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They are also very connected... both in business and socially... some of the biggest deals were done on a handshake...
Most tend to be people of few words and when they say something... it is noticed.
One thing I found interesting is my friend paid full commissions to brokers that brought in deals... even though he owned a brokerage firm.
He told me it is a small price to pay to have everyone and their brother bird dogging deals and those in the business knew they would be paid if the deal was made...
Holding a license to get a cut misses the big picture which is the deal itself.
Bankers would come to him simply wanting a chance to earn business...
He had lots of sayings... one that sticks out is, "Worrying is like paying interest on many you have not borrowed" When people would ask him how he was... he would always respond, "Like a million bucks waiting for change"
many of the wealthy take advantage of deals that us mere mortals would dwell upon and let our brains talk us out of.
i have seen so many that operate under READY-FIRE - AIM.
most humans hate losing money more than they like making it and so they let their brains talk them out of many major deals.
to get in to our deals took 500k both of our own and borrowed money. it was so freakin scarey that i almost let my brain talk me out of buying in to the business.
but we did it and the buying in was the best thing i ever did and certainly ended up being the opportunity of a lifetime .
the folks who's share we bought out just wanted to cash out had no idea of how little they were asking in comparison to the potential of the properties. all i can say is thank god their attorney wasn't an accountant or knew nyc real estate but being from down south they had no idea how to value this ..
cash flow was not that good since it was rent stabilized tenants and cash flow was near break even.
but i figured these are baby boomer tenants and many couldn't afford to live in that area when they retired and the pay checks stopped . a 100k lease buy out offer did the trick and mostly all sold to us ahead of schedule except 2. all went for 7 figures when sold.
our family LLC was very happy with the results . not sure if these last two apartments will be sold in our lifetime but if not the kids are our partners so they will win eventually.
the building is a nyc architectural landmark and apartments sell in the blink of an eye. it is on 7th ave and central park south overlooking central park so it is pretty prime.
Last edited by mathjak107; 04-29-2015 at 03:59 AM..
^^^ At times, I've been overly cautious and have missed a few outstanding opportunities.
Thankfully, most of the time this has not been the case... having my own modest portfolio of local rentals has helped me temper my cautiousness...
I pledged my home for one large deal with a minimum 7 year window with excellent results now at year 10...
Two others bailed in 2009 citing the dismal Real Estate outlook and the general partner had checks waiting within 48 hours...
Another thing I have noticed is "We" tend to sell when people are buying and buy when people are selling... the contrarian approach has also worked well.
Then why did many file bankruptcy and close up shop?
Americans walked away from homes in never before seen numbers.
If the grass is greener... well... you know: Can't beat em join em.
I really cannot understand why someone would walk away from an underwater home.
Underwater is not forever; in the worst case you are underwater until the mortgage is retired, and that obviously would be a most extreme case. Realistically, in a bad case one might be underwater for five years, but I don't know that anyone has been underwater for ten years except in collapsing markets (Ferguson? Baltimore?)
Most of those who went underwater several years ago would be well above water today if they had simply toughed it out. Where today are those who walked? They're paying astronomical rents, and I consider living in an underwater home vastly preferable to paying an arm and leg to rent. If I ever owned a home, I would never choose to walk, because I would expect to never again be able to own a home. Perhaps those who walked didn't consider that? Or did they consider themselves entitled?
freemkt's world: Rent will go up until you go broke if you don't own real estate, because landlords are greedy and don't work for their money.
Real world: In the long run, rent should increase at approximately the overall rate of inflation, but sometimes faster, sometimes slower, and always local. Landlords can only charge what the market will bear. Sometimes it is less than their costs if opportunity costs are included for both time and capital, other times the rent is more, sometimes, the same or nearly so (breakeven), and always local. It is unusual for the net cost of renting to be different from owning by more than 50% in either direction, when taken over a long period of time such as 10-15 years to smooth out the bumps in the markets. The cost of rent is not, taken over a long period, inevitably enough to make the landlord super-rich without having to work at all or put money in. If this were the case, then no one would be willing to lend the money for a mortgage - they would buy the house themselves instead. It works the other way too of course - renting is not an obvious and clear winner in all cases either over long periods - if it were, no one would be a landlord willingly.
At various times and in various places renting or owning may come out ahead, but the market usually keeps them at least approximately comparable over a long enough time span.
The cost of housing is similarly approximately pegged to the cost of construction, with a bit extra to compensate the investor for both risk and time. As with rent, there are deviations from breakeven in both directions, and always local.
I really cannot understand why someone would walk away from an underwater home.
Underwater is not forever; in the worst case you are underwater until the mortgage is retired, and that obviously would be a most extreme case. Realistically, in a bad case one might be underwater for five years, but I don't know that anyone has been underwater for ten years except in collapsing markets (Ferguson? Baltimore?)
Most of those who went underwater several years ago would be well above water today if they had simply toughed it out. Where today are those who walked? They're paying astronomical rents, and I consider living in an underwater home vastly preferable to paying an arm and leg to rent. If I ever owned a home, I would never choose to walk, because I would expect to never again be able to own a home. Perhaps those who walked didn't consider that? Or did they consider themselves entitled?
For many it was simply being shortsighted... walk away from a $3500 PITA payment each month plus repairs and rent across the street the same home for $2500. Now the home across the street rents for $3500 and your $3500 PITA is now $4500.
many of the wealthy take advantage of deals that us mere mortals would dwell upon and let our brains talk us out of.
i have seen so many that operate under READY-FIRE - AIM.
most humans hate losing money more than they like making it and so they let their brains talk them out of many major deals.
to get in to our deals took 500k both of our own and borrowed money. it was so freakin scarey that i almost let my brain talk me out of buying in to the business.
but we did it and the buying in was the best thing i ever did and certainly ended up being the opportunity of a lifetime .
the folks who's share we bought out just wanted to cash out had no idea of how little they were asking in comparison to the potential of the properties. all i can say is thank god their attorney wasn't an accountant or knew nyc real estate but being from down south they had no idea how to value this ..
cash flow was not that good since it was rent stabilized tenants and cash flow was near break even.
but i figured these are baby boomer tenants and many couldn't afford to live in that area when they retired and the pay checks stopped . a 100k lease buy out offer did the trick and mostly all sold to us ahead of schedule except 2. all went for 7 figures when sold.
our family LLC was very happy with the results . not sure if these last two apartments will be sold in our lifetime but if not the kids are our partners so they will win eventually.
the building is a nyc architectural landmark and apartments sell in the blink of an eye. it is on 7th ave and central park south overlooking central park so it is pretty prime.
That is a really interesting strategy , to buy out rent stabilized tenants. It's not something that you hear about too often, but perhaps because it is something that would likely only work in NYC, because of a combination of strong rent control/stabilization and the highest real estate in America. In Los Angeles there is rent control, but there is not the same co-op system (as far as I know) .
I suppose if they don't want to sell out it would become a waiting game of sorts. Just curious, is there anyway that a tenant can 'pass on' their rent stabilization to other family members? What if there is a couple and their adult child moved with them for example. I'm guessing they would have had to be on the lease from the beginning right?
Also if you would share, what is the typical value of a rent stabilized unit, versus market value. not dollarwise but percentage wise. 100% more 200% more?
Are the payouts usually pretty large in the $100,000 range?
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