All Forum Posts by: James Shen

Hi BP Community - 

What are you opinions of using LLCs for real estate investing, particular buy-and-holds? I know this is a fairly debated / evaluated topic and I'm constantly getting mixed messages from research so was hoping to hear from the community here. For context, my partner and I are currently evaluating if we should start setting up an LLC and finding the appropriate firms to work with one (e.g., LLC lender). We're mostly focused on the financial and legal benefits here, can exclude impacts of ownership % and share transaction (this is stuff we can manage ourselves).

Overall, I understand one of the main reasons for LLCs is for liability protection, however, this can easily go to fault if judges just "pierce the corporate veil" and one can also just opt to get an umbrella insurance anyways to limit liability. Additionally, investing through an LLC is a good amount more expensive, with higher interest rates, insurance premiums, entity fees, filing fees, and more. I've spoken to attorneys and CPAs and they all gear towards operating through an LLC, but I understand there's also slight possibility of conflict of interests here since using an LLC may potentially lead to more work and fees for them.

What are your overall thoughts on using LLCs? Is it worth to go through these additional hoops and take the hit on the economics? Perhaps I'm missing certain aspects that's not providing me the proper bigger picture.

Thanks in advance!
James

Hi BP Community - 

I feel like I have a decent grasp in regards to the mortgage process when it's dealing with a typical mortgage bank / lender, however, much less familiar when it comes to receiving financing when purchasing an investment property through an LLC or another entity structure. Are there any recommended guides on this process and what to expect when dealing with this type of financing? All I basically have gathered is that these loans typically will be higher rates compared to what one can expect when dealing with a typical mortgage bank / lender.

Additionally, with the recent Fannie Mae news and tightening investment property financing, how much do we expect that to impact this space? Will it be as detrimental as people going through typical mortgage banks / lenders and buying investment properties under their names? I would think the lenders to LLCs perhaps may not rely on Fannie Mae as much but I could be terribly wrong here.

Currently looking to purchase multi-families in northern NJ area so hoping to better understand the financing options and practices. Really appreciate any insights and help on the above, and happy to connect and discuss further on this as well!

Best,
James

Hi BP Community -

I'm currently looking for a RE Attorney and was hoping to receive advice on what to look for during the search. Are there any guides or just general guidance on what to look out for when searching and partnering with RE attorneys? Understand attorneys can vary quite a bit, even with specialties, so would definitely appreciate any insights or anecdotes / preferences around this topic.

For context, I'm currently beginning my journey to invest in multifamily buy-and-holds in NJ, particularly in Northern Jersey (Hudson County). I want to ensure I have the proper entity structures to really grow this business for the long run.

Again, really appreciate any insight from the community here. Happy to discuss further, feel free to message me directly!

Best,
James

Appreciate the insights! This is extremely helpful, and will definitely take a look through those links @Michael Plaks, think these are exactly what I'm looking for as well.

Thank you all again!

Hi BP Community -

I'm starting to build out my real estate team and currently looking for a RE Tax Accountant, however, I am not too familiar with how to distinguish what to look for in them. Are there any guides or just general guidance on what to look out for when searching and partnering with RE Tax Accountants? Would definitely appreciate any insights around this, or any anecdotes / preferences around this topic.

Separately, what's the priority in terms of partnering with a RE Tax Accountant vs. a RE Tax Attorney? I'm not too familiar with how they necessarily differentiate with one another, so would be great to better understand who I should be trying to seek first.

For context, I'm currently beginning my journey to invest in multifamily buy-and-holds in NJ, particularly in Northern Jersey (Hudson County).

Again, really appreciate any insight from the community here. Happy to discuss further, feel free to message me directly!

Best,
James

Hi BP Community - 

Love to hear your thoughts on a 50/50 ownership for JV partnerships, where one party provides all the capital and the other party manages the sourcing and asset management (provides no capital). Based on just preliminary internet research, the equal split seems a bit steep for the party that provides no capital (seems like the asset managers typically have a smaller equity stake).

Is there a fair benchmark for this type of JV for real estate investing? Are there general averages out there for these types of deals?

Appreciate any insights!

James

Hi BP Community -

My partner and I are interested in purchasing a multifamily in the Jersey City / Hoboken area to live in and rent out (house hack). We've done some research in the area but would love to hear from the community as well on any key hurdles or prioritized areas for these two cities. Our budget is ~$650K total (preapproved), with some wiggle room if needing more equity. 

Any tips / notes or ideas of sensibility around this notion will be much appreciated. Happy to connect and discuss further as well, as we're actively beginning to look to purchase.

Thanks!
James

Hi BP Community, 

A new investor here currently focusing on central NJ (around Monmouth county area) and would love to receive any advice when it comes to estimating / modeling fixed costs (not including reserves, capex, vacancy, etc.). I've been doing research online but wonder if there are any tips / tricks that people use as a general benchmark (understand almost everything's negotiable, dependent on situation, etc.).

- HOI: I couldn't really find much on how one estimates this, any color on this would be appreciated.

- Cosmetic Contracting Work (painting, flooring, etc.): understand this is a large variable but was wondering if people have any benchmark tips. I've read in a few areas that $15 / sq ft can be used but was wondering if anyone else has heard / seen something else. 

- Property Taxes: I've looked on the NJ websites (https://www.state.nj.us/treasury/taxation/lpt/taxr...) to pin down the appropriate property tax rate but not sure if this is the right place to look. Want to make sure I'm capturing everything. 

- Closing Costs: On a high-level, I've seen 2-5% of purchase price but curious what everyone else uses. Additionally, say if it's an all-cash offer, what's a typical % of purchase price for closing costs then (understand there's still costs with title, attorney usage, etc.).

- Inspections: I've heard $500 but know this is dependent on inspector so wonder if there's a typical market price today.

Think the above are the main recurring ones (not including township dependents like landlord fee or flood insurance) but please let me know if there are others I should heavily consider. Again, really am just focusing on broadening my knowledge base and having a better understanding on analyzing deals. 

Thanks so much!

James