All Forum Posts by: Alexander Szikla

Everyone is going mad for NJ right now and especially cities like Paterson, Newark, East Orange and Irvington. Personally, I am not as bullish on those areas. However, I do think Elizabeth, NJ has lots of potential! 

With that being said though, I think the bargains to be had now are in NYC. Previously, people would buy 3%-4% cap rates just to get the appreciation ticket. With prices at lows now, you can get 5%-6% and even higher appreciation (due to lower basis). NYC investing requires more patience and you must have the perspective of an asset accumulator vs. a clipper of coupon. 

@Deb Bandyopadhyay - where in New York do you invest?

Hi all - I have a background in investment banking and private equity. I am also an investor in 2-4 families. I have a real unique, high yield Assisted Living Facility idea which I'd like to syndicate and raise LP capital for. However, a seasoned operator to partner with me as a GP is crucial here. Anybody interested or know anyone else who might be? Please feel free to reach out to me directly. 

Hi all - I have a background in investment banking and private equity. I am also an investor in 2-4 families. I have a real unique, high yield Assisted Living Facility idea which I'd like to syndicate and raise LP capital for. However, a seasoned operator to partner with me as a GP is crucial here. Anybody interested or know anyone else who might be? Please feel free to reach out to me directly. 

@Nicole Heasley Beitenman - I'd start out with an FHA (3.5% down) a Fannie (5% down) and then as many conventionals at 10%/20% down before leaving. Commercial requires 25% so will "slow you down"

@Nicole Heasley Beitenman Yes, some banks will create a special product for it, but I really wouldn't recommend it. Why not close on a few properties while you still have a W2, lock in better financing terms and then quit?

@Ryan Cleary The big benefit behind an LLC is shielding yourself from legal liability. Basically, creating a separation (legally a distinct entity) buffering your assets. It is a very cheap form of insurance!

1. As an agent, you want to protect yourself from disgruntled clients. DE likely provides you with Errors and Omissions (E&O) insurance which should be sufficient frankly. But you can set up an LLC if you want to be super careful.

2. I wouldn't put your live in flip into an LLC. You want that to be your personal residence for 2 years of the last 5 years when you sell. Since you are married, that will provide you with a $500,000 capital gains tax exemption!

3. I would put each investment property in its own LLC unless they aren't worth very much. If these are $30k a piece maybe you want to bunch a few together. But if they are worth $100k or more each, I'd segregate. You want to make sure any potential liability stays insulted to the property "in question" and not spread putting everything else at risk. Very important that you should not commingle personal and business expenses nor cross expenses through various LLCs. Keep everything separate in order to maintain the integrity and legal protections afforded by an LLC. I would also suggest starting a Management Co. LLC to separate a bit further and also provide the convenience of running all financials through one entity as a manager which is okay.

@Trevor Brown Yup!

@Jeff Williams Unfortunately, you cannot depreciate 100%. There are some benefits and accelerated depreciation if you are an RE professional. Might be worth looking into picking up a license or certification to do so. You can depreciate some capital expenditures based on useful life (i.e. appliances can be depreciated over a few years vs. the building itself which has a regimented schedule) which should help. Also, many items (i.e. transportation, repairs, etc.) can be expensed against the property which should help offset some taxes. Generally, residential property has a 27.5 year schedule and commercial property has a 39 year depreciation schedule. 

You do not need to purchase the property under an LLC. However, I would recommend it. Especially since your wife has assets now due to her inheritance. An LLC separates your personal assets from the property - its a cheap form of extra insurance! Very valuable in the litigious society we live in.

LLCs are not ideal for banks. Those that are amenable will classify as a commercial loan and that will be more expensive in both interest rate (0.5% to 1.5% more) as well as equity (LTV of 25%).

@Trevor Brown - Should be about $300-$350 per unit in KY. Happy to connect you with an insurance broker if need be