All Forum Posts by: Kevin Wright

Hi All, I'm putting together a small syndicate to purchase a mixed use building in Williamsburg, Brooklyn. This is buy and hold with a preferred return offered and 12.6% annual IRR expected over the term. Huge depreciation on this property as well to offset your other income as an additional benefit. Please email me at [email protected] if you're interested in further details and I'll send you my investment memo.

-Kevin 

Here's a pretty simple one for anybody that understands my situation. I need to setup an LLC with an operating agreement that includes language about the use of outside capital from family and friends in addition to capital contributed by two partners. The LLC will be project specific for buying and redeveloping a single property.

It seems like a lot of the "real estate attorneys" that I've spoken with are not familiar with doing this type of thing as they mostly handle closings.  Should I be looking for a different type of attorney?  Perhaps someone who handles more general business matters and contracts? 

Thanks!

Hi Andrew, I see there wasn't much financing help offered here.  What became of this deal? 

Buyers back out all the time. That's the whole point of the seller holding the earnest money. But while you're at it, don't let that go without a little bit of a fight either! Read every word of that contract twice. 

Do either you or your husband by chance have any VA benefits? This can be a strong asset to new investors/home buyers. How is your credit?

I'm not sure how strong it is in your market, but Airbnb is probably the quickest way to generate extra cash flow, if you have any extra space where you are living that you can rent out.  

Best of luck!

Thanks! @Aly W.

I've got mine in Hollywood, FL. I'll have to check with TD and some of the local credit unions.  

In your scenario, the VA loan opportunities would be a huge plus!

If you're looking for a price appreciation market, I would think the name of the game is barriers to entry.  Definitely go somewhere that can't be developed indefinitely and saturated with new product.  Coastal or unique scenic areas, major urban hubs, etc...

You definitely don't have to live in for two years. If you plan to be there for a year though, I would definitely use FHA and keep as much of your cash in hand as possible. Sometimes FHA appraisals are stringent and won't come in at the value you need if the property needs work. You can buy in this case with hard money and refinance into an FHA after repairs are complete if the numbers are good enough to make it worth paying a few points on the hard money up front.

I did the live-in thing.  At one point decided it was best to rip out both bathrooms and had no plumbing for a week.  Yeah. But it worked out! 

Moved out after the first year and decided to keep FHA financing at least for now. The two year thing is mainly for capital gains if sold after. You could always refi after repairs and rent to avoid this.

I did it on a duplex with 3.5% down in South Florida. Lived in one for a year and rent both now. Good cash flow. Looking to use FHA again asap.

As far as your analysis goes, use a rough 50% of rent roll as operating expenses to estimate your net operating income (NOI). This is conservative expense-wise. Mortgage / debt service payments come out of the other half, after NOI.

Make sure to check into what assessed values are doing year before and year after purchase in your area so you can figure your taxes.