All Forum Posts by: John Kwon

@Margaret Buoncora I have been looking at properties in this area for about 6 months. Prices are good and you don't need to be in the center of the Poughkeepsie. Also, many duplexes are in horrible condition but prices are jacked up. I just looked at duplex with a contractor (who told me to walk away) and the bidding war is out of control. 

I am starting to look outside of the city, but the taxes are very high in this area and eats away your profit. 

@Jay Helms IBM is no longer the big player. They still have a presence of ~3000 employee. The city is trying to  starting technology triangle within the city with local colleges and IBM. Also, one of main hospital is building a $550M hospital with new medical school and residency program. 

@Mike P. @Matt Caven Do you know of any POK REI meetings? I know there is a one for Newburgh and Orange Country. I would like to meet up with local POK investors.

@Mike Roy @Tanner Crawley Thank you for your input. Some of the capital are coming from investment gain. We are planning to buy and hold as rental. But, local banks have limited portfolio options for refinancing under LLC unless it commercial lending. Terms were not great even if we wanted to hold it for 10 years. Loan terms would likely eat away our tax break gain assuming that property goes up in value. We decided to go via the traditional route and pay cash and rahab under our name and BRRRR it. We just placed an offer. Thanks again.

Hi,

I found a property in a opportunity zone area for $130K which I am planning offer $100K. Also, I am planning to spend about $40K for rehab. ARV is about $190K and rental is about $1800 to 1950. This is a 3 BD, 1 Bath, yard, and detached 2 garage about 1900 sqft.

My conundrum is following where I need your input.

Scenario 1:

I have the cash to buy and rehab. I want to eventually BRRRR the property. BUT... I want to take advantage of OP long term tax break. This means that I need to buy the property under my LLC. This will make BRRRR a bit difficult because I have to use commercial loan - which mean higher rate and shorter term. I called local CU and banks, but the terms are not that great.

Scenario 2:

Buy under my name and get BRRRR, but I don't get the OP benefits.

Scenario 3:

Buy under LLC with 25% down and get a loan. Take advantage of OP. But I don't have as good leverage to but the property at $100K and loan terms . This option gives me more liquidity since I will holding on my case.

Thoughts? Thanks.

John

@Shane Ward I completely agree with you. There is a risk of losing (or not getting your money out by BRRRR) if the property is not worth as much or ARV is lower than expected.

If you do your due diligence and the number works, then cash buy is a great option. But putting all your eggs in on basket can be a risky proposition - especially if you don't have enough reserve. 

@Nicholas Munford I think it would be hard to call it "no cash down" real estate if you need all that cash.

But, we try to do cash buy on all properties. It is so fast and hassle free. If you can do it, then I would recommend it as long as your risk tolerance to put cash in one basket.

Hi,

I found a place that we are planning to buy. It is a short sale and I want to talk to the owner before I put in an offer. I want to find out why they are selling the property and try to find a good compromise.

We did find this place through a realtor. I did get the owner's contact information from public record. Is it legal and/or good etiquette to contact the owner?

Any advice would be appreciated.

John

@Ryan Kawash I'm also looking at Middletown area. I have driven around the area several times. Some areas are definitely C and D class neighborhood that I would not invest. However, walking around and taking to people, I found that Scotchtown area is popular, especially for commuters to the city.

Also, Legoland is being build in Goshen which is a nearby town. I think this might help with the local economy.

First, I had same the issue about my property. If the property is not legally and properly under the LLC, then you don't get the benefit and it can pierce the veil of the corporation. So don't go through the quit deed path.

Secondly, we had to pay high transfer tax in order to transfer the deed from my name to LLC. Mine was 4.1%, so check your local fee.

Third, read through your mortgage contract. Some loans can't be transferred. This means that you have to payoff your current loan and get a new loan under the LLC. This might translate to high rate, etc.

Fourth, get a good real estate and business lawyer to go over details. It might worth it. Also, an accountant who works closely with the attorney helps, too.

We decided not change the deed and got a large umbrella policy that covers our asset. Also, make sure to verify it with insurer and go over the limitations.
 

I learned my lesson so all our future purchases are under the LLC.

Good luck!