All Forum Posts by: Mo Farraj

Hi All - Happy Wednesday, I had a quick question on how promissory notes work. I own 2 properties in Long Island, NY with a partner and originally decided to split the profit 50/50. Property 1 is for sale, while property 2 is still being worked on - I've decided to exit property 2 since it did not go to plan. 

My partner and I agreed on a promissory note that will state I will be paid all profit from prop 1 and also funds from another prop that he solely owns once it sells - what tax implications will I face here. Will I be taxed for the sale of prop 1 even though it offsets my expenses for prop 2? My concern is I don't want to be taxed for prop 1 and then have to chase my partner for more money later on during tax season. All help is appreciated - thank you. 

@Llewelyn A. Tons of great gems and a lot of great points. I found the tax situation with your brother very interesting. I also agree with the high tide in NYC will spill over to our surrounding states.

Though I do know the Brooklyn market well, I do not want to put myself in a position where evicting a tenant will be a yearly process with a storm cloud to follow of issues. That will cut your bottom and top line, especially if you only own a 2-4 family.

Though OOS is very much debated here, I do think it’s something real NYC investors should consider. The drive to Philly etc might be worth the money and the time.

Do you plan to just sit on cash in the interim? What if the laws keep getting worse? Do you just plan on improving your PM business?

@Llewelyn A. I agree with all of your points, seems like NYC has some of the strictest landlord laws in the country regarding evictions and tenant protection.

What are your views on buying rental homes in neighboring cities/states such as NJ/CT/PA?

@Paul Doty agreed I’ll ask the seller, thank you very much!!!

@Jimmy O'Connor I appreciate your reply, I’m still digging deeper on the locations. West Philly seems like a block by block place which is frightening in regards to investments.

@Sheryl Sitman Not the most familiar with the areas the homes are in, like you said I think it’s best to learn a bit more. Thank you for your advice!

@Paul Doty Great points sir. All homes are turn key, the seller fixed up all homes already and also has PM in place. I don't think maintenance will be much since they are turn key but how much would be a safe margin to add to the maintenance fee? 

I will ask for a better estimate of the tax, from the price history I see he bought almost all for 60-80 and selling them for 140k each (nice payday), but like you said Im sure the taxes would have to increase as well. 

Hi All,

I was offered a 14 SFH bundle under seller financing (terms still to be discussed) in West Philly, and I would like everyones opinion on the financials. The cap rate sits at about an 8%.

However the neighborhood looks to be in a C- area, I am unsure if this is worth the investment. How can I structure this deal to be worthwhile? Should I use the potential 5%-10% down payment and invest else where (this question might apply to investors in Philly since you are more familiar with the current crime/economic conditions)

@Eamonn McElroy Very good information, thank you very much sir!