All Forum Posts by: Ankit Duggal

Larry K. Congrats on getting the 2 family under your belt. Now you are starting to step into the world of raising capital so tread carefully.

Here is the way I have done it:
1) Setup an LLC that will solely hold this new investment
2) Draft the asset specific investment plan with your target strategy, timeline and projected return profile
3) Get an operating agreement together wherein you would define what would be your duties as the Managing Member and what would be the duties of the Members. Request potential capital members to sign an accreditied investor statement. As Jeff stated you should have a securities attorney who you can reach out to.
4) You can put together the LLC before you buy or make a transfer after you buy; if you have the capital to take it down and if the seller will not allow an assignment of purchaser name/information
5) Managing Returns: This is the tricky part as it can be setup anyway that you and your capital partners can agree upon. The typical ways I have done it is as follows:
A. Acquisition Fee- this will help compensate you for your time associated with deal sourcing and even managing the renovation. Typically 2-3% of the total capital raise.
B. Property Management Fee- this is will be an expense within the income and expense statement. Typically 8-10% of collected gross rental cash flow
C. Rental Cash Flow Splits: the net cash flow after all expenses I typically give capital partners 90-95% of cash flow and 5% to Managing Member after hitting a certain hurdle rate of return.
D. Resale Proceeds: the net profit from the sale proceeds would be split 50-50% between Managing Member and Capital Members.

I hope this helps

Ankit

Mike Well You can use a couple of sources such as the Altos Research, Local Market Monitor, and REIS reports. It also depends on what you are using the market research for i.e. locating markets or analyzing markets. If you are locating markets then you can utilize census or NJ Department of Labor.

Johann Jells I am not a lawyer so cannot give advice on this matter. But your understanding is correct. The tenant would have to put the money into an escrow account or post all back rent with the court. I can send you some reading resources that will better answer you question Just send me a message to my inbox.

Aimar Campbell a few attorneys that I can recommend in NJ are as follows:

Peter Caplan Esq
130 POMPTON AVE
Verona, New Jersey 07044
USA
Phone: (973) 571-1868

Christopher Goodson Esq
7 Oak Place
Montclair, NJ 07042
Walnut Street Train Stop Metro Area
Phone: (973) 866-3400
Website: www.goodsonlawoffices.com

I hope this helps as you start your wholesale/investing experience in NJ

My recommendation would be against double closing as that can be considered "property flopping" by banks (if you are working on a short sale or a reo). The better way is to do a wet closing the day before or just assign your contract for a fee.

Vaishal Patel What is your end goal from the investment if you dont mind me asking? If your goal is high current cash flow then you will need to consider urban markets to be able to achieve that in NJ. But if your goal is capital appreciation then you can consider better areas which will wind up costing you more in purchase price. So it is kinda a Catch 22 there.

If you want to invest into cash flow assets but cannot do it on your own then you may want to also consider investing into syndicate or Tenant in Common Investment as they would let you participate in multifamily investments without the risk of putting all your eggs into one basket (so to speak) but these investment structures have their own inherent risks so conduct your research on these investment structures.

Vaishal Patel Great question. So the way that I have found to make double digit returns in New Jersey market is through multifamily investments within urban markets such as Newark, Jersey City, Passaic etc. It also depends on the rate of return that you wish to make that can drive where within New Jersey you should consider investing.

A alternative solution maybe to approach the bank mortgage department especially if it is a local bank and ask about buying the debt out at .10-.20 cents on a dollar. The bank benefits as they won't have to get their getting money out over a period of time and you benefit as you are able to get the lots cheaper. Now this is contingent if you have the capital to take out the banks debt in one lump sump.

Matt Liu You can place your father name on the contract with you and then amend the buyers name to just your llc during attorney review. That is another way around it if your father does not want to own the LLC with you as there can be tax implications for him to do so.

Private Entity Auction Sources:

The National Auctioneers Association’s Web site (www.auctioneers.org) or the National Association of Realtors’ Web site (www.onerealtorplace.com) lists dozens of upcoming auctions nationwide. Or, www.auctionweb.com offers an online list of affiliated real estate auctioneers. Some namesake private auctioneers that continuously hold auctions are as follows:

Williams &Williams http://www.williamsauction.com/

Sheldon Good & Company http://www.sheldongood.com/

Real Estate Disposition Corp http://www.auction.com

Hudson & Marshall http://www.hudsonandmarshall.com/

Max Spann http://www.maxspann.com/

Happy Investing

Ankit