All Forum Posts by: Kenneth Wong

Hi @Natalie Lee,

I grew up in Brooklyn/Queens, many years ago, and currently live in the Bronx (North Central). Thanks for sharing your pics- it looks like a complete gut.

I have several properties and if you and your man need any support, please reach out to me.

NY properties (especially NYC) are usually just more expensive than any other areass, but you know that already.  Good luck. 

Hi Jim,

Just to be clear, this property is overpriced due to the quality of the renovations, and as stated, I could not sell it by location, location, location standards- so I sold it for the quality of my work and more importantly, it's cash flow.  The premise behind the 7 year lease to own terms is that there are three total building lots that are associated with the property.  The cash flow generated after 7 yrs, through income and tax benefits, should allow the new owner to buy a pre-fab 3 BR, 1.5 bath for roughly $75K, on one of the lots.  Rental income could generate an additional $18K per annum. Three more years later, you could repeat the scenario, and build another pre-fab.  You can see with three units of rental income, that is the cash flow I estimate at $48K within 13 years.

I absolutely agree with you that there are not many $358K homes in Waterbury.  But, I think that I mentioned there are a variety from $75K - $180k in the immediate area.

The family living there now came from the projects, and sought a better quality of life.  

Lastly, yes, I have built into the equation a caretaker, who lives on premises.  The caretaker maintains the house in every capacity.  After a rocky first 2 weeks, all seems to be fine.

Keeping my fingers crossed.....

Hi Abigail T.,

I concur with Ceasar.  Having met my future wife and then moving to the Bronx, from Wilton CT, it was a bit of culture shock for me at first, but that was 20 years ago.  

May I suggest that you drive by the areas and check your route(s) to the subways or buses; check on numerous weekdays, as commuter patterns are somewhat different.  The more you expose yourself to the area of your liking, you will learn whether you made a right choice or a bad one.

I settled in the north Bronx- Woodlawn, and that is a 40 minute commute to Yankee stadium.  It is a nice quiet neighborhood, but for NYC commuting, it is long, but at least I get a seat on the train.

You already know that the Bronx is heating up for a few years now, and although not guaranteed, those $550K homes will inch closer to $650K.  Its just the law of supply and demand.

Good luck in your search.

Cheers.

This was my recent post:

Lease to Own - 7 yrs 

Hi @Barbara G, 

i live close by in the Bronx, and I have also purchased a SFH in Waterbury, CT. Everyone responding here is pretty spot on whether it is worth the effort to rehab in Waterbury when other CT towns have more pleasant results. I have spent almost 2 years rehabbing a SFH on 4 building lots, on a lease-to-own basis. I just posted a few minutes ago, as i went the lease-to-own route to "sell" my large/expensive home.

Waterbury is akin to Yonkers, but its 4x larger in size but has 1/4 the population.  In Waterbury, roughly, 20-22% are on social services, while in Yonkers, its not that high.  But, after a year plus, you already know that.

Section 8 housing will only allow up to $1100 for a 1.5 BR house, but you know the type of tenant you will most likely have to work with for state $.

20+ years ago, the bad mayoral elect pilfered the Waterbury coffers, and its been that long to recover.  With high social services paying, and less people working and paying taxes, it will be a while for this city to recover like new Britain, or even close to Southington.

I know numerous contractors in the area if you need help.  and, if you feel you have really reliable guys, please let me know- always good to know some good guys.

-Ken

Hello fellow BP community.

Sorry this is long, but I need some feedback.

This involves a single family 3Br, 1Ba Connecticut Colonial short sale (4 lots; total .66 acres).  

It reflects committing the cardinal sin of creating a ho-hum house to one of the biggest and most expensive houses in a fifteen square block radius of a lower middle class neighborhood.  The house was built by a former architect and is rock solid with character. Due to the total costs, the house cannot be sold conventionally, as the neighboring home comps are $90K to $141K in the immediate area.  

Numbers are as follows, house reno details at the very bottom:

1. Purchase Details

Purchase Cost (includes legal fees and oil):  $70K  (short sale; no liens)

Repairs and appliances:                               $135K

Total out of pocket costs:                             $205K

Original house = 1836 square feet; (4) building lots; 3BR, 1bath; hardwood floors; 1 lot

2. Offer of lease to own post renovation, for renovated (3100 sq ft) single family with basement area plus (3) building lots on corner lot; monthly payments for 7 years: 

Year 1: $2100 x 12 = $25,200

Year 2: $2200 x 12 = $26,400

Year 3: $2300 x 12 = $27,600

Year 4: $2400 x 12 = $28,800

Year 5: $2400 x 12 = $28.800

Year 6: $2400 x 12 = $28,800

Year 7: $2400 x 12 = $28,800

TOTAL:                     $194,400  (7 year projected monthly payment total)

After 84 payments; refinance balance due: $164,000; potential sale: $358,000

Lease to own family pays the above; their plan is to save $10k per year to give an additional $70k at 84th payment to lower the refinance of the house from $164K to $94K. 

3. During the course of the 7 years, a caretaker will live in the basement and will maintain the property and perform other duties in exchange for a reduced monthly charge.  contract expires at transfer of deed. Total 7 year projected net income from caretaker: $50,400

4. Providing the above is current, the landlord pays for all utilities, real estate taxes, snow removal, lawn care; projected 7 year costs as follows:

Electric                  $21K

Gas                        $16K

Water                     $  6K

Real Estate taxes   $35K

Snow removal        $ 1K

Lawn care              $ 1K

Projected Utility Cost: $80K  (7 years)

NOTE: 7 year totals: 

Projected Income: +$194,400 (lease to own family)

                               +$ 50,400 (caretaker)

Refi:                       +$  94,000 (conventional bank or landlord)

Addt'l Payment:     +$  70,000

7 Year Total:            $408,400

5. Financial Details for 7 Yrs

House purchase + renovations:                        -$205,000

Projected landlord costs:                           -$ 80,000

Projected collected income for lease to own:  +$408,400

Net potential Gain:                                            +103,000

SO,

although this is a long way to sell an expensive house in a not so perfect area, bucking the location, location, location rule, the new homeowner will control 3 building lots, plus the extraordinary basement apartment, after 7 years of payments plus refinance.  They could rent the basement out for $1200+ per month, which would allow rent free living by the owner.

Any thoughts on this?  Legality on lease-to-own format? Gotchas?

Many thanks.

House renovation Details:

Gutted the entire house

New kitchen; high end stainless steel appliances (Viking, Samsung, Bosch); tiled floors; cabinets;                island with Viking gas range and island  exhast hood

Basement apartment (540 sq ft); IKEA kitchen; high end appliances and huge tile walk in                            bathroom/changing room

Full attic renovation to a 40 x 20 room; sound proofing; insulated; private staircase

New half bath on first floor

New door to rear deck back porch

New deck/porch; two tone trek on pressure treated lumber

New Italian tile laundry room

New Gas Furnace ((Peerless 100K btu)

New tankless water heater; using existing electric water tank as emergency

New roof on garage

I have used TransUnions' SmartMove program as recently as today.   It is convenient, and I have seen some of the criminal records which are not easy to read at times.  Luckily, I have a friend who is a retired detective who can translate the reports.  As with any program, it is always buyer beware.  I am not sure if there are any perfect solutions out there, but, I can have the prospective tenant pay for this service, and expect reasonable details, quickly and it is just another tool to use.  

Hello Lawrence. 

Welcome home as they say.... and if you would like to chat one day, then please reach out to me.

I too reside in the Bronx- Woodlawn Heights.

-Kenneth

Hello BP Community,

I have a Mother/daughter in Waterbury CT which I have had on the market for over a year. I met a fellow that has Section 8 and really wants to lease-to-own this property. Section 8 would pay $900/month and he would add another $800 per month.  Here is my dilemma: Section 8 does not allow for additional agreements in connection with their tenant-landlord agreement for which they pay. I would need to have assurances through a separate agreement for the additional $900 per month, which would mean two agreements. The tenant agrees to 2 month security/first month rent up front. Does anyone have an experience from a landlord perspective how this works?  I do not wish to break any laws here, but it certainly seems like I am being asked to do so, to "guarantee" that I can collect $1700/month.  The "side" money I'd from Social Security which would also be direct deposited to my bank. Thanks in advance as I weight this offer. -Ken

Hopefully, at this point, you have "talked" the hubby out of this deal.

As I own several out of state properties, but within 90 miles, I can tell you first hand, if there are potential problems, the long distance aspect may and will create headaches for you both.

Luckily, I have been fortunate to have great tenants in the closest properties, but there have been numerous "issues," some natural, and some due to tenants, that can cause financial problems.

As you are in California, you had better have access to some good resources in Indy, or you will be paying top dollar for good work, or even more money for subpar work, with follow up re-work!

I am confidente you can find some properties with similar potential- on paper and real cash flow.

Best wishes for the holidays.