All Forum Posts by: Michael Sokolski

As a business owner, I'm well aware of the importance of protecting personal assets by creating a business entity. Can I use my exiting LLC for Real Estate investing even though it was created with an entirely different business purpose? I currently own an IT consulting company which is a registered LLC in New York. As an aspiring Real Estate investor, I was wondering if I could use my company for any Real Estate deals rather than starting a new company altogether.

I know you shouldn't offer or accept legal advise here but was wondering if anyone had experience with this scenario.

Thanks.

The guru's sure make it sound like a great idea but the more I read, the more I see your point. Basically, a wholesaler sounds like a person trying to broker a deal without a license. Sure, there are good people that do it with the best intentions but when there is a good amount of money to be made quickly, that will attract some shady characters which gives the entire group a bad rep.

I'm looking for a way to break into Real Estate Investing. I do work full time and don't have enough disposable income to set aside for an investment. Taxes in NY are ridiculous so finding a property to buy/rent and still make a profit is difficult to say the least.

I've read articles and watched some Youtube channels describing creative financing to get started. Owner financing, Hard Money Lending, Transactional Funding, are a few I've found could be possible.

Now, I am just in the learning phase. I don't have experience with any of these so don't beat me up. I do enjoy the thrill of the hunt and look forward to making my first deal.

I look forward to your comments.

Great insight and I'm glad I read all your comments. I was hoping to break into the field of Real Estate investing as I'm unhappy with my existing career. Unfortunately, I don't have much to get started and wholesaling looked to be the way in for someone like me.

Now what? Flipping? My long term goals are to own rental and vacation properties. How did most of you get started?

That is the asking price, which I certainly wouldn't pay. I was trying to get an idea of what type of offer to make so that i WOULD cash flow. I also have $20,000 - $30,000 to use at DP + Repair.

I'm trying to figure out what my offer price should be. I came across a Bank Owned house. It's a legal 2 family that needs a little updating. Here are the details:

The Asking price is $229,900
Taxes are $6595.00
Apt 1 - Lr, Eik, 2 Br, Fbth (Average Rent - $1200 - $1400)
Apt 2 - Lr, Eik, Br, Fbth (Average Rent - $700 - $900)

Bank wants buyer to pay transfer tax.

I have no estimate on repair costs since I haven't actually seen it or had an inspection. I'm just trying to figure out if it's worth the trip.

Anyone invest in the Rochester NY area?

I posted this in another category but thought I might get more input here. I'm trying to understand the 50% rule.

I've read numerous posts concerning the 50% rule. There are many ideas and opinions on how to figure it. Out of what I've read, this is how I understand it; correct me if I'm wrong.

You figure 50% of the gross scheduled rent. Let’s assume your monthly rent is $1500/Month.

50% of $1500 = $750/Month

Your total expenses should not exceed 50% of gross rent ($750 in this case per month).

Your expenses (not to include your mortgage payments) include:
Maintenance
Property Tax
Insurance
Operating Expenses
Vacancy
Advertising
Tenant screening
Tenant Damage
Legal Fees
CPA Costs
Business Entity costs
Am I forgetting any?

If 50% of the gross rent covers your expenses and the other 50% is more than your monthly Mortgage (principal and interest), it’s a good deal that will cash flow.

Like I said, I’ve read many arguments on the interpretation of this rule so I’d like to hear your thoughts. I know this is not an exact science but is a good starting point in analyzing a potential deal.

I’d be interested in reading some responses to see if I understand it correctly. What other expenses am I missing?

Thanks again. I have finally learned the 50% rule. With this formula, I am now convinced more than ever that I will have to invest somewhere other than Long island which adds a management company expense into the mix. Which isn't that bad considering taxes and housing costs are much lower.

Thanks!

Maybe I should have started another post. My last post was just to see if I'm understanding the 50% rule correctly. I pretty much gave up on this property because I now see what you're saying and I value everyone's advice. It does seem like too much work and the months in lost rent while renovating will not be worth it. I'll keep an eye on it. Maybe the person making the offer will drop out and I can get it for much less.

Did I leave out any expenses to factor in? Are you using the 40% on the expenses or the mortgage payments? I'm also having trouble estimating some of the expenses I'm not familiar with like attorney fees, CPA fees, Tenant Damage, and maint.

Thank you for taking your time to share your knowledge with us newcomers. It is very much appreciated.

I've read numerous posts concerning the 50% rule. There are many ideas and opinions on how to figure it. Out of what I've read, this is how I understand it; correct me if I'm wrong.

You figure 50% of the gross scheduled rent. Let’s assume your monthly rent is $1500/Month.

50% of $1500 = $750/Month

Your total expenses should not exceed 50% of gross rent ($750 in this case per month).

Your expenses (not to include your mortgage payments) include:
Maintenance
Property Tax
Insurance
Operating Expenses
Vacancy
Advertising
Tenant screening
Tenant Damage
Legal Fees
CPA Costs
Business Entity costs
Am I forgetting any?

If 50% of the gross rent covers your expenses and the other 50% is more than your monthly Mortgage (principal and interest), it’s a good deal that will cash flow.

Like I said, I’ve read many arguments on the interpretation of this rule so I’d like to hear your thoughts. I know this is not an exact science but is a good starting point in analyzing a potential deal.

I’d be interested in reading some responses to see if I understand it correctly.