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 November 14, 2020
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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:
Hi, 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, and 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 and we could answer any questions you may have, or you can email us from our website. We could address any of the topics that you’re interested in talking about on our talk show, if we could fit it in, definitely, we’d be more than happy to answer any of those questions, again, on the talk show or directly with you.
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, and provide transactional and gap funding. We work with individuals that want to invest with us in single-family houses up to apartment buildings. We do not speculate and we’re very protective of our money and our investors’ money. I’m not a real estate agent and we’re not a brokerage, but I have individuals on staff that are agents that could sell your house through the traditional Multiple Listing Service.
This show will go through 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 adjusted accordingly. 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 going to provide you with my opinion, it’s only my opinion. I strongly suggest everyone do their own research and do as much as possible. Again, ask people for advice, people that have previous experiences with either a contractor, an agent, so on and so forth. What I always say though is that you gotta ask the right questions and sometimes, it’s difficult to figure out what the right questions are. One of the things that you might do is just ask lots of questions and try to delve into it and really dissect everything, and once that’s done, sometimes, you’d get to really understand how the person is or any issues that may have occurred, and I think that’s the best way, just not do recommend someone, ask about the experience, ask about what they did well, what they did not do well, what bothered them, what did not because one thing that might bother them might not bother you or vice versa, so if the person’s not on time, that might be a major issue for you and you don’t want to deal with someone like that. So by asking a lot of questions, I think you could possibly get to somewhere where you feel very comfortable or fairly comfortable with an individual or a company.
I’d like to do a shoutout to some of my listeners, Tommy K., Lisa V., and Paulette. I would also like to thank my investors that invested in one of our properties we just sold, Susan and John K., John is a police officer and Susan is a retired teacher, so they invested in one of our properties and it was completed, and then they got their check, so it worked out really well. Sometimes, you might hear a private investor, what’s a private investor? So basically, it’s an individual that invests in some type of project, whether it’s with us as real estate investor or it could be for a regular business and that’s what really private means. And again, for us, we handle all different types of properties, single-family properties up to apartment buildings, and when we have an investor, we pay them an agreed upon interest rate and that’s either paid on a monthly basis or at the end of the project, it depends what type of project it is. If it’s a short duration project like for a rehab of a house, it’s usually paid at the end, whereas if it’s an apartment building and we’re keeping the apartment building for X amount of years, then what we’ll do is we’ll pay the investor on a monthly basis, but it really depends on the discussions I have with the investor, what they need. That’s the biggest thing, is what they need and we always try to work closely with that to ensure that their needs are met.
Again, we have calls constantly, they are all very private so we don’t really discuss anything, we don’t, the word is, we’re very discreet when we speak to someone and we are not going to violate their trust, and that’s a really big thing.
I had a number of calls this week on individuals that called for a family member on some hoarding houses or houses where stuff, with lots of junk or just as we say, it’s just, there’s a lot of furniture, some trash, things like that, and they called me and said, “I have this hoarder house, trying to have my brother sell it,” and one of the things we encounter a lot with individuals that have hoarder houses is that it’s very difficult for them to leave, and we are very successful when we are able to consummate our relationship and agreement, but if I was going to look at it from a percentage perspective, it might be only, like, 30%. The other 70% is the individual is just not ready to leave yet and that’s part of the challenge, and we try to work as best as possible, but if a family member is trying to help another family member out, sometimes, they are just not ready. The family member wants them to move on for their safety or from a health perspective because it’s not a healthy environment a lot of times, but it doesn’t always occur and it’s just the nature of what it is, but we work closely with those types of individuals, and I had one where I said to them, I said to the gentleman, I said, “Whatever your mom wants, we will move, we will take and we will help remove it, and I will hire a crew,” and stuff like that. He says, “That’s fine, Joe, but you’ll probably want everything.” I go, “Yeah, that’s a good point.” But if there is a need, we are always there and we always craft every solution uniquely for the person and their needs, and that’s the biggest thing, that’s very important to us and our clients love it as a result of that.
So I’m going to talk about a few things that occurred this week. One of them is that we have a house up for sale, we put it back on the market, we had full asking last time on it and we ran into some issues with the attorney, as I said last week, but this week, so we had an offer come in, it was, like, $45,000 less than our asking price, so we didn’t even entertain that one and I’m not even sure, I guess some individuals want to be strong negotiators but it leaves a bad taste in anyone’s mouth when that occurs. It doesn’t matter if it’s us or we are assisting a person in selling their house, when it comes in considerably lower, it was priced correctly, then it just doesn’t go well, and we just decided not to really counter on that one and the agent for the buyer came back and said, “Well, what are you looking at?” We said, “We’re looking really at probably full asking,” and then she said, “Well, what’s the lowest you’ll take?” And again, when you’re talking like that, it’s just, they’re not interested or it just doesn’t work out, and we just said, “No, I’ll think we’ll pass on it.” That’s really important, that whatever side you’re on, that you gotta really watch how you take it from a negotiation perspective because then, it leaves a bad taste in the person’s mouth and you don’t want to do business with it, and you want a relationship, even though it’s a business relationship and you have two sides, things go a lot better when you’re very ethical and you come across as something, “Well, I need this,” you might go back-and-forth a couple times but it’s really your approach and a lot of times, we might have, when we are selling someone else’s house, the buyer comes back and says, “I want everything fixed.” Again, when that happens, you really have to come back and say, “I’d want the important things fixed,” the safety issues fixed, but not everything on the inspection report. Sometimes, attorneys do that but I frown upon it and our attorney doesn’t do anything like that and we don’t recommend that at all. Again, it’s establishing a relationship where everyone feels comfortable and when you do that, you get a lot farther and the transaction goes a lot smoother.
Another thing that’s occurring is that the market’s still very hot but with that being said, some of the higher priced homes are taking a lot longer to really sell. I spoke about a friend of mine that did a house where he chopped off the roof, and then built straight up, beautiful house, and right now, he has it on for $769,000, and he says, “Joe, getting traffic but I’m not getting any bites, really,” and that’s the thing, and he might have to drop it. I thought when he listed it, it was a little high, and that’s the thing, is pricing it correctly, and he put it in. He said, “Well, I’m going to make $130,000.” He’s put a lot of money into it, it’s a three-quarters of a million-dollar house, so to make $130,000, there’s a lot of risk involved, but with that being said, it wasn’t priced correctly. As a result of that, he’s going to have to drop the price. He said probably another $30,000 or $40,000, so that’s a lot of money, and again, the time and tying it up on the market, and then they start seeing that and you list it for $739,000, someone’s going to come in at $729,000 or $725,000, so that’s the issue, is that once you drop it like that, things start accelerating in terms of the downward pressure.
I saw the house the other day, it was approximately, it was listed at $650,000, there’s some structural issues, and he’s dropped it numerous times. Originally, it was $650,000 and he’s dropped it $150,000. If you are dropping a $650,000 house, dropping it $150,000, I’m telling you now, it wasn’t priced right, and that’s just bad, and when you do something like that, it just, it gets worse. Now, it’s at $500,000 and he’s not going to get $500,000 for it. He might get $450,000, but he’s not going to get the $500,000 that he’s listed it at now, and that’s the way it is. So one needs to be very prudent, especially on higher-priced houses in terms of pricing it correctly, and that’s with any house but especially on high-priced houses, gotta price it correctly and you need to have an agent that is going to be savvy enough to know how to price it.
Well, I’m going to close out this segment. Again, if you want to call us, you could call us at 973-240-8593, thanks.
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.
So on the previous segment, I talked about housing in terms of the higher end housing and pricing that correctly, and that’s something that I always preach on, to make sure it’s priced correctly because when you have a disparity like that, that’s $150,000, it’s just not priced correctly, so some of it is the agent’s fault and some of it is the homeowner’s because they sometimes think that they have something that everyone is dying for, so sometimes, the fault gets spread around it and it should as a result of that. We had an instance where we had a house, we spoke to the client and said that it should be priced around $350,000, and that individual was talking to someone else, also a developer, and the person said, “No, he says someone will buy it, the builder will buy it, and you should list it for $400,000 or $410,000.” I think it was $410,000 and we are saying $350,000. We talked and said, “Okay, let’s at least put it below $400,000,” even though we do not think it’s going to sell, so we did that, didn’t sell, reduced the price to $389,000, I think, and then $379,000, it still didn’t sell, and then after six months, the individual was frustrated that we weren’t marketing it correctly and blah, blah, blah, and they canceled the contract. Now, they have another individual that’s selling it. It’s basically the same price and it’s been on the market now for another six weeks and it still hasn’t sold, and that’s the thing. Marketing, we do do marketing but the marketing only goes so far. It’s based on the price, and if someone sees a price and they don’t think it’s worth it, they’re not going to put an offer in, especially if the difference is considerable. People don’t realize that and you really gotta price it based on where the market is, not what you think it’s worth. It’s really what the market is going to dictate, and if it is done correctly, it will sell pretty quick, especially in this market, but as I said, I think the market’s going to tighten up a little bit and especially some of those high-end homes because you have a home that $700,000, almost 3/4 of $1 million, and it’s a lot of money, it’s a lot of money, and I was talking to one person, they said, “Well, if the interest rates stay low, it should be fine,” and that’s part of it, but there’s another part that’s probably even more important, and that part is confidence, confidence in the economy, confidence in what’s going on, and when individuals lose that confidence, they just, they want to buy because they’re apprehensive. If you’re confident in your job, if you’re confident that you’re going to have a job tomorrow or a year from now, you’re going to buy. If you’re not confident in your job or not confident in the economy, or what’s going to happen, you’re not going to buy, and that’s the basic thing. Right now, you have a lot of individuals that don’t have jobs and they’re going to rely on the government to eventually bail them out or to some extent start paying them, but the challenge is that when government assistance does kick in, it’s not going to be able to fix some of the bills that have already gone into arrears and they owe money on it, and in the end, that’s going to hurt that family and also eventually, the economy as well and other businesses. So even though the government might provide more money to individuals, it’s still not going to fix some of the things that they owe money on. They’re not going to be able to give enough money for that, and that’s a problem. They might be able to pay existing bills or new bills coming in, but the past bills are not going to be able to address and that’s going to be the same for the housing, the mortgage is associated with it, and so on, and so forth. So as I’ve been saying, I’m not very bullish on the economy going forward and I think it’s eventually going to catch up, and we’ll see where it goes but I do not see that any type of government assistance is going to correct some of this that’s been out here for the last six, nine months, whatever the case may be, and we’ll see where it goes but I’m not really very bullish on the environment and the economy.
Next thing is cost for materials. I have been talking to a couple of builders also and our building costs have gone up considerably and as a result of that, it’s challenging certain builders and because of that, the profitability of some of these builders is going to be really challenged. One individual that I was talking about that has the one house that’s listed for $769,000, well, he has another house next-door to him which I had sold him that needs a rehab and he stopped construction on it because the prices went up so high, and he said, “Well, no, I’m seeing, Joe, the price is coming down a little bit but they’re not coming down that fast,” so right now, he has a house that he’s not building on that he’s paying interest on and we will see where it goes, and he’s not going to be able to probably get that $769,000 that he’s trying to get on that house next door, so what’s he going to get it at? I don’t know. When I sold it to him, I said that was my concern. I said that’s why you wanted me to go into partnership with him and I says, “I’m just not that bullish,” and that was back in July, so he purchased it in July, July or August, and right now, he still hasn’t done anything with it and it will probably take him three months to build it and build it out. It was pretty quick last time and like I said, he did a really good job but with the cold weather coming in, he could be hampered with that. Of course, he’s got to get up to sell the house once that done, then it’s just smooth sailing, but right now, we are approaching Thanksgiving and we will see where the lumber prices are, but I think he’s going to have to jump on that pretty soon and that higher price for the lumber is going to really put a dent in his profit.
I had another house that I was at yesterday and he was a builder. He had a beautiful house, it was a family’s house, it was a red brick ranch in Tamworth and he was trying to sell to a builder, another builder and he didn’t want to do anything with this one, and it has a wide lot, so he said, “Well, you could subdivide it and then build two houses,” and I was looking at it. I was like, no, I’m not doing anything like that right now, and the lot wasn’t that deep, so you couldn’t go back that far and then it sloped down so you can’t really regrade the back too much because you can have a run off into the other yard, and so there was a lot of challenges with that layout in terms of the plot, so I don’t know who’s going to buy it. He said someone was going to offer him $480,000. We said that we would list it and he just wanted the $480,000, and I think he’s going to have a challenge getting that, any builder that’s going to get that, he’s going to have some challenges with that as well in terms of the way the lot is, and then I think he needs a variance also, so it’s just one thing upon the other, so I see that is a recipe for disaster.
One of the other things I was talking to one of my friends, he’s a broker, and he was talking about his frustration with getting good agents, and when I bring on an agent, I’m bringing on someone that I’m very, very comfortable with that’s a high performer, and I have high expectations because I want to make sure that those individuals that support our clients are of the best, simple as that, and a friend of mine, he’s a broker, like I said, and he’s the same way, and there’s always a lot of frustration with him. Every time I talk to him because he always has a challenge finding good agents that are willing to hustle or are savvy, and just want to put in all the time that’s needed. Certain agents unfortunately say, “Well, I work a couple hours a week or per day,” and he’s like, “I don’t want anyone like that,” and you gotta really put in the time, you gotta do the cold calling, you gotta be disciplined, and he’s very successful, and because he’s very disciplined and very strict with certain things, as a result of that, he’s doing really well, and hopefully, in the future, we will be able to do a few things together ourselves. We haven’t been able to see the right project but those are the types of individuals we work with, is those that have high expectations and want really good quality work and effort, and bring on the best, and sometimes, it’s difficult bringing on the best. We’ve brought on an individual for our marketing and she’s a dynamo and I’m so blessed that I have her, and she just continues to take on difficult tasks, and whatever I give her, she’s like, okay, no problem and that’s what I want to hear, is ‘okay, no problem,’ or just ‘okay’ instead of why someone cannot do something, and our teams that we build out, that’s what we look for. My contractors, that’s what I look for. My contractors I look for, I give them a call, they pick up, we hash things out and move forward, and you don’t always get that. But if I don’t get it, then I don’t deal with them. It’s pretty simple.
But I have to close out this segment, thank you very much for everything. Hopefully, you have a great weekend, and God bless and take care.
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.
END OF RECORDING