All Forum Posts by: Ankit Duggal

Amir Saeed what if you asked the seller to hold a second mortgage for the additional 15% down. A community bank may allow you to go to a higher combined loan to value given that their exposure is limited to 80LTV. It is something worth thinking about in order to see if you can make the deal work.

Happy Investing

Ankit

What is a good site to find absentee owners list in New Jersey area? Any guidance would be appreciated.

When QA3 was announced I was curious as to what the easing exactly meant. The Fed's chairman, Ben S. Bernanke, in a speech in August 2012 said that when the Fed buys lots of super-safe assets like Treasury bonds or agency-guaranteed mortgage-backed securities, it pushes investors to buy bonds from corporations instead, thereby lowering businesses' borrowing costs. With lower cost of debt should yield more refinancing activity, higher Mortgage REIT profit and potentially expanding asset value if more people can qualify for mortgages. So I think this QA3 should be combined with less stringent mortgage criteria if we want to see real estate value accrete higher.

Jules H I think this question will depend on your individual situation as pointed out by other members. One criteria that you should keep in mind before making your decision is if you can utilize the capital from the refi and earn a rate of return greater than the cost of capital (debt cost plus net cash flow reduction associated with the additional debt payment increase).

Shane first of all great job at socking away $20k+ at the age of 23 as that is a tough feat to accomplish at a young age. Private lenders care more about the deal than your income profile. So if you can get a deal whereby your all in equity needed is no more than $20k and the lender exposure is not more than 65% of After Repaired Value (ARV); you can get a private lender interested in giving you capital.

I would recommend that you prepare a funding package which is what i typically do when I go looking for private lenders. The funding package should include a executive summary outlining what, how much capital, and how will pay back the loan, copy of the signed contract, a copy of your tri-merge credit profile (they will pull one from their credit vendor regardless), a personal financial statement (may not ask but helps to have it), and bank statement showing the necessary equity liquidity.

Happy Investing

Ankit

Ralph Hogan
In terms of your question raised, you can always 1031 exchange your net proceeds into another asset down the line if you wanted to sell the asset past the 3 year mark that Paul Morgan identified.

When you convert a primary asset into a rental property then the rental tax basis of the property will be the LESSER of your purchase and improvement cost basis or the property's fair market value on the date of its conversion from personal to rental/investment use. That is my understanding on it.

Justin S. This speaks to an agency problem in my opinion hence I was suggested capital investors to get top side when it comes to either cash flow splits or revision percentage. If a operator does not put in any capital then what is the operators alignment of interest with a capital investor other than the time he is vesting into the deal?

Steve Babiak thats interesting. So if someone quit claims a deed there is a transfer fee due? What is the typical transfer tax percentage?

David

Here are my two cents on the structure as I have consulted with many capital investors who have wanted to make investments such as this. The three main areas of concern to me:

1) Why is the entire purchase price of the investment (which is your full equity investment) not being secured as a private mortgage on the asset? This way a portion of your principal is being paid back to you over the asset hold.

2) What is the operating partner skin in the game on this asset? So what makes him care about making the investment perform. Would he collateralize one of his 10 other assets as a security instrument for your capital.

3) 50-50 Split is a little bit generous to the operating entity in my opinion. You are the capital investor and hence have the most risk. You should be getting 60 to 80% of the proceeds (cash flow and reversion)

Hope this helps

Happy Investing

Ankit

Amit Patel I know you asked this questions a while ago but I thought I give you a response since I do real estate investments and consulting in the New Jersey market specifically. I am going to try to answer the question you laid out in your original post:

[b]* [b]Can i buy in my name and do a transfer to the LLC ->
Yes you can do it via a quit claim deed. Doing this does trigger the mortgage due on sale clause but typically if you make your payments on time the bank is less likely to care about it. The question I want to ask is why do you want to buy the asset in an LLC; is it for asset protection purposes or because you need to syndicate capital from other partners? If you are doing it solely for asset protection purposes then maybe a Revocable Trust would be a better method to make that happen as that is used typically for estate planning purposes anyway.

[/b]* Do I have to pay Title fees again ? ->
If you complete a quit claim deed transfer with a $100 consideration then you do not need to pay title or state transfer fees again.

[b]* Do you transfer over for full amount or nominal fee such as $1 If I transfer it over for a $1, when I goto sell, is my cost basis $1?->
This is great question. I would have to defer this question to a tax accountant as that is not my field of expertise. What i learned while i was getting my master's in real estate from NYU was that your basis would be atleast the debt amount as that will stay on the property and when you take the asset via a quit claim deed (this deed means that you are taking it subject to all outstanding liens). To secure your cost basis, you can make the exact dollar amount transfer for what you bought the asset to your LLC or SPV; however you will find up paying state transfer tax by doing that. Just keep that in mind

[/b]Banks for LLC loans? Go to a local community bank like Crown Bank or NorthEast Community Bank as they will be flexible when it comes to buying it under your LLC. You will have to provide a personal guarantee/recourse that I do not see a way around unless you are buying via a Self dIrected IRA.

Hope these answers help out.

Happy Investing

Ankit