All Forum Posts by: Ed Matson

@Brian Orr - The simplest way to do this is for your friend to loan you the 50K.  This way he receives a fixed monthly income higher than his savings account and you receive the benefits of your work. You could do it in an equity structure, but that means you have to quantify the value of your contributiuons, i.e. finding the deal and managing the property. This is how larger syndications do it while the GP's also contribute equity. They get paid an acquisition fee, a management fee, a disposition fee upon exit, and receive a share of the cash flow (in addition to that proportional to their equity. Although this is possible, it seems overly complicated for a $500K property.  

Fundrise is doing mostly debt in REIT funds vs. individual MF investments. For non accredited investors, Upside Avenue has an equity MF fund. Realty Mogul also has a private REIT. For accredited investors, RealCrowd is one of the better sites. You need to do your own due diligence.

The income from a duplex is taxed the same way as income from a larger apartment. Both are rental income. I think there are more posts on smaller properties than apartments because it is where more people start investing, and those people are more apt to post on BP than more experienced investors who are involved with larger properties.  

Our building is Class B

Seems low for 10 units. Can you see the actuals? Deferred maintenance? Our Op Ex runs about 40-43% with management on well run 17 year old 46 unit complex.

And the calculators definitely have an amortization term.

you would put in the amortization period, not the term so the calculator can give you the correct monthly payment. So, if you got a loan with a 5 year term and a 25 year amortization, you would use 25. Just be aware that your debt service will most likely change n year 6.

Read "Sean Cook's" Investing in Real Estate Private Equity.

LLC's are entities that can elect to be taxed as C Corps, S Corps, or LLC's. Being taxed as an LLC is like being taxed as a partnership, and it is the default election. LLC taxation is most appropriate for buy and hold rental real estate. There is no requirement to pay salaries or payroll tax for passive real estate investing. BTW, I am only an investor, not a CPA or attorney. It is often easier to finance a property if purchased as an individual.

@Broderick Graham - If you get a single commercial loan for this portfolio, your P&I expenditures will only be fixed for 5 or 10 years depending on the loan.  If interest rates increase, which is a very real possibility, your projected cash flow will most likely worsen.  If you can get five individual residential loans vs. a single commercial loan, you can get fixed financing for a longer term.