An Investing Agent’s Perspective : February 2014

Friday, February 28, 2014

Dromy v. Lukovsky (Landlord Case Law)

A California appellate court has considered whether a landlord could access tenant’s apartment to hold an open house during the weekend.

David Dromy (“Landlord”) leased a condominium to Marina Lubovsky (“Tenant”). The Tenant’s lease predated the Landlord’s ownership of the condominium and the apartment was subject to the local rent control ordinance. In 2010, the Landlord listed the property for sale with licensed real estate broker Dafna Milstein (“Milstein”). While the Tenant allowed Milstein to show the property to prospective purchasers by appointment, she refused to allow open houses on the weekends.
The Landlord filed a lawsuit seeking a judicial declaration over his rights to exhibit the property to potential purchasers. California has a statute that allows the owner to access leased property in a number of instances, including showing the property to prospective purchasers. Unless the tenant agrees otherwise, the landlord may only show the property during “normal business hours”. “Normal business hours” is not defined in the statute.

The trial court ruled that the Landlord could hold open houses at the property during the weekends with reasonable notice to the tenant. The judgment provided that: the open houses could occur between 1-4:30pm; Milstein must be present during the open houses; and the Tenant was also permitted to be present. The Tenant appealed this ruling.

The Court of Appeals of California, Second District, affirmed the trial court. The court looked at the legislative history of the statute. The court found that the statute was an attempt to balance the competing interests of tenants to enjoy their residency versus the landlord’s ability to market the property.

The court determined “normal business hours” was intended to refer to those hours where businesses in the community “generally keep their places open for the transaction of business.” Since real estate professionals generally hold open houses on weekends, the court ruled that the trial court’s ruling was consistent with the statute. Therefore, the court upheld the trial court ruling.

Dromy v. Lukovsky, 161 Cal. Rptr. 3d 665 (Cal. Ct. App. 2013)

Investors Target 'Hipsters' when Flipping

Hipsters usually refers to a subculture of 20-something or 30-something men and women who follow the latest lifestyle trends and fashion. Many hipsters have delayed forming their own households and are living with their parents longer to get more control over their finances and find steadier employment, RealtyTrac reports. But some investors are banking on the hipsters' flood into the housing market soon.

“The low hipster home ownership rate of the past five years translates into a market of potentially millions of first-time home buyers looking to find a home that matches their budget and fits into their hipster lifestyle,” RealtyTrac reports.Some real estate investors are targeting affordable communities where this growing hipster demographic may decide to settle.

The average gross profit nationally of a single-family home flipped in 2013 was more than $58,000. But areas known for a high number of hipsters are offering much higher returns on flips, according to RealtyTrac’s analysis.

So how can you benefit from this information? If you're into house flipping, find towns/cities or neighborhoods in Connecticut that have a large demographic of people between the ages of 25-34. Locations that are within walking distance of restaurants, shopping centers, public transportation, Gyms are ideal. As with everything else in real estate, location is everything. Find a property with these amenities and you could potentially set yourself up for serious profits!!

If you'd like help finding great properties to invest in, Click Here and fill out the form to let me know a little about your goals and objectives.

Wednesday, February 26, 2014

Collecting Rent After a Tenant Moves Out (Q&A)

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Question: Hey Cameron I had a tenant get a job suddenly in another city and had to move. He put in proper notice and left the house in great condition. The only problem is that he got behind on rent after losing his job shortly after moving in. All in all he was only behind about half a months rent. After moving out we agreed he would pay $200 a month until he got caught up; he made the first payment and then nothing. I can't reach him by phone or email. I have no deposit left to draw from so my question now is, what are my options? Do I go the collection agency route, just chalk it up to experience, or is there another way? Help is much appreciated.

Answer: Hi Paul, it really depends on how much time and effort you want to put into this. Consider small claims court. The collection agency route is also an option. If you decide to do it, go with an agency that specializes in tenant debt and has contingency based fees, but just so you know, the rental industry is statistically one of the lowest recovery rates in the collection business from what I hear. So with that being said, I think that you should not realize that there is a good possibility that you won't ever see that money. Even with a collection agency. But at least putting this on his credit might make you feel a little better. I have seen landlords get the judgment and wait hoping the tenant eventually wants to buy a house and needs to clean up their credit. That's when you get paid in full with interest. They say the few times they have collected made it worth learning the process and doing it.

Click Here to email me your real estate investing question

If you have a different opinion or just something that you'd like to add, please feel free to leave a comment below.

This is not legal advice. Please contact an attorney for professional legal advice.

Connecticut Foreclosure Auction List (3-1-14)

The following is a list of foreclosure auctions taking place through out Connecticut this Saturday, March 1, 2014. If you'd like to bid on any of these properties, simply click on the property for more information.

Connecticut Foreclosure Auction List

245 East Hartland Road, Barkhamsted, CT

140 FITCHVILLE ROAD, BOZRAH, CT

22 Elmwood Avenue, Bridgeport, CT

164-166 Greenfield Drive, Bridgeport, CT

7 Exeter Street, Bridgeport, CT

188-192 Hewitt Street, Bridgeport, CT

239-241 Parrott Avenue Bridgeport CT

1992-1998 Main Street, Bridgeport, CT

38 Rockville Road, Broad Brook, CT

52 Currier Place, Cheshire, CT

45 Brookfield Drive, East Hartford, CT

243 Strong Street, East Haven, CT

232 North High Street, East Haven, CT

77 Victor Street, East Haven, CT

18 Glenmoor Drive East Haven CT

473 STRONG STREET, EAST HAVEN, CT

35 Ridgefield Road, Enfield, CT

8 Salerno Drive, Enfield, CT

35 Ridgefield Road, Enfield, CT

132 Marlborough Terrace, Fairfield, CT

110 Valley View Place, Fairfield, CT

50 1/2 MOUNTAIN SPRING ROAD, FARMINGTON, CT

392 Salmon Brook, Granby, CT

399 Norman Rd., Griswold, CT

1559 Voluntown Road, Griswold, CT

41 Parmelee Lane, Haddam, CT

127 Kildeer Road, Hamden, CT

60 Wadsworth Street, Hamden, CT

315 Gilead Street, Hebron, CT

144 Stafford, Road, Mansfield, CT

23 Carpenter Avenue, Meriden, CT

21 South Second Street, Meriden, CT

50 Meetinghouse Ridge, Meriden, CT

8 Yellow Orange Circle a/k/a Yellow Orange Street, Middletown, CT

Click Here to learn more about investing in foreclosures

If you're interested in purchasing Short Sale or Bank Owned properties in Connecticut, please click here to let me know exactly what you're looking for.

54 Tremont Street, New Britain, CT

557 Main Street, New Hartford, CT

779-785 Dixwell Avenue, New Haven, CT

423 Middletown Avenue, New Haven, CT

11 Essex Street, New Haven,CT

19 Mallard Lane, Newington, CT

11 Norden Place, Unit 11, Norwalk, CT

361 Drummond Road, Orange, CT

11 Jude Road, Plainville, CT

56 Ore Hill Road, Salisbury, CT

561 Bridgeport Ave., Shelton, CT

193 RIVERBANK ROAD, STAMFORD, CT

5 Valley View Drive, Stamford, CT

10 Wausau Place, Stonington, CT

1460 Elm street, Unit 128 B, Stratford, CT

615 Cherokee Lane Unit B, Stratford, CT

8 Crestview Terrace, Wallingford, CT

44 South Cherry Street, Unit 502, Wallingford, CT

71 BENTWOOD DRIVE, UNIT #5, WATERBURY, CT

2356 North Main Street, Waterbury, CT

49 Westwood Avenue, Unit 24, Waterbury, CT

64 South St. W., Hartford, CT

55 Prospect Ave, West Haven, CT

11 Botte Drive, West Haven, CT

12 Comstock Lane, Wilton, CT

124 East Wolcott Ave, Windsor, CT

21 Manila Avenue, Woodbridge, CT

How to Determine an Income Property's Value (Q&A)

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Question: I've never purchased real estate as an investment before. I acquired a Quad Multifamily recently in Lowell Mass. My closing is on March 7, 2014. It took me about 5-6 months to find it. I picked this property through an MLS. While going through realtor.com, I found this property. I have an agent who sent me the MLS update daily, but it was not fast enough. I don’t think she really knows much. She does not know the concept of cash flow, cap rate and never helped evaluate a property worth for me. I am a cash flow guy. It is my priority and equity is secondary. Looking back, it was easy for me to determine cash flow, but I have a hard time determining the value of the house. For example, I don’t know if the house is selling at the market rate or has any equity. I looked over the lender appraisal report, and see how the appraiser evaluated the house worth. It is complicated. He could not find much 4-Fam in my town, so he went to towns close by the used those houses for comparison. He picked 4-Fam with similar living space and number of bed rooms.
My question is:
How do you evaluate the house worth? Is there any reliable website that I can use to determine if the house has any equity at the given sale price? I need help – step by step how to perform research and good reference websites.

Answer: Hi Chan, It’s actually very simple. When it comes to “Income Properties”, the buyer sets the value. I wouldn’t even worry about comps because there’s probably not many 4 unit properties within a 5-10 mile radius with the same square footage, amount of bedrooms & bathrooms in each unit, acreage, operating income, operating expenses, maintenance issues etc etc etc. Plus, just because the other guy didn’t do his due diligence and overpaid doesn’t mean that you have to!

I suggest finding a minimum cap rate that you are willing to except and make the offer based on that. So let’s say your minimum cap rate is 10% and you find a property on the MLS listed for $300,000. You do your due diligence and find that the property’s average net operating income is $24,000. $24,000 / $300,000 = .08 or 8% (The Cap Rate). So from here you would just adjust the offer to $240,000 to give you that 10% cap rate.

With that said, there is a big difference between $300,000 and $240,000 so before I submit that offer, I'd try to get some background info on the seller and check public records to get an estimate of how much they owe on the property to see if my offer is even feasible. Also, if you find yourself getting rejected too often, then you're probably asking for an unrealistic cap rate.

As for any helpful websites, there are many out there that will give you comps, but I don't know of any off the top of my head that will help with this method but as you see the math is actually pretty easy.

Click Here to email me your real estate investing question

If you have a different opinion or just something that you'd like to add, please feel free to leave a comment below.

This is not legal advice. Please contact an attorney for professional legal advice.

Tuesday, February 25, 2014

"Diamond-In-The Rough" Property of the week

19 Brook Street
Norwich, Connecticut

Asking Price is $32,900

3 Bedrooms 1 Full Bath

1,120 Square Feet

Built in 1889

Click Here for more photos & details

For more property information or to schedule a private viewing

Call 512-341-1480

This week's "Diamond-In-The Rough" Property of the week is listed for sale by

Housepad LLP

Click Here if you're interested in finding more great investment properties!!

Saturday, February 22, 2014

Buying Investment Properties On The MLS (Q&A)

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Question: Hi Cameron, I must not be seeing eye to eye with many investors that I've spoken to. I'm into buy and hold properties and I'm thinking of making my first purchase soon. The thing is, I know that purchasing and financing a home for a really good (cheap) deal is always a plus. But when it comes down to it. Isn't just buying a good quality property at normal price and renting out for a monthly cash flow a good thing too? Instead of waiting for that one deal that could take months and months to get. Why would it not just be a good idea to pick from the plenty of houses on the market at average cost and make sure you cash flow from the rents for the next 20 years? Wouldn't this type of thinking result in investors getting even more homes and even more cash flow?

Answer: Hi Morgan, Since you're a beginning investor, I'd recommend that you buy a regular ol' move-in-ready property. The key is doing your due diligence to make sure that it will cash flow. Keep in mind that most great deals aren't seen with the eyes, they're seen with the mind. What do I mean by that? Price is just one factor to consider when evaluating a deal. Terms are just as important. So if someone is stuck on finding that property for fifty cents on the dollar, they're going to miss a lot of hidden deals. So to answer your question, I believe that you're right on point with your philosophy. Especially since you're new to investing.

Click Here to email me your real estate investing question

If you have a different opinion or just something that you'd like to add, please feel free to leave a comment below.

This is not legal advice. Please contact an attorney for professional legal advice.

Saturday, February 15, 2014

Using Other People's Money to Invest In Real Estate (Q&A)

Click Here to email me your real estate investing question

Question: Cameron I continue to hear and read about real estate investors leveraging other people's money (OPM) to purchase real estate investments. My question is why don't people use their own money if they have it and where do they invest their money if they don't invest it in real estate.

Answer: Hi Jon, I'll be honest with you... In my opinion, most real estate investing gurus preach OPM because that is what sells books & courses. Many people don't have the 25%-30% down payment that most banks make you pay when barrowing money for investment property. With that said, don't assume that just because someone uses OPM that they're not also investing their own money in real estate as well. The main reason for using OPM, is that there is far more of it available than people have themselves. For instance, if you only have 50k yourself, that greatly limits what you can do. However, bring in 3 others with 50k, and you can really do a ton more. Again, the assumption that people that tend to use OPM and don't put in their own, is flawed. With that being said, using BANK money is also OPM. Banks get deposit money.. and only are required to have X% of that capitalized. So where do you think it goes? Yep, loaned out or invested. So banks use OPM, investors use Banks and OPM (both of which are OPM). As for your 2nd question, there are many investment options out there outside of real estate. Stock, Bonds, Mutual Funds etc. It really depends on the investor. Personally I invest in real estate, individual stocks and my IRA.

Wednesday, February 12, 2014

The Worse Tenant In History!!

I just finished reading one of the most incredible and shocking articles for landlords. It is about a "professional tenant" who may just be the worst there is. If you are a current landlord or are thinking about it, please take the 5-10 minutes it'll take you to read this article. And pray, Pray, PRAY that you never get a tenant like this!!

Click Here to read the article

Saturday, February 8, 2014

"Buildium" Product Review

Ok I have to be honest, I haven't actually tried this software myself, but after I continue to see rave reviews of this product across the internet I felt that I should at least make a little blog post about it.

Complete Accounting
Electronic Payments
Maintenance Requests
Tenant Screening
Easy Reporting
Effective Advertising
Automated Mailings
Mobile Apps

Here's a video to describe the software in greater detail

Find out more at www.Buildium.com

Wednesday, February 5, 2014

Connecticut Foreclosure Auction List (2-8-14)

The following is a list of foreclosure auctions taking place through out Connecticut this Saturday, February 8, 2014. If you'd like to bid on any of these properties, simply click on the property for more information.

Connecticut Foreclosure Auction List