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 May 30, 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.
Hi, welcome to the Templar Real Estate Talk show. My name is Joseph J. Zoppi, a real estate investor, consumer advocate, author and managing partner of Templar Real Estate Enterprises. To date, I’m still recording this from my home. I’ve been doing that for the last six weeks, I think, seven weeks, so it’s been a while. I know we’re all getting frustrated with staying home. At least things are opening up now, which is a good thing. You can reach us at templarcashforhouses.com. That’s T-E-M-P-L-A-R-cashforhouses.com or you can call us at 973-240-8593. We could answer any questions you may have or e-mail us from our website. If you want a specific topic discussed I’ll be more than happy to address it if I have time, so please leave any type of message or call us directly.
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 in single-family houses up to apartment buildings. We do not speculate and we’re very protective of our money and our investors’ money. We’re not a brokerage and I’m not a real estate agent. I have individuals on staff that are agents and if they want to list through the traditional Multiple Listing Service, we’d be more than happy to, but normal we’re buying houses for cash or we’re doing investments.
The show will go over everything there is about real estate, those things that impact real estate, we, talk about our rehabs, some of our investments, what went well, what did not go well, and how we corrected those things. We’ll talk about the economy, interest rates. Anything that’s going to impact real estate. Real estate is one of the biggest investments anyone has, so it’s important that everyone knows as much as possible about it. This show is based a lot on my experiences, but also my opinions. It’s only an opinion. I always strongly recommendation that everybody does their own research and looks at things from a very balanced perspective. When I talk about this all the time I say if you research something make sure you understand where the author is coming from. Do they have a slant towards one view or another view, so you always want to get an opposing view to really truly understand what it is because usually it’s somewhere in the middle, not to one end or the other end, as an article would state. That’s very, very important when you’re looking at researching for an individual, online. You might get some bad reviews. You have to balance that out with the good reviews and how many there are, so on so forth, especially when you’re looking at anything to do with politics. That’s really where it really gets kind of muddy, so just beware when you’re doing the research to make sure it’s really balanced.
Last week when I was closing out I wanted to give a bigger tribute to those individuals that served in this country for this country, went to war, was in active duty now or in the past, especially those that passed away and died for our country. I was thinking about it this weekend and you have all these individuals that died for this country and also the families that gave up their young sons and daughters, and what they’re left with, the emptiness of that. It’s not always stated, so you have the son or daughter that died and then you have the family that’s left. It’s really, I think, really tough.
I’m very blessed. I have two kids and they’re doing great, but when you give up your son or daughter to the military you never know what’s going to happen. I had an individual I knew in high school, he went into the Navy. I was in college, after two years, three years and I heard about him that he was in the Navy and he was throwing garbage overboard, which he was supposed to do. Somehow, something got stuck on his leg and he just got thrown into the ocean and drowned. It’s just crazy, being in the military is a dangerous thing no matter if you’re shooting at someone or getting shot at, but just doing regular things. It’s disheartening, I think, for those individuals that experience those losses. It really is.
The other thing that I think about is the government. I don’t think the government supports our military veterans like they should. This is for years and years, and years, it’s always been that way. I think they’re looked at maybe not as expendable, there’s well intentions, but it doesn’t deliver into something that really helps those veterans. For a long time the VA has always had some issues and challenges. I’ve heard from numerous stories it has gotten better over the years, but it’s probably not still, where it should be. Then, you have all these individuals that come back out of the service and they have problems integrating into society and all the homelessness of different veterans. I think it’s something that we always have to really think about and however we can support them, I think, is really, really important.
This week I’d like to talk about a few things. I’d like to talk about some of our rehabs that we did this week, some negotiation that we’ve done, and what you should look out for when you’re negotiating, either buying a house or selling a house. Also, I’m looking for apartment buildings to purchase, preferably 100 units or more. Anyone that knows of anything, if you’re interested in selling your properties, apartments, preferably 100 units or more, if it’s less I’d still consider it definitely, but I prefer anything over 100 units. If you know anyone that’s interested in selling, please contact me. I will give you a $1000 finders’ fee if I do purchase the property or house. I’ll still provide a $1000 finders’ fee for any information you provide to me if I do finish the transaction. If anyone knows of any apartment buildings or houses, please contact us so we can follow up. We won’t use your name unless you want us to, but we’re always discrete with everything that we do.
The next thing I’d like to talk about is, again, we buy houses for cash, so we’ve gotten a lot of inquiries about that, especially with where the market is. There’s a lot of trepidation with individuals, where the market’s going, where it’s not going, and a number of individuals want to sell their house fast. We’re more than happy to work with homeowners on that. Also, like I said before, we would be more than happy to list your property. We’re very good at that. That’s not our sweet spot, but we do, do that. The one area we just don’t do as much is we don’t usually find houses for individuals. That’s something we really don’t do, but if you want to sell your house definitely; either through the Multiple Listing Service or for us to buy it for cash, we’d be more than happy to look into it and give you a fair offer.
One of the things I wanted to talk about is inspections. We had inspections this week and we’ve been having them for the past couple of weeks for this one property we have. We went, finally through plumbing a couple of weeks ago and we finally passed. Then came the framing part because we were putting in a new basement and finishing it, so it passed framing, which was great. Then, we have where, because it’s in the basement, you have to put insulation, so we have another township official inspector coming by to look at the insulation and that it’s installed proposal. Once that’s done then we can start closing up the walls, putting the drywall in the basement and everything else we need to do with it. that’s moving along pretty quickly and we’re really happy with it, that we finally could get things moving after correcting those issues I had with the previous plumber. We lost about six weeks on that, which is a lot of time for a house just to stay idle and we couldn’t do any work on it. Now, we’re moving forward with that, which we’re really happy with.
The next thing I wanted to talk about is negotiations. We’re selling a house right now and I negotiated a price with an individual. We came upon a price, we agreed to it, then he comes back later and stated that it had to be less. I begrudgingly said okay to it based on a quick sale because he said it was going to be a cash offer. Traditionally, cash offers you’ll take a discount. Depends because you don’t have to worry about the individual qualifying for a loan. That’s always a good thing because you don’t want to take it off the market and then put it back on, especially in these times right now. So, I said yes and then he said afterwards, after I agreed to it, he said no, it wasn’t going to be a cash offer anymore. So, right after that I was very leery of the whole situation. I’d been very cautious progressing further because of that. He changed things twice on me, so I was very concerned about what other things were going to change. For me, that’s a big thing. I highly recommend that you don’t do things like that because all of a sudden you might have the homeowner being resentful. Now, I’m not resentful, but I’m very cautious. I treat this as a business transaction, but I’m very, very leery.
When you negotiate that way, again, the seller might get very upset and then there starts to be adversarial type things going on. I do not recommend negotiating that way. Not at all, I always like to be up front and have them understand where you’re coming from, but you really shouldn’t pull too many surprises, preferably none to say the least. Then, all of a sudden, the seller might tighten up and not give as much and be as flexible, and it goes the other way around. The buyer, if you start twisting the screws too much on them, they’re going to feel the same way. I’m closing up on this segment and I’ll continue with this discussion in a few minutes. Thank you very much.
Joseph J. Zoppi:
Hello, welcome back to the Templar Real Estate talk show. My name is Joseph J. Zoppi, managing partner of Templar Real Estate Enterprises. As I was saying in the last segment about negotiating, I always think you should be up front and fair with that, and be as transparent as possible. I understand there’s always that idea that you’ve got to play your cards close the vest, I don’t disagree with that to some extent, but I think on the flip side, there’s certain areas where you need to be up front. I think when you do that there’s a lot more respect. One of the things that I prefer to do is deal directly with the buyer or the seller. I do not like and I’m not saying I recommend this, because I’m an investor, but dealing directly with them because sometimes when you start dealing with an attorney things, it gets very adversarial sometimes. You’ve got to balance it out. If you have an agent, the two agents work together, I strongly recommend that. Once you start getting the attorneys involved I think they’re great when you need to use an attorney but sometimes it might come across a certain way. Certain attorneys are very good at making it mellow and not too bad, and other ones aren’t as good. I highly recommend doing one on one or preferably, for most people, working with an agent as an intermediary. I think that’s the best. It seems to work best and things don’t get too out of hand.
Like I said before, the individual that I was dealing with changed a couple of things in terms of the price. I gave in on that and then afterwards I find out, to my surprise, that it’s not a cash deal and he had to go for a mortgage. Again, that’s additional time that I’m going to be holding the property. I wasn’t planning on that. My antennas were up. What I did is, before we even engaged into a signed agreement I wanted an inspection done. I didn’t know if I signed an agreement then he did the inspection, then he would add a long list of a hundred things he wanted me to fix even though it a good property. You never know what an inspector’s going to come back with. I wanted to make sure that the list wasn’t long or if it was he didn’t want a lot back. After the inspection there were only two or three things and they were, for the most part, fairly minor. I was happy with that and I said okay, let’s engage and let’s go forward. I made it also clear there’s not going to be any additional changes that your attorney wants, correct? He said no. I didn’t want him to submit everything and say well, my attorney now wants this because then that wouldn’t have went too good for him because I would have definitely said something and put the brakes on the entire transaction.
Again, you have to watch where things are, especially in this market. If you get an offer you try to cease on it. If it’s a halfway decent offer, a good offer, you go for it. We’ve always been that way even in the best of times because you never know what’s going to happen. Money in hand is really, really good. If you know you’re going to be closing go forward with it. You might have taken a little bit less, but again, when you have big assets like real estate, a property, a house, and something happens in the economy that’s unforeseen or even if it is foreseen, then all of a sudden you’re stuck. You have this pandemic, I continue to say even though the market’s riding high, it’s a lot higher than I was expecting. I think eventually there’s going to be a pushback and then I think prices might change.
Now, housing prices are pretty high right now and they’re staying strong. The biggest reason for that is there’s not a lot on the market, so you do not have a lot of sellers jumping in right now. There’s a lot of caution, but there’s properties out there and people that want to buy there are paying close to full asking or somewhere around there, so that’s a good thing. I don’t know how long more that’s going to last. If you start looking at the news and start reading some of the undertones you’ve got to start connecting the dots. Right now, the market’s very high and you have some heavy unemployment. People might be coming back, so that’s a good thing, but if you read certain things about certain businesses they’re either filing for bankruptcy, things like that, so you have to start putting that in perspective. You have to remember that one thing happens there’s a ripple effect to it and that’s very, very important. Case in point, say a large company goes out of business then those individuals obviously are going to go on unemployment and it’s going to effect – it’s a downstream effect. If the company is in a particular town those surrounding businesses are going to get hurt. There’s always that ripple effect.
Right now I was hearing something about car sales. Car sales are down like 50%, so they were expecting car sales to increase, but they’re not. For the last three or four weeks they have not and they’re down 25% for each of the past few weeks. You have to think about it. You come out of this pandemic, there’s a lot of apprehension, who’s going to buy a car. Now, there are certain people who have to buy a car; my car lease expired, it’s broken down, I need a new car. There’s a number of factors, but again, there’s trepidation that individuals are not going to be buying those high price ticket items and it’s just going to continue to ripple when you have those types of things throughout the economy. Right now, President Trump and his team are pushing hard to use different things to incentivize businesses to be hiring and to grow. That’s great, he’s doing a lot of really good things with that, but there’s going to be a number of headwinds. I think you can’t change something on a dime. I think you can push it along and decrease the amount of time it’s going to take for a recovery, but I think the market’s going to go down. I’d be very, very, very surprised that it isn’t and I’ve read some other articles, and it’s the same thing that I always believe in terms of where the market is now and where it’s going are two different things. You have to look at all the big box stores, like I said, these restaurants in terms of getting hit hard.
A number of individuals that have rental properties for different tourist locations, tourist attractions, are not receiving any income, so that puts a burden on them. A number of these individuals have their primary residence, they might have a couple of rentals, so just think about it. you have your primary residence and you have some rentals, and you’re not getting any income coming in, but you’re going to have to pay the mortgage or even if you have some forbearance and you push out the mortgage still you’re going to have to pay some property taxes and other things in terms of upkeep so on so forth. Someone that was doing very good previously could be in a lot of hurt personally and they might have to draw on their savings or other things as a result of that. Again, it’s this ripple effect. Now, you have individuals that have Airbnb houses that they rent out. A lot of them are trying to sell them now because they don’t know when it’s going to come back. So, they’re worried. They’re going to be selling their properties. That’s where you’ll start seeing a snowball effect and hopefully it won’t be too bad.
I think September, maybe after the dust settles, October. Also, October is, I think, the worst month for stocks for some reason. One of them is because you go into November, which is elections usually. There’s always that apprehension, so October is traditionally one of the worse months or the worst month for stocks. We’ll see where that goes. Just be wary of that and if you can be in an all cash position now I’d strongly recommend it. I’ve said that time and time again. Mark Cuban I think is going mostly all cash because he wants to see what’s going to happen. That’s what a lot of the very sophisticated investors do. They put an all cash position or a position that has a lot of cash waiting for the downturn and then snatch things up at a better price. Warren Buffet’s sitting on I don’t know how many billions of dollars right now, I forget. He’s just waiting to purchase things. Right now, he’s said that he’s not getting any calls because right now banks and businesses are trying to negotiate and trying to do deals, and the Fed is pushing money into the economy, but there will be a time when Warren Buffet says, he’ll be getting a call. Then, he knows that’s the right time, right now it’s not the right time for him.
Right now, with everything going on, with rentals as I’ve been talking about, back on May 6th, they reported that about 80% of the tenants have made full or partial payments of the rent, which is really good. The previous month for April was about 78%. So, it ticked up a couple of percent, but that’s good. That’s still 20% that hasn’t paid and that’s still a very big concern, especially if you own a couple of properties and you know you don’t have the reserves to handle that. We always make sure that we have lots of reserves in case of a downturn, in case of any unforeseen problems, but some individuals can’t afford that. You have individuals that have a property that’s worth $1M. I read an article and there’s a lot of individuals in that one property that can’t pay the rent. Now, she can’t pay her mortgage payments, so it is a worrisome thing to do and to be, and it is a big concern on my side and a lot of people’s side because of that.
The other thing that’s going on is that right now unemployment there’s about 3.2M unemployed. That’s the claims that were filed at the end of April, so there’s always a lag in terms of when they’re reporting. We should be hearing about another one for May soon. Credit card use is down, which is really good because a lot of times you buy on credit, you always buy on credit, so there’s that apprehension and again that comes down to the ripple effect. Like I said, people are putting less on credit cards, so they’re buying less. How’s that impacting other businesses? The other thing that there’s been this talk about is rent strikes. Rent strikes are not legal no matter what anyone says. They’re not legal. You just have to be wary of that. If you hear people saying we should do rent strikes, that is illegal. A number of individuals I’ve spoken to, landlords and things like that, have worried about getting paid for their rents. A number of different things could come out of this in terms of trying to set up a payment plan, hardship plan for those tenants, give tenants different options including showing them where there’s additional job opportunities, how to collect government stimulus checks, local charity donations and obviously unemployment options. Some individuals are offering a 5% discount if rents are paid in advance, but again, that’s based on the approval of the landlord. That’s always a great technique to try to get the money quicker. You have to let the tenants know that there is a moratorium, but eventually that moratorium will come off and that they have to pay the rent or they have to somehow get government assistance to help pay that rent. That’s very important.
There’s a rent strike, like I said, that’s been bantered around on the internet and it’s #cancelrent. That’s just illegal. The Southern California Rental Housing Association responded to those statements and said we’re very greatly concerned about the discussion taking place of a potential rent strike, which would not only be illegal, but devastating for small and independent operators in the rental housing industry. That’s what I was saying. You have this mom and pop organizations, companies, that own these properties and not to pay the rent is really something that could hurt them really personally and their kids. It’s just a bad thing. They’re always going to have to pay it. Even with some forbearance, there’s still property tax that needs to be paid and property tax in the northeast is very high to say the least plus other parts of the country, but in Jersey it’s very high. Even with the forbearance of a mortgage that doesn’t stop for the property tax to be paid. Those things always have to be looked at. Not all landlords are super rich, they’re just trying to make ends meet themselves.
I’d like to thank you again for listening. My name is Joseph J. Zoppi, managing partner of Templar Real Estate Enterprises. If you have any questions, please give us a call. Thank you very much. God bless.
The preceding program was paid for by Templar Real estate. The views and options 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.
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