick on a pig". Again, one of the reasons I like buying projects rather than turnkey, but to each their own. 

Hi friends, looking for a creative solution here as I've never heard of this being done. Apologies in advance for my lack of clear articulation.

I would like to come in as a partner on a property already owned by a colleague. This is a small multifamily that he is reluctantly selling to free up funds to make improvements on his primary residence. He is not looking to 1031, so capital gains will be factor, and he would rather sell than refinance into more debt and less cashflow. More importantly, selling means he no longer owns a cash-flowing asset. I proposed coming on as a partner in the property. We would boost the value through AirBnB-ing 1-2 units, increasing rents, and also using the detached garage for our own purposes -- storage, workshop, etc. He loves the idea, as we would both benefit from long-term appreciation, cash flow, and using the property as space for our businesses.

Question #1: How would I come in as a partner since he already owns the house? We would form an LLC to hold the property, then ideally refinance into the LLC. A sale to the LLC would trigger capital gains and increased property taxes, so that would defeat the purpose altogether.

Question #2: How do I figure out how much cash I should put in the deal to make it 50/50 ownership and profit-sharing moving forward? His current mortgage is 40% LTV, so a refinance would automatically put cash in his pocket. Figuring out how much I need to bring is what I can't wrap my head around.

Thanks for your creative thoughts.

- Tim

By "both units", do you mean the combination of one heating unit and one cooling unit, or are you talking about a duplex? Who is paying the utilities? Is this more for your own comfort or for your tenants? Sure, you may be able to collect a slightly higher rent for central air, but you also have increased maintenance and eventually replacement costs. Should something go wrong with it, you are obligated to fix it (unless you write verbiage into your lease regarding repair/replacement being "at your discretion", which is still kind of crappy to do). 

To me, I see more value in central air in a flip than in a hold. 

Sadly, I agree that the moratorium in NYS will probably be extended. I personally don't see a fire sale of inventory, but rather once people are evicted (a big if, rather) screening criteria are going to go way up. I've already raised my income threshold and credentials significantly, and I know several folks around are just keeping units off-market and going by word of mouth. 

@Chris Martone Hi Chris, and welcome. There’s a really great community of investors here and I’m sure you will gain some value from these connections. I haven’t been going to the meet ups as frequently as I’ve had schedule conflicts but they are also a great resource. They have been primarily attended by newbies but there are also some excellent more experience contacts there as well. I’m primarily focused on the west side but have also dabbled in South Buffalo and I am always keeping my eyes open for opportunities. Reach out if you ever want to discuss.

There is a monthly Bigger Pockets meetup, 2nd Wednesday of the month. So...it was last night. I wasn't able to make it, but they usually bounce around locations. Pre-COVID, we met at Thin Man Brewery on Chandler Street. Eric Winstanley sets it up -- he's on here and also administers the BP Buffalo facebook page. Most of the attendees are new investors that are either looking for their first property, or folks with 1-4 units. 

I have tenants sign the form linked below along with their lease. To my knowledge, this is the extent of what the city requires regarding notices. I have not had to deal with remediation, but there are several painters on the "Buffalo Contractors - Where Contractors Find You" facebook page.

https://www.buffalony.gov/Docu...

Hi Patrick, I'm also here in Buffalo. Who is charging you $11K in closing costs on a $140K mortgage? I just did a cash out refi that closed 2 months ago for $136K and my closing costs were maybe $7K, which was high as it was an out-of-area lender (only reason I went with them was no prepayment penalties and I don't anticipate holding this property very long). I think you are getting burned on the refi costs, but maybe I don't know the whole story. 

I have been researching 2nd mortgages on investment properties for a while and have yet to find a local lender willing to be in 2nd position. Perhaps your primary mortgage holder with allow a LOC on the original property?