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 March 13, 2021
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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:
Hello, 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. You could reach us at templarcashforhouses.com, that’s T-E-M-P-L-A-Rcashforhouses.com, that’s one word, or you could call us at 973-240-8593, again, that’s 973-240-8593. And we can answer any questions you may have, or you could email us from our website. If you want a certain topic discussed on the show, we’d be more than happy to see if we could fit it in, we have no issues with that, or any other questions you may have.
For first time listeners, 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. I’m not a real estate agent and we’re not a brokerage. I have individuals on staff that are agents that will sell your house through the traditional Multiple Listing Service.
This show will go over everything there is about real estate and those things that impact real estate. We’ll talk about our rehabs, some of our investments, what went well, what did not go well, and especially how we learned from it. We’ll talk about the economy, interest rate, we’ll discuss trends in the real estate market. Real estate is one of your biggest investments, so it’s important you know as much as possible about it.
I will provide you with my opinion, and it’s only my opinion. I ask everyone to do a lot of research and make sure you check things out, whether it’s through references. As I say every week, make sure if you do references, which is good thing, you ask lots of questions even with references, okay. Again, a person’s tolerance for one type of work for someone might be different than somebody else. I’ve had situations where usually when we go to a client, we always work very hard to be on time. Some of our clients will say that “That’s very good. I expect someone to show up on time” or “That’s a important aspect of what I’m looking for in someone that’s providing a service to me.” So it’s very, very important that you understand that and you understand what the other person, the recommendation that they’re given, what their tolerance is, because some people might say, “I don’t care about that” and that’s fine, but you might. So if you get a reference from someone and they’re not what you expect, then you’re going to be like, “Wow, you know, I wasted my time,” or “I didn’t realize it was going to be that,” so on and so forth.
The other thing to look out for is family friends. So if you get a reference and someone says, “Well, it’s my brother-in-law” or “my friend” or so and so forth, just be a little wary of that as well, because again, when you have a friend or a family person, you might be a little more tolerant towards their work, whereas you yourself might not be as tolerant towards the way they do things. So really, really just be on the side of caution, bare in side of caution with that. Same thing is with the real estate agent, you might know real estate agent. It might be good that you use that person, might not be good. Again, if you have issues, then what’s going to happen with the friendship. So there are certain things where you need to kind of draw the line, what I believe, and there’s other things you should not but that being one of them, that’s something you just want to make sure you have a good relationship, friendship afterwards. So if everything goes well, yeah, that’s fine. But if it does not go well, well then what?
I’d also like to do a shout out to some of my listeners, Paulette, Timmy from the Cedar Grove Water Department, which I saw last week, and one of our current clients, Connie. I would also like to thank some of our private investors, that’s Sammy and also Cheryl. So Sammy and Cheryl, thank you very much for the investments. And, as always, as we said before when I talked to you two weeks ago, everything’s going smooth as always, and thank you very much for the investment.
Again, I sometimes have individuals, private investors that invest in our deals, and those deals range from six months, approximately six months to a year, sometimes a year, but usually it’s a lot less than that, or long term investments, which are up to five or seven years, depending on — and those are usually for apartment buildings, things like that. Those are longer duration, which all consistent returns. On the apartment buildings, depending on the deal, you would get a consistent return every month plus an additional bonus after the sale of the apartment building or the re-file of the apartment building, so there’s a lot of different scenarios. If you’re interested, please give us a call. Again, if you need to sell your house fast for cash, please give us a call on that as well. Or if you want to sell with a realtor, please give us a call. We have some great realtors and my partner’s a very, very good realtor as well and I’d highly recommend her. She sells a lot of our houses and does a bang up job.
Couple other things, I’m still looking for underwriters, so I’m still looking for five or six underwriters, those individuals have to have a strong financial background, good in Excel, good at numbers, former CPA or current CPA, someone like that, someone that really knows how to crunch numbers and thinks out of the box and is a hard worker. I’m also looking for a person to do some web development, it’s not too intense, as well as some it work possibly. I need someone that’s technical as well for that. Again, I want someone that’s going to be a hard worker, someone that’s going to, again, think out of the box, someone that doesn’t need to be told everything to do. I like individuals who are very independent but communicate well. So as long as you communicate also well, that’s a good thing. It’s a good thing to be independent, bit if you’re just going off on your own and then I don’t know anything, well then, that is somewhat of an issue. But someone that communicates really well, that’s very, very important in all these positions. I really value communication. So if anyone’s interested, please give me a call on that, that’s very important.
The other thing I’d like to talk about is a couple things today, the first thing is we were looking at a house the other day, and I’ll try to paint out the scenario. Again, I was frustrated with a real estate agent, and so was my partner. We were looking at a house in a specific town, that specific town, it was a fixer upper. The agent got a lot of calls on fixing it up. Like I said before, there’s a lot of people jumping into the market right now to fix things up. They’re spending more money than they should and I think they’re going to get burned in the end. I hope it doesn’t happen but I really do think that’s the case. I’m just going to give you some general information about the town without being specific to the particular town. This town, one of the things, it’s a blue collar town, nice town. This town has sewer, just sewer and city waters and city sewer for 95-98% of the town. This one house has septic. And we asked the question because when you’re dealing with septic, there’s a lot of challenges with it. Certain areas, that’s all there is, a septic, and you have to accept it and that’s what it is. Same thing with well water, it’s just what it is. But certain towns have sewer in the street and you just have to connect to that, and it might cost you $10,000, maybe less than that, depending on the distance from the house to the sewer line. So there’s a lot of factors involved. And the type of topography it is, there’s a bunch of complexity to it. So it could range from different price, $6,000, could be even more than $10,000, it really depends.
But with that being said is, our question is, is there a sewer line in the street, and the agent said, “No one’s ever asked that question.” My partner and myself just looked at each other with just amazement, because this agent is supposed to be marketing the property. There’s multiple ways of obviously marketing, but generally speaking, right now, you have to put it on the MLS but you kind of have to know certain things, or you could talk up certain things or certain things saying, “Well, you could do this to the property or you could do this to the property,” so on and so forth. She’s just taking a listing, she’s not looking into it. She wasn’t asking the question or anything to understand the different things that can be done to the property to make it more marketable. And even if it’s a great time to just sell houses, I’m not saying that — again, there’s a certain responsibility that agents need to have, and this is one of them – to ask these questions and find these things out ahead of time and say, “Yes, it does have septic but there’s a city sewer on the street.” That’s going to increase the marketability and what people will pay for it. I can’t say I don’t believe it because I do believe it. But these are the types of things that when you have a strong market, people kind of just throw it up and just say “Okay, whatever” or they’re just not wise with all to ask those questions and determine that to market it that way. It’s one of the two. I think it’s more on the latter side a lot of times, but maybe not. But it’s just crazy because the market is so strong that people just accept it.
There was one house I saw in Morristown. I was looking for the address, and I’m going to have to see if I could pick it up for next week and figure out which address it was. But it was a house that needed tons of work. I went in there and I was going to put a bid on it, but it was just a lot of people were looking at it and I didn’t think I was going to win it. I should have probably put a number in on it. I was a little frustrated that day, looking at a couple other houses that I think went for just excessive numbers. I was going to offer probably like 120 or something like that, and afterwards it was sold for about that number because it needed so much work. It was on a main road, Morristown demands some good numbers but it was on a very main road, the backyard, it wasn’t level at all. So there was these different patios that were really decks at different levels of the yard, and you’d have to go up the steps, and all the steps and the path was out of wood also because it was just rocking. It was all deteriorated wood that would have all had to be replaced, it needed a lot of work.
This gentleman or woman, I don’t know, that was a wise person purchased it and then turned it around, I don’t know, in a week or two weeks, maybe a month, and sold to another investor. I think they made about $50,000 on it. I got to look at the exact numbers but it was an easy flip, and someone was going to spend a lot more money on it, which I think was crazy. So I’m going to track that house and see how much really it’s going to sell for in the end. I can usually kind of figure out how much they put into it within reason. I might be off but I could usually get a general idea so I could figure out when they purchased it, their carrying costs for the most part, and even on a conservative side, as well as agent fees and general carrying costs. So we’ll see, I’ll keep you guys updated on that.
I’m going to have to close out this session and I’ll be back shortly. Thank you very much. And again, if you need to call us, you could call us at 973-240-8593. Thanks a lot, guys, and I’ll be right back.
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. You could reach us at 973-240-8593, again, that’s 973-240-8593 or templarcashforhouses.com. That’s T-E-M-P-L-A-Rcashforhouses.com.
So this segment, I’m going to talk about a couple of things. First one is if you have an apartment complex or even apartments, and it doesn’t have to be a lot, there are certain things that you could possibly do to increase your profit. That’s why when you have an apartment or apartment complexes, obviously you want to be putting more cash in your pocket. I have a list of about 13, and it’s always ever expanding. There’s other ones that I’ve missed and I know I’ve missed, but I’m going to keep it to 13 because I think I could fit that into the segment as it is right now.
So a lot of times when you have apartment complexes, there’s sometimes units that aren’t used. They’re used sometimes for storage and sometimes there’s basements that you can convert to units, depending on how the basement is set up and they egress and how you could leave the basement. So sometimes, what you could do is convert one of those units or a basement over to another unit, and that’s going to obviously put additional cash in your pocket as a result of that. The one thing obviously is depending on the situation, you might have to put up walls, run additional electricity, so on and so forth. So it might be over the long haul, you might obviously have different lines of credit that you could use to pay down as a result once you’re getting that income coming in. So there’s a couple of things with that.
Another thing you could do is provide laundry services. You could put coin operated washing machines, dryers in the basement. There’s a couple things you could do. One is you could install them yourself or you could use a laundry service that will do it, and then you’ll get a percentage of the revenue associated with that. And again, that’s fairly straightforward, obviously, you’re going to have to run some plumbing that’s associated with that and you can maybe meter off the plumbing for that so you could segregate it compared to it going to other residents. There’s a couple things with that, and I’ll go through that shortly. But a lot of times we try to meet her out as much as possible so it’s just easier, but with that being said is that there’s a lot of additional costs once you meter things out. There’s workarounds for that, which I’m going to discuss shortly. But if you already have everything metered out for water, you want to break out and have another meter exclusively for the laundry machine so you could pay that separately, and from the revenue associated with that, you could apply it towards that.
The next thing that I want to talk about is storage. So there’s a couple things with storage, again, with basements, you could put a storage locker, you could rent those out, you could provide that. Another thing that we’re going to possibly be doing to one of our Bellville properties is I’m going to be installing in the back storage lockers that are fairly nice size, probably 10 feet by 10 feet, and based on the lot size, I could fit about four. Fortunately, what I might have to do is get a variance for that or at least apply for and then see what the township does as a result of that. So I’m working right now with an attorney. I’m not sure if I’m going to do it or not. We’ve had a couple of discussions on it. I’m probably going to be selling the property so I don’t know if it’s really worth the time and effort to put into it. But putting storage units is a really good way to, again, get additional money. As a result of that, you don’t have to worry as much about evictions
for that, so it’s not as bad. You don’t have to worry as much, especially if you have a lease with a person that’s not in the apartment or apartment complex. So that always adds to it, so that makes it a lot easier. Same thing is, is that if you have garages on the premises, those could be rented out, obviously. Anything that you could provide an additional service for, people will pay. And if they don’t want it, they’re not going to pay, it’s pretty straightforward and simple. So you’re not gouging, again, you give it to them at market rate and some people really want it. That’s very important.
The other thing is to charge late fees. I don’t like charging late fees per se, but depending on the situation, really got to put in certain language in terms of collecting late fees, because people push it and push it and push it. And if there’s no ramification associated with it, then some people will take advantage of it, and that’s the thing. The other thing is, is that if you don’t charge late fees, even if you state it, and like certain individuals just say, “Well, it’s only this one time, this one time,” and then other individuals you’re charging, you could get in trouble for that. You got to be consistent with anything that you implement. That’s why a lot of times, it’s important that you have a property management company, because if you don’t, if you’re not consistent, then someone could complain and then you’d be liable for certain things depending on what the situation is. So you always got to be consistent with your tenants. That is like the most important thing is always consistency. So if you’re not charging, if you have in the contract late fees, and you’re not collecting it, well then you can’t collect it from anybody. So just remember that consistency is always important because someone could say, well, it’s very prejudicial, so on and so forth, you’re favoring this person, you’re favoring this person or favoring this family. You can’t do that. It’s unfortunate but that’s just the way it is.
Another thing that we’ve been doing, so we got hit really hard in Bellville with some water bill increases. I’ve talked about this last time, they were increased like 50% or almost 100%, it was crazy. It was a lot of money. I was frustrated because you can’t do anything about it, it’s the government. And that’s why I’m always hard on town governments and township governments and state governments and federal governments, because basically, they could do whatever they want and there’s very little recourse you have. So we had some enormous water bills, relatively speaking, for properties in Belleville. So what we’ve done as a result of that is implement what’s called RUBS, RUBS stands for Ratio Utility Billing System. It’s basically, we never metered out water there, because it was always there that way, it wasn’t metered, we were just eating it. It was kind of factored into the profit or the net profit, basically.
Well, what we did is, now we started implementing this, where there’s a portion of all the entire water bill is divided up with the residents that are there or the tenants that are there. So as time progresses, we won’t be paying any water. Instead of metering it out and incurring all those costs, we’re just going to divide it based on the units and if the units are a two-bedroom, it’s going to be one charge, and one-bedroom, it’s going to be a one charge, so on and so forth, and then we divide it up accordingly. And that’ll be for everybody the same way. In the end, we’ll be making more money and there’ll be a conscious effort also on the individuals that know that they’re going to be paying for the water, and it’s that simple. So that’s one method that is used a lot and in the end, you could put additional money into your pocket and not worry about some of these additional costs. And you could always, obviously, increase it as water bills increase, and you could put that in your lease as well. After a while, people just accept it as is. And especially if they’re paying the other utilities, it’s just like, “Okay, I have to pay water too.” So it’s not that bad, really. And especially with new individuals coming in, it’s just like “this is what it is.”
Another thing you could do is you could charge for appliances. In one set of apartments, we were going to charge for washer and dryers. Some people said, “No, I don’t want it,” other people said yes, they do. That’s something that you could do. You could charge for appliances for both stove, refrigerator, so on and so forth. Some of them we do, some of them we don’t.
Another thing you could do, which I don’t do is I always collect the security deposit. Some people say well don’t collect the security deposit, it’s called a moving fee. It’s a few hundred dollars, it depends on the area, and you don’t collect a security deposit. But there’s other things that are done that you require the person to purchase to ensure that, again, if there’s any problems with anything that occurred in terms of holes in the wall that they’re ultimately required to pay and there’s some type of different types of policies that are associated with that, that they would purchase. And again, I haven’t done that, I know individuals that have and they really like it.
The other thing is, is that you can encourage renter’s insurance. I don’t require that, but you could require it as well. What you could do is basically, they might pay $9, you get a policy, and you work with a specific insurance company basically, or they’ll charge $15 and really it only costs $9, you’ll keep $4. Again, it’s not a lot but it depends, again, how big your apartment complex is. So if you have 150 units, those things start adding up, especially so it’s $4 a month, and then you multiply that by 100 units, and that’s for 12 months, then you could start seeing some money, and that’s the name of the game.
The other thing you could do is short term rentals. So most of the time people want or at least landlords want long term rentals, at least 12 months. Sometimes people say, “No, I can only do six months or seven months or eight months.” And I get calls a lot of times on that when we have a vacancy, and I say, “No, that’s alright.” But what you could do also for that is you could charge extra, so you might charge $300 extra or $400 extra or $500, and some people pay it as a result of that. That’s always something that you could do.
The other thing you could do is sometimes depending on the size of the complex, you could work out a deal with a cable company, where it’s a dedicated — it’s just like Verizon will be the only one that will service that. And as a result of signing that contract, you’ll get a fee as a result of that. It might be $10,000 or whatever the case may be, duration might be seven years. But again, it’s $10,000 in your pocket or $20,000, it depends what the number is and what you can negotiate. But if you sell it or if you buy a property that has that, then you’re going to want a prorated amount, because you’re going to be stuck with that for, we’ll say, two years or four years or five years, and they receive money as a result of that, so you should receive a prorated amount. So that’s something that you should always look into.
The other thing is, is always have built-in rent increases. We don’t always like to increase our rent, but there are certain things that depending on the size of the property and the economic conditions, we’ll say, that’s I think very, very important, because you have to pay your staff and they want to get raises, so on and so forth, property taxes go up, all those things. And so it’s not everything is just static, and that’s all factored into the cost of rent.
So I got to close this session out. I’d like to thank you very much for everything. Again, you could reach us at 973-240-8593 or templarcashforhouses.com. Everyone now, please take care. God bless, and have a nice weekend. Bye.
Be sure to listen to the podcast of the Templar Real Estate Talk Show. Find it now at templarbuyshouses.com.
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.
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