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Cash In While You Can! NYC Neighborhoods Where Prices Are Rising—or Falling—Fastest

New York City’s reputation as one of Earth’s most expensive—and daunting—real estate markets is well-earned, thank you very much: $1.8 million studio apartments? Check. Full-cash offers everywhere you look? Check. Freakishly competitive open houses? You bet. Welcome to the big time—with the prices and killer views to match. It’s little wonder that housing is top of mind for just about all of the nearly 8.4 million folks who call the Center of the Universe home.

Everyone, it seems, is angling to hit the NYC trifecta: a decent space in a good neighborhood at an affordable price. That’s why it’s so important to get a handle of what’s going to be the next big neighborhood, before it explodes in popularity and prices get out of reach.

To find out which neighborhoods in this bellwether, nationally scrutinized market are seeing the biggest price climbs—and the biggest falls—we teamed up with real estate appraiser Jonathan Miller, co-founder of Miller Samuel. He compared the median home sale prices in all of New York City’s neighborhoods throughout the five boroughs in 2017 and 2018. We included only the neighborhoods with at least 25 sales in both years.

What we found is a city going through churn, much of it due to the flurry of luxury development in some areas that traditionally have had older—and more affordable—homes. Prices go up, an area gets saturated, the luxury stock sells out, then prices go back down. Rinse and repeat. Meanwhile, the megadevelopment causes people to search out nearby areas that might be cheaper.

It’s the NYC circle of life, and it’s accelerating.

“Developers have left no stone unturned and developed wherever they could,” says Miller. “They went everywhere there was an opportunity. And that caused a lot of price fluctuations, especially in more modestly priced neighborhoods that saw a lot of new, high-end development introduced.”

But New York City hasn’t been immune to national trends. The overall market is slowing throughout all of its five boroughs of Manhattan, Brooklyn, Queens, the Bronx, and “can’t-get-no-respect” Staten Island. The city has been particularly affected by the national tax changes that make it more expensive to own a home in pricier parts of the country, says Miller.

More fun still: This month, New York state’s new mansion tax went into effect, upping the amount of taxes on properties $2 million and up. Sales had been down earlier in the year, but the prospect of giving more to Uncle Sam resulted in a rush of higher-priced home sales. Going forward, the number of sales is expected to fall back down again. Phew … Dramamine, please.

High price tags are pushing many New Yorkers farther out into cheaper communities such as the Bronx, which doesn’t have the hipster cred or water views of Brooklyn. But dollars can stretch way further there.

“A large shift or decline [in a New York neighborhood] is generally not a reflection of weakness,” says Miller. “It’s more of a reflection of … now it’s back to business.”

So which neighborhoods are seeing the largest real estate price spikes? And which expensive communities are getting (a bit) more affordable?

The New York City neighborhoods where home prices are rising the most
The New York City neighborhoods where home prices are rising the mostTony Frenzel

1. Fieldston, Bronx

Annual median price increase: 122.7%
Median 2018 home price: $612,500

Tudor home on Livingston Ave. in the Bronx
Tudor home on Livingston Ave. in the Bronxrealtorcom

When folks think of the Bronx, the mix of grand TudorsGeorgian Revival estates, and midcentury modern homes and lovely winding streets in suburban Fieldston are rarely what come to mind. Homeowners in this privately owned enclave of tony Riverdale pay property taxes and fees to their property owners association, which maintains the streets and sewers and pays for its own security patrol.

Prices are surging because word has gotten out: Buyers are increasingly drawn to its seductive combo of urban and suburban living. The historically designated community is near top private schools, which include the Horace Mann School and Riverdale Country School. It’s also only steps away from the Hudson River and the 28-acre green oasis of Wave Hill Public Gardens in the northwest swath of the Bronx.

“In Fieldston, you are part of the city but you have the real suburban feeling,” says Chintan Trivedi, a licensed real estate broker with Re/Max In the City. “Here you’re getting a real home, a backyard and a private community.

“For a good house with a larger backyard, a complete renovation, and maybe a pool, you can expect to pay $1.5 million to $2.5 million,” he says. But there are six-bedroom homes listed in the $1 million range. Just tryto get that in Manhattan. (Spoiler: You can’t!)

2. Kingsbridge/University Heights, Bronx

Annual median price increase: 41.2%
Median 2018 home price: $275,000

Single-family homes in Kingsbridge
Single-family homes in Kingsbridgerealtor.com

Just south of Fieldston are the middle-class communities of Kingsbridge and University Heights, where buyers can score deals for a fraction of the price. But the lack of homes for sale and little turnover are causing prices to heat up. And investors are buying up whatever lots and houses they can for new development or rehabbing.

“The Bronx is the new Queens in the sense that there’s been an expansion of demand moving out from Manhattan as consumers search for affordability,” says Miller.

The neighborhood’s become popular with 20- and 30-somethings looking for a reasonably priced community with an urban vibe. Hilly Kingsbridge is filled with century-old, single-family houses and midrise co-op and apartment buildings as well as plenty of shopping, parks, and public transit.

These buyers “are[part of] the new generation that’s learning that real estate should be part of their planning,” says Trivedi. “They want to feel like they’re in Manhattan—a place where they can still go right downstairs and get a smoothie.”

3. East Village, Manhattan

Annual median price increase: 38.7%
Median 2018 home price: $1,535,000

East Village of New York City
East Village of New York CityJJFarquitectos/iStock

Over the past couple of decades, lower Manhattan’s East Village has shed its image as a sketchy, open-air drug market to become a sought-after place known for lively bars, great restaurants, and a defiantly boho vibe—as well as a slew of new, high-priced developments, causing prices to jump. They’re going up everywhere you look.

The community is still mostly made up of low-rise, brick condo and apartment buildings with funky cafes and boutiques on the ground floor. There are also some townhouses, including this six-bedroom, nine-bathroom brick beauty for $28 million.

But as the newly constructed luxury buildings reshuffle the neighborhood, locales are hoping the essential vibe of the area doesn’t change.

“From Avenue A to Avenue D, you can walk past a gallery, a Puerto Rican garden, a pop-up party. There’s life and it’s vibrant here,” says Sydney Blumstein, a real estate agent with the Corcoran Group.

4. Prospect Heights, Brooklyn

Annual median price increase: 36.1%
Median 2018 home price: $1,226,750

Grand Army Plaza, on the southwestern border of Prospect Heights
Grand Army Plaza, on the southwestern border of Prospect Heightsslobo/iStock

Like the East Village, Prospect Heights has been rapidly gentrifying. Professionals, families, and a few stray hipsters are drawn to its charming rows of stunningly restored early 19th-century, multistory brownstones on tree-lined streets. The neighborhood is near several main subway lines and in close proximity to the 526-acre Prospect Park and the Brooklyn Botanic Garden. It also borders Barclays Center, home to the NBA’s Brooklyn Nets (and soon the team’s new dynamic duo, superstars Kevin Durant and Kyrie Irving).

In recent years, Prospect Heights has become popular with folks priced out of neighboring Park Slope, a community long popular with upper-middle-class families. They gravitate to the brownstones as well as the new high-rises and the used bookstore, artisanal bakeries, and constant stream of new restaurants.

Not surprisingly, the Prospect Heights neighborhood has attracted a slew of developers putting up luxury condo and apartment buildings wherever they can. Those high-end housing developments are skewing the neighborhood’s median prices up to new heights.

For example, this two-bed, 2.5-bath condo with floor-to-ceiling windows and marble countertops is on the market for $1,750,000.

5. Kensington, Brooklyn

Annual median price increase: 34.6%
Median 2018 home price: $875,000

A row of apartment buildings in Kensington, Brooklyn.
A row of apartment buildings in Kensington, Brooklyn.cmart7327/iStock

As Prospect Heights has become more desirable (aka expensive), more Brooklynites have been turning to lower-priced Kensington. It’s a quieter community, far from aggressively groovy Brooklyn nabes such as Williamsburg. It’s known for its single-family homes, many of which come with cheerful porches and outdoor spaces out back. There are also plenty of condos, co-ops, and apartments in older brick complexes.

This isn’t the kind of place where you’ll find buzzed-about restaurants—you’re more likely to stumble upon a dollar store than a bougie boutique. It’s a more down-to-earth community, populated by old-school Brooklynites, hipsters, as well as Pakistani, Orthodox and Hasidic Jew, Mexican, Chinese, and Latin American immigrant groups.

The rest of the top 10 neighborhoods where prices are rising the most include Tompkinsville, Staten Island, where the median home price rose 33.6%, to $472,500. It was followed by Crotona Park, Bronx, at 31.3%, to $490,000; Cobble Hill, Brooklyn, at 29.7%, to $1,265,000; the Lower East Side, Manhattan, at 29.5%, to $1,075,000; and Melrose/Concourse, Bronx, at 26%, to $380,000.


The New York City neighborhoods where home prices are falling the most
The New York City neighborhoods where home prices are falling the mostTony Frenzel

1. Downtown-Fulton Mall, Brooklyn

Annual median price increase: -40.7%
Median 2018 home price: $915,500

Condo tower being constructed in Downtown Brooklyn
Condo tower being constructed in Downtown BrooklynEpics/Getty Images

Once grim downtown Brooklyn has been booming in recent years. It’s become home to a slew of glassy, luxury high-rises. So why are prices in such a vibrant area plummeting?

Well, now there’s a glut of new construction, giving buyers more negotiating power as buildings compete against one another to lure residents. Plus, builders are putting up towers with some smaller, less expensive units. But in NYC, less expensive is relative. Buyers might save themselves a couple hundred thousand on a million-plus-dollar condo.

But many of the condos here, some designed by famous architects, come with just about every amenity imaginable, including sun decks, hot tubs, dog runs, saltwater pools, and even music studios. This two-bedroom, 1.5-bathroom abode in a 57-floor building is going for $2,040,000.

Some believe developers overshot their market.

“Developers there created a mountain of homogenous product,” says agent Blumstein with the Corcoran Group. Buildings in the area “were built on the thought that people are demanding amenities. But the old-school, prewar neighborhood vibe is what’s in.”

2. Civic Center, Manhattan

Annual median price increase: -39.3%
Median 2018 home price: $3,200,000

Transit options in Civic Center, Manhattan
Transit options in Civic Center, Manhattancnicbc/iStock

Even many lifelong New Yorkers have never heard of the Civic Center neighborhood in lower Manhattan. The tiny community encompasses City Hall and courthouses as well as some high-rise co-op, condo, and apartment buildings. It’s just west of ultradesirable Tribeca, where prices are sky-high, and just below Chinatown, guaranteeing plenty of good Asian eats.

Prices are down because the wave of development has pretty much played itself out, says Miller. Many of the older brick and limestone, midrise office buildings had been gut-rehabbed and turned into pricey condos. That led to a spike in prices. Now that those units have been bought, the real estate for sale is a mix of lower- and higher-end properties.

It’s “run its course,” says Miller of the wave of development in Civic Center.

3. Javits Center, Manhattan

Annual median price increase: -30.2%
Median 2018 home price: $450,000

Javits Center on the west side of Manhattan
Javits Center on the west side of ManhattanMBPROJEKT_Maciej_Bledowski/iStock

Like Civic Center, Javits Center as a neighborhood isn’t very well-known—but that’s likely to change. Named for the sprawling convention center on the west side of Manhattan where the community is located, it’s wedged between trendy Hell’s Kitchen and Chelsea and abuts Hudson Yards.

Even nonlocals have probably heard of Hudson Yards, Manhattan’s newest neighborhood, built on a formerly desolate stretch of disused train tracks. It’s a glam (and critics say overly generic) development of ultrahigh-priced condo and rental towers overlooking the Hudson River, complete with its own weird tourist attraction, the beehive-like Vessel. The Javits Center’s proximity to this buzzy development will likely have an impact on sales with prices shooting up.

But in the meantime, prices fell because there simply isn’t much of the first wave of luxury real estate left on the market. Now what’s selling is less expensive, older condos.

That’s likely to change as sales heat up in Hudson Yards.

“Sales [in Hudson Yards] will help to increase values in the surrounding area,” says New York real estate agent Matt Crouteau. The place “was designed so people don’t have to leave.” Ever.

4. Financial District, Manhattan

Annual median price increase: -30%
Median 2018 home price: $997,500

The canyons of FiDi, on Wall Street
The canyons of FiDi, on Wall StreetPgiam/iStock

Just south of the Civic Center is the Financial District, home to Wall Street and the World Trade Center on the tip of Manhattan. Like all of the other neighborhoods on this list, FiDi (as it’s called) experienced a spike in development, then a market saturation.

“It’s not that prices are collapsing,” says Miller. “The early wave of high-end new development drove prices higher. … After that activity cooled, the prices for the neighborhood are less than what they were.”

But there are still plenty of new units to choose from, including this three-bedroom, four-bathroom condo going for $5,300,000. The unit features granite countertops, a waterfall island, high ceilings, and floor-to-ceiling windows. On the lower side of the spectrum, buyers can snag this studio with plenty of closet space for $480,000.

The neighborhood is home to a few cobblestone streets, giving it an old-world charm, as well as the South Street Seaport, a tourist fave.

5. Upper East Side, Manhattan

Annual median price increase: -29.6%
Median 2018 home price: $1,550,000

Park Avenue, Upper East Side
Park Avenue, Upper East SideOlegAlbinsky/iStock

Thank the long-awaited Second Avenue Subway line for prices falling in the upper portion of the Upper East Side, from about 96th to 110th streets. Developers flooded the neighborhood putting up buildings near the new train extension, which opened in 2017 after being discussed, planned, and replanned for nearly a century. They believed—rightly so—that this least fashionable part of the Upper East Side would become far more desirable thanks to its close proximity to the new train line.

“That’s essentially East Harlem, which has benefited from a significant amount of new development,” says Miller. Now development is mostly over and there’s fewer sales.

“You’re not seeing the same amount of high-end [sales], because there’s not as much new housing being introduced,” he explains.

The Upper East Side/East Harlem now has a mix of sleek towers, brownstones, low-rise brick buildings and townhomes, and apartment and public housing developments. This new one-bedroom, one-bath condo clocking in at just 609 square feet, which is near the new subway line, is on the market for $786,161.

The rest of the top 10 neighborhoods where prices fell the most include the Flatiron, Manhattan, where the median home price fell 28.5%, to $1,870,000; Douglaston, Queens, at -28.4%, to $466,250; South Williamsburg, Brooklyn, at -20.4%, to $923,000; Brighton Beach, Brooklyn, at -19.9%, to $472,500; and Woodlawn, Bronx, at -18.8%, to $325,000.

Chelsia Rose Marcius is a reporter, author, and journalism professor based in New York City. Her work has been published in the New York Times, Chicago Sun-Times, and New York Daily News. She has also appeared on MSNBC, FOX News, CNN, Inside Edition, BBC Radio, and WNYC.
The realtor.com® editorial team highlights a curated selection of product recommendations for your consideration; clicking a link to the retailer that sells the product may earn us a commission.
Source: Realtor.com –  | Jul 22, 2019
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7-Step Process for Finding Great Contractors for Home Renovations

To be blunt, most contractors are terrible. As a landlord, I deal with it all the time. 

They don’t answer their phone. They don’t show up when they said they would. They don’t do what they said they are going to do.

But there ARE gems to be found in the rubble. The problem is most people have no idea how to identify that great contractor from all the bad ones out there—until long AFTER they’ve already hired one.

I want to share with you my seven-step process to identify a great contractor before hiring them. Whether you’re remodeling your own home, a rental property, flipping houses, or need a contractor for something else, here’s how to land a great one.

How to Find a Great Contractor

  1. Build your contractor list

What I mean by this is you need to get the names and phone numbers of a lot of different contractors in your area. I mean, if we’re searching for a needle in a haystack, we have to first get a haystack.

You can find potential contractors in a number of ways, but my three favorite are: 

  1. Referrals, meaning ask people you know who they have used
  2. Referrals, so yeah, asking people you know who they have used
  3. You guessed it! Referrals.

Human nature is to generally do what you’ve always done. It doesn’t guarantee success, but when you know a contractor has done great work in the past, it’s likely they’ll do it again.

So get in the habit of asking your friends and family often—even when you’re not looking for a contractor. “Who did this work for you?” Then, keep track of those referrals.

There are a few other ways to find contractors, as well. I like to talk to other contractors and ask who they like working with.

Rockstars tend to party with other rockstars, and good tradesmen tend to work with other good tradesmen.

For example, I have a great finish carpenter, so I can ask him, “Hey, do you know any great plumbers?”

You can also build your list by snapping a photo every time you see a contractor sign on the side of a work truck, or by searching Yelp, or by asking the employees in the pro department of your local home store who they like.

Related: The Ultimate Guide to Finding an Incredible Contractor

  1. Pre-screening on the phone and in person

Just as with tenants, our opinion of the contractor begins the moment we start talking with them, whether over email, phone, or in person.

Do they carry themselves professionally? Do they respond well to questions?

Ask them some general questions, such as:

  • How long have you been in this line of work?
  • What skill would you say you are the best at?
  • What job tasks do you hate doing?
  • In what cities do you typically work?
  • How many employees work for you? (Or “work in your company” if you are not talking to the boss.)
  • How busy are you?
  • Do you pull permits, or would I need to?
  • If I were to hire you, when could you start knocking out tasks?

Then, set up a time to meet and show them the project, if you have one. Set an appointment and be sure to show up a few minutes early, just to see exactly what time they arrive.

Are they on time? Late? Early? Do they look professional? How do they act?

If everything feels OK after this first meeting, move on to the next step.

man sitting at desk working on a computer

  1. Google them

The first thing we do now when looking for information on a certain contractor is to simply search Google for their name and their company name. This can often unearth any big red flags about the person.

You’ll also want to add your city name and some other keywords to the search, such as “scam” or “rip off” or “court.”

For example, if we wanted to find out more about First Rate Construction Company in Metropolis, we would search things like:

  • First Rate Construction Metropolis
  • First Rate Construction scam
  • First Rate Construction sue
  • First Rate Construction court
  • First Rate Construction evil

These terms can help you discover major complaints about a contractor. But keep in mind, not all complaints are valid. Some people are just crazy.

What this will do, however, is give you direction about what steps to take next.

  1. Ask for references

Next, ask the contractor for references from previous people for whom they have worked. Photos are nice, but names and addresses are better.

Then, do what 90 percent of the population will never do and actually call those references!

You may want to ask the reference several questions, like:

  1. What work did they do?
  2. How fast did they do it?
  3. Did they keep a clean job site?
  4. You are related to [contractor’s name], right? (If they are, they will think you were already privy to that information and will have no problem answering honestly!)
  5. Any problems working with them?
  6. Would you hire them again?
  7. Can I take a look at the finished product? (This could be in person or via pictures.)

These questions will help you understand more about the abilities and history of the contractor. Then, if possible, actually check out the work the contractor did and make sure it looks good.

Another tip recently given to us by J Scott was to ask the contractor to tell you about a recent big job they’ve done. Contractors love to brag about their big jobs, so he or she will likely regale you with the story of how much work they needed to do and how great it looked at the end.

Find out the address, and then go to the city and verify that a permit was pulled for that project. If not, the contractor did all the work without a permit, which is a good indication they are not a contractor you want on your team.

  1. Verify

It’s okay to be trusting, but make sure the contractor is worthy of your trust first! To do this, first verify that they truly do have a license to do whatever work you intend for them to do.

If they are an electrician, make sure they have an electrical license. If they are a plumber, make sure they have a plumbing license. If they are a general contractor, make sure they have a general contractor’s license.

Next, make sure they do actually have the proper insurance and bond. As we mentioned earlier, you could ask them to bring proof, but you can also simply ask the name of their insurance agent and verify it with that agent. Either way, just make sure they have it.

Remember: this protects you.

  1. Hire them for one small task

Before hiring the contractor to do a large project, hire them to do just one small task, preferably under $500 in cost. This will give you a good idea of what kind of work ethic they have and the quality of work that they do.

If the work is done on time and on budget, and if it meets your quality standards, consider hiring them for more tasks.

Even if the contractor has passed through the first several steps of this screening process, 75 percent of them will still likely fail at this step, so don’t settle with just one contractor. Hire multiple contractors for multiple small jobs and see who works out the best.

Related: 14 Killer Questions to Ask Your Contractor

  1. Manage them correctly

Ninety percent of the time, when I have a disastrous situation with a contractor, the blame lies on no one but myself. If I had managed the job correctly, I wouldn’t be caught in the positions I’ve been in.

Here’s an example. I hired a contractor to paint a bedroom. He says $500. I say, “Great.”

He calls me, tells me he’s done, and I send him the $500.

Now, I go check out the property and what do I see? He didn’t paint the ceiling, despite the obvious need for it. And there are a couple paint splatters on the floor that are easy to clean—but now I have to do it.

I call the contractor and he says, “Well, you didn’t say I needed to do the ceiling,” and “No, the floor was perfectly clean when I left. Someone else must have made the drips on the floor.”

Now, you might be saying, “But that’s ridiculous! It’s clearly his fault.”

But it’s my responsibility to manage him correctly. Therefore, when you work with a contractor, always get a detailed scope of work that clearly lays out 100 percent of what is going to be worked on, what’s included, and what isn’t.

Then, never pay anything until you’ve inspected the work. On larger jobs, be sure to spread out payments over the course of the job, so they don’t get too much money up front. You always want them hungry for the next paycheck.

To help with this, I put together a really simple “Contractor Bid Form” over in the BiggerPockets FilePlace—100% free—so you can fill this out every time you work with a contractor. Just go to BiggerPockets.com/bigform.

The Bottom Line

Whether you’re a real estate investor like myself or not, you’re going to need to deal with contractors in the future. By following this seven-step process, you’ll save yourself time, stress, and a lot of money.

Source: BiggerPockets.com by

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The Least Discussed Reason Wannabe Investors Don’t Take Action (& How to Overcome It!)

I’ve never fully understood the obsession with figuring out why other people fail to take action when it comes to real estate investing.

It seems like a lot of people genuinely look for justification not to start.

“If Jimmy didn’t start because he had no money, and I have no money, then I’m justified in not starting yet.”

This is entirely the wrong mentality! Why not focus your energy on figuring out why successful people DID take action?

Regardless, I’m going to tell you the real reason some who are interested in investing never take action. It’s something that isn’t discussed very often.

But first, here are some of the most stereotypical excuses.

Why Some Wannabes Never Take Action: The Typical Responses

Don’t get me wrong. All of these excuses are pretty understandable—yet unfortunate.

Let’s briefly discuss each.

Fear

Fear is a beast. And taking the plunge into real estate isn’t easy.

That being said, everybody experienced the feeling of fear when they bought their first property. It may not have been crippling, but it was there. Anyone who tells you they weren’t at least a little scared is probably not being completely honest with you.

This is why it’s important to make decisions based on numbers and bounce the analysis off experienced investors. Don’t bring your emotions into the deal at all.

Emotions are dangerous—leave them out of investing.

Nervous businessman peeking over desk

Lack of Experience

This excuse drives me nuts!

NOBODY had experience before they took action—you gain experience BY taking action!

If this is your excuse, either quit or work under somebody for free to gain the experience you so crave.

This is a silly excuse to me. Just take action!

No Money

This is an understandable excuse and probably the most common.

I have been investing since 2015. To date, I have never paid more than 6 percent down on a real estate transaction.

Leverage is wonderful. It is risky but wonderful. I house hacked my first duplex for less money than most of my cars have cost.

Theoretically, you could sell your car and buy a house.

You can overcome the “no money” issue by utilizing FHA loans, VA loans (if qualified), seller financing, purchasing subject to the existing mortgage, partnering, other people’s money, hard money lenders, etc.

My point is this: While having no money is scary, if you have knowledge and time, you can invest in real estate!

male showing empty pockets implying moneyless

Not Enough Time

YOU HAVE THE SAME AMOUNT OF TIME AS EVERYONE ELSE!

Set your priorities, and either make REI a priority or find someone with time and provide money/knowledge!

This is a cop-out excuse.

I purchased a property while spending six weeks on a remote island and only having access to the internet through my cell phone a couple of times.

Figure it out.

Why Some Wannabes Never Take Action: The Least Discussed Reason

We have ruled out the most common excuses. And yes, they are just excuses.

Now let’s talk about the least discussed reason some wannabes fail to take action (and how to avoid it).

You’re LAZY!

That’s it.

The number one reason some people fail to take action is the amount of work required.

This excuse is behind the time, fear, and experience excuses. You know it’s going to take a lot of time and energy to make this happen. You’re afraid because it takes a lot of work, and you don’t fully understand what to expect. You don’t have experience because you haven’t done it yet.

In the military, there is a common phrase we use in combat: “Complacency kills.”

Although the meaning is a little different when applied to real estate, the message is the same. It’s not the one morning you sleep in or the one day you get nothing done that hurts you. It’s not the hassle you avoided today or the excuse you used today in order to procrastinate.

However, if you ALWAYS avoid hassle, procrastinate, and sleep in, you will never succeed.

Sloth is one of the seven deadly sins. If you want to succeed as a real estate investor, or in life in general, you need to kill the urge to be complacent—before it kills you!

Related: Getting Started In Any New Real Estate Business

Start Investing NOW: Here’s How

Goals

The first step to conquering the excuse of laziness is to sit down and set goals.

You need to long-, medium-, and short-term goals. These goals should be similar to a five-year plan, yearly goals, monthly goals, and weekly goals.

Think of the cartoons you watched as a kid where a rider would tie a carrot to the end of a long pole and dangle it in front of a stubborn horse/mule in order to motivate them to move forward.

Goals are the carrot you dangle in front of yourself.

No matter how driven you are (or aren’t), there will be days when you lack the motivation to do any work. At these times, it is important to have a carrot (goals) to chase in order to stay on track!

Pensive young entrepreneur looking at laptop screen and drinking coffee at table in cafe

M.I.N.S.

Some of you may have noticed I didn’t say you need daily goals. You may have even been bothered by this and decided to tune out (haha).

The reason I didn’t mention daily goals is that, while they serve a purpose, I prefer to think in terms of the “most important next step.” This is sometimes called M.I.N.S.

M.I.N.S. should be determined every night before you go to sleep. This will ensure you knock out the most important next step toward your weekly goal(s) first thing the next morning.

If you can knock out the most important next step toward your goal every morning, it will snowball into accomplishing your goals quickly!

The key is determining what this step is the night prior, and then doing it first thing the next morning!

Accountability

Most of the actions you take to achieve your goals will not be fun or easy.

It’s easy to find “busy work” to use as a distraction. This busy work is more fun and often easier than accomplishing the most important next step would be.

Since we are all human (I think), it’s safe to assume that you will have days, weeks, months, or even years when you fail to do the difficult task(s) that need to get done.

This is human nature and a hard habit to break. And this is why accountability is crucial to your success as an investor.

You need to find some people who are on the same path as you, as well as a few who are farther down that path, and get together to grow and hold each other accountable!

A common way to do this is through mastermind groups. A mastermind group is comprised of people who have lofty goals for life and are determined to achieve these goals. They meet regularly, whether in person or on conference calls, and talk through their struggles, successes, and so on in order to help each other progress.

These mastermind groups are great for helping you grow and holding you accountable to achieve more!

Mans Hand Reaching For Red Ladder Leading To A Blue Sky

Systems

Real estate investing isn’t easy at first (most things aren’t).

Imagine REI as a large flywheel, and every step you take gets it to move just a little bit faster. As the flywheel speeds up, it takes less and less effort to keep it moving.

This is the power of systems!

Every time you complete a task, remember how you did it. If you complete that task a second time, create a system for streamlining the process. The simpler you can make tasks in real estate, the easier it becomes to buy homes!

For example, one of my favorite systems to date is my Google Drive folder for lenders. Every time I have applied for a loan, I needed to provide the previous two years’ tax returns, W-2s, bank statements, photo IDs, verifiable income, etc.

I created a folder titled “Lender Documents” in Google Drive that has all of this information in it, separated by tax year.

Now, when I apply for a loan, I simply email a link to this folder to my lender and wait for them to tell me if they need any more documentation (which is minimal, if any)!

Talk about streamlining the lending process.

Don’t forget to create systems as you journey down the path of real estate investing. It will make your life so much easier!

Use Laziness to Your Advantage

Lazy people will often find the easiest way to accomplish a task. Use this mentality to succeed as a real estate investor—without losing all of your hair.

Real estate investing isn’t easy, but it is extremely rewarding.

Embrace your laziness, and use the safeguards above to continually attack your goals.

Take the time to put in a lot of work now. You will be happy that you did!

Source: BiggerPockets.com by

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Listen, 2008 Is Never Happening Again—Invest NOW for Best Results

The real estate crash in 2008 was unique in that we saw a very fragmented industry that was burdened by large-scale systemic risk. This is not what usually happens.

It’s important to realize this situation would not be easy to duplicate; it was sort of a perfect storm of bad circumstances. Since then, we have implemented things to protect us from a similar event. Things like Dodd-Frank, better lending fundamentals, and a lot of growth left to capitalize on all make the possibility of another crash similar to 2008’s very unlikely.

Real estate is usually market-specific, so this isn’t to say prices can’t drop in the near future in your market. But it does imply that those waiting around for the next nationwide crash are going to watch a lot of success pass them by in the meantime.

This is going to frustrate many people who see inflated prices and increased competition making it a harder time to buy. However, the truth is real estate is going to be a good investment for a long time going forward. Now might not be as lucrative of a time to get in as it was in 2012, but investing now is likely better than getting in five years from now. In 20 years, it won’t make any difference at all.

Waiting for the perfect moment costs a lot more in experience and opportunity than the potential downsides could produce. As the saying goes: “Time in the market is better than timing the market.”

red down arrow on black and white grid indicating stock loss

When Will the Next Crash Happen?

In 2016, I bought my first rental property. At the time, there were an abundance of threads on BiggerPockets that said, “Don’t buy now. We are about to see a crash.”

Luckily I ignored this noise and bought anyway. In the last three years, I’ve done very well—despite the supposedly imminent danger. Grant Cardone had a bunch of content around this time claiming he was preparing for a crash, as well, but he’s done quite a bit of business since then.

The BiggerPockets forums now reflect much of the same message as a few years ago. Don’t buy! There will be a crash soon!

Maybe those members who are spreading this sentiment are right; maybe they are wrong. Either way, I find that this message seems to have a single constant underlying motive: jealousy.

I really think much of this mindset is coming from people who are actively hoping the market will downturn so they can buy in. They are salty they missed the last big opportunity.

I’m not mad about that. In fact, I’m salty I missed the last downturn, as well! I would have much rather purchased in 2012 than 2016. But unless I create a time machine to go back to 2010 and buy assets, I’m sunk. Fussing about it is never a helpful strategy.

While another recession of some sort is inevitable, no one really knows what it will look like or when it will happen. It most likely will NOT be a repeat of last time though. So waiting for the bottom to drop out of real estate is a mistake, because you’ll be waiting forever while not learning or building experience along the way.

If you don’t have the confidence to buy in an upmarket, you don’t stand a chance to pull the trigger in the down market.

Plan Around Fundamentals—Not Luck

Over the last eight years, many BiggerPockets members (myself included) have bought low and then ridden the wave upward, making money on the sheer luck of being in a good industry at the right time. This is not a sustainable strategy for success in the long term, but it doesn’t mean that real estate only works when you stand to get outsized gains.

Do you only want to buy real estate because you think you might get lucky with an area that’s rising? Or do you want to buy a profitable asset at a discounted price that is going to make money even through market fluctuations?

Waiting for a theoretical crash is just admitting to the world that you can’t compete unless the market is unusually easy to make money in.

In real estate, you make money when you buy. This holds true no matter where we are in the market cycle.

So instead of waiting for your market to downturn, find great deals that are going to make you money no matter what. Have good exit strategies in place, and pass on deals that don’t make sense.

Businessman forecasting a crystal ball

There are two kinds of mania surrounding real estate right now:

  1. Those who are so excited about real estate that they are willing to spend anything to get into an asset and are therefore blind to risk.
  2. Those who are so sure a crash is coming that they are sitting on the sidelines.

Neither of these two parties is going to make as much money as they could. They are too busy making decisions based on emotional hyperbole, anecdotes, and luck instead of solid financial analysis.

Focus on the fundamentals, and you can make money in any market.

Accept That Real Estate Is a Long Play

Why does everyone seem to be playing a two-year game with a 30-year investment? Even if you’re doing fix and flips, there is a long road of education and understanding that goes into this business.

Certainly there are outlier success stories of people doing 20 deals in their first year. However, it’s disingenuous to assume that is universally possible.

In many cases, chasing unrealistic gains gets people into more trouble when ambition outruns reality. Real estate is a slow business filled with complex transactions and ill-liquid assets. Even most superstars go slow!

It’s a patience game that relies on compounding. Trying to force outsized gains at the command of one’s ego is dangerous.

The long game of real estate levels out lots of short-term instability. You need cash reserves to weather economic storms, and you need to buy based on good fundamentals.

You will absolutely experience drops in the future; you can’t avoid them completely. This is why it’s best to get in now (at the right price) and start making money—money that will help you get through a recession.

Even if there were a crash tomorrow, it would be a long time before you felt comfortable at the bottom. The last bottom was in 2009, but people didn’t start buying until 2012 or so.

That’s three years later! Do you really want to wait that long to get started—just because you can’t buy at the discount the last crash offered?

You missed the crash. So what?!

Stop waiting around, nostalgically hoping that opportunity will return. Instead, enter the marketplace. Grab the opportunities that are available right now!

Source: BloggerPockets.com – by

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A first-time buyer’s guide to becoming a landlord

Photo: James Bombales

Buying a home isn’t always about finding the perfect place to raise a family or host those summer barbecues — for some first-time buyers, owning real estate is the gateway into the realm of landlordship.

Becoming a small-scale landlord can look easy, but there’s more to it than collecting the rental cheques every month. Whether you lease out an individual property or have a self-contained rental unit in your home, such as a basement apartment, buying to become a landlord requires you to be a hands-on business owner.

“I tell my clients upfront [that] you’ve got to think of it as a business,” says Nawar Naji, a Toronto real estate investor and broker at Chestnut Park Real Estate. “It’s not just about, ‘Let’s go buy a condo and rent it out.’ You’ve got to think of it from a business perspective. Think of the operation side of it, taxation aspect of it, and the other part of it — the exit.”

Want to buy your first home?

With television shows like HGTV’s Income Property showcasing the benefits of owning a rental property, like easy income and a boost in property value, renting out your basement looks appealing. Yet, without proper preparation or knowledge of provincial landlord and tenancy laws, the landlord dream can quickly go sour.

“If people have a bad experience in the first year [of landlording], and the first tenancy is problem-ridden, nine times out of 10 I would think they would get out of the business,” says Susan Wankiewicz, executive director of the Landlord’s Self-Help Centre, a non-profit legal clinic for Ontario’s small landlords.

If you do your homework and plan accordingly, becoming a small landlord can be rewarding. As Naji and Wankiewicz tell it, here’s what you can expect if you’re working towards that first investment property.

Put your back into it

Landlording isn’t a passive investment — it requires maintenance, time and experience to nurture into a successful money-maker. As with any business, being present and aware of your investment’s unique needs will start you on the path to being a successful landlord.

“You’ve got to be active in the business,” says Naji. “It’s not just paying the mortgage, getting the rental cheque and calling it a day. There’s more work to be done to it.”

Naji, who has been investing in real estate since 2006, says a new landlord can expect the operation stage of landlording — running the property — to be the longest and most cumbersome. Semi-annual inspections, repairs, collecting rent and regular maintenance are the landlord’s responsibility. You could hire a property management company to take care of this for you for a percentage of your rental earnings, but Naji advises not to within the first year of a new investment property.

Photo: Julien Dumont/ Flickr

“[That way] when you pass it on to a property manager, and they call you [about a house issue], you’ll understand if it makes sense or doesn’t make sense,” he says. “If you haven’t done it by experience, somebody can call you and can come up with explanations that don’t necessarily make sense — it might not need any repairs.”

Naji also recommends building a team of professionals that specialize in residential investments. Your accountant, repair person or real estate agent, he says, should have knowledge of landlording in order to fully understand your needs.

Know it like the back of your hand

Legal jargon may be a dry read, but understanding tenancy laws in-depth before you become a landlord could save you a whole lot of trouble down the road.

“Usually we meet landlords once they’ve rented and they’re in trouble,” says Wankiewicz. “If they were to do the front-end research and understand what they’re getting into before they rent, I think they’d be better off.”

Wankiewicz has seen every kind of problem come through the LSHC office: tenants that default on rent; pets that suddenly appear unannounced; damage to the property; and tenants that decided to move their whole extended family into the unit. Whatever the issue may be, Wankiewicz explains that landlords who familiarize themselves with the provincial landlord and tenancy laws beforehand have a better understanding of what their rights are. For instance, she still encounters landlords who haven’t fully read Ontario’s Residential Tenancies Actand don’t understand that the law equally applies to both high-rise and second suite rentals.

“Landlords are surprised because they think that [because] they’re renting in their home and they’re the king of the castle. That’s not the case. They’re subject to the same legislation as if it were a high rise rental,” she says.

Photo: James Bombales

If a tenancy isn’t working out and an eviction is required, Wankiewicz warns that the process isn’t a quick fix. If a tenant stops paying rent, a landlord will need to give a termination notice and apply for a court hearing to the Landlord and Tenant Board as soon as possible.

“What we are seeing now is that it’s taking anywhere from four to six months for a landlord to terminate the tenancy and recover possession of the rental unit,” she says.

The price is right

Buying a house ain’t cheap, nor is saving for a downpayment, so you’ll want to ensure that you can get a return on your first investment property, and it starts with picking the right rental unit.

Naji says to follow the money — wherever there’s construction for a master-planned community or an injection of government funding into infrastructure, there will be a demand for rental housing. Highlights of a specific neighbourhood — proximity to transit, a family-friendly community, lots of amenities — will entice tenants over more space. As Naji explains, buying the largest rental unit on the market might allow you to charge slightly higher rent, but it will cost you more to purchase.

Photo: James Bombales

“If you’re buying the largest two-bedroom, two-bathroom condo, it’s not necessarily the best idea because the tenants are not going to pay more rent,” explains Naji. “They might pay a little more rent, but not enough to justify the additional cost of acquisition for that larger, or extra large, unit.”

Instead of focusing on big bedrooms and living areas, Naji says to look for smaller spaces with appealing characteristics. Tenants are feature focused; they’ll value better appliances or a shorter commute time over a bigger kitchen. A semi-detached could bring you in the same amount of money as a fully-detached home with the same number of bedrooms, but will cost you less to buy.

“It might be a little bit smaller, but your cost of acquisition is less, and the numbers are going the be in your favour because your rent is going to be pretty much the same with a lower purchase price,” he says.

When pricing your rental unit, Naji says to compare current neighbourhood rental prices with seasonal demand to determine the right price.

Meet and greet

With a tenant living on your property, you’ll get to know all of their quirks very quickly. Some landlords aren’t prepared for the extra smells, sounds and interesting habits on display that go hand in hand with having a tenant.

“Landlords in a smaller situation, were they’re renting part of their home, they become consumed with tenant behaviour, like if the tenant has an overnight guest and, ‘They didn’t tell me’, ‘The tenant’s taking too many showers’, or ‘The tenant’s leaving the lights on’, or ‘They brought in a pet and I didn’t approve a pet’— issues like that, small-living landlords are unprepared for,” says Wankiewicz.

The landlord-tenant relationship can sometimes be a rocky one. Wankiewicz emphasizes that in addition to good communication and responding to issues quickly, landlords need to conduct a comprehensive screening process to find a trustworthy tenant. She advises that going off face-value alone won’t provide enough information about a person. Using a rental application, speaking to references and checking a tenant applicant’s credit score are good methods to finding a quality tenant.

“So many times the small landlord will just make their decision on how their tenant appears, but they need to dig in and check with previous landlords, not just where they’re living now, but where they lived prior to that, because that’s where they’re going to get accurate information about what their behaviour was like,” says Wankiewicz.

Naji likes to take a personal approach to rental applications; he strongly recommends meeting prospective tenants in-person not only to check for that gut-feeling, but to get to know the person.

“At the end of the day, this is a people business. You’re renting your property to a person or a couple. It’s good to meet them, get to know who they are.”

Source: Livabl.com –  

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Renting Versus Buying: A Real Estate Expert Breaks It Down for Us

The renting versus buying dilemma is one my friends have started to face since they’ve begun leaving Manhattan and escaping to the suburbs (I’m still not there yet, but when I think about how much money I “throw away” each year on rent, it’s actually cringe-worthy). But, maybe it’s true when they say the grass is always greener. Buying doesn’t come without its own set of problems, considering both sets of my friends who recently purchased homes faced movers damaging their patio, gas leaks, and even a broken washing machine within the first week. (They’ve confided in me that their bank accounts are still recovering.)

Since we’re no experts on the topics, we decided to tap Scott McGillivray, a real estate/renovation expert and TV host, to get his professional take. “Neither renting or buying is intrinsically right or wrong,” he says. “It basically comes down to your goals and your lifestyle.” That being said, he encourages getting into the real estate market once you feel financially prepared to do so. And what if you’re worried about going all in? McGillivray suggests trying a practice mortgage in which for one year while you’re renting, you put aside the amount you’d have to pay as a homeowner (mortgage, property tax, potential repairs). This gives you a realistic idea of how your lifestyle and budget will be affected if you buy.

“If you can manage, go for it,” the expert says. “And the bonus is that at the end you’ll have some extra cash for a down payment.” Since renting versus buying is no small debate, we asked McGillivray to break down all the pros and cons for each. Keep reading to get the full scoop.

 

 

Source: MyDomaine.com – by 

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Naborly protects landlords’ investments

As every landlord surely knows, running a credit check during the tenant selection process is paramount. However, not every landlord realizes what to do with the information the credit check reveals.

“Every independent landlord knows that to screen a tenant, you have to look at their credit, but a lot of them have no idea how credit relates to a tenant’s ability to pay rent on time,” said Jerome Werniuk, director of sales at Naborly Inc., which runs free credit and background checks. “Ninety-five percent of landlords have tenants show up with their own credit file, meaning they go to Credit Karma or Equifax, but when we hear professional tenant stories, these people come with doctored credit checks.

Doctoring a credit check is as easy as finding a template online and filling it in as one wishes. It’s what Werniuk describes as a huge problem within the industry.
While savvy landlords realize they can obtain credit checks from Equifax or TransUnion, many still don’t know, nor have time, to mine the information therein to decipher a tenant’s capacity for prompt rent payments.

“To get a credit file from either of the credit bureaus, they have to pay for it and a set-up fee for the individual’s report, but there’s a heavy credentialing process to pull somebody’s file,” said Werniuk. “Even when the landlord gets a credit file, they don’t know how to read it. They don’t know exactly what an R9 is or how someone paying a cell phone bill on time impacts their ability to pay rent. So credit is not necessarily a good tool for independent landlords.”

Naborly builds a different type of credit report using critical criteria like contemporary cost of living and verifiable income to determine a potential tenant’s ability to pay rent. It has proven so popular that, when it launched in February 2018, Naborly screened 100 people a week. Now, it screens at least that many people in a day.

“The biggest feedback we’ve received from landlords is our tool is amazing at assessing risk so that they can properly evaluate whether or not to accept the rental application,” said Werniuk. However, there remain risks that are extremely difficult to predict. Landlords have said that many of their previous evictions  were due to circumstances that changed after the tenant moved in, like job loss or some other unforeseen, and expensive, event in their lives. Nobody can predict those things.”

The average cost of eviction in Ontario is $9,000, and that could cripple an investment. In response, Naborly has rolled out Rent Guarantee, which doesn’t just risk assess but also protects the landlord for the full term of the lease. In effect, Naborly cats as the tenant’s co-signor, which shields the landlord’s investment.

“It’s based on the Naborly report and the risk score we give, which directly correlates to a tenant defaulting on rent,” said Werniuk. “We give a quote for how much rent guarantee will cost. They can have Naborly become a guarantor on the lease, meaning if the tenant ever defaults then Naborly steps in and covers the rent for up to six months. Our primary customer for Rent Guarantee is the landlord who only owns one or two units because if they don’t collect rent for two or three months, they’ll have issues paying their mortgages and they could lose the property.”

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