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 February 22, 2020
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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:
Hi, my name is Joseph J. Zoppi, a real estate investor, consumer advocate, author, and managing partner of Templar Real Estate Enterprises. You could reach us at templarcashforhouses.com, that’s T-E-M-P-L-A-Rcashforhouses.com or you could call us at 973-240-8593 and we could answer any of your questions you may have, you could always email us from our website. If you want to have a topic answered on the air, we’ll do our best to answer it on our show.
My company is a real estate investment firm. We buy houses for cash, we purchase apartment buildings, we do joint ventures with other real estate investors, we loan money for rehabs and provide transactional or gap funding as well. We work with individuals that want to invest with us on single-family houses up to apartment buildings. We do not speculate, we’re very protective of our money and our investors’ money. I’m not a real estate agent, I have individuals on staff that are agents and they’ll sell your house through the traditional Multiple Listing Service, but we are not a brokerage, and again, I’m not an agent. There’s another individual with my same name which is an agent, but that’s not me.
This show will go over everything that there is about real estate, those things that impact real estate. We’ll talk about rehabs that we’re doing, some of our investments, what we went through, what went well, what did not go well. We’ll discuss different trends in the real estate market. Real estate is your biggest or one of your biggest investments, so it’s important you know as much as possible about it.
Again, what I’m providing is my opinion, it’s only my opinion. I ask everyone all the time, make sure you do your research, whether it’s for anything for our company or someone else’s company, whether it’s for a contractor or anything, there’s a lot of information out there on the Internet. Some of it’s good, some of it’s not that good, but if you do your homework, I think you’d be in a really good place for whatever you’re doing.
We’re going to have a special event on Sunday, March 22nd at noon at the Marriott Courtyard in Parsippany on Route 46, that’s east bound right near TGI Fridays. So we’re going to go over why it’s good to invest in real estate, how to get consistent returns, how to partner with us or other investors, we’ll also have there a couple of different vendors. One is the Infinity Group and they’re going to talk about home equity loans and how to use them for investing in real estate. We’re also going to have Specialized Trust Company which we had a few weeks ago, Edwin Kelly, well, one of his staff members will be there and they’ll talk about 401(k)s, IRAs and how to use those to purchase real estate. What we’re going to focus mostly on is passive real estate investments, not active where you’re going out finding the property and then doing all the work in terms of researching, so on and so forth. That’s what we do and it relieves a lot of the burden. We’ve been doing this a long time and we’re very good at what we do.
One of the things that I constantly talk about and I compare, the real estate market and you have the stock market. So the stock market keeps moving up. It’s been moving up, it’s on a tear and it’s been on a tear for a long time. That is obviously a concern for anybody. At one point, it’s not going to up anymore, it’s going to start coming down and you can’t time the market. Anybody that says they could time the market, they’re not, that’s not the case. Sometimes, you’ll hear people that say, “Well, this individual predicted the last two or three downturns.” Well, you got to look at their record, so as they say, even a broken clock is right two times a day, so the same thing with someone that says the stock market’s going to go down or it’s going to crash. So if they preach it long enough, it’s eventually going to happen. Does that mean that they really timed the market or is it just that they kept preaching that, and then eventually, the market did come down, and then everyone is saying they were able to time the market? Timing the market is very difficult. Sometimes, you could see certain things in the market which maybe you start hedging a little bit more with your assets from a stock perspective, mutual funds perspective, but you’re never really going to say, “Well, I know it’s going to go down this month,” and so on and so forth.
One of the things that’s coming up obviously is we have the elections, so with the elections right now, still the market is going very strong. They are thinking, and I agree with that, that the later half of the year market will probably flatten out, maybe come down a little bit before the election. So a lot of times with the stock market, the stock market and investors like when they know what’s going on, so as we get closer to the election cycle, nobody really knows. Who’s going to be elected? There’s always the uncertainty, so as a result of that, usually, the market could be going up and down a lot during that timeframe or even just flatten out. I highly doubt it that it’s going to continue to go up like in this September-October timeframe. I think, if I’m not mistaken, October is one of the worst months for the stock market historically, so that plays in, well, obviously, and you’ll see it with the elections, so there’s going to be a lot of trepidation in terms of who’s going to win and so on and so forth. Even though there might be a frontrunner today, who knows who the frontrunner really is in October? So there’s a lot of caution with that.
In the real estate side, there’s more consistencies that we will give to our investors because they are going to have a guaranteed rate of return, which is good. It’s good for planning, it’s good for the future in terms of where you think your money is going to be with – if you think about it this way, if you had $100,000 in assets and they went up 100% over the last X amount of years, so it went up from $100,000-$200,000, it would only take a 30% market correction to eliminate $60,000 of that $100,000 you gained, so that’s only 30%. So if the market does come down, 30% is a reasonable number market correction to come down. Obviously, that would be in a bear market and that could happen. I used to trade a lot of stock and in terms of both going long where I thought the market was going to go up, as well as shorten and the market was going to go down. So traders traditionally like when the market goes down because it goes down very quickly, so you could have the market drop 10% easily as opposed to it climbing. It might climb at 3%, 3%, 5%, so on and so forth, but when the market comes down, it can come down viciously. So the question is, where do you want to be? If you are at the top of the market and you don’t realize that it comes down 30%, then the question becomes, well, do I take out stock? Do I remove where my positions are or is it going to go back up? It might come back up another 10%, 15%, 20% – you don’t know. So that’s one of the things that is always tricky with the stock market. It’s like when do you go in, when do you come out? Example, Tesla right now is on a tear. Now, do you go buy a Tesla now? I don’t think so, but I bet you there are individuals that saw that it was going up and they purchased more stock for Tesla. Again, if we have a market correction, they’re going to be in top shape. So just be wary of that in terms of investing in the market and especially at this time, it’s getting very high and it’s something just to be cognizant of.
I’m also going to have a lunch and learn in April for real estate agents, so that’s going to consist of different things that a real estate agent can do to make more money. They traditionally make it through commissions but there are other programs out there now, other brokerages where they can make substantially more.
Next thing I’d like to talk to you about, it’s been a reoccurring thing on my other shows in terms of things to look out for a cash buyer, so we spoke last week about if a cash buyer says that they are going to forgo the CO process, Certificate of Occupancy, just to be wary that that’s a major red flag. You can be fined by the township as well as they could.
Another thing that you need to look out for is if they don’t want to do what’s called a tank sweep, so a tank sweep is basically a mechanism that sends out soundwaves and the person goes up and down the driveway, the lawn, all around your house to see if there’s any buried tanks. When we purchase a house, we always do a tank sweep because there could be a buried tank, oil tank, that nobody knows about. As a result of that, you could have environmental issues, so if an individual or a company says that they are going to forgo that, one could say, “Well, that’s going to be their problem, not yours,” and that could be the case, but if you’re going to work with a company that that’s brazen and will gamble, that might not be the company that you are going to rely on that they are going to come to the table and give you cash for your house. It’s a very dangerous scenario, and we never do that, never. It doesn’t matter what it is, for the $300, whatever it is the insurance on that to be assured that there are no buried tanks is a big one. Even if there is a known tank that was decommissioned, I would still do a tank sweep anyway because there might be a second tank. So that’s something that we always look out for and we will want to make sure it’s done right. We have a video on our website on the process on one of our vendors that does the tank sweep for us. He does a great job and we call him up and he will be there in like, two days. We are closing on one house right now and he’s going to go out there, it takes probably less than an hour and he’ll just scan the area and just make sure that there’s nothing there.
Next thing I’d like to talk about is retail sales. So as investors or rehabbers, we know how to rehab a house, we know the process, we know what needs to be done, we know the costs associated with it, so when we purchase a house and we see these different flaws or issues, we know what it’s going to take and we know how to fix it, who to go to for it. On the flipside, right now, we are representing a seller and a number of issues came back with the inspection, so the buyer wants certain concessions. Those concessions consist of approximately 15 items that need to be fixed. So a number of times, a seller will go to their attorney and talk to the attorney. That’s definitely a possibility but we always want to be part of that because we know a lot more than the attorney knows in terms of what’s in the house, how to fix it, so on and so forth, and sometimes, they will respond in a certain way that they really don’t need to respond, and the thing is, you want to sell the house, so you want to try to give in as much as you could without hurting the pocketbook.
So this individual, there was mold in the attic, so the buyer is requesting that a mold remediation is performed. Now, we are talking to the seller on this and we’ll definitely agree with that. The issue is, they want a mold expert. The amount of mold that’s up there in the attic is not a lot. We would just have our contractor go up there and remove it. It’s very wide in terms of how bad it is. If it was extremely bad, then there will be a different situation, but if you start getting a mold expert in, you’re just going to spend excessive amounts of money.
The other thing is, we always get looked at for any of our flips. There’s usually nothing with electrical for the most part but sometimes, an outlet that might not be working, so on and so forth. We always fix the electrical because it could be a safety issue even when it’s really not. So we always recommend that. One of the things that was kicked back from this inspection that the seller received information on was the airflow of one of the vents was very low in one of the bedrooms. Well, nothing could be fixed with that. It depends on how far it is from the unit, so you are never going to have even airflow, and that’s some of the issues with inspections, is the inspector just goes down the list and sometimes, there’s not any thought associated with it, so it’s just, does this work? Yes, no, so on and so forth. So they start going down the list and checking things off, and then it comes on the report and then everyone thinks of it as a big problem when it’s not.
Another one is the sidewalks, so there’s a little dip in the sidewalk, we are going to push back and not fix that. It could be costly on the cement side. Any time you’re working with cement, fixing it is very, very expensive, even our prices are just very expensive. There is a cracked floor joist, so we are just saying we just have to reinforce it. The attorney for the buyer says he wants it completely replaced. Again, we would push back on that and say we will fix it with some additional bracing, so again, it’s really knowing what to say, what to do, how to respond to these different things. I think being that we are investors, we could really address these things a lot better than the standard real estate agent or attorney, even if they are a real estate attorney. I have encountered numerous agents that don’t understand rehab to the extent that they should and I’m constantly educating them. There’s a lot of good agents out there but there’s a lot that – they list a few houses a year and that’s about it. We are knee-deep in buying houses, selling houses for ourselves as well as for our clients. Some of the other things that we always have to look at and that we are addressing with this one sale is termites and little quitters floating around in the attic, so we have someone that can look for those – lice, it’s like $180, so it’s pretty quick and easy, it’s cheap, we have certain contractors and vendors we always use, so we get good prices, preferential treatment and then we pass it on to our customers as well, as well as with termites. There is one thing that they’re also questioning, is there is the AC unit for the central AC as well as the water heaters at its so-called expected end-of-life. So what we are going to do with that is just provide – they’re going to provide a home warranty, so it’s about $500, so it gives the buyer some reassurance and you can move the sale along because the ultimate goal is to move the sale along, and we try to give as much as possible. Like I said, without really hurting your pocketbook. That’s one of the big things.
There’s also a lot of frustration when you start seeing the lists and you start getting angry saying, “This is my house, it’s not bad,” and they are ripping it it apart and they are saying, “This is wrong with it,” and “This is wrong with it,” so you got to have a level head with that. The buyer’s always going to want to take extra, and obviously, the seller is going to want to give less. Even with our rehabs, as good as they are, sometimes, things come up and inside me, I just go crazy because they are saying, “This is wrong.” I’m like, there’s nothing wrong here, and I know there isn’t, but sometimes, it’s just the smallest little thing and then you go to work with the parties, whether it’s the other agent or directly with the buyer or seller, so that doesn’t happen. But you have to take the emotion out of the process and that’s really something that’s sometimes very, very difficult, especially when you have a lot of sweat and blood put into it. You might have updated your house and done a lot of good things to it, and then all of a sudden, they are saying they like it but then there’s all these problems.
The other thing is the inspector is going to put at least 10, 15, 20 problems down. They have to do it. I’ve said this before, they have to justify the cost of the fees they are charging. So that’s something that you just have to understand. Some of it is ridiculous and some of it just has to be. Like I said before, sometimes, they just look at checklists and they are saying, we had a situation where we had an AC unit that kept going on and off every two minutes and they needed to get it fixed but the inspector came in, and again, the inspector didn’t catch – it was a blatant issue, we were going to fix it, but they didn’t catch it and he should’ve caught it because it wasn’t on the checklist. So there’s a little caveat there with inspections. There might be things that they are going to miss, so you have to be aware of that.
But I’d like to throw to a break and be right back.
Joseph J. Zoppi:
Hi, welcome back. This is Joseph J. Zoppi, managing partner for Templar Real Estate Enterprises. So I’d like to discuss two things at our final few minutes with you.
The first is an event we are having and as I stated before, it will be on 22 March, Sunday at 12 o’clock. It’s a lunch and learn that has to do with learning about investing passively in real estate, and a second one which will be in April for real estate agents, how they could make more money just not through commissions but through other means, both partnering with us as well as some other things, how they could really double their commission structure.
The next thing I’d like to talk about, because we are investors, we are always looking creatively at things and how to address them. So a number of things that we are doing now is some of the elderly, they are in their homes and they cannot afford the house anymore in terms of their taxes, so what we do, we have a program where we buy the house, and then they could live in it until they pass, so they are very comfortable in their house, they don’t want to go anywhere else, and we have different programs for that. Now, certain things we don’t do, we won’t do it if you’re 50 years old because you might be living for another 50 years. But we will do it for certain circumstances, and then the individual could just stay there, they won’t have to pay rent or if they do, it’s a nominal amount, it’s more towards just keeping the person happy and comfortable where their home is, and that’s important, their home, it’s not just the house, it’s not just a property, it’s their home, and you are at the rest of your days that are left. A lot of people, if they want to die, they want to pass on when they’re home and they don’t want to be doing it in hospital rooms or senior care facilities. They want to do it where they have lived all their life for most of their life.
We do different creative scenarios like that and solutions like that for everyone. We really don’t have one canned solution because each person and each situation’s different, and that’s important to us. There are hoarder houses, we will work with them with that and there are different situations that are always coming up. I might have a client that has a really unique story and I’m going to save that one, but it’s really unique and a little crazy story that I want to try to get him on the next few weeks because we helped him out and we bought his house, he’s going to stay in it and he’s probably going to buy it back but he needs the money right now for his sister.
Again, thank you very much for your time and I’ll see you next week. Bye.
The preceding 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.
END OF RECORDING
Listen to Us on the Templar Real Estate Show on WMTR 1250AM on Saturday at 10:00 AM
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