All Forum Posts by: Shivam Patel

@Bryce Stewart Hey Bryce, What you do if you were in my shoes.

@Louis Dilonardo III@John Tobin

I just realized you guys aren't too far from me. I have a property in Boonton,NJ. I have a realtor @David Da Silva whose based in NY + NJ, and knows the market very well in our area. Currently he's helping me find a multifamily property. Trying to sort out my financing at the moment for my second property haha. If you guys have lenders I could talk to, please do reach out!

Hey Fam,

I have a 3-part question. 

Backstory: I bought my first property (closed in last September) for $315,000, and got at interest rate of 2.375% through FHA. I had to put 9% down for this SFH (3br,2ba) and about $11,000 closing costs. I'm house-hacking and it rents for 850 for one room, 950 for the other room. They don't pay utilities(~$400), shovel snow, lawn maintenance, etc. They are on month-month lease. My mistake on the lease, I know. Market rent for the whole house is $2500, and my mortgage is $2120. I realized I want out. I have a property manager who will look after everything for 8% of market rent in September when I move out. I want to move out to cashflow or potentially sell the property and get an FHA for 4plex closer to my parents(2hr drive south).Property is in Boonton, NJ. I do not have the debt/income ratio to hold this and also buy another property. I have about 20k cash.

Question 1: Do I have to be there 1 year of Closing date with the title company as per FHA rules, or the 1 year past the first payment towards the loan, because I think when I moved in, I didn't have my first mortgage payment for 2 months?

Question 2: $300 cashflow is not a lot (doesn't account for prop management fees/CAPX), I should probably get rid of this property, so I can reuse the FHA for a multifamily right? Or hold the property because of the good interest rate that's lower than inflation. Property is in Boonton, NJ. Also I heard New York Corporations are getting hit with a tax hike, and if they migrate to north jersey while market is hot, maybe I can sell the property for a little more right now, but either way need to figure out how to incentivize tenants to leave. 

Question 3: If I am to keep the property, they are good people, and I want them to find something just as cheap. However, its better for my business to have the whole house rented out on a yearly term to a family preferably. These are students currently and I don't want my PM to go through the hassle of renting out each room by room to strangers where it can cause conflicts. How do I transition them out of the house appropriately. Let them know property management services will take over the business in September, and lease will be changing soon? Or what? Any good ideas?

Sincerely,

Shivam Patel (Newbie Investor)

@Louis Dilonardo III Yeah, worth it. The guy is a pure genius haha. I'd like to meet him one day.
I just recently got his SOLD, haven't read that one yet. To be honest, I went on a spree and bought like 10 bigger pockets books a few days ago haha. They were all on sale randomly. Anyways to stay on topic. I thought you should give property managers in the market you're looking at a call, to figure out the best areas to invest in(figure out rental comps), and then cross-check with realtors (figure out price comps). Create an excel sheet with rent/price ratio to see if it meets the 2% rule. Sort it by highest ratio, and there's your market, but Always DOUBLE CHECK. The the property manager may say it rents for 2,000, and the price point may be 100,000 per house, but that doesn't mean its true, and it doesn't always mean there's low vacancy rate, etc. I'm actually trying to automate that whole process right now. All i know is, do your due dillegence and properly research, and I know you got this bud! :D

Be sure to follow your township guidelines, because i think there are laws for minimum dimensions for closets. It doesn't take effect until you start the process because you might already be "grandfathered" in. However, once you start the work, you might have to follow the local municipal code.

If you have a list of application criteria, you can add it to the list for the future, you can deny by not meeting all criteria of the application process. But for this specific situation I think you can just deny for that example you gave. "Fraudlant paystubs" is a reasonable for denying a tenant, I'd like to think.

If you've already read David Greene's Book on Long distance investing, I would definitely suggest finding the market you want to invest first. Then do some research on the people that you want on your team. Once you've developed the team, then invest in real estate in that market. The most important thing is preparation to mitigate risks.

Hey Nick,

Great to talk to ya again. Is it legal to setup a LLC, not to own the property under because of due on sale clause, but to have it set up in a way so the rent goes to the LLC, utilization net operating costs with utility costs, operating it more as a business because it is, to pay lower taxes to (15%), and include property management company costs, and all. I don't want it adding it to my w2 job income. Or is it not worth it? or not doable? I realized having a business has its advantages for leads, and hiring people.

Brandon needs to reveal the secrets to his undeniably crisp beard. I've been practicing for years.. no luck.

Call property Managers in the area to confirm the rental rate, and take the average between property managers, and rentometer, just to be safe!