Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime

Let's keep in touch

Subscribe to our newsletter for timely insights and actionable tips on your real estate journey.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions
×
Try Pro Features for Free
Start your 7 day free trial. Pick markets, find deals, analyze and manage properties.
Followed Discussions Followed Categories Followed People Followed Locations
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Brian Kantor

Brian Kantor has started 28 posts and replied 178 times.

Post: BRRRR & Business Structure

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

@Brian Rogers I created the LLC before I bought the property and bought the property in the name of the LLC. In theory, though, you could also do this just before the refinance and then quit-claim it into the LLC.

Post: BRRRR & Business Structure

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

Hey, @Brian Rogers. My first couple of properties were BRRRRs so, yes you can be a newbie and do this.

Regarding LLC structure... talk to your accountant and/or attorney. I know not what you want to hear. In my non-expert opinion, long term, the structure you suggest is best--each property in its own LLC and then having them all ladder up to a holding company that is it's own LLC. Short-term, keep it simple. Nix the holding company for now and just buy the property in an LLC. Once you have 4+ under your belt, revisit the holding company idea.

Some CPAs will say 1x property per LLC. Others will say that it's OK to have more than one in there so long as the total value of all properties is under something like $250k. The advantage of one property per LLC is that in a lawsuit, your other properties will be better protected. The advantage of more than one is that it simplifies filing your taxes. So the more LLCs you have, the more your tax preparer will charge you.

Regarding the property acquisition... putting the above on pause for a moment, it's much harder to find a traditional lender who will give you a mortgage in an LLC. Most will not. Two options:

  • Buy the property through a standard investor mortgage in your name, and later on quit-claim it into an LLC (either during the refinance or even later on down the road)
  • Buy the property in cash right into your LLC, then double quit-claim it from the LLC to your name and back to the LLC during the refinance (this is what I did)

Either of the above routes, it's critical to find a lender who has a lot of experience with this. If done incorrectly, the quit-claim could trigger a "due on-sale" clause and cause your mortgage payment to be due in full immediately. Depending on your market, I may have someone to recommend to you (DM me).

As far as the initial cash outlay, you're either going to need to:

  • Pay cash from your savings for property + renovations
  • Get a hard-money loan or find private money for this
  • Get a traditional mortgage before the renovation, pay for the renovation out of savings, then do the refinance

I strongly urge you to be extremely cautious if you use hard money for the above. As a new investor, you don't know what you don't know, and you could easily get obliterated by a hard money lender if your mis-calculate how much something is going to cost or how long the renovation will take.

Best bet is to fund yourself out of savings if you can.

There is no second down payment on the refinance, but you're only getting around 75% of the value back in that loan. The other 25% you cant touch and is sort of equivalent to your down payment. That said, you will need to pay closing costs for that refinance and likely points and fees as well.

Good luck!

Post: starting out...how much is enough...or what to do with 20k

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

At 20% down on a 30-year-mortgage + savings for reserves and rehab gets you a property in the $60k to $80k range. That's more than enough in my market in Detroit (was all-in for $45k on my first rental and looking to be all-in at $70k on my 2nd). 

While I don't know your markets well, I've heard that there are some solid neighborhoods around Camden. Just be careful (Camden or elsewhere) that you don't buy into a problematic neighborhood just because it's what you can afford. If you're only seeing options in sketchy, high-crime areas, you may want to save up for another 6 to 12 months until you have more capital to invest.

If you go this route, while you're "waiting" to save more capital, get started running analyses on 1 to 2 properties per day on your market and finding the right neighborhoods for you. Then, by the time you've got that extra capital, you'll already be a local expert.

Post: New Detroit investor hoping to understand banks

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

Hi, @Ingrid Lewis. Shoot me a DM, and I can share with you a recommendation. 

Post: Any experience w/ Owens Management for funding?

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

@Logan Marienau, no I did not end up working with them, and no longer need them for this specific project, but I would still consider working with them in the future. @Account Closed can you share anymore detail on your experience? What type of loan and in what market? What did you love about working with them? What could have been better? Thanks!

Post: All in with only $40k, is it still possible?

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

@Scott Gaspar, for my first rental in Detroit, I was all-in for  about $45k including closing costs and a $2500 bonus to my agent for helping me on a property with such a low commission. You can read the details on that here.

It is doable in Detroit for sure, but as previous @Jaron Walling mentioned, you do need to be careful of the micro-market you are in. My property is in a solid C neighborhood, and I was comfortable with that because I found a property manager with many properties in that area and a ton of experience. For example, we did not install the hot water heater until after a lease was signed and then just a few days before the tenant moved in. And after it was installed, we paid someone $100/day to live in the property on an air mattress from the day of the installation until the day the tenant moved in (to prevent theft).

Net-net, you can do it, if you take the necessary precautions.

And, yes, I am a proponent of Section 8. I only offered my property to Section 8 tenants for the exact reason you mentioned. My tenant only pays 5% of the rent with the government covering the remaining 95%, so even if she misses a payment (she hasn't), the effects are small. Every state has different Section 8 guidelines, so be sure to Google your state's affordable housing office, and contact them for information before you go that route. You'll also want to ensure that your PM has experience with Section 8 tenants because there is a decent amount of paperwork that needs to be processed and inspections that need to be scheduled and paid for by the owner.

Good luck, and feel free to DM me with any specific questions.

Post: First rental. In Detroit. Off-market. Buy-and-hold.

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

Investment Info:

Single-family residence buy & hold investment in Detroit.

Purchase price: $20,000
Cash invested: $45,000

Purchased run-down, vacant, 1100sq ft 3BR/1.5BA SFH in Warrendale neighborhood of Detroit for $20k. Renovated for about $25k and am all-in at about $45k. Renting for $805/month to a Section 8 tenant, so 95% of the rent comes from the state and I don't have to stress missed payments due to covid or otherwise.

What made you interested in investing in this type of deal?

I like Detroit because the cost of entry is super-low and easy to find a cashflow-positive rental. It's a short flight from NYC where I am based. After bottoming out in the aftermath of the 2008 crash, DET has been appreciating nicely and new economic developments are popping up everyday.

How did you find this deal and how did you negotiate it?

I found a different property on the MLS in the same hood for $40k. I showed it to my PM who said that one of his other clients was liquidating his portfolio and had a similar property in the same hood on a better block for half the price. So I bought this from him for $20k and he got to keep it under his mgmt.

How did you finance this deal?

Paid cash. In the process of refinancing.

How did you add value to the deal?

New roof, new kitchen, refinished bathroom, new windows. Graded and trenched along the rear wall to fix a leak in the basement.

What was the outcome?

Cash-flowing about $450/month after capex and expenses prior to the cash-out refinance I am going through. After the mortgage, I'll be around $300/month in cash-flow. With that said, I am only going to be able to pull about 50% of my investment out of the deal at this time.

Lessons learned? Challenges?

This is not going to be a great BRRRR, but I am OK with that for Property 1. Net-net, the property cash-flows well and has a strong cap-rate. Because I purchased this through my PM, I was obligated to use him as the contractor and while the work wasnt bad, it wasnt as good a I would have liked. Lessons learned: (1) Let my PM know up-front that he can bid on the renovation, but I want other options, (2) make sure I get the property inspected before close, (3) make sure the BRRRR works in advance.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Steve Saleh was my agent. Great guy who I would recommend, but he's now at a different company and only works with sellers. Mousa Ahmad at Mutual Property Management has been great to work with on the PM side and will be using him again for Property #2.

Post: Making offer before property can be seen

Brian KantorPosted
  • Investor
  • Brooklyn, NY
  • Posts 185
  • Votes 205

Hi, @Moe Joseph. I also invest in the Detroit area. Nice to meet you.

There are pros and cons to both SFH and multi-unit:

SFH pros:

  • Cheaper/lower out-of-pocket cost to get started
  • More inventory/more available options
  • Easier to sell (whether immediately because you want out or later down the line because you want to recapture your investment) due to the fact that both investors and buyers looking for a primary residence are potential buyers.
  • "Easy" to get a loan from most banks.
  • If there is a major problem with the property, you only have 1 tenant that it affects (what happens if the hot water goes out or pipe bursts, for example?)

Cons SFH:

  • Higher risk due to vacancy, missed rent, etc
  • Typically will cash-flow less than a multi

Multi-unit pros:

  • Diversified risk (due to vacancy, missed rent payments)
  • Higher cash-flow (in most cases)
  • Consolidated costs (ie, if your duplex needs a new roof, it won't cost you that much more than if your SFH needs a new roof and cost is split across 2x sources of income)

Multi cons:

  • Less inventory/harder to find
  • Tougher to sell (because typically only other investors buy multi-family; yes there are exceptions to this)
  • More expensive (in most cases)
  • Tougher to get a loan (if more than 4 units)
  • More tenants are affected by major problems (like a burst pipe, etc)

Ultimately it comes down to preference. If you're just getting started, many people find it easier to learn the ropes with a Single-Family. Things will pop-up that you don't expect and sometimes it's comforting to know that your "mistake" is only affecting a relatively "inexpensive" SFH and one tenant vs an "expensive" multi-unit with multiple tenants. That said, if you find a great deal on a small multi-unit and you can afford it, there is more upside.

    Post: Property Salling records

    Brian KantorPosted
    • Investor
    • Brooklyn, NY
    • Posts 185
    • Votes 205

    Most city and county government offices are pretty responsive via email and phone. In and around Detroit, I usually get an answer in 24-48 hours. Try Googling the Accessors office, Recorders office, and Treasurers office. Between those three, you can usually find everything you might need. Good luck!

    Post: Pre-Fab experience in/around Detroit?

    Brian KantorPosted
    • Investor
    • Brooklyn, NY
    • Posts 185
    • Votes 205

    @Ken Taylor, totally. But a lot of these properties built in e 40s are in really bad shape, and there are a ton of empty lots. I thought perhaps the city or the county would have some incentive in place to spread new construction. The Corner project is a good example of this.