Anthony Lolli is the CEO at Rapid Realty. He gives us some tell tale buying signs that he sees from his clients. Anthony can tell from a client’s behavior if they are saying “yes” when they really should be saying “no.” Anthony thinks a client’s demeanor can help determine the right type of property for them.
Anthony also explains if real estate agents always have resale value of property on their minds when evaluating a potential sale. Find out more about Anthony Lolli at http://anthonylolli.com. Visit Rapid Realty at http://RapidNYC.com.
Female Voice: Welcome to Creating Wealth with Jason Hartman. During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness then you ever thought possible. Jason is a genuine, self made multi-millionaire who not only talks the talk but walks the walk.
He’s been a successful investor for twenty years and currently owns properties in eleven states and seventeen cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it. And now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman: Welcome to the Creating Wealth Show. This is your host Jason Hartman. This is episode number 318. I have been busy traveling and I’m sorry we haven’t gotten an episode out to you in — gosh, I guess it’s been over a week now, but last week I was in Chicago. I was at an entrepreneur’s conference there and it was very interesting and educational, and we did some charity work there as well, and had a little fun.
So that was a good time and now I am in California this week, doing some meetings and so forth out here and look forward to getting back home in Arizona. Everything except for the heat, it is starting to get a little warm there but you know what they say it’s a dry heat, right folks? At least that’s what all the real estate people say.
Anyway, today we’ve got a great show for you and I just want to remind you of our ten commandments of successful investing and one of those very important commandments is, thou shall not gamble, and I talked about commandment number three a lot. This is not commandment number three. I want to talk about the gambling thing. This is number five and what that means is, it means that when you invest you shouldn’t have to expect anything great to happen to have a very successful investment. And what I mean by that is, so many people who call themselves investors, they basically “invest” and I’m saying that word in quotes because I don’t think it really qualifies as investing when they’re expecting appreciation to occur. That is speculation, that is gambling and that is very reliable. But as you know cash flow is pretty darn reliable. Now, nothing is perfect, nothing is one hundred percent. Mostly it’s less than one hundred percent reliable but sometimes it’s even a little better than one hundred percent. In other words, if you’re — if one’s expectation’s going into the deal are one hundred percent and that everything will turn out exactly as planned on the performer, sometimes the expectations are met, sometimes they’re actually exceeded and sometimes more often than not, they’re a little bit less than what was expected.
But as I always say, even if it doesn’t happen as well as expected, you’re still doing better than pretty much everybody else because of the special multi-dimensional characteristics of an income property investment. this brings up a good point because I — I talked to an investor today who was actually upset with a property, a four plex that he bought, and one of the units has had some pretty significant problems, an eviction, loss of cash flow, etcetera. But the other three are doing fine.
So if you parse this up and look at that as twenty five percent for each unit, well seventy five percent of this investment is going phenomenally well and not only that, this is a — this particular investment had a phenomenal projection and I don’t know what the actual projection was off hand, but just given my experience in this particular market that I’m speaking of where this person bought, this projection was probably in excess of thirty percent annually overall return on investment and the client himself, when I asked — okay, look at let’s get this in prospective here. Let’s not be too terribly concerned about this one unit that is having problems, this one of the four, and let’s look at the whole deal.
Have you done any calculations? Hopefully you’re using property track when this client said he wasn’t. Folks, I really want to admonish all of you. Property tracker is a critically important thing and not enough of you are using it. Again, I don’t profit from telling you this. I just want you to be a better investor and you can be a much better investor if you’re using the property tracker software or at least some software to help you analyze — and not only analyze but track your investments.
Well it turns out this client was just doing it manually, which you certainly can do with a calculator or a spread sheet. Way back when I got into the business — I’m a bit of an old timer here, we just used the Hewlett Packard 12c calculator, the — the famous HP 12c. And I remember I took a three day class on just how to use this HP 12c calculator.
Well needless to say, this was over twenty years ago and they do [inaudible] how long ago this was, but you can do it a lot of different ways. You don’t need to use the software, but I certainly advise you to do exactly that.
Anyway, so this client by his own calculations was making an eleven percent cash-on-cash return. Hey, that’s pretty darn awesome. I mean, that’s what — it’s twenty two times better than you’re going to do in the bank, twenty two hundred percent or better of a bank account. I can’t even estimate what it is on a mutual fund because on a mutual fund you might lose money or a stock investment, you might lose money, so I can’t even compare there, but suffice it to say perspective is incredibly valuable.
Anyway back to the point her, thou shall not gamble. The property makes sense the day you buy it or you don’t buy it and I originally recorded today’s guest, who I like very much and I — I like a lot of his ideas. I originally recorded it for my AIPIS Show, accredited income property investment specialist. It’s a — it’s a four of the trade show, if you will for financial planners, realtors, mortgage planners and mortgage lenders and people like that who want to cater to investor clients. Well, I wanted to play that for you on this show because I think it’s very — very good at illustrating kind of a speculator’s thinking. And again, I — I’m not a speculator. I have made money speculating. I’ve done quite well speculating, but the important thing to understand is that this is gambling and sometimes gambling wins and sometimes gamblers do well. And now in many of the over priced markets, like California, New York and some other areas around the country, in — in many of these markets, we’re — we’re seeing that speculators are kind of winning again and they go in cycles, but at the end of the day you’ve got to remember, it’s like that game of musical chairs. Sometimes the music stops and you don’t want to be the one left standing or the one left holding the bag. That invariably happens in every cycle. So, thou shall not gamble. Invest for cash flow. Cash flow is pretty darn reliable. Appreciation is not reliable at all.
And you know, again it reminds me of that conversation I told you about on a — on a recent episode that I had with Doug, and he’s been on the show before and he has spoken at several of our Meet the Masters events. Well, I — I said Doug you know, you do a lot of financial planning — well, not financial planning, financial modeling I mean to say, a lot of financial modeling for your work in the — in the big corporate finance world.
Well, we got to really think this through, you and me and the other advisors and people that help create content for my company. We’ve got to — we’ve got to think this through and come up with a — a formula or a way that we can figure out how to predict appreciation and he — he — he leans over and gives me this knowing look while we’re sitting at the table and — and this was at the last Meet the Masters event at the Hyatt Regency in Irvine, California, in January. And he — he says Jason, I’m not that good. And you know, I agree. Nobody’s that good. Appreciation is extremely difficult to predict.
So, if you want to be a — a prudent safe, conservative investor, hey invest in areas that you think appreciate but don’t depend on them to appreciate. Invest in income. Invest in cash flow because by and large over time, it’s pretty darn reliable. Not perfect, but pretty darn good. A lot more reliable than trying to predict appreciation and trying to be a speculator and — and gambling.
So, our first chance we’ll talk about that, and if we have time I want to do a recent interview we had with our Austin, Texas local market specialist. Now this is something we brought on a few months ago and we have not aired the show. Sometimes we do this, we’ll credit go into a market and get — now, for those of you clients who have been around a long time, you know that I’ve done a lot of business in the Austin market over the years. I own property there myself. We put probably two hundred investors into that market, but we haven’t really been able to make it work for quite a few years now, so we stopped recommending it because frankly, it’s just a more expensive market but a very, very appealing market at the same time.
But we’ve recruited a couple — a couple — three or four months ago a new local market specialist there who actually has some pretty good inventory and if we don’t do that on this show, if time doesn’t permit, we’ll do it on the next episode, on episode number 319.
So, I’m going to let our producer decide, depending on how time goes after our first guest. If we play the Austin, Texas local market specialist interview or if we do that on the next episode, but in either case, if you’re interested in Austin, Texas which is just a fantastic city, really, really a great city, check with your investment counselor at my company. You can contact them through Jasonhartman.com, the website, or go to Jasonhartman.com, click on the properties section and look at the properties in Austin, Texas. And again, we have not been in this market for several years now and we’re recommending again, because we found some good inventory. So, check that out and again we may or may not get to that interview on this episode. But without further adieu, let’s get to our next guest, our — our guest here, and let’s look at a market that again, we don’t recommend, but it is interesting to get a prospective on this market.
This guest is a very successful real estate broker in — in a market and I’ll — I’ll tell you in a moment just what it is, in a market that is very competitive, very high priced and a market that I wouldn’t be recommending, but he’s got some very interesting insights into that market and I think you’ll really enjoy the interview, and he’s a great guy and a very successful business man. So, you may gleam some tips there, as well. So, we will be back with our guest here in just a moment, talking about — you didn’t think I was going to tell you did you, New York City. Yes, amazing. You’ll probably never hear that on this show again, but New York City. So, we’ll get to that in just a moment here and possibly Austin, Texas as well. And we’ll talk to you on the next episode, but we’ll be back with our guest in just less than sixty seconds.
Female Voice: Want to know what you’ve missed in the Creating Wealth Series? Well, here’s your opportunity with Jason’s five book set, that’s shows one through one hundred through digital download. You save two hundred eighty eight by getting this five book set. Learn all of the advanced strategies for wealth creation. For more details go to Jasonhartman.com.
Jason Hartman: It’s my pleasure to welcome Anthony Lolli back to the show. He’s a CEO at Rapid Realty in New York City and we’re going to talk a little bit about the investment outlook and what’s going on there. Anthony, welcome back. How are you?
Anthony Lolli: Very good, very good. Thanks for having me back.
Jason Hartman: Well good. So, you know we just talked for literally thirty seconds before we started the show today and — and we both very, very quickly agreed that the market is improving quite a bit. Talk on a national basis, if you would for just a moment outside of your local market and let us know what your thoughts are and — and then we’ll talk specifically about what you’re seeing and hearing in — in the big apple.
Anthony Lolli: Oh what’s happening nationally is you have institutional investors buying up a lot of these properties. You have things like the bank’s expediting foreclosures a lot — a lot quicker. There’s been a couple of laws that have been passed, like in California. This January there was a law that stopped the banks were foreclosing on people while they were in the middle of loan modifications, which kind of slowed down the pipe line. Then you have other things like rebound investors, basically people that — that foreclosed on — their credit was mangled but then a year or two later now they’re back and they’re ready to buy again. So, there’s all sorts of things happening in the real estate atmosphere that’s strengthening up the confidence you have, specifically like the Toll brothers now investing in properties mainly towards rental related properties. So it really kind of gives a — a — a vote of confidence to the consumer, but what’s happening is, people are being outbid on some of these existing homes, specifically if you’re selling right now, you’re in a great position to sell for above asking price because there’s very limited inventory.
Jason Hartman: What are your thoughts Anthony, about the inventory hangover? You know we used to hear that phrase all the time. Now we still hear it a bit and I still think it’s out there to some extent, however I don’t — I really always debunked it a little bit. I mean of course it depends where. That’s the huge question is where, but – but what they never really accounted for in this inventory hangover discussion was that they would predict, for example, when adjustable rate loans were adjusting and thinking that at that time people would have payment shock, and if they had payment shock, they wouldn’t be able to afford the payments and they would ultimately enter foreclosure and be back on the market and that would create a lot more inventory.
But what they never bothered to think about, at least in almost every survey I saw, was that a lot of these problems are worked out at the loan modification level or the property is sold and maybe it’s sold in a short sale either way, or you know some of them do end up in foreclosure and then the other thing they never considered is that — and you eluded to that just a moment ago, is the rebound or the recycling where these — these people that are kicked out of their house have to recycle into the renter pool, actually increasing demand for rentals. So, as an investor looks at the market, okay take one position say there’s a huge inventory hangover now — now it’s lower, you know they’re saying, two maybe three million homes, but before they were saying seven to ten million homes, really a huge number, frankly. And – but you take it from an investor prospective well, even if there were a lot of homes coming onto the market in foreclosure, maybe softening prices, still though there was a lot more demand for rental housing because when foreclosure happens, the person is still alive.
Anthony Lolli: Yes.
Jason Hartman: They sill have to live somewhere. That’s what — that’s what none of these surveys ever seem to understand that — that — that the doom and gloomers never really get the whole picture, it seems like.
Anthony Lolli: Sure. Things happen. People are — are still active and people are — even in the rental market, even in the luxury rental market, when things got a little tight and people were kind of downsizing and it was cool to — to not necessarily upgrade, but downgrade, people were instead of spending four thousand dollars a month, five thousand dollars a month on a luxury rental, they would downsize to maybe two thousand – two thousand dollars a month. So the five thousand dollar luxury rental luxury rental was — the price was lowered. So, even o the rentals — rental end, the cycle kept continuing. So, you know there’s a lot of things that weren’t factored. For example, how long it takes to actually foreclose on a property. There were many people that just opted to not pay the mortgage whatsoever and just wait it out and basically live and occupy their home that they used to own that’s under foreclosure for three years because you know there’s just a big bottleneck. And then some cases, people would rent out their homes and actually profit. They would rent out their homes, they wouldn’t actually pay a penny of the — of the rent towards the bank and they would actually profit and use that as cushion.
Then there’s also the cash for keys program that some of the banks were offering where they would give you cash in exchange for just getting the keys and not giving the bank a hard time, going through a long arduous court process and just — then they had something else that’s out there which is the zombie foreclosures which I think you’ve heard of where — where a person says they get all the notices and they said okay, no problem. I’ll leave the home. I — I understand I’m not paying. I understand you don’t want to negotiate a — a loan modification. I’ll pack up my bags and I’ll leave. And then what ends up happening is, six months later the home owner gets stuck with the water bill, the tax bill, an eviction bill, all sorts of things and the reason why is the banks they don’t want to be landlords. They weren’t equipped to — to be property managers and to handle squatters and vandalism and — and — and paying of taxes and water and sewer and things like that.
So there’s so many things that — that were unforeseen circumstances that all happened all at the same time.
Jason Hartman: Well so, explain the zombie foreclosure thing a little bit. I mean, I — I’ve heard that term to some extent but you kind of explained it differently than — than some people. What do you mean the homeowner foots the bill? I mean if it’s foreclosed, the homeowner’s gone. The homeowner’s out.
Anthony Lolli: Well they never went through — the bank they never went through with actual possession or — or repossession of the home. They never actually went through the court process and said this — we now own this home and for good reason. They didn’t want to own the home. So, until the bank actually takes possession legally through the courts, the homeowner’s still on the hook.
Jason Hartman: Yeah, okay, all right. Got it, yeah.
Anthony Lolli: So, and in — and in the interim —
Jason Hartman: But that wasn’t really a foreclosure?
Anthony Lolli: No, but if you — if you look at some of the — the letters they were basically saying you have to leave here. You’re — you’re under foreclosure. I mean some of the letters were crafted in such a unique way it looks so official that a homeowner can just — you — you can scare a homeowner out of their home. They’d rather — they don’t want to see the marshal. Some of them see a marshal’s eviction in ten days. You know, all these different types of tactics that are now being scrutinized and looked at and penalties are — are being implemented for some of the tactics, but some of them really scared the homeowner out of their house.
Jason Hartman: Yeah, very interesting. Okay so what else are you seeing? We — we talked about the foreclosures. Now in your market, I assume you’re seeing rents strengthening, right? Rents are increasing?
Anthony Lolli: Oh boy, super. I mean, there was a recent article that came out that talked about it. I mean, New York City in general, for the first time in fifty years we have more people moving in then — then ever and less people moving out. And mainly it’s because we have a strong rental economy. If we study the bank atmosphere, they were only lending to rental related projects and where do you find mainly multi-unit homes in New York City or any metropolitan area? But New York City just happened to carry the flag. And what’s interesting about the study was, Brooklyn was at the forefront and so many things happening in Brooklyn that the Barclay Center with the — the Nets and over one hundred sixty hotels planted their flags in Brooklyn. Brooklyn was named one of the coolest places on earth to live by GQ Magazine. And then of course —
Jason Hartman: Why?
Anthony Lolli: — all of these —
Jason Hartman: What — what’s so cool about Brooklyn? I never knew that.
Anthony Lolli: I mean you have all the — the hip towns, Park Slope, Brooklyn Heights. You have Williamsburg, you have all the reality shows that are based around — around some of the five boroughs, particularly Brooklyn and even Manhattan, and — and it’s just New York in general is just a cool place to live. And the boundaries and the — and the tolerance level for — for people who wanted to — to have transportation into the city have — have increased due to the quality of life. I mean, Bloomberg is — is coming to the end of his — of his run, and —
Jason Hartman: And — and are a lot of people happy about that, because they want to order maybe a twenty ounce soda? Obviously, that didn’t happen but it —
Anthony Lolli: No, that didn’t happen but you know what — what happens is, is that he’s really doing a great job to really — to — to exit on — on a high note. I mean he’s really green lighting so many development projects, cleaning up the red tape, making it more attractive for developers to be more creative for — for more creative architectures — architects and interior designers to really showboat a little bit on some of their skills, making it attractive.
Another thing that made New York attractive was the nondo market, condos turned rentals, based on —
Jason Hartman: Nondo?
Anthony Lolli: Nondo, nondo. That was the nick name they were calling it and basically it’s a condo project that — that obviously due to the recession couldn’t take off and they decided you know that the city allowed them to take advantage of some of their tax relief and switch it over into a rental, which upped the bar. So, you could rent and lease an apartment that you otherwise could never afford for a reasonable price which really raised the standard for what a — a rental building should look like. So now, almost every new rental project has a doorman, it has amenities, so it’s so attractive to rent.
And even in general, I mean there — there’s another study that came out talking about woman are at the forefront of — of being renters.
Jason Hartman: Well, what’s that mean? What do you — so what?
Anthony Lolli: Well we — the study was — it was an interesting study. It said four point two million more woman than men over the age of twenty five are employed. Three point two million more women than men over the age of twenty five are enrolled in college and the study also showed that more women obviously with some of these degrees are snatching up some of these high power jobs and high power jobs really come with the — the — the necessity for agility. One day you’re in New York, one day you’re in Chicago, one day you’re in California and they also are very demanding, which requires you to not be so committed to a — a property.
So, that in combination with equity appreciation, not really being as high as it used to be, right now the people that are buying are people that are just buying whole. I mean buying in general is a smart way. It’s — I like to call it a forced way to save.
Jason Hartman: Yeah. It’s a good forced savings program, I agree.
Anthony Lolli: It’s a good forced savings program.
Jason Hartman: Okay. You mentioned so many things here, Anthony. I’ve got to talk you about a couple of them. So first off — and — and I want to get to this women thing for a moment because that’s really — I read a lot about that. I’ve been seeing that for the last fifteen years and stuff — stuff like you mentioned, and we’ll get to that in a moment.
But you mentioned that it was so attractive to be a renter in New York and you know, my company does business nationwide. We — we help people buy investment properties and this is one of the reasons we don’t do New York or any high priced market because we just can’t make the numbers pencil. You know, we’ve got to see one percent per month, so if the property costs — you know, I’ll talk numbers like you — you living there and you know and this is cheap for New York probably but four hundred thousand dollars. Can you get anything for four hundred? But — but if you’ve got a four hundred thousand dollar property, you’ve got to get four thousand a month or better.
And so it really is — in a high priced market, it’s a great deal to be a renter because what happens is there’s just not much price elasticity. If you’re going to live in L.A., New York, even Miami frankly, any sort of flagship city where prices are high, where land is expensive, it’s a great deal to be a renter. It’s a better deal to be a renter there and own less expensive properties elsewhere.
Now granted, you could have appreciation in the more speculative, high flying markets, California, certainly that’s — my whole background is in California for so many years, but getting those numbers to pencil, boy it — it’s just hard to do it from an investor perspective. From a renter’s prospective, it’s an awesome deal. Is that what you were saying or did I put words in your mouth?
Anthony Lolli: Well no, that’s exactly what I was saying on a quality of life perspective. If you’re a renter right now, you’re going to get more bank for your buck especially if you don’t know what your job and your personal situation is going to be —
Jason Hartman: Right.
Anthony Lolli: — you know within the next three to five years. But — [voice over].
Jason Hartman: Let — let me say — let me say one thing about that. The best thing — and I’ve said this for many years, the best thing you can have on a — on — on a resume is mobility. If you can move to where the jobs are, that’s how you’ve got to position yourself. In today’s fast change and economy you’ve got to be mobile. You’ve got to be flexible. America is the most — most mobile population in the developed world, and the fact that people can move and not be tied down to a house, is a great thing. That really can increase your employment prospect.
Anthony Lolli: No — and that’s right. And then also the ability to — to have a nice home to come home to, makes you a happier employee when you don’t have to go home to something that’s really wouldn’t be your case living scenario.
Jason Hartman: Yeah. Give us an example of — what — what’s one of the better areas in New York City that someone would want to live?
Anthony Lolli: Well there was — if — it depends now. If you have a family, there was an article that came out that talked about Park Slope and Bay Ridge being one of the best places to live to — to — to raise a family, mainly because you’re going based on school districts and graduation rates and reputation, scholastically.
Jason Hartman: Okay.
Anthony Lolli: So if you’re —
Jason Hartman: What — so what can you get there? Just give me an example really quick. You know, like a three bedroom. I mean if you’ve got a family, you’ve got to have three bedrooms, probably. So, what do you get? How much does it cost and how much can you rent it for?
Anthony Lolli: Well a three bedroom range, you can rent from twenty five hundred up to four thousand dollars a month, but you’ll get something that has the works. It’ll have an elevator building, it’ll have a doorman, it’ll have consigliore, it might even have an on site gym so you have all those amenities and so then [voice over].
Jason Hartman: So three — that’s four to five thousand a month, you mentioned?
Anthony Lolli: No, twenty five hundred to four thousand dollars a month in some of the prime neighborhoods of downtown Brooklyn.
Jason Hartman: That — that same place, how much does it cost to buy it?
Anthony Lolli: Well that same place if it was a — if you’re talking purchasing a condo, it could be something like seven to eight hundred thousand dollars.
Jason Hartman: For — for the four thousand dollar amount or the twenty five hundred amount?
Anthony Lolli: For the twenty five hundred dollar amount.
Jason Hartman: Okay, so see there you go. That’s a perfect example, Anthony. Thank you for mentioning it. So, you can rent the seven hundred thousand dollar condo and not have homeowner’s association dues or co-op dues, for twenty five hundred bucks a month, give or take. I mean that’s a great deal. That’s just a — that’s says be a renter. That is an awesome deal.
Anthony Lolli: Yes.
Jason Hartman: And give me another area. Where do the happening singles live? Where is that?
Anthony Lolli: Well you have the — the Tribeca area. You always have SoHo in Manhattan. You have Williamsburg, you have east Williamsburg, Bushwick.
Jason Hartman: Tribeca’s probably and SoHo are the most famous of those two. Those are the names people would know off the top of their head. What — what can you get in Tribeca or — or SoHo? How much does it cost to rent it and how much does it cost to own it?
Anthony Lolli: Well here’s something that’s interesting in — in terms of cost. It’s still expensive but what you’re looking at is owners looking the other way at room mate situations. Before an owner would say no, no, I don’t want a bunch of people room mating and — and — and cooperating paying the rent. I just want one or two people, that’s it. A couple, a working professional, but now when the recession hit it kind of loosened things up where the owners aren’t as strict as they used to be. So, the prices still maintain in terms of renting. So in an area like Tribeca, depending if you’re talking three bedrooms, you’re going to look at something you know in SoHo, you’re going to look at something at the starting point of thirty eight hundred dollars a month up to almost eight or nine thousand dollars a month. But still —
Jason Hartman: Let’s round it off. So say it’s four thousand dollars, what do you get for that? Is that one or a two bedroom? What is it?
Anthony Lolli: You’ll — you’ll more than likely get a two bedroom.
Jason Hartman: How — how many square feet?
Anthony Lolli: Oh, less than one thousand square feet.
Jason Hartman: Whoa, that is pricey. And — and how much does it cost to own that place, to buy it?
Anthony Lolli: You’re looking at close to about a million and a half.
Jason Hartman: Whoa, it is such a better deal to be a renter. This folks is the rent to value ratio discussion right here with Anthony and that is a — a strong case of the — there’s — there’s some great opportunities to be a renter. Americans have got to change their thinking about stuff. Real estate investing is an awesome thing, you just got to do the investing in the right product type, in the right markets, and renting is an awesome deal too.
I’ll share with you my example. I don’t know if I mentioned this to you. I — I moved from southern California, Orange County and I lived mostly in the Newport Beach area for many years, and I — I spent ten grand a month on my house there that I owned and it wasn’t even that great. It was pretty nice but it wasn’t super great, and then I moved to Phoenix last — about a year and a half ago and for four thousand dollars a month I’ve got this gorgeous brand new penthouse. I’ve got thirty seven hundred square feet of living space and decks, four thousand dollars a month. I mean views and the curvature there, it’s — it’s phenomenal. But to own this place it would cost a million five to two million, I’m estimating. And I should be paying fifteen to twenty grand a month.
It’s just like your example you gave — I think Tribeca that example was, right?
Anthony Lolli: That’s right.
Jason Hartman: Yeah. [Voice over].
Anthony Lolli: Well the only difference is — the only difference is, is that you don’t have to put a down payment if you put a down payment on a rental. So, you can get —
Jason Hartman: Yeah.
Anthony Lolli: — so you can get —
Jason Hartman: Even the homeowner’s association dues, that are huge.
Jason Hartman: Yeah.
Anthony Lolli: Absolutely.
Jason Hartman: That’s a great deal, yeah.
Anthony Lolli: Sure.
Jason Hartman: Good. So, you’re — you’re market though, the prices are increasing, right?
Anthony Lolli: The prices are increasing and that’s mainly because there’s lack of inventory so people are getting above asking price. Institutional investors buying up whatever’s out there that the banks are selling, you know REOs and short sale properties, scooping them up bucket loads, buying portfolios, but you know the difference is we have professional people buying properties whereas in before anyone that had a Home Depot credit card and — and a little bit of equity in their home, could now be deemed a real estate investor. And you know — and they would take short cuts, not really renovate of the snuff. Now these institutional buyers, they know exactly how to renovate the properties. They’re renovating them for the specific purpose of renting for now, but they do know they’re going to cash in somewhere down the road so they’re adding in the right amo — amenities, the right appliances, the right type of renovation.
So, it really sures up the equity appreciation in the surrounding properties because they’re doing the right thing inside and out, and they have the right to have a managerial staff, mobile quarters and things of that nature. And they’re employing people that’s not necessarily Mr. fix it guy, man with a van who operates all cash. They’re — they’re employing professional contractors. So, it’s really doing a lot to stimulate the economy.
Jason Hartman: It is, and we represent several hedge funds that are buying up properties in — in different markets. They seem to like Atlanta, and Indianapolis and the — the Texas markets. I mean, there’s several in Texas, quite a bit, but I got to tell you, I think a lot of times they’re over paying. They’re — they’re not too — they’re not too chintzy in terms of prices and I think they’re driving up the prices. I — I mean of course they’re doing it just because they’re buying inventory and reducing the inventory supply, but when it’s somebody else’s money, you’re not too picky about it. It’s kind of like the government. When it’s everybody’s money it’s nobody’s money and so you know you got some fund manager, their job is to go acquire stuff and they don’t seem to be too picky about if they’re paying 1tenpercent more, sometimes. I mean we’re kind of shocked in how they don’t really — they don’t really care that much. Like our — our individual buyers, they’re more frugal.
Anthony Lolli: They are but the margins are so big right now. I don’t think you can make a mistake, and the — the — the — the rental, I mean as soon as you put the place on the market for rent, sometimes in a matter of hours it’s going to get rented. So the return is there, it’s not really where you have a vacancy rate of ten to twenty percent and they’re miscalculating. They’re now calculating on the time for renovation until the time that the lease is signed.
I mean, they’re — they’re going to make money on the front end and on the back end. They’re making money simply on the renting and when they sell down the road. So — and also from what I hear, they’ve not planning — you know when the market does really turn itself completely around, they’re not planning on putting all their properties on the market. They’re going to just slowly release some of the inventory into the market so it’s not flooded.
Jason Hartman: Yeah, good. Good stuff. Well hey, thank you for sharing some of this with us today, interesting conversation. Anything else you want to mention about what’s going on in the market or you know, what’s going on with your business? Just anything I didn’t ask you?
Anthony Lolli: Well you know, all positive things are going on the market, on sales and — and also on the rental end. I mean that’s actually my company Arnis was apartment rentals and we actually had to bring in a sales division because there’s so many renters now ready to buy. I mean, they were only renting temporarily. And there’s credit restoration companies out there repairing some of these renter’s credits. So now they’re just equipped. They’re — they’re not as scared, they’re — they — you know the — the saying goes a broken bone is better when it’s healed it’s stronger than a regular bone. So, that’s what’s happening now with some of these people that suffered a little bit, they took their licks and now they’re ready to back — jump back in. The dream of homeownership is still alive.
In fact, I was on Fox Business last week and we were talking about renting versus buying and — and the truth is, if you’re going to buy and buy in whole, it’s definitely the right time. If you want to be an investor to buy and flip, really, really sharpen your pencil, really, really do the math.
Jason Hartman: Yeah, you’ve got to be careful. You’re — you’re asking — you’re asking for trouble if you’re a flipper. You’ve got to be super careful.
Anthony Lolli: That’s right, that’s right.
Jason Hartman: Because you can get stuck. And I’ve seen a lot of flippers really turn an otherwise good — good progression to what they looked like they were really going to go places and one or two got flipped. So, really it will just destroy their careers. So you’ve got to be super careful.
Yeah good — good stuff. Well, thank you. Give out your website if you would, Anthony.
Anthony Lolli: My website is Anthonylolli.com. That’s A-n-t-h-o-n-y-l-o-l-l-i and I always have good information on there and also I have my company website, Rapnyc.com. R-a-p-n-y-c.com.
Jason Hartman: Good stuff. Anthony Lolli, thanks so much for joining us today.
Anthony Lolli: Thank you, thank you.
Female Voice: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected] Nothing on this show should be considered to be specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc., exclusively. (Top image: Flickr | wilhelmja)
Transcribed by Debra
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