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 July 31, 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 could reach us at templarcashforhouses.com. That’s T-E-M-P-L-A-Rcashforhouses.com, that’s one word. Or you could call us at 973-240-8593. Again, that’s 973-240-8593. We could answer any questions you may have, or you could email us from our website as well. Ask any questions or if you want something discussed on this radio show, we’d be more than happy to try and accommodate you.
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. We provide transactional and gap funding as well. We work with individuals that wanna invest with us in single-family houses up to apartment buildings. We do not speculate. 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 could 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 compensated for that. 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 you know as much as possible about it. I’m gonna provide you with my opinion. It’s only my opinion. I ask everyone to do a lot of research and make sure you turn over all those stones. Peel back the onion as they say, all the other clichés about different things, but specifically about this. Make sure that you just do a lot of homework. Again, as always, I’ll say it every time, you read an article on the internet, make sure you realize the perspective of the author. That is the biggest thing. I read two articles this week. One said the house and market boom is over. And the other one says, the house and market boom is not over until 2023. So I don’t know. You know, someone could say one person’s right over the other. I have my own opinion on that, and we could talk about that a little bit today, hopefully. But again, you have to look at the perspective of the individual and what they want to convey. So they’re gonna obviously show you proof that something is a certain way. So when you do your research, you have to understand that. When you do your research for bringing someone on, providing a service, you gotta ask lots of good questions. I always prefer when someone does their homework and ask me a lot of questions. Because my statements are hopefully supported by their research.
I had a gentleman that was going to… We’re gonna buy his house for cash. He lives in a really exclusive town. It’s a big house, it’s a fairly big house. About 3,000 square feet. It needed a lot of work. A lot of work. So I was gonna have to put a lot of effort into it. A lot of stuff in terms of HVAC. It was just gonna take a lot of rehab. And I was going over some of the stuff with him in terms of those cause. And I said also, one of the options is to list it. And I explained… He was on a little bit of a main drag and I told him, if he was like, on the side road, you probably get a 100,000 dollars more for the house. And these houses are expensive anyway. And he said, “Yeah. You’re right Joe.” Because he did a lot of research because he was disputing that with the township for the property tax. So he did an analysis and everything, but he did the homework. And it justified a number of statements that I made. So he felt more comfortable also with me because he could tell I was telling him the truth. And that’s a big factor. Because whoever it is goes into a new situation with a potential client, you’re not gonna trust that person for the most part. That’s the way it is. Some people are just very trusting, but most people are gonna have their guard up. And that’s understandable. And that’s why for us, we have great reviews. I have a background in terms of past work with managing large sums of money for the business that I was working for. And I’ve been interviewed for Forbes, Fox News, a number of different outlets as well as… I’m on the Forbes Real Estate Council. So again, all those things stack up to something that’s just, I’m not a flyby knight, We’re not a flyby knight. We have a great reputation and that’s what we make sure that we want to keep, always a good reputation.
I’d like to do a quick shout out to a couple of our favorites that I always talk about. And of course, that’s Paulette, a famous Crossing Guard from Livingston. As well as Tim from City Grove Water Department. We have a couple of new listeners that had called me. One is Susan G, and her husband John G. So hey guys, welcome to listening and thank you very much for all the kind words that you have given me.
So coming up, one of the things that I’m gonna be doing is, I’m going to a conference in a Mastermind that I belong to. And we always share ideas with the top 150 flippers in the country. And we share our horror stories and what’s going good, what is not going well. And we learn from each other. What I’m gonna be doing is, I’m gonna have one individual from my company attending that. And there’s another Mastermind going on for a large multi-family property. So I’ll be attending that one. And again, we spend, I spend just on myself, probably close to at least 60,000 dollars on different types of education annually. And that’s the only way we stay ahead of the curve. So that’s very, very important to us. And see what the emerging trends are. Especially when we’re looking at it from a national perspective. So you look at things locally, but you also have to look at them from a national perspective. I say that all the time. Because certain parts of the country might turn to the downside or upside, it depends what it is. Depends on what time of year where you are in the life cycle of anything, especially real estate. And you see what’s going on, so then you could prepare accordingly. The areas that are the most expensive always turn down first. They always go down first. And then the other ones follow suit. So it’s always good that you have a pulse on it. I might have someone from LA or San Francisco saying “Yeah Joe. We’re having some challenges now selling houses. And we’re starting to see some problems. Or, “Now we’re still, everything’s doing well.” So we’ll see. Right now, Jersey of course is not, we’ll say the leader in terms of people flocking to the state. Usually, people are leaving the state more than coming to the state. And we’ll see how that impacts it. So we might be one of the first ones, or New York, or New Jersey, things like that as opposed to in the previous down-cycle where you had Las Vegas turn negative first, parts of California, parts of Arizona, things like that. So we’ll see and we always try to keep, like I said, a strong pulse on that. That’s very, very important to us. And seeing where everything’s going. We look at economic factors very closely. I have my Wall street Journal and I’m always looking at things. We’re always talking about that because we have large investments. And our goal is to get in and get out as quickly as possible. And right now we’re seeing a couple of towns that are concerning us a little bit. And we have a house in one of those. That will always make money. I’m not really concerned about that as much as how much money. So that’s the question. So we have one town, Long Valley. It seems things aren’t moving as quickly as we would like. I’ve seen a number of houses priced around our price range. Our house right now is not on the market. But we’re starting to see some reductions. And so, it’s a little bit of a concern to us. It might just because it’s July, August coming up. Not that summer is not a strong time but, might be just that. So many people are just beaten up by Covid, that they’re on vacation. They really don’t want to think about it, so on and so forth. A lot of families though, do like to shop in the summer for a house and be well-established before the kids go back to school, so they could start a new school. But we’ll see. Right now, the other trend is obviously, there’s a good with mortgage rates. The rates are still really good. So that’s a positive factor. But things have been brewing and I continue talk about inflation, things like that. So there is a concern on that side about that and how that’s gonna impact certain things. So we’ll see. But time will tell on that, but we’re looking very, very closely at inflation and where it is, and what’s gonna happen with that, and how that’s gonna impact everything from our multi-families that we’re looking at, to our single-family houses. We have individuals that are calling us. You know, they’re kind of concerned also saying, “We really want to sell our house. We want to put it on the market.” We work with both types of people. Those that need to sell their house fast for cash and those that do not, that say, “I’d like top-dollar and I’ll wait.” And that’s a good thing. But we cater to both types of clientele.
We have a number of things coming up. I had spoken about last week. I had a woman, she has a really nice house and it was inherited. They pulled the tank. The tank had insurance on it. And I don’t think I made that clear last time. I talked about insurance. But did not talk about that the tank had a posse on the tank in the event that it leaked. And it did leak. And it leaked bad. And it leaked into the groundwater. And she’s still cleaning it up. And she wanted me to come by. I was a little hesitant. And we’ll see. I said, we’ll see. And then after that, I made an appointment and I asked her more questions about the leak. And I wanted the report. And then she was getting a little cagey about that and a little worried. And I said, well, I have an environmental scientist that wants to look at it. And she wanted to know who it was, and so on and so forth. I’m not sure why, because he knows she doesn’t know the different companies out there. But I told her who it was. And then she was more hesitant and then I said, finally I said to her, how about we just cancel it? And I said to her, I said, I’m gonna do my due diligence. And she was, I guess a little naive, or I’m not sure what. Because she just assumed that I just go there, buy it, and that’s it. And that’s not the case. I still have to do my due diligence. And any person that’s gonna invest money should be doing that. And with that being said is, I look at the issues. I look at the risk. And then I price accordingly. If there’s extreme risk, like any wise investor, they’re not gonna get as much money. It’s just that simple. And for this situation, I was not gonna give her a lot, relatively speaking. But she would have came out of that and saying, “Oh, he could make so much money if he sells it at the top price.” And I’m gonna come out of that saying, well, I could lose X amount of dollars because I’m not gonna be able to sell it. So there’s two perspectives on it. So when I price something, like this, that’s very extreme in terms of an issue, I’m gonna price it accordingly, with the idea that I might lose the money. So I might lose 200,000 or 150,000 dollars based on this. Because it might not be sellable. Because no mortgage company’s gonna underwrite it. So all those factors come into play.
So let me close out this segment. Thank you very much. Again, you can call us at 973-240-8593, or templarcashforhouses.com. Thanks a lot and I’ll see you shortly.
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, that’s one word. Again, if you need to sell your house fast, please give us a call. We could buy it for cash or we could list it through the Traditional Multiple Listing Service. Again there’s no obligation. We’ll go out. There’s no fees associated with it. We’ll give you a price. We agree upon the price. We’ll set a closing date. And then we’ll buy it as-is. It’s really pretty straightforward. The contract’s pretty straightforward too. We really don’t have too much pushback from any attorneys because of its simplicity. And we’re accepting all the risk. A lot of times we go into these houses, and even the owners don’t realize what’s lurking under things, behind walls, things like that. We open up walls, all of a sudden we have issues. Lot of times our budgets do get, go over definitely. That’s why one of the things I do like is condos, or townhomes because it’s somewhat limited to the walls inside the structure as opposed to outside the structure, which just adds additional complexity. And it just adds a lot to it. Even though you wouldn’t think so, it does. And that’s the problem. It’s just the additional complexity. We don’t have to worry about the outside. We don’t have to worry about the vinyl siding or the painting or the roof, or the grounds, or anything else associated with it. It’s really just the windows and what’s on the inside. So it’s pretty segmented and relegated to a certain area, which can control your expenses considerably. And that’s a good thing. But when we get some of these houses, all of a sudden we just open them up and it’s just, it’s one horror story upon another. We’re looking at one where the ceiling was sagging. And we’re like, we weren’t sure why it was sagging. And we started to open it up a little bit. And a previous contractor glued the sheet rock, or the drywall to the other drywall. And there was no nails really keeping it up. And then all of a sudden everything came down. So all of a sudden, something that we didn’t expect to be really fixing that much is all of a sudden, as a result of, a whole ceiling has to be replaced. So it’s just one thing upon another. And that happens a lot.
So one of the things that I’d like to talk about is really structuring deals and it’s always a dynamic process. I spoke about this one deal that we’re working on. It’s four parcels of property in different towns with five houses. So one parcel has two houses on it. And I said before that, a couple of them had underground tanks, or partially underground tanks. And we did some soil tests associated with it. And it came back where the, what they call the soil’s dirty. So it means that there’s some type of environmental issue. There’s one specifically has to do with oil in the soil. And it got some prices back to remediate that and that’s to remove the tank, as well as clean the soil. So basically, they’ll remove the soil, bring it an EPA site that’s designated, and then they’ll put fresh fill in. Before they do that, they’ll start pulling the soil out and then doing some tests and determine if the soil’s clean or not. And then if it is, they’ll fill it in. If not, then they’ll have to dig more out, so on and so forth. So, of this one deal that has four parcels, like I said, there’s two tanks that are buried, or one that’s half-buried. It’s underneath a porch. So it’s partially buried. And they’re leaking. We got prices back, approximately 13,000 dollars each. One is probably a little less. And I said straight up in the contract, I made it very clear, I said that, if there’s a problem with the tanks, we’ll have to discuss it. And we’re not really going to pay for it. But we’ll figure something out. And the situation is that, the gentleman, unfortunately, he doesn’t have any money to pay for that cleanup. So we said, we will do that. And we want to do it before we close. Because what might be 13,000 might not in the end be 13,000. It might be, I don’t know, 14,000. Not 14,000, maybe like 40,000. So we need to know what it really is beforehand. And if I told him 13,000, they gave me the 13,000 and then afterwards it was 40,000, well it’s gonna be hard for me to collect, easily. So I want this resolved sooner. In addition, if, like I said in the previous broadcast, if it hits groundwater, that could cause a lot more issues. So I want to clean it beforehand to understand what my total exposure is. So as result of that, I had to figure out a good way of crafting this addendum, which my attorney would eventually write up. But I had to figure this out. So we had a couple of options. The first option is that, I do the work and whatever it is, it is. And if we decide not to close on the house because of the environmental damages, we’re gonna put a, it’s called a UCC lien on it. And when he did sell it, I would get the money. That’s one option. The other option is that we would not buy the house. So that’s a possibility. But at what point? So the way we decide it, and the way I figured out to craft it is this, is that we would do the initial remediation. We will continue with it until it got to a point, in the event this happens, that we will continue to clean it. And if it became at a point where it was just, we feel this cause prohibitive. And I don’t really know what that number is to be honest. Because it wasn’t gonna come out of our pocket in the end. But if I didn’t see any light at the end of the tunnel, then that would be an issue. Like I said, with that one woman that had the tank and it went into the groundwater. And she doesn’t know when that was gonna be cleaned up. It could be done in five years. So under that type of scenario, I would have probably just walked away with it. But I already spent the money, so I did not really want a lien on that property because who knows if it would ever be sold. So what we said is that, we would buy the other two properties and once those properties are sold, it would come out of their proceeds. The other thing that we would do, is because we’re using lines of credit, we do have to put some money up. It’s like 10% approximately. So what we would do with that is, we would purchase the property at the price that we had stated. And then we would get a check for the cleanup. And the reason we would do it that way as opposed to reducing the price of the property, at the end, when we would close, is because the money that was expended for the cleanup, that’s just cash that comes out. And cash is king. So we always want to preserve our cash and use lines of credit where we could. So we would purchase it at that price that we stated. And then we would get a check back and that would reimburse us for the money. So that’s the way that we would do it. And again, that would save us in the end. Because then we have our cash and we could do more deals, or whatever the case may be. Any investor that says that they have unlimited funds or so on and so forth. That’s just not possible. They might be well-funded, and we’re well-funded. But to say that, you can just spend money and spend money, that’s crazy. It’s just like a bank. Even banks have to have certain limits in terms of, based on branches and things like that, about what their reserves are, and how they spend the money. It’s just the way it is. So we make sure that we keep reserves. Make sure we’re very strong financially, so we cover everything that comes up and those things that don’t come up. So that’s why we look at deals. When we look at them, we structure them a certain way because of that. So with this one, we will say that the first house that we closed on with him that we will get, from the proceeds, we will get to cover our remediation. Now if we close before the remediation starts, that money goes into Escrow, for the estimated amount plus, I had it like, 10,000 more, or something like that. So we could get reimbursed as soon as we expend the money. And he needs to sell, I don’t know if there’s some issues. There’s some issues with that. I’m not sure why he needs to sell, but he’s very, very anxious to sell. The one house that has the oil tank, the house is burned down basically. And it’s underneath the porch. So it’s half underground, and half not. It’s above the ground. And I think someone died there because there was a cross outside. I think he’s very anxious about that one. There’s some suit going on. So I’m not sure what’s going on with that. And I don’t ask those questions. I don’t need to ask those questions. He’s coming to me to fix his problem. That’s what I do. Sometimes I’ll ask, just to get a general idea to help with the solution. But he’s a private person so I’ll just leave it at that. But we’re here to help. So we’re here to help in sticky situations. We’ll put it at that. Very, very sticky situations.
Well I’m gonna have to close out today. Again, have a nice weekend. God bless. Take care and everyone be safe please. Also, before I forget, you could reach us at 973-240-8593, or templarcashforhouses.com. Again, thank you very much. Be safe, God bless, and take care of your family. 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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