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Indulge my fantasy - What would it take to own this building? - mattkime - 09-17-2009
http://maps.google.com/?ie=UTF8&ll=40.714545,-73.937436&spn=0,359.994464&z=18&layer=c&cbll=40.714549,-73.937545&panoid=8sUQaFgLm5hiDSBt37lDtg&cbp=12,5.65,,0,-14.01
I'm half serious and misguiding you by a few doors. A friend of mine moved out of a neighboring building owned by the same landlord. While the landlord admits she left on good terms, she's unable to refund her deposit. Now, I don't (currently) run an apt building, and I'm sure I'm unaware of a few of the expenses that go into it, but I've never been without the amount my friend is due.
This is likely entirely beyond my means. Its a building with five apartments and it probably brings in about $9k/month, fully rented. I'd need have money for a downpayment, an emergency fund, estimated yearly amount spent on repairs, etc. I probably could have bought before the mortgage bubble but it probably would have sunk me too. Still, I'm very curious.
So macResourcers, explain to me how owning property in this part of ny isn't as easy as xeroxing dollar bills.
Re: Indulge my fantasy - What would it take to own this building? - Seacrest - 09-17-2009
http://en.wikipedia.org/wiki/Capitalization_rate
Re: Indulge my fantasy - What would it take to own this building? - C(-)ris - 09-17-2009
I believe the landlord would be in violation of state law. Deposits are to be held in a separate account and not used in the day to day operations of the business. They are only withdrawn from to pay for damages and to refund the renter. In some states interest from the deposit is also due. Both a criminal and civil suit could be filed against the landlord. I would nicely remind the landlord of these facts and ask for the deposit back.
Re: Indulge my fantasy - What would it take to own this building? - Racer X - 09-17-2009
C(-)ris wrote:
I believe the landlord would be in violation of state law. Deposits are to be held in a separate account and not used in the day to day operations of the business. They are only withdrawn from to pay for damages and to refund the renter. In some states interest from the deposit is also due. Both a criminal and civil suit could be filed against the landlord. I would nicely remind the landlord of these facts and ask for the deposit back.
correct. may vary state by state, but in Washington, it must be in an escrow account, and the landlord has 14 days from the last day of residency to refund the deposit, or give a full, in writing, accounting for any damages or deductions. In addition, if the landlord doesn't do a final walk through with the tennant, the landlord can't charge the tennant for any damages. If the landlord is over 14 days, for any reason, even if the check gets lost in the mail, the tennant gets it all back, even if they trashed the place.
Have the friend do a search for her cities tennant/landlord laws. Seattle specifically, and Washington State in general, has the toughest tennant landlord laws on the books, leaning towards the tennants.
Re: Indulge my fantasy - What would it take to own this building? - mattkime - 09-17-2009
>>Have the friend do a search for her cities tennant/landlord laws.
We have no question about that. NYC has some very strict laws as well.
Re: Indulge my fantasy - What would it take to own this building? - mattkime - 09-17-2009
Seacrest wrote:
http://en.wikipedia.org/wiki/Capitalization_rate
yup, but there are few investments where you can take out a big loan and have others pay it off.
Re: Indulge my fantasy - What would it take to own this building? - Seacrest - 09-17-2009
mattkime wrote:
[quote=Seacrest]
http://en.wikipedia.org/wiki/Capitalization_rate
yup, but there are few investments where you can take out a big loan and have others pay it off.
You need deep pockets to be a landlord.
Especially in a city with high acquisition costs and tenant-friendly laws like NY.
Plenty of folks bought up "investment property" during the boom, and are now suffering under the weight of high mortgage payments and low rents (not to mention maintenance and repair bills and prop taxes).
When the easy money is not flowing and prices are relatively low is the time to buy, but it's much harder to get financing during those periods.
Re: Indulge my fantasy - What would it take to own this building? - mrlynn - 09-18-2009
You have to figure out what your annual expenses would be (mortgage, taxes, utilities, maintenance, repairs); what the income would be (assuming not every unit is rented 100% of the time, as they may not be); and how much of your time you could spend 'being a landlord', i.e. dealing with tenants and their innumerable 'issues': e.g. the toilet in Apartment 4 is stopped up at 2 AM and water is pouring through the ceiling of Apartment 3, whose occupant's drug deal was interrupted. . .
Remember, too, that evicting deadbeats is very hard to do in most tenant-friendly cities these days.
If those calculations work out, and the building is not a complete dump in need of major work (roof, siding, furnace(s), wiring, etc., etc., then go for it.
Better you than me.
/Mr Lynn
Re: Indulge my fantasy - What would it take to own this building? - Wailer - 09-18-2009
$9k/mo gross means the building should be worth somewhere between $800k and $1.5M.
Landlording is definitely not for everyone. You have to have a fairly thick skin and be able to roll with the punches as you can get a lot of problems over short periods. If you have to pay a management company, you'll never make any money. It's also not something I'd advise doing if you depend on the rental income to pay the mortgage. All it takes is one tenant who "knows" his rights and how vulnerable you are and you're pretty much screwed. Most successful landlords are already financially independent when they start buying buildings.
Re: Indulge my fantasy - What would it take to own this building? - lafinfil - 09-18-2009
Well you would need about 20% down to start with probably closer to 25-30% by the time you get through closing
and then you'll need the money to fix all the stuff that has been neglected by the previous landlord.
Been there - done that and have a huge collection of tools to show for it.