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Templar Real Estate Radio Show Transcript 1-11-2020

Learn about Real Estate by one of the premier Real Estate Investors in New Jersey. Each week Joseph J. Zoppi will be talking about investing in real estate including buying and selling houses and apartments. Understand how the economy, the Fed and world events impact real estate and how to adjust to these dynamics.

Templar Real Estate Radio Show for January 11, 2020


The following program was paid for by Templar Real Estate. The views and opinions expressed on this program are not necessarily those of the staff and management of WMTR. As always it is advisable to consult a professional before making a major decision. It’s time now for the Templar Real Estate Talk Show. Here’s your host for the program; Joseph J. Zoppi.

Joseph J. Zoppi:

Hello, my name is Joseph J. Zoppi, a real estate investor, consumer advocate, author, and managing partner of Templar Real Estate Enterprises. My background was in corporate America a long time ago and I was focused mostly on the IT consulting arena for the financial field. I worked with Citigroup, JP Morgan Chase. I always would say that I was screwed or attempted to be screwed or attempted to be screwed by the best of Wall Street. While I was working there, I thrived on the pressure. I loved it. Today, I have pressure again to ensure that my firm is successful and those individuals that invest with us are successful. I’m not a real estate agent, let’s be clear. I have individuals on staff that are agents, but we are not a brokerage and I’m not an agent. My company is a real estate investment firm. We buy houses for cash. We have agents that sell houses through the traditional real estate multiple listing service. We invest individuals’ money is real estate that is safe and that will see a nice rate of return. We also purchase apartment buildings. We do joint ventures with other real estate investors. We’re not speculators. If anyone has an apartment building, they’re interested in selling, a house they’re selling, we’re always willing to talk and see if we can come to some type of agreement. 

The show will go over everything that is about real estate, those things that impact real estate, the economy, the interest rates. We’ll discuss trends. Real estate is one of the biggest investments an individual has so it’s important that you know as much as possible. You can always see us on the web at templarbuyshouses.com or you can always call us; 973-240-8593. What I’m going to go through today is 12 things that a person should be looking for if they’re going to use a cash buyer. Today I’ll probably go over two of them and in subsequent broadcasts, we’ll go over some additional ones. 

First one is very, very important. How long has the company been in business?  One of the things that you could do for that is you could get on the internet and go onto the state website and on the New Jersey state website you could bring up any business, how long they’ve been in business, who the owners are. You just have to query your search on the business name or the owner name. We encourage that. We encourage you to look for who we are, how long we’ve been area. We’re very transparent. Any company you’re dealing with, there should be transparency. That’s extremely, extremely important. 

One of the things that I will have on my website is all the different things that we’re talking about today in terms of the 12 things you should be looking at when you use a cash buyer. You’ll be able to see the websites you can go to and check everything out. The other thing that’s very important, it’s probably one of the most important things, is are they part of the Better Business Bureau. Originally when we went onto the Better Business Bureau, I was like well, it’s just an organization, it’s nothing, we’re just going to pay some money and we’re going to be in there. I realized afterwards that it wasn’t just that simple. One of the things that they look at very closely is everything that you do business with. So, I was a little taken aback by it but again, from a transparency perspective, I had no issues with that. One of the things they looked at is our website. They questioned numerous things on the website. They said, “No, you have to change this, this is not clear, it’s ambiguous. You need to do this differently. You need to do this differently.” Certain web pages we just eliminated because it wasn’t to their satisfaction. We wanted to make sure that we were very clear, we were very articulate in our message, and that any of our customers would understand that. 

The other thing they look at is the existence of your business. You need to be in the business, working in the business, for six months or more. They go through the state records to ensure that you’ve been in business for at least six months. The other thing they look at is contracts. We have purchased numerous houses. They were scrutinizing our contracts, which is fine. Some of it they had lots of questions on. One of the things that real estate investors do, when they purchase a house like we do, we’ll put a house under a particular corporate name, usually an LLC. We buy another house, we put it under another LLC so on and so forth. So, they had lots of questions on that. They were assuming that everything was going to just go under Templar and that’s not the case. The reason for that is, I had to pull up lots of documentation on this because they kept questioning it, is that when you have multiple properties under one LLC you increase the risk. In the event we get sued for some type of catastrophe like doing a rehab and someone gets hurt, they could potentially sue us. Obviously, we have insurance, but with that being said, the exposure is a lot greater if we have two, three, four, or five properties under one LLC. We went through that extensively.

Another thing that’s very important is mediation and arbitration. Because we’re a member of the BBB we say that if there is a problem, we’ll go to mediation in the event that one of our customers has an issue. Then, it could go to arbitration where that’s binding. We see this as extremely important for anyone to do business with a cash buyer or even contractors. I hear horror stories all the time about contractors. I highly, highly recommend using the BBB for that. Then, you can look at their history and if there’s any complaints associated with them. We have an A rating. We have no complaints, but even with a contractor I’ve encountered stories almost every week where a contractor did not complete what they needed to do. They took the money. They’re not finishing it, they’re delaying it, so on and so forth. That’s a really sensitive thing on our side, to ensure that we are meeting what we’re supposed to do, but also for any contractor. Some of these people are spending $50-$100,000 on some of these contractors and they’re not doing what they should be doing. 

I had a woman that called me, she was out of East Orange. She said, “Joe, I bought this house, I wanted to rehab it and just bring it up to high standards for the community.”  She wanted to make the community better, which his more altruistic than making money. She gave him $100,000. He did half the job, maybe three-quarters of the job and then just took off and I think went back to Eastern Europe or somewhere and she couldn’t do anything about it. We came in and we purchased the property, but she went through a lot and she was just very stressed at the situation. Being part of the BBB is extremely important. We encourage people to look at that. You can do searches on it. You go right into the BBB. You can pull up our name or anybody else’s name and ensure it’s there and that we have good standing or anybody else has good standing. I think that’s extremely important. Thank you very much for this segment. We’ll talk about real estate and selling real estate in our next segment. Thanks. 

Joseph J. Zoppi:

Welcome back. Again, this is Joseph J. Zoppi, real estate investor, consumer advocate, author, and managing partner at Templar Real Estate Enterprises. You can reach us at templarbuyshouses.com. You can drop us an email if you have some questions. If you want something brought up on the show, we could possibly do that. If you have any concerns that you’re running into with another real estate investor or real estate agent, attorney, anything to do with real estate. If you have some issues, please drop us a note and we’ll try to help you out. You can also call us at 973-240-8593. 

I’d like to talk about pricing houses when we sell, when we sell as well as when we’re selling for someone else. That’s always the most sensitive subject, getting the price that the seller wants. Part of figuring out the best prices, there’s a little bit of art associated with it and a little bit of science. We have to look at the comparables in the area, what the houses are selling for or sold for, and you have to look at a lot of different factors that aren’t always tangible, which makes it somewhat difficult. Sometimes it’s very easy when the market’s very hot; it’s very simple. When the market starts cooling down, that’s where the challenges become. Right now, the market first of all it’s because it’s starting to get towards wintertime, it’s cooling down. Inventories are increasing. Also, just holistically, the market is cooling a little bit. It’s throughout the country. Certain areas have continued to do really well and other areas are not doing as well. We’re getting some pull backs in Seattle, California, and New York City specifically are some of the areas. Those are the bigger areas, but sometimes first the big areas move and then it starts moving across the country. 

I’m going to give you a couple of examples. You can pull it up on Zillow, some of these, and just look yourself. You can see where some people have made some mistakes. We had an individual, we’re not going to really state the town or the person, but we’re going to give you an overall what had happened, what had occurred. Individual called us, they had a house that was approximately over 6,000 square feet. It was towards the shore, probably about 10 minutes from the shore. They were listing it at approximately $900,000. It wasn’t selling. They said, “Joe, can you come in and take a look at it?”  She said I’m an agent at one time or I studied to be an agent and I got put in the information and the Realtor property value said it was $900,000. I’m looking it over saying you’re not going to get it. She didn’t get it. It was, I think, on the market for over a year. I said you’re going to have to cut it substantially. She was interested in seeing if I could buy it. I just couldn’t. It was a beautiful house though, had a basketball court, swimming pool, a Tiki hut. It was really, really nice. I would have liked to buy it, but just the price wasn’t there and she needed a lot of money for it based on the loan. 

So, I told her she’s going to have to really cut it substantially and she couldn’t at the time because of some financial and medical issues. But that was over a year and a half ago. She listed it, she took it off the market, she put it back on the market down to like 789 now. After she put it back on the market, it’s still been on the market six months and there’s still no bites. You can’t be looking at these automated types of calculations like in Zillow, Zestimates, things like that. You cannot do that because they’re not pricing it correctly. 

There was another one in Rutherford that I saw, and it was an investor. This one wasn’t a client of ours or a potential client, it was three Prospect Terrance in East Rutherford, you could always pull that up. And he started selling it at $530,000, this thing was completely redone, it was beautiful. I looked at the pictures that they were beautiful. Put it on the market in January 2019. He started dropping the price because he wasn’t getting any bites on it. Dropping 20,000 here, 10,000 there. After two months, it sold for $405,000, so it was about $125,000 reduction. Just because you build something and it’s nice and you rehab it, that doesn’t mean you’re going to get a number that’s doesn’t work within that neighborhood, that was a big mistake. I don’t know if that was the realtor telling them, or that was just himself saying, well, I’m going to put so much money in it and I want a rate of return of X. But $125,000 was a mistake, difference, simple as that.

There was another one in Central Jersey that we spoke to an individual. She’s going through a divorce and she said, “Joe, I’ve got to sell. I’ve got to sell.” We went in there, it was a contemporary type house, so it was very modern. Contemporary houses don’t sell as quickly, they just don’t. This was about 3,500, 4,500, I forget, 4,500 square feet, so it was a big house. We gave her a price, we set it. She said, “I need to sell” her husband says, “We need to sell” and we put a price of about $510,000. They didn’t like that price, they said we’re going to get the top agent in the town. She’s got lots of contacts, so on and so forth. I said, “Okay.” 

They said, we’re putting up for $600,000. That’s a $90,000 difference. Well, right now it’s still on the market, it’s 200 days on the market. They dropped from 600 to $10,000. Guarantee over the wintertime they’re not going to be selling it for that price. After a while the listings get stale and people don’t look at them and then all of a sudden, the prices start dropping considerable. Then what happens as a result of that becomes a snowball effect. So, all of a sudden someone starts seeing it dropping X amount of dollars and say, well, we’re going to wait, or we’re going to put in a low offer. Then the homeowner starts getting more frustrated and it just snowballs. So, pricing a house correctly is very, very, very important. 

We have one property right now that we listed. We thought it was listed too high, she wanted to list it at that price. We said, “I think it’s probably about $20,000 less than you should be listing it”, but she wanted it $20,000 than what we said. So, first week someone came, looked at it, offered her like $30,000 less than the asking price. She came down 20,000 and they had an agreement, so all is good. Right? But that is not the case. She took a 20K hit in her mind even though it wasn’t priced correctly, and she said, “I’m not giving in anymore.”

They went through inspections and as always, there’s always things that need to be fixed. When we do a rehab, we, we do everything soup to nuts and we still have to fix things and it’s just, that’s the way the name of the game. It just is. She said, “I’m not going to fix anything. It’s going to be sold as is.” After a while there was some discussions back and forth and then, they didn’t hear anything from the potential buyers. One week went by, two weeks went by. The seller started getting nervous and started fixing things. Then we contacted the buyer and they went dark basically, and she lost the deal. 

Now it’s been on the market for three or four months. She reduced the price again and now a new house came on the market right down the street, which is $30,000 less. It’s a smaller house, it’s got one less bedroom, but it’s completely fixed up. So that’s going to challenge it. Even though it’s smaller and it has one less bedroom that’s going to be an issue. So, two things, need to price it correctly. Second of all, you need to be flexible in terms of the inspection reports that come back. We have inspection reports that come back all the time from our houses and I get very frustrated. So, let’s be clear, there’s emotion involved in it, but that does not mean you should throw away a deal and say, I’m not going to fix anything. It’s still business transaction. You need to do it and you need to work with that. 

That’s where a good agent will work with you to negotiate what is good and what you should give in on and what you shouldn’t give in on. One of the things that you need to remember, a lot of people lean on their real estate attorneys. Real estate attorneys are good for the most part, but they’re not business people. And, you got to rely on the agent or someone else, if you know someone that’s good and, in the market, and understands all these things because, you need to get them fixed. But you have to balance it out, so you might have to give some money, you might fix a few things, and that’s the way we normally do it. We have an idea of what we need to do when we sell the house in terms of how much we have to fix or correct before we even put it on the market.

We usually allocate certain amount of money and we try to March to that so we can control our profit and loss and it works really well. But, even though there’s a motion involved with any of these transactions, you need to take a step back and understand it, because you have other houses that are always coming on the market and the freshest house usually gets the attention. Whereas, the older houses that start staying on the market for 90 days, 100 days, they get stale. You could always work with us, give us a call, we’ll  give you our opinion. You might not like it, but the opinion’s going to be a good opinion. There’s always that case where someone could be right, and you could get the full asking are whatever the price is on it. But I’d say 80% of the time, no, we’re right or we’re pretty close to right. And if we’re wrong, we’re going to know quickly and then we have to move quickly and then we have to reduce the price of the house. 

So, one thing is to be wrong, the other thing is how you work on that and what you do as a result of being wrong. Sometimes we’ve purchased houses where we’ve remodeled them, rehabbed them. I had one in New Milford and it was four bedroom and we did the remodeling and we had one good bite, but we weren’t getting any additional action because it had a small kitchen, we knew that. But they were looking for a dining room. What we were going to do is we’re going to take it off the market pretty quickly and one of the bedrooms, which is on the first floor, we were going to put French doors and, and it could have been dual-purpose. We’ve done that before where we’ve converted a bedroom and it could be either a dining room with French doors or it could be a bedroom. So, it goes to whatever the type of buyer that is looking for it. Within two weeks we had it under contract and we sold it. But again, it’s acting quickly and  how you’re going to do and what you’re going to do with it. Thank you very much for this segment and we’ll be talking about some real estate news coming up. Thanks. 

Joseph J. Zoppi:

Welcome back to Everything Real with Joseph J. Zoppi, Real Estate Investor and Managing Partner for Templar Real Estate Enterprises. I like to go over mortgage rates. There was a slight uptick this past couple of months in terms of mortgages but it’s, it’s very slight. The reason for that is there’s a decline in the recession fears. So, depending on what newscast you hear, you’ll hear there’s going to be a recession, there’s not going to be a recession. Take some of that with a grain of salt. It depends on their political affiliation so on and so forth, so you really got to watch that. So right now, as of today, the 30-year fixed rate is 3.75%. That’s the average. 15 year is at 3.2%, and the adjustable is that 3.44%. Jerome Powell, which is the Fed Chief, he told Congress last week that the interest rates are on hold for now and will remain that way, unless the economy deteriorate. He said there’s no elevated risk of recession. And he’s described the current outlook as moderate economic growth with a strong labor market, inflation near 2%. 

One of the things that he has spoken about is the reduction in manufacturing, so there is some weakness and that has to do obviously with the tariffs. Now, from my opinion, the tariffs were unnecessary because we were dancing with China for 10, 15 years and they’ve never really,  changed their stance. They haven’t yet, but it is affecting their economy as well in terms of those tariffs and a lot of companies now are moving out of China. That was going on before the tariffs, but it’s just has accelerated. That’s going to put additional pressure on them as well, and I think that’s a good thing, as well as certain manufacturing coming back to America. Some are moving,  to Vietnam, and they’re big on manufacturing now and starting to really pick up, which is a good thing and less reliance on China’s very, very good. 

In terms of the recession fears, like I said before, that’s always up in the air. I’m not seeing anything right now. I’ve talked to a number of people on Wall Street as well. And for the most part that they’re not seeing that. I’d like to also now go over a couple other things about loans. So, for the 10th year in a row, Quicken Loans has had the highest customer satisfaction. A lot of people go to Quicken Loans, it’s a very good organization. And,  another one is Fairway Independent Mortgage. They are rated number two by JD Powers. Now a couple of the other ones that are really even rank higher but based on the criteria they didn’t rank, and that is a Navy Federal Credit Union, USAA, Federal Savings Bank and Veterans United. Those organizations, whether they’re doing insurance or from a mortgage perspective are always very good. The Veterans, that support the veterans, they’re, they’re very good from a customer satisfaction perspective and they always win high marks. So, I like to thank you very much for joining me. And again, I’m Joseph J. Zoppi, from Templar Buys Houses and you could call us at 973-240-8593. Thank you very much.

The preceding program was paid for by Templar real estate. The views and opinions expressed are not necessarily those of the staff and management of WMTR. As always, it is advisable to consult a professional before making a major decision.  


Listen to Us on the Templar Real Estate Show on WMTR 1250AM on Saturday at 10:00 AM

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