Posted by Frank Chin on April 29, 2006 at 05:21:07:
I have no idea what I’m doing all these years.
Frank Chin
Anyone in Nassau County, near 11793? - Posted by Kevin - WA
Posted by Kevin - WA on April 26, 2006 at 20:32:28:
I have someone pitching me a potential deal on a SFR in Wantagh. I have never been there. What is the real estate market like there, generally? Rising, Falling, Steady? My tools say that this house, worth about $400K, costs just over $10K in property taxes. Surely that is a mistake, right?
If I do this deal, there is a tenant and everything already built in, but I just have to try to figure out if this even makes sense numerically.
Thanks,
Kevin
Re: Anyone in Nassau County, near 11793? - Posted by Frank Chin
Posted by Frank Chin on April 27, 2006 at 07:28:43:
Kevin:
Taxes in Nassau County has gotten riduculous due to government mismanagement among other things.
I got a property in the East Meadow area where the P&I runs about $550/month, and when I refie’d back in 1993, the monthly payment with “escrow for taxes” ran a little over $900.00
It’s up to over $1,200 today, and thank goodness I only got a 60K mortgage. Taxes for me is almost 7K, and its LOW due to the fact that I owned the place for 20 years. Someone “buying it at market price” would easily be hit with 10K in taxes.
Coming to think of it, RE taxes just about doubled in about 10 years.
I heard of police officers leaving the NYPD to Nassau County for higher pay, and I heard around 100K a year with overtime, and friends who are teachers making almost 100K/year.
With high taxes, young folks unable to get affordable housing, (how much would P&I run on a 400K mortgage?), businesses leaving for more affordable areas, do you really think investing in Long Island makes sense?? I don’t
However, since I got a low mortgage, a relatively low RE tax, I can rent the place out to someone much more cheaply than any one else, without breaking a sweat.
Market rents SFH’s starts at $2,200. Figure P&I, taxes, and someone buying at market will not cashflow.
Frank Chin
Re: Anyone in Nassau County, near 11793? - Posted by Bob Eberle
Posted by Bob Eberle on April 26, 2006 at 21:24:08:
Not a mistake. What do the numbers look like?
Wait a minute, Frank! - Posted by DaveD (WI)
Posted by DaveD (WI) on April 27, 2006 at 08:13:49:
You GOT to sell, because (pant, pant, trying to sound like a breathless RE broker) YOU ARE RUNNING OUT OF DEPRECIATION and it will cost you more to keep it. Why not (pant, pant) 1031 yourself into someone elses problem at a nice retail price so you can start your cycle all over again? Bwahahahaha!
As always, you are spot on Frank. While buying and holding isn’t very sexy, if you hold on long enough you can then go on to buy as much of your particular vice as you care to. Just ask Phil Fernandez. He doesn’t break too much of a sweat these days either.
Here’s the story … - Posted by Frank Chin
Posted by Frank Chin on April 28, 2006 at 09:22:53:
Dave:
What Phil said in jest is “on the money”.
I had this property since 1983, but technically closed in 1984, with 19 year depreciation. Would’ve been 18 years had I closed in the place in '83.
So the depreciation already ran out back in 2003. But should depreciation been determining factor?
Got the place for 70K, and rehabbed it orginally for 10K. Actually tried selling place on several occasions through the years.
Bought it to rehab and flip, and actually got two buyers back in 84, selling it for 127K. Had an iron clad contract with the second buyer, he got his mortgage. Long and short of it was I kept 8K of his escrow when he backed out, since the contingency was satisfied, and I used the money to pay for the closing.
Had a tenant who fell in love with the place, and around '95 or '96, wanted to buy it. Got an appraisal for around 155K. He wanted a better deal as he did a bit of work, asking for 20K off. We said we’ll think about it. Our problem was we could’ve had 127K in 1984, and after sitting on it 12 years, selling it for 135K less expenses didn’t seem right. We’re back where we were!!
A few months after, his wife got sick, turned out to be cancer, and the matter was dropped. She then passed away a year or two later.
His dad died in 2001, and told us he’ll be moving to his dad’s house a few blocks away. As we knew him for over ten years at that point, said it was OK to come by any time to fix the place or show it. So we called around for contractors to fix it up, give it better curb appeal.
By 2001, the place appraised at 249K.
Waited for the contractor to come by Apr, then May, and finally July came and almost went. Got the outside work done the first week of August.
We then listed the place, allowed a 90 day exclusive, and made sure WE CAN CANCEL. The broker assured us that if we are no happy, or if something happend, that’s no problem.
We then decided to put new siding in, new roof, as it was the ugliest house in the area with “dirty old aluminum siding”, and an ugly old roof. It was done the last week of August, and with the siding job done so poorly, I spent the first 10 days of Sept 2001 repairing the repairs, while the place was being shown.
I was going to take Sept 10, 2001 off (a Monday), and finally finish it off on Sept 11. But decided to get this thing over and done with. Took Sept 11 off instead, to watch some TV.
Then Sept 11 2001 came along, and I was told by the broker phones stopped ringing, buyers all stayed home, almost through the end of the month of Sept 2001. I called the broker and asked to “cancel the contract”, mentioning that I’ll be renting it out again till the market stablized. We heard of folks backing out of contracts in NYC, and values may go down.
Then the broker gleefully told me that there’s a clause in the cancellation of the contract saying that even if the contract is cancelled, they still get a commission on the rental, if we rented the place out, even if we rented the place out ourselves for 90 days from contract date. We thought we read through the contract carefully enough, and didn’t notice it.
We thought to oursleves, “what a sneaky bunch”!!
Called my tenant back, and said since Thanksgiving and Christmas will be soon coming, maybe he consider staying to the end of the year, or even January. His response was he was so depressed with the death of his wife and 9/11, that he hoped we wouldn’t have sold it so quickly, and moving in a few months suited him fine.
We called the broker back and told then that since we won’t be renting the place out “till next year”, would that mean the rental commission does no apply since it’ll beyonf 90 days of the contract date"??
DEAD SILENCE.
Dave, we took another look not long ago, after we got our tax bills indicating a current market value of 375K. Round numbers, properties in the area runs about 400K.
The wife and I laughed about this whole thing, and thought we should send Osama Bin Laden a thank you note. And another thank you note to the contractor for draggin his @ss. The buyer who backed out originally because he lost his job a week before the closing. The tenant was found to have cancer two months after expressing interest in the place.
Dave, I’m afraid to put this on the market as it might START ANOTHER DISASTER. Do you beleive in Karma??
Guess we can conclude that real estate is such that if you sit on it long enough, we can’t scr*w it up. Not even Osama, not even the contractor.
Seems I did OK NOT SELLING THE PLACE.
Frank Chin
PS: I told my dad to sell his commecial property back in 1980, mentioning that the depreciation for the place he got in 1963 will run out. His answer was "I’m starting to make some money now, and you want me to sell it??
I recall he depreciated the place for 25 years at the time, so depreciation came to no more that $1,000/year on a 25K pruchase. Telling the man to sell the place based on a 1K deduction seems a bit ridiculous, now that I’m thinking about it.
By 1983, when he got some unsoliciated offers, the place was worth about 250K, ten times the 1963 price.Commercial rents had since gone up, with a current 75K/year rent roll, caps rates around 5 to 6%, its worth well over a million today.
While he could’ve roll the 250K on his free and clear property back in 1980, and MAYBE done better, making another 750K doing nothing and no risk is nothing to sneeze at either.
LOL - Posted by phil fernandez
Posted by phil fernandez on April 27, 2006 at 20:33:30:
Hi Dave,
Well it’s not how smart you are. It’s how long you can hold the property for. How long have I had some of mine, 25 years or so.
How to acquire a million bucks.
1./ Start with 2 million bucks, do nothing, don’t plan and wait 5 years. At that point you might have one million. Or
2./ Buy a bunch of income producing real estate and wait for it to appreciate.
Either way you can get to your goal.
Now of course if you follow the experts on this site and read and study the how to articles and follow this site on a daily basis, there are faster, easier ways of getting that first million
Too much information! - Posted by DaveD (WI)
Posted by DaveD (WI) on April 28, 2006 at 22:10:14:
Sheesh!
Up till now I thought you were this shrewd son of a gun. Now I know better. You let the cat out of the bag!
You mean, it’s possible to buy a house, stumble along forever, try like heck to get rid of it, spend a lot of money on it… AND STILL COME OUT SMELLING LIKE A ROSE! Who’d a thunk it?
Nice job (although obviously having nothing to do with any real effort on your part)