All Forum Posts by: Daniel Gonzalez

@Danny Lee Let the contractor put a lien. It's baseless and he clearly is lowering the settlement because he knows he is in the wrong and wants to force you to pay up. This guy is just scaring you. I'd ignore him and anything his "legal" team sends.

Better luck with the next contractor.   

@Kj Lee Do you have a preference on how you get to NYC, Bus vs Train? 

There are many towns that have a direct train to Penn station and attract many renters because of it. You should look into Essex, Morris, and Bergen counties for towns with trains into Penn. Hudson County is also fantastic due to its proximity and the availability of buses to get you into the city. The rental market in Hudson County has taken a small hit due to the pandemic but is still very strong. 

I have a househack in Essex county and take the train every morning into the city. Aside from all the snow lately, I usually get into the city within 30-40 minutes. It really isn't bad especially since it's a direct train with no transfers. 

In regards to a lender, I've used @Drew Walls in the past, he was great and easy to work with. PM if you want more info. 

good luck.

@Luther McIntosh It is a good strategy to use the FHA. A lender can correct me if I'm wrong but FHA and underwriters frown upon using FHA loans to gobble up properties. In theory, it could be done, but if you go too quickly it could be a red flag to underwriting as your rinsing and repeating.

On your 2nd option unless you 1031 it, which this new administration is trying to remove, or use it as your primary for 2 out of the last 5 years you'll need to pay capital gains. I've never heard of not getting hit with it because you want to improve your living situation. 

Regarding the flip, I believe you could do it since it's all under a "business" that is doing the buying. It'll be clear that it is an investment and underwriting shouldn't give you an issue so long as you aren't on the loan docs. Even if your the owner/managing officer of the LLC it should be fine. I'd venture further and say you'd be fine since it wouldn't be your primary residence. A lot of first time home buyer programs focus on where your primary residence was/for how long, and if you rented or owned.

@Kevin Ravenell Jr. Congrats on passing and not giving up! With determination like that, I'm sure you'll be a great agent.

Best of luck moving forward. 

@Luther McIntosh I think I'm following what your strategy is. You're planning to purchase the investment property (2-3 fam) first under your name and get the 15K 1st time buyer money if you can find one. You then plan to hold onto it for 2 years to avoid paying capital gains and then sell it and downsize to an SFR. How do you plan on going from a triplex to an SFR and doing the 3-2-1?

Now you plan to do the flip first and sell it first. You will be subject to all the taxes since it's a flip and you'll need 20-25% down and reno costs. Will that work for you and your strategy? 

I'm currently in the market looking for my next investment and have been strongly considering a live-in flip simply because of the tight multi-market and the lower downpayment. Between that and reno costs I couldn't do it. That's why I'm interested in how your plan would work. 

@Luther McIntosh good idea on the househack. The inventory is really tight right now and things are flying. Where do you plan to buy the multi? Have you considered flipping an SFR?

Are you referring to the FHA loan or something else. I know with the FHA loan you need to purchase it in your name and live there for 1 year. It cannot be assumed that you're using the low downpayment for an investment property, which purchasing under an LLC would look like to underwriting.

I would imagine most first-time homebuyer programs have similar stipulations. Your name must be on the deed and all loan docs, otherwise, I'm sure there would be more people using similar programs to flip their first homes under an LLC.

Why do you want to acquire it under your LLC and do the fix and flip? You can very well acquire it under yourself, claim it as your primary residence, and then benefit from any capital improvements/tax deductions while still doing the flip. I'm not an accountant so I'm not 100% sure which would be more beneficial tax-wise, I can only speak from my experience.

@Dalton O'Rourke Why a single? if you plan on using it as an investment property the loan and downpayment would be the same as a small multi 2-4. Don't quote me on it though, but last I checked it was 15% down for single and duplex investment property and 20-25% for a 3-4. Definitely check with your lender on that one. 

In regards to an SFR, have you considered student housing? You can buy a place, and make it nice enough for students and charge higher rents since it's by the room vs a traditional single-family. This is another option if you consider near a University.

House hacking will get you in at a lower downpayment of 3.5% for FHA and even some conventional Fannie and Freddie stuff at 5%. Also since it'll be your primary residence you will get a better interest rate than if it was strictly an investment property. If you're working with a lender they should be able to provide you with options and give you better numbers.

@Dalton O'Rourke It's tough in the New Jersey market, but that doesn't mean it can't be done. 1st, How far are you willing to invest? You mentioned you're open to long distance, so have you ever considered north west jersey, south jersey, or even PA right across the boarder. I don't know exact numbers but the homes tend to be cheaper out that way and still rent. Biggest thing is to determine how far you're willing to go.

2nd, what's your plan. Are you househacking, flipping, or something else? This can impact the above decision. 

3rd, will you self manage? This is also important because you might not want to drive 2 hours round trip at 8pm because there is a leak or something else. Rare that it happens but it can all the same. 

@Danny Lee Sorry to hear about your run-in with that crook. Let them put the lien on you, there isn't a signed contract so you should be fine. If you have any emails or texts then you may be stuck there. I've had a few situations in NYC where liens were placed due to non-payment and the contractors ended up paying an arm and a leg in court fees and legal fees so in the end sometimes it isn't worth it. 

@Natalie Schanne mentioned some great points. I personally like to include those incentives and penalties. Usually, in a construction contract, they are referred to as liquidated damages (LDs). You can charge the contractor LDs for things such as days past contractual substantial completion or missing milestones which could lead to a delay. This could protect you to some degree. 

I wouldn't put a lien for 2k. That contractor might spend just the same for a lawyer. I'm not a lawyer and this isn't legal advice so talk to your lawyer until you feel comfortable with your decision. I would communicate and share with your lawyer every bit of correspondence you had with the contractor. This is an expensive lesson, but I doubt you'll make the same mistake twice. 

As a contractor, I tend to cringe when I hear horror stories. Next time keep an eye out for punctuality, communication, and honesty. If a contractor is late, fails to communicate why they are late, and then makes a terrible excuse for being late you can already imagine how the job will go. Always ask for referrals and to see the jobs or visit a job in progress. 

Good luck getting this resolved. 

Hi @Account Closed. That is such a vague question that many newbies ask, I know I did when I first thought about getting into REI. One of my biggest pieces of advice is to have enough capital to cover the surprises. Anything from unexpected repairs, vacancy, and their own unemployment. Now that this pandemic has hit I recommend having even more capital in reserve. Preferably it's cash in the bank, but anything with liquidity such as GameStop stock or potential equity you can tap into if needed is fine as capital.

In the end, everything depends on the individual's risk tolerance, plan, and market. Learning, analyzing deals, and networking will always have the best ROI.