All Forum Posts by: Ryan Vienneau

To be clear, I have no intent in going after the agent or anything like that, I was just really surprised that she offered up that tidbit of info, it seemed to me like that was just her way to angrily react to us saying the condition had changed, and she just spit out the first words that came to her mind, which was probably not the smartest thing to say.  

The part that's most aggravating is that she told us that since the property was winterized, we would have to pay their subcontractor to dewinterize and then rewinterize the property ($1000 total for both units) to conduct our inspections, but we obviously would not have been able to dewinterize pipes she knew were broken.  To save herself a lot of trouble, she might have thought to mention when we scheduled the dewinterizing, "Oh by the way, almost forgot, the pipes are broken so you may not want to do that...".  

As a consolation, I did call their winterizing contractor back to cancel once the deal fell through and explained what happened, and he laughed and said it didn't surprise him at all, he quoted them to fix one tiny leak in a pipe in the fall so that he could adequately air blow the lines out for winterizing, but they refused to pay him to fix it, which led to water being left in the pipes and busting several more.  What a waste!

Question for New York agents:

I know that an agent is required to disclose known issues with properties to a buyer for conventional sales.  Does that same rule apply to "as-is" foreclosure properties?  

Three weeks ago I found a foreclosure 2F in Schenectady NY that was in really good shape, needed updating and cosmetics but was overall a great deal.  There were multiple offers, we offered list price, cash offer, with an inspection contingency.  Before we could even get the inspector in, the temperature hit 15 below zero one night after we made the offer, and although the property was winterized I found at least 3 places in the basement where the pipes split that night.  

We called the agent to say the pipes had burst since making our offer and we would either need to renegotiate or need more time to assess the damage since our contingency period was up in 2 days.  She basically told me that nothing had changed, the property is being sold as-is and the pipes were already like that and that there would be no negotiating or extension, take it or leave it.  We told her fine, rescind our offer, which was disappointing because I don't think the pipe issue was catastrophic, but I certainly wasn't going to keep our original offer on the table.  

So my first issue with this agent is she basically inferred that we were either lying about the pipes bursting in order to negotiate or that we just hadn't noticed it before, which was fairly offensive to me since one of them burst while I was actually standing in the basement and I watched the water spray out of the pipe with my own eyes.  More importantly, I didn't think to mention it at the time but if there was legitimately an issue she knew about regarding the pipes, isn't she legally obligated to disclose that?  

Furthermore, my guess is that they'll go back to the next best offer that looked at the property prior to the pipes bursting a few weeks ago, accept their offer, and try to screw that poor sucker over if they don't go and reinspect.  Are they obligated to tell THAT guy the pipes burst since he made his offer?  

Couldnt have said it better myself!

Welcome!  Beware of flood insurance in waterford, rates have skyrocketed since the flood a few years ago, thats why home values have tanked and foreclosures are way up there.

@henry r.

I inherited a Sec 8 tenant in my first property that I also occupied, and quickly learned that it's similar to unemployment standards in that if you lose your job, you need to prove that you are at least looking for a job to get renewed.  So my tenant would get a job at jiffy lube, then leave the drain plug out of half cars on his first day, get fired, then his clock would reset for 6 mos and not have to work.  Then when the clock started running out, he would go to Valvoline and do it again.  He was an able bodied 25 year old.

I just formed a single member LLC in Jan in NY with Legalzoom, it was like 150 plus the NY fees. Prior to doing so, I met with my lawyer and CPA about forming one, and they ALL agreed an LLC was the way to go for me, and said I'd be wasting money having them do it and to use LegalZoom instead for the first one and use it as a template for any subsequent LLC's I want to form (for rentals). I did exactly that and it worked great, took 30 days, and my lawyer and CPA looked and said it was fine.

Personally, I think the explicit instructions and documentation that Legalzoom provides is more helpful than anything a lawyer would provide, and they had very good customer service.  

Believe it or not, I actually wouldn't be surprised by those vacancy numbers if they are Sec 8.  Here in NY anyone with a pulse that doesn't want to work can get on Sec 8, but few landlords want to accept it so there's a huge demand for Sec 8 rentals and very little supply, which is why you can get astronomical cap rates.  They will also stay forever, and fight tooth and nail if you try to evict because they know they wont be able to find another Sec 8 unit available.

Example, I just looked at 2 fourplexes in south troy last week, they havent had a vacanacy in years, the units are rented for 700/mo, yet the owners can't get 100k for either after a year on the market, and theyre decent buildings.

A 7 cap is absurdly low for Lansingburgh, that area is one of the sketchiest in the capital region, half the houses are boarded up, theres a TON of rental inventory on the market because even low income renters are fleeing the drug violence.  

The ONLY reason to buy there or in similarly bad neighborhoods like Arbor Hill in Albany or Crane St in Shenectady, or South Troy for that matter, is because you can easily get 15+ cap rates and 30+% COCR because most of us would rather not have to wear a helmet when collecting rents. I would say a 7 cap MIGHT make sense in Saratoga, but thats about it.

And don't get overexcited by the occupancy rate, I would be willing to bet that occupancy is high because its 100% section 8 tenants.

Personally if I were going to choose an area of the country to invest in that's not in my own backyard, NY would probably be the absolute last place to do so due to the taxes and weather, especially with SFR's. Forget the 2% rule, you'll be lucky to cash flow a SFR at 3% due to the taxes. Everyone on BP that touts the 50% rule and 2% rule doesn't live in NY where taxes can easily be 5-10% of the total acquisition value of the property each year. Example, I just went to look at a gorgeous 4 BR 2200 sf house in a really good neighborhood in Schenectady near the college, it needs some work but nothing major, yet the price has dropped to $45k, no one will buy it, because the taxes are $8200!!!!!! So, suppose you could get $1600/mo, almost 50% is eaten by taxes before you even begin to pay mortgage, maintenance, etc. No flipper, investor, or homeowner can make that math work, so it's going to rot vacant.

I bought my first house when I was 20, it was a duplex in Watervliet NY, and it was one of the greatest financial decisions I ever made despite everyone telling me at the time I was too young, broke, and naive to own a house. I lived there 4 years almost for free, put $10k into it and a lot of sweat, and sold for a $40k profit. The only thing I wish I did differently was to owner occupy more multi-fams while I was still single and lock up as many 97% LTV properties I could and keep them all as buy-and-holds. Search for "house hacking" in the forums and you'll learn all the benefits of doing so. Welcome to BP!