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NFT: NFT: Real estate investment: MultiFamily homes

newjacksm : 5/23/2020 10:10 am
Hey everyone; I've helped my family over the years manage property in the NYC area. I now want to buy into a multifamily home (Outside NYC/NY Area)

I do rent in NYC and owning a home on LI/Lower NY to me doesn't sound right. The taxes are dumb and almost look like a second mortgage. I started thinking about potentially buying a home outside of NY but more as an investment property.

I wanted to see if anyone was or is a remote landlord. Would love to hear your thoughts or if anyone has any advice.
I have a 4 family and I am a remote landlord...  
BleedingBlue2 : 5/23/2020 10:38 am : link
It really comes down to how much complication you’d like to add to your life. It is great when you have no issues and money is filling in, but it can get really burdensome when issues arise.

Keep in mind, a multi-family dwelling is a whole different animal since tenants can cause cascading problems. I had one tenant who didn’t notify that a toilet was constantly running, which collapsed the ceiling into another apartment. I have had to “remotely” take people to court, which wasn’t fun either.

If you do it, make sure you do a lot of due diligence and find a great property manager. It is worth every penny when not there.

..  
Named Later : 5/23/2020 10:55 am : link
If you're asking for opinions, I'll give you mine.

I wouldn't want to be an absentee landlord in this economic environment. You either have to have the plumbing, electrical sand carpentry kills to fix a lot of nuisance issues, or you have to have tradesmen on call....either way it cuts into your profits.

Also, nobody can say for sure where property values are going to be over the next few years. Some areas are going to retain home values. And some are going to take a beating. MF dwellings may be one of those.

You have to maintain a reserve fund for big ticket maintenance, and extra umbrella insurance. I think there are better places to invest your money, at least until things stabilize.

Just my 2 cents....and it's worth every penny.
Good luck  
UConn4523 : 5/23/2020 11:36 am : link
it’s a risk I wouldn’t take but no doubt if done right it can make the back half of your life easy, financially.

That said I’d rather invest my money in a place I enjoy visiting but don’t want to live so I can Air BnB when not using.
Better off doing commercial  
robbieballs2003 : 5/23/2020 11:49 am : link
if you can.
RE: I have a 4 family and I am a remote landlord...  
gidiefor : Mod : 5/23/2020 12:13 pm : link
In comment 14909442 BleedingBlue2 said:
Quote:
It really comes down to how much complication you’d like to add to your life. It is great when you have no issues and money is filling in, but it can get really burdensome when issues arise.

Keep in mind, a multi-family dwelling is a whole different animal since tenants can cause cascading problems. I had one tenant who didn’t notify that a toilet was constantly running, which collapsed the ceiling into another apartment. I have had to “remotely” take people to court, which wasn’t fun either.

If you do it, make sure you do a lot of due diligence and find a great property manager. It is worth every penny when not there.


As someone who represents buyers/sellers that do this -- This pretty much nails it.
RE: Better off doing commercial  
steve in ky : 5/23/2020 12:19 pm : link
In comment 14909475 robbieballs2003 said:
Quote:
if you can.


This is not the best climate for entering into commercial properties for the first time.
RE: RE: Better off doing commercial  
robbieballs2003 : 5/23/2020 12:37 pm : link
In comment 14909489 steve in ky said:
Quote:
In comment 14909475 robbieballs2003 said:


Quote:


if you can.



This is not the best climate for entering into commercial properties for the first time.


Agreed. And neither is residential imo. Residential is tough to do remotely as is commercial but imo it is more stable long term. I met with a management service once and they do background checks and have access to more information on a person renting than a normal person would leading to an increase percentage of that person/company sticking in that location. Imo, a well researched business is a better investment than families looking to rent out a part of a house. There is a ton of turnover and more turnover means more expenses. Just my two cents.
Anybody here doing Crowd Street?  
Jim in Hoboken : 5/23/2020 1:01 pm : link
A buddy is doing it, but I have to do more research on it first.

I don't even want to think about the headache of being a remote landlord.
Link - ( New Window )
RE: RE: RE: Better off doing commercial  
steve in ky : 5/23/2020 1:16 pm : link
In comment 14909503 robbieballs2003 said:
Quote:
In comment 14909489 steve in ky said:


Quote:


In comment 14909475 robbieballs2003 said:


Quote:


if you can.



This is not the best climate for entering into commercial properties for the first time.



Agreed. And neither is residential imo. Residential is tough to do remotely as is commercial but imo it is more stable long term. I met with a management service once and they do background checks and have access to more information on a person renting than a normal person would leading to an increase percentage of that person/company sticking in that location. Imo, a well researched business is a better investment than families looking to rent out a part of a house. There is a ton of turnover and more turnover means more expenses. Just my two cents.


Setting aside this economic climate for a moment. Investing in commercial properties is a much higher risk/reward than residential. Yes you can due your due diligence and even get personal guarantees for smaller but viable options. But many commercial leases are for only three to five years, with ten years usually being the maximum, but then to get a ten year with a triple A type company Its not uncommon to have to offer some financial allowances, which can be expensive and out of pocket.

The thing is with residential while yes you have some expense with turnover but it’s a drop in the bucket compared to what a turnover is on some large commercial properties. You go from hundreds or thousands with residential to often tens of thousands and even hundreds of thousands with some larger commercial properties.

If there is large common areas then you also get into CAM and reconciliation each year so your booking becomes much more involved. Things like roof repairs and heat and air units are exponentially more expensive. Your operating expenses are a lot higher so carrying vacancies cost you much more. And you better find and buy great property with great locations or you will have trouble if not be impossible to attract triple A national type tenants which is what you really want.

That said if you can do all that and get the right properties and keeps the right tenants, and then have a very solid lease, some good relationships with some bankers then commercial properties can sometimes become serious cash cows. Again very high risk/reward that should be entered into cautiously and well financed
RE: RE: Better off doing commercial  
EricJ : 5/23/2020 4:15 pm : link
In comment 14909489 steve in ky said:
Quote:
In comment 14909475 robbieballs2003 said:


Quote:


if you can.



This is not the best climate for entering into commercial properties for the first time.


I think there needs to be a distinction between commercial retail/office and commercial residential. In my opinion, commercial residential can be an excellent investment in just about any environment if you know what you are doing and you know how to find a property with upside.

In fact, with the impending foreclosures, I think owning a multi family building (5 units or more) in the right spot can be great. Many people already no longer qualify for a mortgage to buy their own place. So, if you have 25% down, you can do this after learning from others first.

Otherwise, you can consider looking at a 4 family or less which is considered to be residential. You can get an FHA loan with just 3.5% down to buy it. Even better, find a building at a reduced cost that needs a little work and get an FHA 203k rehab loan where with still just 3.5% down, you can borrow the money needed to purchase the property plus what is needed for the rehab. *It must be your primary residence.
I would not touch  
Giant John : 5/23/2020 4:35 pm : link
Commercial residential right now.
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