The Inglorious Truth Of Real Estate Investing

As my dad always says "if it was so easy then everyone would do it" this saying rings true with real estate investing. We are all accustomed to hearing and reading about all the successful real estate investors but no one seems to tell the stories about the not so successful real estate investments 

Today I sold a two family home which we purchased out of foreclosure on August 28th 2009 for $55,000  4

Four and half years later we sold it for $84,000. One might say OK, great! you made a little bit of money not bad.... right?  We’ll let me tell you what was involved in this "small" two family home.

Rehab Pictures 

                                 

Let me give you a quick overview as to what happened between purchasing the property in 2009 & selling it March 7th 2013. 

Four different Contractors 

•         First - Got arrested for unpaid child support
•        Second -Lost his license due to drunk driving
•        Third - Simply disappeared 
•        fourth - Import a referred contractor from CT

Some fun pictures

City Of Paterson 

The City of Paterson decided to get involved because I wanted to improve a small section of the roof of the rear house. They put my entire project on hold for over 8 weeks, & requested I pull architectural plans to complete this "magnificent" addition to the home. I kid you not it was a 4 inch lift in an 8X10 extension. If people ask why the City of Paterson is the way it is, well now you know. 

Four Tenants 

1. Lost a long battle with HIV
2. Forced Eviction 
3. Existing
4. Existing

Inspections

This wonderful property required a total of 24 Inspections 

•           Seven Section 8 inspections
•           Six Smoke & Fire Inspection
•           five Lead inspections
•           four Insurance inspections
•           two Bank inspections

Incidents

 Tree smashed through the roof of the property in the 2010 storm, I had to re-locate my tenants and handle the insurance claims & repairs         

       

Thugs destroyed the walls to get the copper piping 

Health Department

I had a tenant (consequently the one I had to evict for nonpayment) report me to the health department because their child & I quote “had a single mosquito bite”   

The health department immediately initiated a full on investigation, but since I have records that I use QTRLY Pest control treatments  I was legally protected, but If I had not, who knows what would have happened. 

(I kid you not)

Anyways.. Before you decide to get into real estate investing you should really ask yourself. 

Is this really worth it? 

Good news? 1 more down, and four more to go! 

Any buyers?

 You can check out the real live fun in my YouTube video below

 http://www.youtube.com/watch?v=axKEpQJ6zKs

Today we finally closed on the sale of one of my Two family properties in Paterson NJ.
This particular property was by far the most challenging property I have yet to work with.
Everything that could go wrong did for this particular unit did.

However at the end of the day it was a successful deal and a very good learning experience.

I purchased this property out of foreclosure on 8/24/2009 for $50,000

After overseeing the complete gut rehab on this property. Renting out the property to 3 different Section 8 tenants 4 different real estate companies and dozens of showings and nearly 19 months later we finally accomplished our mission of selling the unit.

Below you will two links to before and after videos of the rehab along with some pictures and descriptions.

Video one

http://www.youtube.com/watch?v=radxM5hMoso

Video Two (Better Video)

http://www.youtube.com/watch?v=axKEpQJ6zKs

Before Picture.

Notice how the windows are bordered up. The tractor was there to repair the sidewalk. A request from our home insurance company for liability reasons.

After

You can see from the pictures we installed brand new windows, gutters, liters, and aluminum siding

This picture below is of the original chimney, The chimney is required to let the exhaust from the heating system in the basement out. As you can see this chimney aint looking to shabby.

Repaired Chimney below.

Gutted Kitchen

What you see below is actually the before pictures of what eventually became the 1st floor kitchen.

1st Fl Kitchen after the repairs
Below is pictures of this same kitchen after one of my tenants had moved.

It can at times be very disheartening when you put in so much work into making something from nothing, and then having someone destroy it. But hey thats why we collect security deposits rite? ;)

Below is actually a bathroom.

Bathroom after the rehab

Below is the old and obviously dysfunctional boiler

Below are the two new Gas boilers installed. Courtesy of Mario plumbing supply in Paterson NJ

I would like to thank my family and friends for the continued support. My business partners for trusting me with their investments, my work crew for always getting the job done and my real estate agent for helping making this happen. Always a special thanks to Mario plumbing supply in family for their continued help and support.

285 Ellison Roof Repairs

We are currently in attorney review for the sale of our property 285 Ellison StreetThe buyer requested we make some repairs to the roof in order to proceed with the sale of the property.
We had to ad flashing to the roof, and repair the chimney. Flashing is a special adhesive tar which is applied to the edges of the roof where the roof connects with the walls. Flashing protects the roof from heavy rains from seeping through the cracks of the roof.

FLASHING


Before


After

Leak in Van Houten Caused by faulty water line

Damages caused by the water line
Ellison Street. after being repaired
The way the tenant left the apt.

Second leak caused by a 3rd fl leak that was unattended to
Those little black dots are cockroach droppings.

Working in real estate can really feel like you are living through a TV sitcom. The best way to go about it is to roll with the punches and look at the situation as if it were a sitcom And you were playing the main role. and everybody else is the audience.
Let me share with you just a small story of what happened in the past two weeks.
To catch you up a bit my 1st floor tenant at 285 Ellison Street had moved out on Feb 1st leaving behind a pig sty which would make the messiest of omnivores proud. (view above pictures) After completely rehabbing the unit and brining it back to its "previous glory" I then put it up for lease.
What was happening just a few block away on my other property Van Houten Street was of a similar story but caused by aged pipping and a little bit of mother nature.

My tenant was paying an overnight visit to the hospital when the cold water line burst. Causing water to leak from the 2nd floor ceiling through the sheetrock, flooding the living and kitchen and then leaking down through the basement damaging the hot water tank and boiler.
After having my crew pump the home from water, (which at the time of discovery was so high I could have started a second business in breeding local alligators) ha, ha

After clearing the unit of water I then went through and executed the below punch list.
Notifying my insurance company
Hiring a notable independent insurance adjuster
Hire contractors to make repairs.

Notify Section 8

Get to work on relocating my sickly and government subsidized tenant

While overseeing the above mentioned actions ensuring that they were being executed in a timely and efficiently manner. I then took the liberty to show my now homeless tenant my vacant 1st fl unit on Ellison Street just a few blocks down the road. The tenant liked the apartment and requested S8 to do the inspections. Now remember. This is the same unit which was turned to ruin by my previous tenant, and I had just repaired it earlier that week.
Well, low and behold just 48 hours before the scheduled S8 inspection a leak per-cured from the 3rd floor bathroom of the second unit atop the 1st fl unit. My tenants did not notify me of the leak.. The leak dripped from the 3rd floor, through to the second fl, and into the 1st floor, ripping a hole in the roof and flooding the kitchen..
I kid you not. This is a true story. Well none the less I got all the damages repaired in under the 48 hours just in time for the Section 8 Inspection.

Just thought I would share with you a day in the life, of Jacob in Paterson NJ.

Today I received an early Birthday present.

I closed the sale of a house in Paterson NJ. I had purchased this two family home out of foreclosure on March 4th 2010. My partners and I purchased it with the intention of fixing, renting and then flipping it.

What made this home so special is that it is one of the few homes in Paterson, NJ with a driveway. At the time I found this home, my partners were not ready to purchase additional properties. We currently had 13 units and were nervous about the downward trend we saw in the market.

After a lengthy discussion with my partners and a fair amount of arguing, they relented and agreed to invest in the purchase and rehab of the property. What convinced them was my willingness to put my name on the line, and of course, my prior track record of success in the rehabbing of properties had something to do with their level of confidence as well.

My responsibility was to be the general contractor, which means I am responsible to hire all the sub- contractors, purchase the materials, design the rehab of the home and to bring all this in on budget.

After completing the rehab on time and only several thousand dollars over budget I then got the home rented to Section 8 Government subsidized tenants.

Watch video Link here (If you can stay awake through my boring soundtrack) http://www.youtube.com/watch?v=yOB5kAyfI_w


From there the next challenge was finding a qualified buyer. After having two contracts disappointingly disintegrate in front of my eyes, with help from my real estate broker, we found a qualified buyer.

Today, October 27th, nine months after the purchase of the home, we reached our goal of selling the home. The feeling of accomplishment I experienced at the closing was truly amazing.

I would like to give special thanks to my investors, and to their trusting me with their capital, to Shannon my contractor, who took great pride in his work, and did an exceptional job. A special thanks to my realtor Mell Espinosa without whom him this would all not be possible.

As if this wasn't enough, today I also closed my second commercial lease in New Britain CT working with Jasko Group. (Thank you Avner)

Two closings in a single day!
Happy Birthday to me :)

Monday August 23rd, 2010 marked one of the biggest days in my real estate carrier. 
Adrian Goldstein  and I formed GoldKat, LLC  in 2008. On August 27,2008 , we  purchased our first property at 13 Pennington street in Paterson NJ. It was a three family home.  Since that time we have purchased a total of 17 units. One of which we sold for a substantial profit. The rest are 100% leased with government subsidized tenants. 
 
What made this day so special was that  it was the first time we had come full circle  by accomplishing  our goal of  purchasing  multi family homes from foreclosure with  cash , rehabbing  them, renting  them out, and  then re-financing  them. 
 
A few years ago one would have thought that the easiest step would have been the refinancing, but in today’s market it turned out to be the most challenging. After working almost 16 months, with two different banks, and two brokers we finally got the deal closed. Sitting at the closing table and  seeing my dream come to fruition was the most rewarding feeling I have yet to experience. 
 
I would like to thank Adrian,  my partner for giving me the opportunity and entrusting me with his capital. George, our mortgage broker for making this deal happen. Lee, our attorney for all his diligence in making sure all details were handled, Mario supply and family in Paterson NJ for support and guidance, Damian from Gelt, Inc for all his help and support and  my parents for being there for me through all the ups and downs. 
 
Thank you! 
 


Adrian and I at our are two family home 318 Van Houten Street Paterson NJ



At the signing table




From left to right a picture taken after our closing.
George Stergiopoulos, our mortgage broker from COOPER-HOROWITZ- Jacob Katsof-Lee Levitt our attorney who has been with us since day one - and of course Adrian my partner.



Later that night we went to celebrate at a fantastic restaurant in NYC
My new partner Avner Krohn from Jasko Development joined us for dinner.
From left to right: Jacob,Adrian, Jordan (Adrians eldest son) and Avner

New Britain is a vibrant up and coming city with the second to largest Polish population in the US and with a total population of 82000

I plan on taking all of my experience and knowledge learnt from working in Paterson NJ to New Britain. With Jasko help build an a successful portfolio of real estate.

Below our pictures of our new office.






I recently partnered with Jasko Development, LLC A real estate development company in New Britain CT.
Check out their website for more info http://jaskogroup.com/