All Forum Posts by: Jocelyn Canfield

First time Commercial investor here. How do you deal with uncertainty of having an ARM for something you want to buy and hold long term? The idea of potentially rising/adjusting rates pricing me out of a property I own is unsettling. If I go with a fixed rate, the shorter terms make the deal impossible from a cash flow standpoint. Are there commercial lenders who do 30 year fixed? Or do you evaluate and offer on a property assuming you need positive cash flow with a 20-year amortized loan? (under ten unit under $1 million property)

Appreciate your insights.

Thanks all for your input. Intend to sit down with listing agent and the numbers. 

@Russell Brazil i use the calculators on this site and my numbers are not off. This is in a higher value area. I did mention to the lender I was interested in living in one of the units and they said they would simply take that income out of the calculations. This is 5 residential rental units. 

I am interested in this particular area because my partner and I are constrained to living in a fairly small geographic area based on his work situation and this meets all our criteria and then some. And of course I don't want it with negative cash flow...they just want more for it than it is worth...as a commercial investment property. I agree about the sitting and waiting.

I cannot seem to find a way to search the forums and it is simply not possible to go through hundreds of screens looking to see if my question was covered before. It is easier to use google search for my question, then come back inside the site

I am looking at a property I REALLY want...but at their asking price, we are at significantly negative monthly cash flow (-$2500). This is assuming me dedicating $ to capex, R&M, Prop Mgmt. I'd like to live in one of the units here, which would also take $2000 income out of the mix. My question is, what negotiating strategies can you employ to REALLY move people from an asking price that is $400K too high for a commercial property? I realize that I will probably not get this property. But I want my best shot. I'm willing to take -$500/mo cash flow. I want to sit down with them and go over the numbers, but this is an estate with 5 adult kids who want the $$$. Being commercial, lending terms are not helping me any. I want a fixed rate so I have to go with 20-year term.

i'd be interested in joining in. We could do a mastermind group...free teleconference call weekly perhaps... Each person check in with 5 minute report on action steps taken, then Q&A helping each other...

don't forget that as a 1099 you are paying both halfs of the social security and medicare. 7.5% of that goes out the window right there.

@Ben Raygor, I'd like to understand more about this comment... 

Creating an LLC positions yourself to potentially elect to treat your LLC as an S-Corp, (which many investors do for tax savings purposes when they have active income running though that LLC), but until that LLC is S-Corp or C-Corp, it still will result in the same income and expenses being reported on Sch E and/or Sch C of your personal tax return.

I continue to own my props in my personal name as my accountant has stated that the corp onl results in double taxation. obviously there are other considerations, such as liability but I do have decent insurance. I keep seeing folks go round and round on whether it is worth the LLC. in light of the tax changes, is there an entity that is the most advantageous?

What I cannot seem to find is whether the other normal costs of rental properties are still deductible? (I was worried about taxes being lumped with the 10,000 cap but see they are not for rental properties.) Are Repair and Maintenance, replacing appliances, carpeting, etc. still itemizable or is the 20% deduction supposed to cover these write offs? Also couldn't find anything on depreciation.