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 June 12, 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 can reach us at templarcashforhouses.com. That’s T-E-M-P-L-A-Rcashforhouses.com, that’s one word, or at 973-240-8593. Again, that’s 973-240-8953, and we can answer any questions you may have, or you could email us from our website, again, any questions you may have, as well as anything you want to discuss on this radio show.
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, and 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, but I have individuals on staff that are agents that can sell your house through the traditional Multiple Listing Service. This show’s gonna 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 how we learned from them. We’ll talk about the economy and interest rates. We’ll discuss trends in the real estate market. Real estate is one of your biggest investments, so it’s important that you know as much as possible about it. I’m gonna provide you with my opinion, and it’s only my opinion. I ask everyone to do a lot of research in anything they do, make sure that you understand different points of view, if you’re researching a topic, or a person. Again, as always, it’s always good to get referrals, but if you get referrals, please ask lots of questions with that as well. You wanna make sure that the individual is going to meet your expectations, not what the individual the preferred you to. So everybody’s expectations are different in terms of services provided, how quickly, how frequently things are communicated, so on and so forth. So that’s very very important. The other thing you have to do is always, I would always look at the Better Business Bureau, and look if they’re, first, a member of the Better Business Bureau, or if there’s any derogatory comments or cases against them. That’s very important, and we’re part of the Better Business Bureau. We feel that it’s extremely important for us to be a part of it. We have to go through certain things to ensure we were approved by it, and we have to continue to adhere to these certain standards, so that’s extremely important. To one of my favorite listeners Livingston’s Famous Crossing Guard, Polette, and Timmy from City Grove Water Department, as well as John, and Cindy. Hey guys, how are you doing? Would also like to thank some of my investors, Cindy, and John, also on that. So I’d like to thank you guys for the confidence in giving us the money, and how we’ve had years of working together, and continue to hope that goes forward. Thanks a lot guys.
We’re looking for different properties, if you have anything to recommend from someone that’s selling apartment buildings, someone tell forth, please give us a call. We prefer a hundred plus units, but I need a few other smaller ones. Nothing like less than 10, not even 10, has to be preferably 15, not even 15. I’m thinking about it now, it has to be, maybe 25, 30, 40, something like that. We’re right now in the process of selling a number of properties, and we gotta reinvest it within a short period of time or we’re gonna get taxed. That’s kind of very important to us, so we’ll get taxed by the government, and have to give away some of our proceeds. We could all understand that, no one likes the IRS so, I’m one of them. Couple other things that I want to make sure you know is that, again, if you need to sell your house fast, and no hassle, please give us a call.
Right now, we’re in the process of purchasing a individual’s house. She’s going through a divorce, and you know, it’s going very smooth. We also, we have to get standard CO like we normally do, and we always tell everyone you should be getting a CO when you sell the house. And, we’re doing one for the town. The town’s not coming out, we have to sign an affidavit saying that, we’re adhering through certain things, as well as take some pictures. So, wanna make sure we’re above board on everything we do, but when we purchase most of these houses, everything goes really pretty smooth, like clockwork. Not always. A lot of times when we have some challenges, it’s sometimes really on the seller’s attorney. We’re having one right now, which is giving us some angst, and we’ll talk about that shortly. But, for the most part, things go very smoothly with us. We have the money, we’re not gonna nickel and dime you once we come to an agreement. We don’t renegotiate later on. Make certain things very clear in terms of what’s part of it, what’s not part of it. It’s an easy transaction.
One of the things I do want to talk about is that Governor Murphy extended the moratorium on evictions ‘til the end of the year. And to the consternation of landlords, they’re very upset, myself included, even though it’s really not affecting me, except under one scenario, but even that one, I don’t think I have to worry about it. But it’s kind of, I don’t know what the words are, and I’d rather not say them on the radio to tell you the truth but, you know, it’s basically it’s a blank check saying, “You don’t have to pay for rent”. You could cut it, slice it, or dice it, whatever way you want but in the end, when someone says, “I’m not paying”, they’re not paying and you can’t do anything about it. Under a few circumstance you can, but it’s basically if you’re a squatter. But short of that, if someone doesn’t want to pay, they don’t have to pay. They don’t even have to, if there was something in the what Governor Murphy put it out says, that you have to prove that you don’t have a job or something like that, it would be a little more forgiving, for me, and I’d say “Okay.”, but, I know numerous landlords, they’re just mom and pop like things, they’re having all these problems, and it’s not fair, it’s just not fair. And you know, they say, “Well, you can get a moratorium also on the mortgage, possibly, or also you could request a reduction of the property tax from what I understand, but it’s still not the same, it really is not, and there are certain expenses that go in in having a property from renter’s insurance to, you know, a certain number of things like water, so on and so forth. And, it’s just, it’s just not fair and it’s ridiculous that a individual has this much power that can do this, it’s just crazy. And it’s extremely frustrating to me and a number of other landlords, again, they’re not all large landlords that have thousands of units that could work this in, because they have a lot of cash flow on other things. It’s just not the case you know, you have individuals that have like, a couple units here, a couple units there, and it’s just really hurting them, and there’s no reason why that should be the case, no reason at all. And who knows, they say it’s ‘til the end of the year, then there’s been talk about these different groups that are trying to push it even further, and not wanting to pay for rent. It’s just, it’s just horrendous, horrendous, what this is turning out to be. And again, you have individuals, because of this type of policies, that are moving out of the state, moving out of New York, moving out of Jersey, and they’re moving South. And they’re going to Florida, and a number of these other states that do not do things like this. There must be a reason why everyone’s going down there. The taxes, and it’s a bunch of other things, and they’re tired of it. I spoke to someone the other day, they said that, “They’re gonna move down to Florida.”, or be part-time down Florida, or enough whatever that dividing line is, where they’re a resident of one state as opposed to New York City, or New York, and because of the taxes and everything else associated with it. And people are going to continue to do that. I might do that as well in the next couple of years. I really might. And I’ll visit here, do something, where I can stay up here sometimes ‘cause I’m a New Jersey boy, I’m from New Jersey, that’s just who I am. But this is just really ridiculous in terms of that.
Couple of other things before I go into some of the stuff that went on this week within our company. Interest rates. Last week they were pretty low, and they’ve gone down even further. Right now, last week, the 30-year fixed rate refinance was 2.75%, and the 20-year, again, fixed rate refinance, was 2.75%, which is unbelievable, now the 15-year rate, for refinance is 2%, and the 10-year fixed rate was 2.125%, it was a up a little bit from 2.0%. But I think, they’ve gone down a little bit since then. There’s a lot of factors that are playing into this, but for how long, that’s the question. So, you have, on the large economic factors, you have the strength of the economy, inflation rate, which I don’t know right now, you know, we’re getting hit with some inflation, pretty soon that’s gonna affect things, employment, consumer spending, housing construction, and other types of market conditions like that. The stock and bond market where that is, the 10-year treasury, and then the Federal Reserve Policies. And, Federal Reserve, they even said, they’re gonna play behind the curve as opposed to in front of the curve where they’re going to react based on the circumstances instead of being proactive. So I think that might affect things and make things a little worse also in the future. The other things that really impact the interest rate for your personal mortgages is your credit score, your credit history, how much, especially in the refi, how much equity you have in your home, the loan amount, the loan term, and the loan type, as well as, the location of the property, and the debt-to-income ratio. So, all those factors play into, when you’re refinancing a mortgage from the economic side, than macro side, the large perspective on the economy, as well as your personal economic factors. Those are two important things that will affect it. So, let me close out this segment, I’ll be back shortly. Again, you could reach us at 973-240-8593, or templarcashforhouses.com. 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. 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. Again, if you’re interested in selling through the traditional Multiple Listing Service, I have some great agents, the rock stars, that would love to list your house, or we could just purchase your house outright, as is. You could leave anything you want there. It’s a fast, easy, quick way going, and you don’t have to worry about anything. So that’s what one of the biggest things, that really, individuals like.
We’re dealing with this one widow. And I spoke about her last week, and she has a, she has a nice house, but you know, it needs some work, and you she was very anxious. Her husband passed away. She just wants to leave the house, she just really wants to leave, and she’s very apprehensive, and you know, we’re making this transition for her, and the sale, very easy. But, as always, like I said, sometimes things are challenging and a lot of times, the attorney sometimes throws in a lot of curve balls. Originally, when we were under contract, we’re very clear on everything. He wanted to put in the contract, an extremely large down payment, as an initial down payment, like 30,000 dollars initially. And, we had to go back and forth a little bit, and he accepted a lower amount. We don’t just want to just put the money up, and just tie up our cash. There’s no reason for it. Second thing is that, we have lines of credit, he was stating that with our lines of credit, they still have to look at the house, to do like, a pseudo appraisal. And, he didn’t think it was required, and he says, “That doesn’t make sense.”. As I’ve said before, there’s a few things, attorneys aren’t business people, second of all, there are dealmakers and deal breakers. And we went back and we explained it to him. We still need to do an appraisal. They’re giving us the money, so they want to see and make sure it’s what we’re saying it is. And, you know, we don’t have to go through any qualification or anything like that, we literally have millions of dollars in lines of credit, and so, he accepted it but, anytime a lending institution gives you millions of dollars in lines of credit, they still want to make sure there’s something really here. You know, it’s based on compliance, so again, you can’t just have a free for all, and just give the money out, and you know, maybe there’s nothing there. Even though you might be able see something on Google maps or something, but you never know. So, there’s compliancy things from lending constitutions that we need to adhere to. They’re not that strict, relatively speaking, especially for us, you know, we have a great reputation over the years, so it goes very far for these lending institutions and for our track record, and that’s how it plays out, based on our track record, years of experience, credit worthiness, things like that. How much money we have in the bank, so there’s a lot of lot of factors, and because of that, we have the ability to borrow large sums of money, and we could extend it even further based on the deal. So, we’re not too concerned about that, but again, the attorney pushes back a little bit, we had to push back, and then that was it. Then the next thing was the solar panels on the roof. And as I said last week, it was one of the most poorly written agreements, well it wasn’t poorly written for the individuals making the money, we’ll put it at that, but for the consumer, and for this elderly couple, it was horrendous, and we said, and we recommended that to, they default on it, at least for the estate, and then we’ll renegotiate. And we spoke to the seller’s power of attorney, which is her grandson, and you know, he said, “Let me talk to the attorney on it.”. The attorney came back and said, “Well, why don’t you take over the lease.”. It was just very frustrating because it was like, the lease was lousy, why even say something like that, we’ve clearly stated to the seller’s power of attorney, her grandson, that it was lousy and anyone that could look at the contract, it was just lousy. So, we haven’t heard anything on that, but like I said, if they do default on it, then I will contact the solar company and renegotiate, and one of the things I would push, if we’re going to take the deals that they can’t go after the previous home owners, that’s what I put in there, and I think they would do something, I think, because the system right now is about 4 or 5 years old. So, the technology is older, each year, 2 years they’re coming out with new technology, so right now with the, if they take it back, they’re going to go after the estate, which is not gonna have anything, and they’re gonna be, just holding the bag really, so it’s probably in their best interested really to renegotiate. And I guarantee you, it will be in my favor, they’ll still get tax credits and everything else, so in the end, they’re not gonna make that bad. But we’ll see.
But with that being said, we also had a septic inspection and that failed. We made it very clear in the contract that, there’s a couple things that we always have to go back in and renegotiate, one of them is like septic system. So the septic system is gonna cost about 40,000 dollars. We did not plan on that, we thought the septic was good, because they had it cleaned out and it was working, but really, it was barely working. There’s a lot of problems with it. Someone said it was 50 years old, and the other one said 30-something years old. It’s just in bad shape. And we weren’t expecting that, we didn’t factor that into the price. We spoke to the grandson, he understood it very clearly. We had a report on it. The report was pretty clear. We sent the report over to the attorney, and the attorney came back and complained that it was vague, he didn’t want to pay anything because it was vague, and he didn’t think anything was wrong with it. I basically responded, and said “Well, why don’t you speak to the inspector, or get another inspector, it’s very simple.”. And my partner, she was upset at that, she was pissed off saying, “What is this, it’s vague.”. I said, “Don’t worry, this is just, as we all know, this is just something that they go through, and make statements that don’t have any validity, or anything to back it up.”. And, she was just frustrated because the attorney keeps pushing back at everything. So, it makes the transaction a lot harder for us. And then they came back, we estimate, it could cost between 35,000 to 42,000 dollars. So he came back and said “15,000 dollars. We’ll give you a credit of 15,000.”. We said, “No.”. It was that simple. I said, “We’re not gonna eat another 20,000 dollars.”, in addition, there was other things that came back that we’re going to eat. There was problems with the well, there’s a bunch of problems with the well. It’s drinkable or potable, as it’s stated, or called, but we’re gonna probably have to invest 5,000 in that, and if the solar panels come off the roof, we might have to redo the roof, which we have to, we’re gonna eat that cost, so that’s not being pushed onto the seller either. But, as we said in the contract, the septic is a big thing. So he came back again, and said, well, “30,000, and that’s final.”. We pushed back and said no. So my attorney, being too expeditious and just said, “Okay. Contract is cancelled.”, which got me crazy. With these contracts, with discussions, you know, things aren’t black and white, and it’s just like, it’s cancelled, and it shouldn’t be that way. I’m a little frustrated to say the least. I reached out to the seller’s grandson, “My attorney is a little expeditious. I would like to talk about it.”. And he agreed, saying the same thing that his attorney was also too cut and dry, and we both kind of sent smiley emojis to each other, in the text that we’re going back and forth in. So I’m going to talk to him and see what we can do. But you know, things come up all the time. Again, it’s, you know, sometimes these attorneys are too cut and dry, and you know, they’re not the ones, they’re very protective, but then they’re not. Very protective because they’re trying to save money, but again if the deal’s cancelled, they’re gonna have to go with someone else. They’re gonna extend that time. The grandmother, which is stressed out already, will be stressed out again in the couple of months until the deal is put together. She’s moving our right now, the grandson has her moving out right now. Because we’re supposed to close in the next week or so. He wants to keep this thing moving. Now, if the deal doesn’t go through, she’s gonna stay there. And next time, she’s gonna probably stay there until the end of the duration until the day of closing, and he doesn’t want that. I think it’s in everyone’s interest, we would like to deal, and he would like to consummate a deal, but there’s always these complexities with these deals. Most deals are straightforward, but there’s always a lot of touch points. Even after we do a deal that is easy, then we have to rehab it. And then there’s those additional complexities associated with it. Everybody thinks it’s easy, everybody says, “It’s just making a lot of money”, so on and so forth, it’s not that simple. And one needs a lot of care. One of the reasons why traditionally, the cost of money for rehabs is probably close to double digits, it could be 10 percent, 11 percent, 12 percent, and points associated with it is because of the risk associated with it, it’s that simple. Lending institutions sees a flip as one that has risk associated with it. And because of that, they price it accordingly. Case in point, when you live in your own home, the interest rates are considerably lower. Because you’re gonna live there, there might be ups and downs in the market in terms of valuation of the house, but you’re gonna live there. So you could ride out any long-term changes. Next is, if you have a second home, those rates are higher than usually a primary mortgage. Case in point is because you’re not living there, and in the end you might say, “Okay I’m get that one foreclose, or I’m gonna get rid of it, or I’m just gonna let it go in disrepair, and then they mortgage company and the lending institution will have to take it away.”. The risk there is higher. And then when you come to something like a fix and flip, then the rate is even higher than that, and it’s based on risk. So sometimes, individual, when they’re figuring what my cost are, are figuring in like a 2 percent on a mortgage or a line of credit, and that’s not the case. It’s lot different. I have insurance, my insurance on the houses are expensive compared to regular homeowners insurance because it’s riskier.
So, unfortunately, I have to close out this session, thank you very much for everything. Again, you can reach us at 973-240-8593 or templarcashforhouses.com. Everyone, thank you very much, please be safe, God bless you, and please take care, bye.
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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