All Forum Posts by: Andrew Pandolfino

@David Dachtera

Thank you, I will carry that advice with me for the rest of my career.  I can assure you, I do not plan on cutting corners, just want to make the best decisions possible.

I know it has been recommended by all on this thread that I skip the LLC and just purchase it personally and get an umbrella policy for liability protection. However, given my current situation having already set up the LLC and funded it via family loan, do you see any issues with going this route instead. My issue now is that I do not have enough personal cash to purchase the property, but the LLC does.

@Matthew Kreitzer @David Dachtera, I was pretty confident that this was going to be the general consensus, which is why I am asking before acting.  Thank you all for confirming! I imagine this would be considered co-mingling and thus pierce the corporate veil.  I will certainly be speaking an attorney on these matters but wanted to gather some initial information on my own before having that conversation.  I have all intentions on playing by the rules, I want to be able to sleep at night, not have an extra 50 bucks in my pocket.  Just trying to figure out those rules.

@Michael D. Thanks for the info! I have read conflicting information about umbrella policies vs LLC's for liability protection and which is best, and it seems to be an ongoing debate that really boils down to exact personal circumstances and who is giving the guidance. I will have to discuss this with my attorney. Once it has been decided upon I will reply back to this thread with that information for others to use as reference.

So the loan will be personally guaranteed by myself, meaning that should I default on the loan, the bank will be able to collect from my personal assets to recoup their costs, regardless of the title being owned by the LLC or myself. However, for liability purposes such as a potential lawsuit from a tenant, having the title in the name of the LLC should protect me against potential lawsuits from tenants etc, correct? In this instance an umbrella policy will also protect me via insurance. The reason I was thinking of going the LLC route is because even though this is my first real estate purchases, I do have other personal assets I want to protect. I am guessing that you will reply that simply getting an umbrella policy large enough to cover all these things would be the advisable solution. Assuming that I have approximately 150-200k in asset, how large of an umbrella policy would you recommend?

The multi is a 3-family, so I understand this should be handled as residential. I went to a couple of the big banks and they both told me that if its an LLC taking out the loan that it would be considered commercial, regardless of the number of units. Looks like I will have to shop around and speak to some more lenders on this matter. It would be great if personally guaranteeing the loan taken out through the LLC allowed me to receive it at a lower interest rate.

Thanks @Account Closed and the rest of you for your input! I can not express how thankful I am to have the support of the BP community.  Please feel free to add anything you feel necessary/helpful to this thread for both myself and future readers.

Hello BP community, I have a bit of a tricky situation and am hoping to get some advice on how to best proceed with my first real estate transaction. I have recently put an offer on a multifamily property that I had intended to buy through a recently formed single-member LLC. The offer is for all cash. I received a loan from a family member to the LLC for the amount of the property plus some repairs that are needed. This is a short sale subject to bank approval and financing is out of the picture because I will be needed to obtain an updated Certificate of Occupancy within 60 days after closing. The goal is to make the repairs, obtain CO, and then refinance to pay back the majority of the loan.

After some more research and speaking with a few lenders I have discovered that financing obtained through the LLC will have about a 1% or so higher interest rate as compared to what I could get personally. I read about a lot of people "taking the risk" of triggering the Due On Sale clause and obtaining personal financing for more attractive lending rates, and then transferring the title over to their LLC's for liability protection.

My main question is if it is legitimate for me to pull the money that my single member LLC received via family member loan out of the business and into my personal account to complete the purchase of this property. Then make repairs while the property is being "seasoned," and refinance after the 6 months or so and put the majority of that money back into the business to then repay the loan.

Two other quick notes, I do not intend on living in this property, and I have a good amount of money in my personal accounts already, but not enough for the full purchase.

Any advice you all have will be greatly appreciated, thanks in advance!

@John Hickey - Just saw your post about the 3-unit in Bed-Stuy.  Congrats! Looks like your determination and patience have paid off.

Hi all,

It has been a few months since this thread has been active but felt it was an appropriate place to mention that I have decided to make my first investment in Peekskill.  Contracts were signed last week on a 3-family and I am anxiously awaiting closing.

@Stephanie Minor, I hope everything is working out well in your endeavors!  If you have any updates and want to share, please do.

I too have been looking for an entry point into the buy and hold rental market in Westchester.  I grew up 5 minutes from Peekskill and strongly want to see this market explode the way it deserves to.  Peekskill has seen some great changes over the past few years with a number of restaurants setting up by the waterfront and downtown division st strip.  Having said that, the school system is still not very good which makes me weary of jumping in here.  Do you see the school system improving as new businesses move in and residential properties are improved upon?

I have looked at Ossining as well, and know some people who are invested there and really like the area.  I am open to different areas but want to feel fully confident when in the market I choose. Ultimately, the schools in these two locations are not the greatest, with Peekskill being slightly worse.

Any thoughts on school districts improving?

Hi Jeremy,

It has been a few months since this post was active, but just came across it now. I am born and raised in the Westchester area and am currently building my team/business as well. In general, Westchester is one of those high end markets that makes the cost of involvement higher than average (taxes are amongst the highest in the country). Mt Kisco is a beautiful town in Westchester and is a great area to invest in. Did you have any luck with the property you were analyzing at the time of this post? Has your team been growing with reliable and trustworthy contractors?

Hope things have been working out well for you so far! If you would like, send me a message and perhaps we can help each other along this journey with contractor/agent recommendations and so on.

It has been a while, but as promised I wanted to update all the helpful people on this post about what happened to this property.  Since my friend is the one who built the house, he and his crew handled all the repairs.  Luckily because of his quick reactions, which were made possible in part by the BP community, he was able to take immediate action.  First things first, removing all water and drying all affected areas.  Once dried out, they replaced sheetrock and repainted, evaluated the wooden floors and were able to sand and restain them (and are happier with the new color), and of course fixed the pipe/furnace.  As far as insurance, he ended up eating the costs and handling the repairs on their own.  He did have significant coverage but somehow was not covered for this incident. I believe he will be looking for a new insurance agent after this.

He never sold this home and instead has moved in with his girlfriend and dog.  The property is working out really well for them, and he is in the process of selling his 2nd flip which is proving to be very successful!

Some hard lessons were learned but fortunately this did not end up being as bad as it could have been.  For anyone who is reading this, if you have vacant property, make sure you or someone you trust is keeping close tabs on its condition as well as have the proper alerting devices installed to alert you in the case of an emergency.  Also, do your homework when finding insurance services, if the damage had been worse in this situation my friend could have found himself in a tight spot.

Thanks again to everyone who offered their advice in our time of need.  I hope to return the favor some day, and until then, wish you all the best!

Hey Dawn, I know this post is a little older, but welcome to BP!  I am a newer member as well and looking to get started in the world of real estate.  The question is, where? I grew up in Westchester around the peekskill/croton harmon area, and now live in manhattan (rental).  Have you been seeing any deals pop up since the last post in this thread? I am interested in all multifamily investment opportunities between NYC and The Catskills.  Let's chat!

Thanks again BreAnn, that makes sense.  I guess good records is always a wise decision.

@Derek Lacy I believe he has a builders risk policy, as well as homeowners policy.  I am not sure about specifics but I believe he did not try to shave costs when it came to insurance.