All Forum Posts by: Jon Borowski

If the property doesn't cash flow, then it should appreciate in value a lot.  If not, then don't do it.

@Allyssa Compton Newark is being developed at a fast pace, but still has a while to go.  This NY Times article will interest you on what's been going on there.  http://www.nytimes.com/2016/08/21/realestate/in-newark-a-new-chapter-unfolding.html

@James Mc Ree I feel the need to act now (next 6-12 months) because interest rates are slowly going up, and I want to "get in" now.  My parents have a good amount of retirement income from pensions and annuity to cover expenses (they have no mortgage), and they certainly never travel,  And yes, I would def give them a nice gift for helping me out... Maybe pay for their first vacation south Maryland.. ever!

@Stephanie Medellin If I first purchase a property using conventional financing, can't I say that the funds were gifted to me and have them seasoned in my account for a few months and avoid paying tax? Then afterwards utilize FHA to finance the home which will be my residence?

@Justin K. Great advice. Starting an LLC is something I would be doing before any real estate transactions are made.

@Chris K. I know what you mean. I put "profit" in quotations marks because I didn't account for the many variables such as repairs, maintenance, vacancy, etc. House Hacking is the goal, 'to live for free or almost', while simultaneously saving for the next property. Any property I purchase would be at least two units since there are more streams of income. FHA is a way I would go, and in the future the GNND program as well (but that would have to be a single family which I live in for three years and sell after).

@Marcus Johnson I'd hate to think it'll fail, but anything is possible. The payment for the $100k HELOC is about $440/month, which isn't much based on my income. Parents also have good retirement income.

@Stephanie Medellin I have my own funds and will be using those to cover costs in vacancy is longer than expected, as well as any kind of initial repairs/upgrades.

@Mike Cumbie The properties I'm scoping are some of the least expensive in the area and to be used for rental purposes and house hacking, not for flipping to sell; although that may be an option many years down the line.

@JD Martin Guaranteed in sense of civil service career and collective bargaining agreement contract raises.   The only way my parents will lose is if I can't pay $440/month, which I can pay with ease now when my W2 income is $70k, and with the future raises that will bring it to $110k area.

@Deanna McCormick If anything were to happen to me, they could pay it themselves based off their savings and retirement income without a issue at all. The HELOC payment is $440 and the last time I had trouble coming up with $440/month was 15 years ago in high school.

@Joseph Scorese My parents would not expect any return on investment. All they would want is for me to pay the HELOC on time every month which is no issue since $440 which is the estimated monthly payment is easy for me to come up with on a $70k salary that grows to $120k in the next 2 years.

Would I have to pay any tax on the 'gift' money? Would I have to pay tax if the money is season monies after two months?  Also, if i have the home with the 20% down payment in my parents name, but I operate it fully; would that still require me to make it my primary (or their primary)?

PS. Temple grad here. Lived in Philly for 6 years. Fight fight fight for the cherry and the white! Doing rehab flips around Temple campus is something I'd like to get into in the future!

Here is a possible detailed scenario which I drafted up:

*Note* The HELOC has a payment of $440/month which I would be covering from my own pay from my job.

Purchase a $450k home with a 20% down payment of $90k.
Home is a 2-family (3br & 2br) with rents of $1,700 and $1,300.
Monthly payment (mortgage/taxes/insurance) of $1,977.
"Profit" of $1,033/month.

Purchase a $175k home with 4% down payment of $7 (FHA).
Home is a 2-family (3br & 2br) with rents of $1,400 and $1,300; however I will be living in the 2br for 2 years so the $1,300 will not be collected during that time).
Monthly payment of $1,615 on a $1,400 rent.
"Cost" of $215/month.

"Total profit" of $818/month.

Save the $818/month and take $1,500/month of my pay from my job and SAVE it for 24 months.
$1,500 + $818= $2,318/month multiplied by 24 months is $55,632.
I know that the number will be lower than $55k because of many costs involved, so let's say for 2 years the cost of business is $10,000... so that will leave with $45k for a downpayment on a 3rd home.

After 2 years I will move out of the 2br and can collect $1,300/month from that which will be "profit" to $2,118/month.

Going into the purchase of a 3rd home, I can have $45k in cash for a down payment, and have a cash flow of $2,300/month.

Hi everyone.  I'm thinking of approaching my parents with the following scenario.  I have a feeling they would be okay with it due to my work ethic.

I live in the NY Metro area and want to get into real estate investing.

My income is around $70k, but is guaranteed to jump to around $110k-125k in two years.

My parents are retired and have a home in Pennsylvania with a value of $150k that is 100% paid off for many years now.  I am contemplating approaching them to take out a home equity loan of 75% of the value of their home which would be about $110k, and to use that money to start-up my real estate investing career.  

The goal is to purchase two multi-family homes with the $100k, one with a 20% down payment and another with a 5% down payment thru the FHA which I will live in.

Would anyone consider this a good or bad idea?