New Member on Long Island, NY!

[Richard Bohl]

Hello everyone!

My name is Richard Bohl, I am currently 22, although I will be turning 23 on Monday. I currently reside in East Meadow on Long Island. I became interested in real estate after looking into apartments or possibly a house for myself after graduating from Molloy College in 2014 with a Bachelors degree in Business Management.  After realizing that the cost of buying a home, or even renting an apartment, was incredibly expensive I started looking for ways to supplement my income in order to afford my own place. The idea struck me that maybe the exact thing I was trying to obtain could be what finances my goals. So after some lurking on the internet and doing some research I have ended up here! There is an absolute mountain of information here and I already need to say thank you to all the members who have posted! I learned a lot before I even joined the site. 

I am looking to gather as much information as possible before I make any kind of venture into the world of real estate. Unfortunately, Long Island is so expensive that I cannot afford to finance any kind of project myself just yet. However, I am extremely interested in either house flipping or a multifamily property that could be used for the "house hack" method. If anyone has any information regarding the Long Island market, specifically Nassau county if possible, please let me know! I would love to learn more so that I can take my next step!

Regards,

Richard Bohl

[Thomas Franklin]

@Richard Bohl I am not a fan of purchasing a Residential Multifamily Property known as "House Hacking." If you are looking to owner occupy, you may want to consider starting out, with buying a Duplex, TriPlex, or a Four Plex. 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). You live in one unit and let your tenants pay the mortgage and other property expenses. This will give you experience as both a Landlord and Property Manager. The downside is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND 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, Conventional, 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.