All Forum Posts by: Doug O.

If you are looking to pull money out, it may be difficult to get much more than 70% LTV, which would only generate about $80,000 for you. Commercial loans will always have a balloon, most commonly 5 or 10 years. With low rates, definitely try to find a 10 year balloon so you can benefit the longest. If the property cash flows well enough, I usually try to go with 15 or 20 year amortization as well rather than dragging it out to 25 years since you'd be paying most interest anyways. Of course, different folks have different strategies.

Careful along the JC/UC border ... That's the worst area of UC in terms of rents. I have a property a few blocks up on Bergenline and while there are rarely vacancies, the rents are pretty depressed in the area despite all the new construction. You are also dealing with a tenant class that can be a challenge at times. That being said, it's a solid rental market but requires a lot of oversight to protect your investment from constant wear & tear.

I'd be interested in bouncing ideas off each other if you are looking to invest in the area. I also own 2 multis in Hoboken, which I've done well with although that market is incredibly difficult to find any deals that make sense these days.

I hold each property in its own LLC. There are advantages and disadvantages.

Piercing the corporate veil of an LLC is relatively easy if you are slapped with a large enough lawsuit, so you can't really count on that protection.

I do like the anonymity it provides, as well as the separation of assets. The way to truly benefit from this form of ownership is if you own several rental properties, and all are owned by LLC and then managed by a third party manager. In this way you are able to deflect virtually all liability. It is not quite as simple as I am describing it, but that is the easiest way to explain.

Keep in mind, LLC may change your managing style depending on where you are located. A good example - in my location in NJ, by owning via LLC, I am unable to evict by myself - I must have an attorney represent the LLC. Obviously, this adds to the cost of each eviction since I cannot simply file at the court myself. Each municipality is different, so make sure that you wouldn't be affected by something such as this.

How many units is the property? That will make a difference with most lenders as well. over 4 units and it would be strictly commercial lending.

I just closed on a cash out refi last week on a property (that was about 8 months in the making with a local lender) also held in an LLC. It was a painful process now with all the changes in commercial financing with the banks. They were only willing to go up to 60% LTV (which wasn't an issue for me), and there were all kinds of hoops to jump through. Have you tried PNC? Not sure if they lend in that area, but if they do, I found them easiest to work with. Of course, YMMV, but worth a shot.

All NJ multifamilies 3 or more units need to be registered with DCA. This is so they have you on record to perform the 5 year green card inspections with the state - it has nothing to do with section 8. It is also very important to make sure you have registration card when you are evicting tenants since judges (especially where I am in Hudson County) demand to see a copy of it prior to even hearing your case in landlord tenant court.

Apply early since it takes about a month to get the registration back from the state.