All Forum Posts by: Mordy Chaimovitz

It is easier to get lenders in on a multifamily. 

banks are more willing to lend, and will require a lower DCR

Wow! Good for you! 

here are some tips to get started

Your lender will most likely require you to have a few documents to get a loan

1. PFS - Personal financial statement:

  most lenders will want to see that you or your sponsors have assets equal to to the value of the loan, with %10 of that being liquid assets. 

2 SREO- a schedule of real estate owned:

lenders want to see that you or your sponsors have experience with Real estate and will ask for some info about your current portfolio

3. OS- Operating Statements

Lenders will want to see the income and expenses of the property for the past 2 years sometimes 3 years

4. Current Rent Roll 

5. Unit mix

most of these things you will need for due diligence anyway. 

have these items prepared to send to your lender and it will expedite the process significantly!

Good luck!

pay 160k for it.

your down payment will increase by only 12k.

if you can rehab it and still make decent money. the 12k should be well worth it! 

Quote from @John Mazzella:

@Nathaniel Winkel I think @Senate Eskridge's point about defining your criteria is key. There are so many avenues in real estate, being passive vs active would be the first question to answer. Below I have a list of books that I found helpful, they are in order from smaller deals to large syndication type deals. The answer for you could potentially be active in some deals and a passive LP in other deals. I am always happy to talk real estate and answer any questions, best of luck!

- Rental Property Investing - Brandon Turner

- BRRRR - David Greene

- Long Distance Real Estate Investing - David Greene

- The ABC's of Real Estate Investing - Ken McElroy

- Multifamily Millions by David Lindahl

- Best Ever Apartment Syndication Book

David Lindahls book is good but there is a lot of hype there. And since he wrote the book he started a company that will chase after you to join their mentorship program like you are the last person on the planet. 

It's a good read but overhyped and not so reality based. Especially in today's market. 

In addition to all the above....

If you are planning on investing out of state you should have a property management company you are comfortable with already in place before you start looking at properties. They can help you determine which areas you should be looking into. In addition you don't want to buy a property and then have a hard time finding someone to manage it once you own it. 

Read David green's book BRRRR. Buy rehab rent refi repeat.

pay cash for your real estate. Rehab the property. Rent it out. Do a cash out or heloc to get your cash out of that property. Then use that cash to repeat the process. And again and again and again. 

this way with the price of buying one property you can buy many. 

Quote from @J Scott:

Quote from @Mordy Chaimovitz:

Quote from @J Scott:

Quote from @Mordy Chaimovitz:

Isn't it true that if you hold the property for 1 year and 1 day , you would save on taxes.  Because your gains won't be considered earned income, but rather a capital gain, which is taxed at a lower rate?

No.  Flips are considered business inventory, not investments.  So, capital gains don't come into play.  Regardless of how long it takes to complete/sell them.

Oh!
What if I buy a property with built in equity because I got a good price and then rented it out for a year. Is that considered and investment after 1 year, or inventory? 

As long as your intent was to hold it as an investment, it's subject to short/long term capital gains rates.

But, IRS will look at your original intent.   And if they believed your intent was to flip it after renting it for a year (to get favorable tax treatment), they could treat it like a flip.  So, don't let the IRS see this post...  ;)

Note that I'm not a tax professional, but I've dealt with these issues quite a bit.  So, don't rely on what I say...

Amazing how much I learn from you guys every day.
J I keep your article on analyzing  deals on my desk and reference it all the time. Thank you! 

As far as my intent. I got the houses at under market value. I bought them as investment properties. I hope to make money off of the sale at some point in the future but right now I am renting them out. My intent was to make money for myself and my investor. 
It's not a flip as I bought them almost turn key.   It's an investment.

Exit strategy to be determined based on market rents and market value for a sale, as well as determining if the equity in the houses would perform best where  its currently sitting, or in a different investment. Also would need to decide if a sale is more appropriate or a refi. 

Quote from @J Scott:

Quote from @Mordy Chaimovitz:

Isn't it true that if you hold the property for 1 year and 1 day , you would save on taxes.  Because your gains won't be considered earned income, but rather a capital gain, which is taxed at a lower rate?

No.  Flips are considered business inventory, not investments.  So, capital gains don't come into play.  Regardless of how long it takes to complete/sell them.

Oh!
What if I buy a property with built in equity because I got a good price and then rented it out for a year. Is that considered and investment after 1 year, or inventory? 

Hi BP 

I am looking to understand why a lot of lenders don't like to lend on mixed use properties. any one have any info to share?

Isn't it true that if you hold the property for 1 year and 1 day , you would save on taxes.  Because your gains won't be considered earned income, but rather a capital gain, which is taxed at a lower rate?