All Forum Posts by: Kevin Forsell

Quote from @Theresa Harris:

Start by talking to the banks that you already deal with.

Thank you, that's helpful. I bank with Ally personally, which doesn't offer business banking. I have loan accounts with Chase (and recently met a banker with Chase at a REI meetup), so that might be my first phone call. I also have history with Wells Fargo, but haven't done any research about their business banking. 

Hey everyone!

I have no experience, but I've been learning and researching REI for years. Several circumstances have left me without any capital to invest myself, however I have a friend who wants to passively invest $50-70k into real estate (Flips and/or STRs) and is trusting me to invest as a partner.

Of course, 70k is not a lot for a property in north Jersey. I've researched several ways to make the 70k stretch: Owner-occupant loans won't work because my partner doesn't want to "lend me" the down payment- we're creating an LLC for the most protection. I've looked into DSCR loans for a turnkey STR. I've contacted two DSCR underwriters who approved me for 7.12% interest and 20% down. This would give us a max purchase price of ~$300,000. Our STR market is Hudson Valley NY, which does have properties for 300k, but pickings are slim for a turnkey at that price, especially if we take into considerations furnishing and marketing costs etc.

Are we stuck with the out of state option (unless we find another investor, which we'd like to keep as a last resort)? We could make our 70k go much further in a cheaper market, but as my first flip, I'd prefer to keep it local. We're also looking into the Trenton and Newark markets which seem a bit easier, but still tight. 

Let me know what you all think!

Kevin

Hi all, 

As I set up my LLC I'm wondering how have you gone about choosing which banking institution to bank with? I'm aware that local banks and credit unions tend to be easier with creative lending, but large banking institutions tend to have more ease of access and tend to have user-friendly software. But aside from that, what should I be looking for or questions I should be asking?

Thanks!

For context: I'm starting out with a partner, but I plan to go solo after I've built up the capital to do so (structured as a holding company in my name, with subsidiaries for each property we acquire- some in both our names as JVs, and eventually solely under my name). We live in North Jersey and will be investing mostly in Flips and STRs (with a few BRRR's in the mix as well). Thanks for your help!

Quote from @Nicholas L.:

@Kevin Forsell

Hi.  In brief - if you haven't done any deals yet, I wouldn't partner yet.  

Can you start with a house hack or live in flip that you do on your own?  Once you have a track record of success - then you could revisit.

Good luck

Yes, investing other people's money is certainly a risk. And I plan to invest my own capital once I have it saved. It just so happened that my friend mentioned interest in REI but doesn't know how to go about it. I, on the other hand, have done quite a bit of research (no real flipping experience- just academic knowledge). So I'm just going through my options for the best way to pitch this to Dan. He knows full well I have no experience and is a risk.

Quote from @Basit Siddiqi:

I don't beleive you should take another person's money and invest if you don't have experience in the space. What happens if you lose all his money?

It also does not seem like you are clear in your strategy, you mention everything from 1031 exchange, flip and sell and potentially renting it out.

 Hi Basit, thanks for your response. Yes, investment is risky, and I plan to invest my own capital once I have it saved. At this rate that will only be about 2-3 years. I just happened to have a friend who has capital and mentioned wanting to invest in real estate. 

As for the uncertainty, I haven't pitched this to Dan yet, so he may prefer a quick flip or he may prefer to buy and hold. Both are strategies I plan to use in my REI career. There is naturally uncertainty when neither the lender nor even a property has been solidified yet.

I’m just the kind of person that thinks through each option to make sure I’m utilizing the best strategy.  

Quote from @Dave Foster:

@Kevin Forsell, Silent partners can be good... or bad. House hacking can be good... or bad. Borrowing from "Dan" can be good... or bad. It just all depends on your relationship and how the deal is structured.

If you structure your partnership as (TIC), whenever you decide to sell, each of you could do a 1031 exchange on your percentage of interest in the property and invest it into another investment property. That would be perfectly fine. You do not necessarily have to take title to your % as an LLC. Dan would take title to 60% of the property. You would take title to 40%. That's not necessarily a problem. But in a dispute, the percentages will speak if you haven't addressed responsibilities already

The title holder or (tax payer) for the old property has to be the same to satisfy your 1031 exchange, If you put the property in a multi member LLC with you and "Dan" as members you would be making the entity the tax payer and the entity would also have to do the 1031 exchange to remain the tax payer for the new property. That would require you to stay together into the new property.

Thanks for your help! It was my understanding that in order to 1031 exchange, it had to be through an LLC, you couldn't do so under your name only. But I'm getting a bit over my skis here, because the 1031 is the last step. My uncertainty is whether to go with the TIC strategy (most likely Dan will want at least some ownership of the property rather than just loan me the money), or possibly create a Joint Venture LLC. The JV option raises questions about how to split the equity and would require each of us to pay taxes on the equity unless we 1031 and both go in on another property together again. Thats a commitment I don't think either of us are ready to make.

Quote from @Drew Sygit:

Why not just do a loan from Dan and let him lien the property until paid off?

Great question. We may decide to hold the property, in which case Dan would like to be part owner to benefit from the appreciation. 

Hello all, 

I am just getting started in the REI world. My goal is to work full time in REI, but currently do not have capital to invest. My best friend (let's call him Dan), however, mentioned that he has about $100,000 that he would like to invest passively in Real Estate. After some research, I discovered the Tenant in Common (TIC) strategy. I would like to pitch this as an idea to Dan, but I would like some input from seasoned vets.

My plan would be to use Dan's capital to purchase a home through TIC agreement. I would use an LLC so that after the final sale I can 1031 exchange to another property. Dan provides the capital, and I provide the sourcing of the property, the complete renovation, and property management in the event we decide to rent it out. Otherwise we would flip and sell. We would split the equity 60/40 in his favor.

I'm curious to learn from you all. What do you think of this plan? Is there anything you would warm me of, or suggest to change? 

Thanks, 

Kevin

Hello everyone!

I'm very excited to get tarted on my real estate career started! By the end of next year I will have saved about $50k for a down payment plus some reno budget. I plan on using the BRRRR method.

I live in Jersey City, NJ, and the home prices are very high in this area. The upside is I can manage the renovation much easier, and for my first reno, it will be much easier to have a local property. 

Another option is to invest in Salt Lake City, Utah because my best friend lives there and owns his own Property Management company. He has connections to trustworthy Agents, contractors, CPA's, and lawyers, and of course, he would manage my property(ies) for me. The home prices are also much more affordable, and from what I am learning, the Salt Lake City market is getting very hot, especially considering the Salt Lake City Winter Olympics in 2034. 

So, do I find my own team and invest (at least to start) in North Jersey, or do I use my friend and his contacts and invest out of state? I'm leaning toward SLC, but it does worry me to invest out of state. 

(By the way, 50k is my starting point. I plan to start searching for properties when I have 50k, but likely will have more reserved by the time I close on my first property. I know I'd likely need more if I decide to invest in Jersey). 

Thanks for all your help! I'm excited to hear what you think!

Kevin

Hi everyone, I'm a new investor only in the "creating a foundation" step of my real-estate investment journey. I have $10k in savings (3 mo emergency fund) and I'm the process of eliminating about $16k in debt (credit card, and auto loan) before really sprinting toward saving for a down payment and reno budget for my first flip. 

My landlord wants to sell the building I live in currently. It's a 4-plex (3 story walk-up with a ground level unit with a separate entrance). One 3 bed, one 2 bed and two 1-bed (all 1 bath) and about 1,000 sq ft each unit. The building is located near the Hamilton Park area of Jersey City (highly desired neighborhood, walkable to the PATH into NYC). He is willing to sell for $2.2M. I'm inexperienced in this, and having trouble seeing if this is a good opportunity to House Hack. I already live here, my unit is renovated, the others are not, allowing a perfect BRRRR + House Hack strategy. The issue is, of course, I don't have the capital. Is this a deal good enough that I should seek investors? Are there any agents out there who are familiar with this area who can let me know if this is a good deal?

Am I getting way too ahead of myself and need to focus on saving money for a deal that's more appropriate for a first-time buyer?

Happy to answer any questions about the property. 

Kevin