All Forum Posts by: Steve Genna

@Carl Fischer Agreed, I guess I should clarify I'm laying out this info so all you experts might be able to steer us towards professionals who can cater to my father's needs.  Thank you for the reply sir!

Hello All,

I have already found BP to be a wealth of information for my own needs and now my father's portfolio could use some assistance from these forums.  

My father owns 3x properties in NY (their primary residence in Long Island, a second summer/vacation home in Long Island and a rental unit in NYC). I'm becoming more familiar with asset protection in terms of real estate and during a conversation with the old man, I asked how he owns his properties. He told me they are all in his name and he owns them free and clear. He was under the impression that having a $3M insurance policy would suffice, but I told him that EVERYTHING he and my mother owns is at risk given any litigation against the two of them. As I'm sure many of you would agree, I recommended that he explore setting up an LLC and get the rental unit and 2nd home into it (the second home because they're always partying with guests out there).

He agrees with this assessment and is eager to get an LLC formed in NY and the deeds transferred over to it. Since I am not familiar with the NY area, I was hoping to find him an attorney to speak to regarding his needs, which I believe are as follows;

- Determine if he should put these properties in 1 or 2 separate LLCs

- Determine which type of LLC would suit his needs best

- Start said LLC/s in NY (and handle the publication requirements)

- Quit claim the deed from his name to his LLC

- Steer him right in determining other needs in terms of opening a business bank account, adjust insurance policies, etc

Does anyone know a suitable candidate to help my father out in this endeavor?  Much appreciated as always.

Steve G

@Jason Lee that's what I'm thinking/hoping.  I have a call scheduled with one of their reps to inquire about the possibility of picking up a bundle of properties at once.  Hopefully this is within their normal scope of work.

@Peter M. Thanks for crunching those numbers, very helpful to have a professional do it.  I only trust those online calculators so much (and my own spreadsheets).  

My thoughts exactly on the 50k in equity... it might be comlex but where else will I earn/keep that much $$$ when you take into account the effort/risk to produce it?

I'll go check out the article you recommended as depreciation recapture is new to me.  As always, I'm grateful for your input, thanks bud!

@Anthony Dooley - I wouldn't call it hesitant as much as hyper aware of the complexities and a desire to not run afoul of the 1031 process.  Also the buy and hold strategy is alluring to me, so I don't plan on selling any more property after this NJ transaction.

@Jason Lee

Thank you for your input. I never occupied the condo, it has been rented the whole time (I thought about moving there for the required time, but my commute would be the end of me!).  I agree with your assessment about the appreciation on the property and it's attractiveness to other investors.  

My strategy with the 1031X replacement properties was to find a seller/broker who had multiple rental units in their portfolio (such as those found on roofstock.com).  The hope (keyword) being, in one fell swoop I can grab multiple listings at once.

@Anthony Dooley - I appreciate your input.  Yes, this seems complicated, especially for a relatively new investor but my fear is that I may be throwing good investment money by paying capital gains tax on the profits.  I think my taxable gain would be on $180K assuming a sale price of $380k, debt of $170k and ~$30k in closing costs.  Am I being too stubborn with keeping the ~$30k with overly complex solutions?

@Peter M. - I have done nothing but research in my free time during the past month!  There is so much more to learn and I'm hungry for knowledge.  So... much respect and appreciation to people like you folks who share your knowledge.  

In regards to managing B-C properties, the answer is ... I think so?  15x months ago my fiance and I purchased a 5BR single-family home in Bridgeport CT to rent to Sacred Heart students.  Our 2nd round of students just moved in a few days ago and we're happy with the results thus far.  The home cost $220k and we rent it for $3250/mo, which is great as long as we continue to find tenants.  I frankly don't know if it would constitute a B or C class, but certainly isn't an A.  

I have also subrented a 3 BR apartment in Brooklyn for 6 years so I've dealt with showing prospective tenants, marketing the place, dealing with mishaps and the usual.  With these experiences in mind, I still prefer to hire a property management company in my future investments.  Also, I have little to none interest in NY (where I live) or NJ (where the condo is), precisely for the reasons you mentioned (high taxes!).

I have researched a bunch about the 1031X process and have spoken to 3x different companies that handle such transactions.  I find myself attracted to this path since I can put my equity (and debt) in NJ to work immediately, defer losing 15% to taxes and if I go with a "turnkey" provider - do so without taking on too much work.   Is there an easier way?  Perhaps just rolling the condo into 1x property of like value with better cash flow?  I'm not afraid of hard work, but I already work for multiple companies, a union and will be getting married in 4 months (no kid yet, that's my nephew!).

Hi Everyone,

Although perhaps taboo nowadays, I started gaining interest in real estate buy and hold transactions via Morris Invest.  My goal was to utilize my current (non-performing) asset to kick-start a strategy for generating passive income for my fiance and I.  Using BP's amazingly detailed forums, I've discovered that utilizing MI would not be a prudent choice.  I'm now researching other vendors, such as roofstock.com, dfy-realestate.com and others.  Below is my plan and my concerns.  Hopefully someone can jump in and provide much needed advise...

What I own:  In 2012 I purchased a 1BR condo in Jersey City that is now worth approximately $380k.  I purchased it for $240k and have $170k left on my mortgage.  The current tenant is paying $1800/mo but between the mortgage, taxes (which just jumped 66%!) and insurance, I'm receiving no cash flow. 

What I planned to do:

Step 1: Start a single-member LLC and transfer the deed (via a quit claim?) to the SMLLC away from me personally.

Step 2: Conduct a 1031 exchange on the property and purchase multiple rental properties (in the 60-90k range)

Step 3: In order to replace the value of my debt, enlist a service like Fund & Grow to get a loan that is 0% for 2 years.

Step 4: Contribute all net proceeds from the rents, plus wedding gift money (assumed to be $50-100k) towards paying off the loan during the first 2 years.

Step 5: Before the 2 years is up (and the 9-18% interest kicks in), take the remaining debt amount out from my 401k to stabilize my debt interest rate to ~6.75%

Step 6: Pay off all debts over years 3-5.

My concerns are;

1) How hard will it be to find multiple properties in the allotted time frame of a 1031X using these services?

2) Am I wasting my time trying to find many B & C type investments when I should find one or two A type investments?

3) Is there a completely different strategy I should focus on given my ability to convert $380k into a better investment than a NJ condo that provides no cash flow?

Any advise, recommended books, articles or professionals to chat with would be greatly appreciated!  I'm currently reading Real Estate Loopholes and have done much research online, but I think it is time to speak to real professionals.  I look forward to utilizing BP more and more and building relationships while sharing my journey with other new investors in the coming years.  

Best,

Steve

Thank you all for the recommendations and notes.  I've reached out to Nicholas and look forward to our conversation.  Any other recommendations are certainly welcome in the interim.  I look forward to utilizing BP.com more as the community appears very informed and productive!

Hello BP,

I am new here and fairly new to the real estate investing marketplace.  I personally own (but will transfer deed to a SMLLC) a NJ condo that I rent out but would like to utilize a 1031 exchange to pick up a few smaller rental properties.   I have the 1031X service picked, but would like to begin a long-term relationship with a knowledgeable CPA who knows how to properly use the tax code to advance my wealth.  

Along with my fiance, we would like to generate more passive income and grow our portfolio but need expert advice along the way.  We live in Brooklyn and would like to work with someone in our area.  If you have any recommendations we would love to hear them.  

Thank you for your time,

Steve G