Hello. I am a newbie from the hudson county area Nj

[Account Closed]

I'm 29 years old with a full time job and looking to invest NJ/Pa. So now looking to purchase a multifamily because of some of the good feed back on it. It's scary for me mainly because it will be my first big purchase. So I'll try to gather as much info and hopefully meet the right people and not get screwed. The part I'm most concern about is running the numbers wrong. So I'm defenetly will need help. Should I find out how much I can get aproved for or maybe partner up? Any thoughts?

[Thomas Franklin]

@Account Closed Since you are interested in Multifamily Properties such as buying a Duplex, TriPlex, or a Four Plex, I invite you to consider the following. Many Realtors will suggest purchasing a property using a FHA Loan, to reduce your out of pocket money. If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a 203k Loan. A 203k Loan is where the purchase price and rehab costs are rolled into a single loan.

Assuming you have a respectable FICO you can buy, with a FHA Loan (3-5% down, a 30 year amortization schedule, and a residential loan rate). Because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC. What happens if one of your tenants has a slip and fall, on your property, or something else happens to them? You are on the hook and can be personally sued, for everything you own. Some people will say, "Take out a quality Insurance Policy and you will be protected." Ambulance chasing attorneys know their way around and can legally navigate around Insurance Policies. Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.

If you want to close in the name of a LLC, Mortgage Lenders will offer you Commercial Loan Terms (25-30% down, a 15-25 year amortization, and a ballon due in 5-7 years). This is what I am encountering, in the current Mortgage Industry.

If you think you will go FHA, 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.

Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests. You many be asking yourself what can I do? Locate a Motivated Seller that will consider Seller Financing. You may have to put more money down (10-15%), but you can close, in a LLC, with no worries about banks. I have a lengthy Legal Opinion, from my seasoned Legal Team regarding this matter.

You also mentioned that you are concerned about running the numbers. If you go to my ACT Investment Properties, LLC Website, click on the tab "Investment Strategies" and scroll down until you see a photo. Click on the photo and a PDF will appear, of a property I once owned. This Property Analysis will give you an idea of what numbers you need to run and Funding Scenarios. Focus on the expenses. Many Investors do not account, for building Capital Reserves to cover major expenses such as roof replacement, major repairs to electrical and plumbing systems, etc. it is wise to also factor Property Management as an expense because as your Investment Portfolio grows, eventually you will need to have a Management Company oversee the day to day operations.

I hope you find all this information, to be useful.