All Forum Posts by: Zach Ziskin

Nice job, looks great!

I you don't mind me asking, did you order all the materials from a single place or supplier, or various outlets?

Agreed! I listed my property for sale a couple weeks ago. Got some interested parties, so I'm hoping to do just that, and pocket that extra 50-60K.. :D

I spoke recently with a friend who writes a great investment/economic newsletter, and has been uncannily accurate for the past 10 years. I was asking him specifically about my residence and where he thought prices would come back down to, but what he told me I think could apply to anyone else.

He said that when all is said and done, prices should return to the mean, or historical trendline of prices. He said to go back and figure out what the property was worth in the late '90s (i.e. before the RE bubble began) and add 3% to it per year (what he said is the historical average appreciation for most real estate) up through this year, and that would give me an idea of where the property would likely come back to price-wise.

Doing that on my property puts it $50-60k lower than where it currently is now, which is already $30k below where it was at the height of the bubble... :shock:

Got it, thanks guys!

As it turns out, we just got more details on the property and it looks like we have to pass on it right now. It basically needs to be gutted, and it's not a true 4 plex, as the basement is unfinished and would need to be converted to make it a 4 plex. So it looks like the rehab costs are going to push it out of the positive cash flow range. We'll keep looking, though...

Thanks for the advice Eric, much appreciated!

As far as reserves, is there a general formula or rule in terms of how much should be kept or built up in reserve for unexpected repairs, etc?

Thanks for your response. :D We know each other through a mutual friend, we're both recording engineers. We've communicated for a while online (mostly about recording and engineering), and just recently discovered that we both were looking to get into real estate investing.

Basically, he is doing all the legwork up there (since I don't live up there or know Pittsburgh as well as he does), in terms of having found the property (and other future properties), getting a contractor for repair/rehab bids, overseeing the rehab and repairs (as well as doing a good deal of the work himself), and of course landlording and handling any maintenance and/or repairs that come up.

So essentially, this is really his deal, I'm mainly just putting up the money/financing.

What would be your suggestion in this scenario? Let's say the rents on the four plex are $300/mo. per unit, one of which he lives in, and there is $500/mo. in positive cash flow after debt service and expenses. What would be a fair way to split the cash flow, factoring in reduced or free rent for him (and which option is fairer?)

Hi all,

Well, it looks like I may have found my first real estate investment deal! It's a four plex in Pittsburgh, PA (I'm based in South Florida). I've attached a photo below. It's an up and coming neighborhood, but not a war zone at all. In addition, a brand new casino is being built nearby, as well as new townhouse developments. Asking price is $19,900. I'm waiting to get an estimate on what the repairs/rehab costs would be, but based on the numbers I've run so far, unless there's something really wrong with it, it should cash flow easily.

Now for my main questions. I'm doing this deal as an equity partnership with someone who lives in Pittsburgh who I haven't done business with before. I'd be putting up the money and/or using my credit to secure financing, and he would landlord and handle maintenance, as well as live in one of the units rent free. Given this situation, I assume that the best way to set this up would be to create an LLC with both of us as equal partners/shareholders, and have all cash flow and expenses deposited and paid out of an account opened under the LLC?

And with respect to him living in one of the units, how should the positive cash flow be divided between us, given that he would be living in one of the units rent free? And should the equity in the property be normally split 50/50 in this type of situation?

I also assume I should have an equity partnership agreement outlining who gets and is responsible for what. Is there any other particular due diligence I should do regarding my potential partner beforehand?

Thanks in advance!

So here's the million dollar question--how does this recessionary/collapsing financial environment affect what you guys are doing with respect to RE investing? In other words, is this a good time to sit on the sidelines, build up cash and wait for things to bottom out and pick up properties for pennies on the dollar, or just keep hunting and pecking for good deals?

Given the fact that today's bargain could be tomorrow's even bigger bargain, what are you guys looking to do over the next year or so?

Hi Jon,

Thanks for your response. I could rent a decent townhouse or SFR for approximately $1400/mo. Currently I pay approximately $680/mo. between mortgage, taxes and insurance on my residence.

However, I've calculated that the monthly interest generated on the money I'd receive from the sale of my townhome could cover the difference. So in other words I'd be able to rent without paying any extra out of pocket from what I'm paying now , the interest income would make up the difference, and I wouldn't need to touch the principal from the sale of my townhome. And if I could find a buyer to do an interest only mortgage, I'd actually have money left over after paying the monthly rent.

I think I'll try doing the spreadsheet and check out the different scenarios just in case though. Thanks!

Hi all,

Here's my situation and what I've been thinking of doing, and wanted to see if anyone here has any different thoughts on the matter. OK, here goes.

My wife and I live in a townhome which I purchased 12 years ago. It's almost paid off (I owe about $30k on the mortgage, which I could pay off now out of savings if I wanted to). The current FMV is in the $175-185K range.

We live in South Florida, which as you all know was one of the RE bubble capitals. Based on what I've heard from various trusted sources, many feel that there is still substantial downward price movement to come in this market. At the peak of the bubble, these townhomes were going for maybe $220k, so it's already come down $30-40k.

With that in mind, I was thinking of selling our place and maybe renting for a little while and ride out further downward price movement, and eventually find a single family home at a great price for our primary residence, which is what we've been wanting to do for a while (maybe an REO or pre-foreclosure).

I was thinking that since I have a ton of equity in my place, I can be pretty flexible. Originally I was going to just sell the townhome, and put all the cash into an interest bearing account while we rent for a while. But a friend suggested offering seller financing, maybe a 2 year interest only balloon, which would open up the pool of potential buyers as well as yield a higher return on my money, and of course if the buyer defaults I could always take back the property and sell it again.

So my questions: 1. Assuming there is more downside to come in the market, is this strategy a good idea, and 2. Does anyone see any other or better options given how much equity I have sitting in my place? Thanks in advance.