All Forum Posts by: Brian Schmelzlen

This sounds like a great deal.  Based on your numbers, the cap rate is 11.15% which in my area would be amazing but I don't know if that is good for New Jersey.

I like that you have a long amortization period and an interest rate that is close or lower than what you could get at most banks now.  It is also great that you have long-term tenants in place.

I would have a real estate attorney review all the leases to make sure that there are no surprises for you.  I would also use social media to see if the tax firm has a good reputation; if they have a good reputation for business in general they may be a good tenant.  On the other hand, if they have a lot of client turnover and do not seem well liked by their clients (or former clients) they may be a nightmare, long-term tenant.

I don't have any experience in this, but my thought would be to talk to a commercial broker.  They give broker price opinions for residential property, so I imagine that a broker that specializes in commercial should be able to give a quick price opinion for a commercial lot.

LegalZoom is fine, but if you are not going to consult with an attorney I would at least consult with an accountant (not the same as an attorney, but should be able to point out most of the basics to you without giving you "legal advice").

If you have an LLC with multiple owners, you need an EIN and probably a state ID number as well. Applying for an EIN is a simple, quick process you can do through the IRS website. You will definitely want an operating agreement; I think it makes sense to do that through an actual attorney so it is customized to you and your partners (and covers all eventualities including the death of one of your partners). You will need a separate bank account for the LLC. One of the biggest problems LLCs run into is "commingling funds" so having a separate bank account for the LLC is a necessity; along the same lines it may makes sense to have a debit or credit card for the LLC for any necessary business expenses.

I don't want to leave my job, but my goal is to have enough passive income so that if I am forced to leave my full-time job for whatever reason my lifestyle would not change.  So basically my  goal is to double my income by having my passive income be close to the same as my "active" income.

Are there any value-add opportunities for you?

To all my fellow tax preparers, congratulations on surviving another tax season.

I don't think this is an area where there is a right answer (e.g. always go with a commercial mortgage broker, etc.).  Talk to a few different lenders from big banks to small local banks, commercial mortgage brokers, etc.  Find out who is willing to lend to you and on what terms, and go with whatever credible lender will give you the best terms.

I think that it is a good idea to have a relationship with your tenants.  My reasoning is that when you are the nameless, faceless landlord, the tenant does not think of you as a person and may be more willing to pay late and not take as good of care of the property.  However, when they know and like you, they don't want to "screw you over".

There is a line though.  Even if you have a friendly relationship with your tenants, ultimately the business side of the relationship has to take priority and you cannot let them take advantage of you.

Hi Christine,

While I personally would not be interested in a property that does not cash flow (or will cash flow after some rehab is done), if you are playing the appreciation game I would make sure that the property at least breaks even when all the costs (including vacancy) are factored in.

If you are at least even, you are having someone else pay down the mortgage which at least still makes you some money, even if it is tied up until you sell.

Hello @Alefa Daley.

I would recommend Sam Powell from Regal Properties.  PM me for his contact information.