All Forum Posts by: Basit Siddiqi

@Helen Lowery

Have you and the seller agreed on a price that you would purchase the property within a year from now?
If you agreed upon a price - there may be little to incentivize the seller to repair the roof.
Has a contractor come in and given an estimate on how much it will cost?

The person who pays for the roof will ultimately get the deduction/depreciation write off.

Replacing a new roof sounds more like it needs to be capitalized.
it can be currently expensed if the cost was below $2500.

The above responder is slightly incorrect. if the cost is $10,000 - you would not be able to expense $2500 of it. the full amount would be capitalized.
Furthermore - you would need to look up the years to write off the property. Roofs are usually not depreciated over 5 years as suggested by the poster above.

@Sang Pak
You always have a choice...don't listen to anyone who tells you otherwise...

FIrst and foremost - you need to clarify if the $3500 is TOTAL estimated closing costs or relates to just the loan origination fee.

I am also confused because you mentioned that the offer was accepted by selling agent and then you mention you were afraid of the seller getting in another offer...

If the offer was accepted - What is the closing date scheduled? if it's 30+ days out - you still have time to shop for another lender.

I also think you are mistaken that there is no fees associated with a Heloc. a HELOC can have a loan origination fee and may also require an appraisal of your home.

@Sang Pak

Banks charge a loan origination fee to generate a mortgage. They also require an appraisal(that gets paid to a third party).
Other closing costs such as title search fees, recording fees, real estate taxes are costs that you would pay regardless if you acquired the home through a mortgage or HELOC.

What consists of the $3500 fee?
Loan origination fees normally range from $800 to $1,100 depending on the size of the loan and the size of the bank.(at least these are figures that I seen).
Appraisals usually range from $500 to $1000 depending on the size of the house(at least from my experience).

If they are really charging $3500 for a loan origination fee - I would shop around for a smaller bank and even some credit unions.

@Sam Sopheak

Are your aunt and uncle US citizens?
if they are - they are required to inform the US of any accounts held in a foreign country that is in excess of $10,000. 
If there is some large transfer coming from them and the IRS picks up on it; it can not look so good if they failed to report it.

Does your aunt/uncle plan to loan you money for you to invest or to actually invest in the properties.

They may be required to apply for an ITIN and file a US tax return if they invest in real estate directly or indirectly through a pass-through vehicle.

@Cornel Smith

The first step is to see if your neighbors are the owners of the property.

Also - how do you plan to help their problem?
Will you acquire the property, fix it up and then decide to rent/flip it? If this is the route you will go - Do you have the capital to acquire the property?
I dont know the Queens Village area that well but I know homes are expensive here in NYC.

Do you plan to wholesale the property - figure out what it will cost to buy it, rehab it and then advertise this information to potential buyers.

@Rene Attias

Welcome to Biggerpockets!
You may want to take a look at the ultimate beginners guide real estate wholesaling about by Brandon Turner as a starting point.

https://www.biggerpockets.com/renewsblog/2015/01/3...

There are also a lot of real estate networking events in NY and Brooklyn that revolve around wholesaling. Please check the event section of biggerpockets or meetup.com

@Kyle Dutson

Does the seller know you are creating an LLC in which he would lend to the LLC?
just asking because if he doesn't know - it may or may not scare him off. I would tell him asap if he doesn't already know.

You should speak with an attorney about the entity structure.
I think it may be more advantageous for you to set it up as an LLC with you as the managing member and the investors as members. This may be the same thing as the LP formation but you may be afforded liability protection also. Again speak with an attorney on this matter.

 why the "hahahahahhaha"?
no one said this is an older plex(1967) with maintenance issues. Also no one mentioned the quality of the tenants...

@Kyle Dutson

Most people budget 5%-10% for capital expenditures(it can be more or less during a year but thats the average).
The age of the house may dictate the number you use - Older homes require more upkeep than newer homes
Quality of tenants - Better tenants will take care of home better and require less
date of capital expenditures done by seller - Permits are usually required when there are big repairs done to a house. I think you can pull up the permits related to a house from the state/county/city.

It looks like a good deal considering it looks like it surpasses the 1% threshold(monthly rent >1% of purchase price).
I like that you are getting seller financing. Chances are slim that you would have qualified for a porfolio loan considering you have no track record.

A 20 year loan will obviously allow you to cashflow better than a 15 year loan. However, if he does push for a 15 year loan; instead of walking away maybe you should ask for a deeper discount on the interest rate to make up for it. or for the loan to amortize over 30 years but the loan to balloon in 15

@Steve S.

Does the "AGI" of $150,000 already include the rental profit?(normally AGI includes all taxable income). Also taxable income is a better number to know your tax rate and to know how much you will give to the government. The difference between AGI and taxable income is personal exemption(s) and Itemized or standard deduction.

As Jon indicated; taxable rental income is not calculated as gross rental income less PITI and expenses.
You have to add back principal and minus depreciation.
How much is the principal?
Do you know how much the depreciation would be?

Are all your properties located in Texas? If so - you won't have to worry about the government taking away state income taxes?