All Forum Posts by: Wesley Sherow

Hey Adam, I was scrolling through old posts and I saw yours. If you haven't gotten this handled already, I do have a decent lawn guy. As for snow removal I have some recommendations. Please let me know if you'd like a referral still via direct message, as BP forums don't like contact info posted here.

Hey Voula, I was scrolling old posts that didn't have answers and I found yours. I hope you were able to get some money back from these issues with the resident. If not however I wanted to chime in. I've used in the past Hunter Warfield for my collections. It's a bit of a "set it and forget it" because let's be honest, if they're not paying rent for that long of a time, they probably aren't going to bother once they're in collections. With that said, you may be able to go for ERAP (if somehow they can qualify) or at least LRAP which is the post-eviction/move out equivalent. 

Hey Jason! 

I'm currently in the midst of refinancing a 10 unit in Albany, NY. We purchased it as a small investor fund for $735k, and we're looking at an evaluation of about $1.5M on the refinance. We're currently getting bids from lenders now to find the best deal. In the meantime, I'm also going into contract for 12 more apartments on a fix/flip/refinance approach in Troy, and Cohoes, NY. 

Generally though I may be an outlier, I've had a lot of success over the past year in finding deals. I would mention the general gist I get from my NYC investors versus my experience upstate is that it's difficult to be a small solo passive investor if you're not taking semi-regular trips to your portfolio. Other than that, returns upstate seem to consistently be 8%+ at a minimum, secured against a little extra effort finding well qualified tenants. 

Personally, i'm involved in the purchase/management portions of investments, as a registered agent. Especially if you'd consider directly north of NYC, I'd be happy to connect. My specialty is in the financial modeling/ROI calculations to select the best property.

Investment Info:

Other buy & hold investment.

Purchase price: $635,000
Cash invested: $200,000

Built in 1880 as a single-family address, this rare three-story grand brownstone designed by Ogden and Wright was purchased by myself and investors for conversion to a boutique hotel. This project is still ongoing, so more to come.

What made you interested in investing in this type of deal?

I have been in the short term rental space for quite some time now. This is one of the last remaining buildings in Capital Square that has legal Bed and Breakfast usage rights. In addition to that the price was amazing, so I couldn't pass it by.

How did you find this deal and how did you negotiate it?

I had been watching this property listed overpriced for many years. The moment the price was reduced I jumped on it.

How did you finance this deal?

Through a construction and purchase loan with a hard money lender.

How did you add value to the deal?

We are fully renovating the property from top to bottom.

What was the outcome?

Still in progress!

Bigger Pockets Community,

I wanted to share a bit of advice I got a while back that's common knowledge for some, but a good tip for others just starting out. When you purchase your first investment properties and you decide to self manage on them, you're a property manager. Now, property managers often follow the rules/regulations of the market, their firm, and instructions that the owner of a property has given. With this in mind, you're allowed to be a little secretive with tenants. Whenever I go to properties that I personally own to collect rent, check on service, or do any kind of work, I never tell tenants that i'm the owner of the building. Why? Because owners of the building have more decision-making power. Instead, when you're on a property just let your residents know that you're the property manager selected by the owner. This lets you work around any basic rules/expectations without having to make special exceptions for tenants. I'll share a quick example where this served me in the past.

I had a tenant who wanted to vacate the property before the end of their lease. It's not common, but it's known to happen occasionally. In those situations many people may do their best to help a tenant, re-list the apartment, make exceptions on rent expectations for the term of the lease, etc. In these cases you may easily find yourself wrapped up in more work than necessary being reactive to the situation and trying to negotiate and work with the tenant. I've found that if taken on a different approach wherein you're just the property manager, it's a lot easier to enact and enforce rules that are simply "the way things are." In this case what I ended up doing for this tenant that didn't know I was the owner, was I let them know that our property management regulations stipulate a two-month lease break fee paid before lease cancellation, including all past due rents if any. In this case the tenant tried to negotiate, but there's really nothing I can do because this is the owner's wishes and it's also the regulation of the property management company. At the end of the day, the tenant ended up agreeing and making the payment.

Besides the fact that I was able to avoid a lot of headache in assisting the lease break, or conflict in arguing why I won't let them out of their lease, the rules book did all the talking for me. It's an easy way to say "unfortunately it is what it is, I wish I could help you." The bonus added affect from this is if you for whatever reason decide to give the tenant a break from whatever "the rules" are, you're now doing them a major favor! It helps set the baseline expectation, and anything above and beyond is much appreciated cooperation by the resident. 

Take it for what it's worth, but over my morning coffee this morning I thought i'd share! How do you interact with your tenants - as an owner, or as a property manager?

@Adrianna Harris, I just stumbled upon a lender that *might* be able to do this one for 80% on a 30 year note. Nik Gak is a lender who mainly does the NYC area, but will delve into other markets if the investment is a good one. PM Me if you want contact info. Getting a deal done with him is tough as his firm is selective, but he does both the fix/flip lending, and the 30 year 80% note. I've also had a good experience with a particular broker if you don't want to go the lender route. Lev Capital seems very competent, and they take 1% as the broker. Might be worth it if they can find you the loan you're looking for. They're also pretty high tech, so they make putting files together pretty easy. 

I'm not affiliated with either, but i've used both on my investment journey in the Capital Rei

Having cash to invest is a great first step to growing in Real Estate (Ironically, not required). I think what you have here is an identity issue to resolve. Cash is only a minor factor. The biggest is what you are looking for in your investing career. 

I know many people who invest their cash into turnkey investments and reliably generate 5-10% ROI. Now for most that's more than enough wherein you beat inflation (hopefully this year), but it's entirely a passive role. The second type of investor is likely looking into growing in real estate actively, and that's precisely when I would stop recommending turnkey investments. If you're looking to do real work but also maximize the return on your investment, you could be seeing 15%+ returns depending on how diligently you push to find and execute excellent deals. In a recent investment with a small group of investors we turned $350,000 into $500,000 in one year using the BRRR method. The difference is that I myself had some pretty serious work before, during and after to see those returns. In this case I spent almost a year finding this deal (as with all deals I captured that year) by underwriting hundreds. In addition, I had to manage contractors, budgets, and eventually bring a bank in both for purchase and the eventual refinance.

In essence, my best recommendation on how to use the $75k is to first decide what level of involvement you want. After you've picked a Real Estate identity, then decide how to proceed be it actively or passively. In my own experience, I'm more in tune with the active side, but there's a lot of great agents out there who excel at finding the best passive turn key deals. 

Hey Carson, that's amazing! What's more; I can't believe nobody responded to this success! Congrats on your first investment. A good place to start may be - @Jamie Brayton is hosting a meeting; Albany, Troy, Schenectady Investor Meetup, which may interest you. I personally work with lenders and do deals anywhere from 4+ units, and i'm in contract for an 84 unit with some investors. Would love to connect. 

Hi Gina, sorry nobody responded to this! Short term rental is an excellent industry to delve into. In general, depending on where you're starting out you'll have a different experience. In the capital region for example the demand for AirBnB is a lot more stable, though the average daily rate is a little lower. Mountain and destination locations will be much higher on your nightly rate, but seasonality is quite extreme. You'll get hikers and snow birds, but find that some months are close to vacant, or you're having to drastically reduce your pricing. My advice to anyone starting out is start small, try it out, and learn what it's like to tend to guest needs. Then after you've gotten a taste for it, scaling up is the easy part. 

Investment Info:

Large multi-family (5+ units) buy & hold investment in Albany.

Purchase price: $730,000
Cash invested: $360,000

After several months of renovation and rent increases, the building was re-appraised for $1.5 million. Investors earned approximately 144% return on their investment in one year. Afterward, they continue to on the building. A couple of Airbnb‘s help keep cash flow above 10% even after refinance. (although cash flow is technically infinite when there’s no more cash in the deal)

What made you interested in investing in this type of deal?

After underwriting hundreds of deals and saying no to all of them, I chose this syndicated 10 unit multifamily in upstate New York Albany. This was due to its high potential for rent increases, and growing location.

How did you find this deal and how did you negotiate it?

Originally I came in with an all cash offer for significantly under purchase price, after in contract due to a change in circumstances we had to change to a traditional mortgage. The seller worked with us and was able to continue under market value.

How did you finance this deal?

We used a traditional mortgage, though in the future I would probably use a purchase and construction hard money loan.

How did you add value to the deal?

Every project I do is heavily underwritten with financial modeling. I have a strong background in numbers, so I use it to the best of my ability. I consider the before renovation income and expense, as compared to the after renovation income and expense. My goal is always to refinance or sell within one year to see my entire investment return.

What was the outcome?

We refinanced the building at a one. $1.5 million evaluation, turning $300,000 invested into $500,000 in exactly one year.

Lessons learned? Challenges?

The biggest hiccup in this deal was the renovation. Unfortunately finding good contractors in upstate New York can sometimes be a challenge if you’re working on a budget. Heavy oversight was needed to make this work, and even that presented its own challenges. Overall next time I do a deal like this, I would put cameras to all of the construction sites, and stay in more regular contact with the GC.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Anton Pasquill is a very talented zoning professional and real estate agent with heavy routes in Albany, as well as Phil Engborg with M&T BANK was great working with our group to secure financing. Of course there is also a group of investors who all contributed individual talents wherever their skill sets could shine.