All Forum Posts by: Steven Lewis

Are you a managing member of your LLC? If so, I don't think it would be a problem. Not 100% sure though.

Are there any threads on just Jersey city multi family?

@Dawn Brenengen Thanks for the mention :)

@Steven Lewis I'm sure you've seen me post about this before, but don't be afraid to go non-local. You will expose yourself to a wider pool of expertise which is critical for real estate investors.

Many of us service clients all over the US and even world. We utilize various forms of technology to collaborate seamlessly with our clients and rarely have issues.

If you are set on using someone local, search the BP forums for investors local to you and reach out to ask for a referral. Or join a local FaceBook/ REIA group.

Here's a blog post that goes into detail questions to ask a CPA.

Hope this helps!

@Steven Lewis:

What kind of tax adviser are you looking for in NJ? For example, a Certified Public Accountant (CPA) can advise you on all sorts of tax issues, including the purchase and sale of property assets and the income tax consequences of these actions. A local property tax adviser can provide advise on real and personal property taxes levied by cities and counties where your property is located.  I hope this helps you clarify your question.

Check around some of the local banks and ask them if they do commercial loans on SFH's. The condo thing may become a barrier though. Local banks tend to shy away some from condos versus SFHs.

But local banks would have no problem doing a loan under an LLC. It would be a commercial loan - typically 5 yr balloon, amortized over 20 or 25 years. Rates around 5% or so.

Still, its far better than leaving all that money in the deal.

So you paid 189k for a unit worth 200k to maybe 230k? 
I guess the key is what is actually worth? Is it 200k or 230k? 
If 230k, then you're close to 80% so you got some equity there.
If its 200k, then that was not a good deal at all. You basically paid retail.

As a rule of thumb, you typically want to be all in (purchase plus rehab) at 70% of the ARV of the property. So if the house is worth 200k, then you would want to have a purchase price plus rehab costs of 140k. And it may be ok to go to 75% of the ARV so you could be all in at 150k. But to pay 190k for a property worth 200k just doesn't seem to be a good investment.

Again, it could very well be your area is really tough to get discounts though. The coastal areas can be a whole other model. 

Just curious but what was your goal with the investment? What do you see the return being overall?  And how much would you guess appreciation would go up year over year in those units - if you had to guess?

Keep in mind, most investors suggest that investing for appreciation is not investing, its more in line with speculating. But the coastal investors over the years have made out like bandits because of appreciation so it may be more a calculated risk than a risk there. But one well worth the potential reward.

So, for me, I think I'd still like to know what the unit is worth - i.e. did you get any equity in the place when you bought it?

And two, I don't like the cash flow on that thing at all and I also don't like tying up all that cash either. It significantly reduces your rate of return on your money.....

@Steven Lewis that 8.33% would be your vacancy rate per year.  This would be used for budget on a yearly basis.  So you can think about it as a reduction in income due to the projected loss of rent.  

Based on your only repair being $600, than your repair costs would be 3.125% (=600/(1600*12). But given that you have only had it one year, and only one repair, that low of a expense budget could be too low. 

So while it is really budgeting, it could be thought of as reserves. Since if you send all of your income from the property every month and need it, then when these things happen, you will be unable to pay for them.

@Steven Lewis Given you only have one unit, the most likely case would at lease a full month between tenants, 1/12 or 8.33%, assuming that you have a strong rental market.  But it really depends on your experience.  It is not clear if you have had this as a rental very long, if you have had it for a good amount of time, use what you feel comfortable with.  For my duplexes, I use 8.33% as I have high turn over (most tenants say less than 2 yrs), but the area is in high demand and rents fast.  For my condo, that's another story and it can take 1-3 months to rent it out.  That is partly the area/town and partly the unit (its a 1/1).

For repairs & maintenance, most will assume 10%, but again it depends on your unit and how new everything is.   You should have almost no maintenance, given its a condo (that should be included in the Condo fees).  I have older renovated units, and new construction units. I obviously pay much less in repairs for the older units than the new one (in the last year on my new construction duplex, I spent less than $150/yr in repairs on a $25,500/yr rent income property).  My turnover costs are fairly constant, costing me ~$100 in materials per unit, but I do all the labor (cleaning, painting, misc repairs, etc.)

Hope this helps.