Property #2: A Fourplex Across the Street
In the wake of all these battles, Becky discovered a role reversal had taken place. “My husband got very depressed when our first property had so many issues. But I was energized: I think I would have gotten rid of him before I got rid of the property!”
And it turned out they didn’t have long to wait before opportunity for a second property came knocking. Quite literally: “While our real estate agent was inspecting the property, a little old lady from across the street went over to see who he was.It’s a typical neighborhood where everyone knows each other, and our realtor stood out as a stranger.She mentioned to him that she might want to sell, so they stayed in touch for a few months.”
The old woman and her husband had owned the property, a fourplex, for 30 years. They decided they were ready to sell, so they called up Becky’s real estate agent. “When he got the listing, he called me.”
But as so often happens, this elderly couple had let the property fall into disrepair. “They never did any work and were legitimatehoarders.Every inch of the property inside and out was covered with what we called garbage but they called valuables.We have no idea how the renters walked down the hallways to get to their apartments.”
They put the property under contract for $650,000 without it ever hitting the MLS. But the hassles were just beginning.
Renovation & Cleanout Battles
Becky & Emilio’s second multifamily house hack
This time, the contract of sale included an escrow clause, requiring the sellers to put money into escrow for the cleanout. But yet again, the seller failed to deliver. “They cleaned it up for the most part before closing but didn’tfinish. We took them to court to deduct our cleanout costs from the escrowed funds and won, but they appealed. We are still in court for the money in escrow.”
In fact, the sellers proved difficult to work with across the board. “The owners were so confused when we bought the building.They failed tobring keys to the closing, and afterward when I painted the front door firetruck red to distract from the garbage and cleanout work that still wasn’tfinished, the little old lady called our realtor (as he was dual agent) and complained I painted her door!
“We renovated one entire apartment right after we closed. My hubby and I were actually on our honeymoon on the other side of the world talking to our contractor at 2am do get this done, which was new to us as we had done all theother work ourselves. Since then we have had to do major upgrades but the units were functional so we just do one renovation at a time.It will probably take us another ten years to restore it to its former beauty.”
As for the rental cash flow?
“Gross rent for the four units comes to $6,200 per month, plus we rent out the parking separately for another $1,200 for $7,400 in gross rental income.” It always pays to get creative to find ways to earn more from your rental properties!
Changing Tactics & Strategic Buying
“I learned to always keep my ears open for opportunities, but to have a goal and to stick to it.”
In other words, have a clear destination in mind – but stay flexible in how to get there.
After picking up a third property (an apartment in the Bronx), Becky and Emilio set their sights on buying a vacation rental. “I was going to buy a short-term rental in the Dominican Republic before COVID hit. It was tough because a beach rental is my life goal and I was so close. But it didn’t make financial sense, so I pulled out.”
Instead, Becky looked at the rapidly shifting housing trends in the US and noticed the de-urbanization trend taking place in New York City. So she turned her sights to easily-accessible areas outside New York City, and bought a duplex an hour out of the city.
“I think people need to watch for trends and think with numbers over their emotions.” Which novice real estate investors all too often do, getting excited about one property or area in particular and then bending logic to support it, rather than using the numbers to find the right areas and properties to invest in.
Investing Overseas
Becky and Emilio may have changed course on buying a beach vacation rental in the Dominican Republic, but that didn’t mean they abandoned the notion of investing there entirely.
Being quite familiar with the Dominican Republic – Emilio was born there – they found a long-term rental property to buy there instead. “Emilio picked the property, a long-term rental in the capital rather than the typical beach rental I’d been exploring. It cost $70,000, we put down 50% and financed the rest (which we could do because Emilio is from there).
“We bought it as brand-new construction, so it didn’t require much work. But there are things considered standard there that the construction company doesn’tdo, such as installing bars on the windows and doors, so my husband did that himself.”
As for how they manage it long distance, Becky put it like this: “The DR is like anywhere else, where one guy knows a guy who knows a guy. So it’s the same process to build a team as anywhere else!”
Find a few good people, and you’ll find more. It’s that simple.
And Becky hasn’t abandoned plans to buy an Airbnb rental in a beach town in the Dominican Republic. She’ll become an Airbnb landlord yet: “Our next purchase will be in the DR again for a beach property in Spring 2021.”
