All Forum Posts by: Forrest Hayashi
Forrest Hayashi has started 10 posts and replied 43 times.
Post: First Multifamily (Long Distance BRRRR Gone Sideways)
- Investor
- Posts 45
- Votes 11
Thanks for sharing your stories and it kind of resonate some of my experiences but more so being screwed over by my RE Lawyer and RE Agent's lack of patience (we spent close to 1.5months finding houses and got annoyed when i want to negotiate more).
Are you planning to hold it or sell it now?
Post: Should i file a 1031 exchange in this case?
- Investor
- Posts 45
- Votes 11
Originally posted by @Ashish Acharya:
Originally posted by @Forrest Hayashi:
Hello BP'ers,
I am in the processing of selling my property at $200K (Flip within a year time, so short term) and am wondering whether a 1031 exchange is necessary?
Contract Price: $200,000
Property Cost: $(130,000)
Improvement expense: $(35,000)
Zoning Attorney: $(10,000)
This nets me a $25,000 in gross profit
RE Agent Commission $(12,000)
Capital Loss YTD from other investments: $(7,500)
Net Taxable Profit is $5,500
First time i am doing this so wondering what the cost of filing a 1031 exchange and hiring an intermediate for escrowing typically cost?
Many thanks all!
You cannot 1031 the flip property.
Got it thanks! I have hold the property as a rental after renovating it but want to sell it.
If 1031 is not viable, then i would assume that i'll be just be taxed on the Net $5,500.
Would this be just treated as normal income rather than capital gain? would that mean my capital losses can only be limited to a $3K offset on regular income this year?
Post: Should i file a 1031 exchange in this case?
- Investor
- Posts 45
- Votes 11
Hello BP'ers,
I am in the processing of selling my property at $200K (Flip within a year time, so short term) and am wondering whether a 1031 exchange is necessary?
Contract Price: $200,000
Property Cost: $(130,000)
Improvement expense: $(35,000)
Zoning Attorney: $(10,000)
This nets me a $25,000 in gross profit
RE Agent Commission $(12,000)
Capital Loss YTD from other investments: $(7,500)
Net Taxable Profit is $5,500
First time i am doing this so wondering what the cost of filing a 1031 exchange and hiring an intermediate for escrowing typically cost?
Many thanks all!
Post: Should I just forget about this deal?
- Investor
- Posts 45
- Votes 11
Originally posted by @Troy Jones:
@Forrest Hayashi No not necessarily. We offer them as low as 3.5% for up to 30 years.
Whoa! that's awesome actually. I got a quote of 4.5% on a commercial loan for just a duplex! which is insane since i know my DTI is really good.
Do you provide loans in PA? I might just need to look into this now. Are there any special requirements for a portfolio loans?
Post: Should I just forget about this deal?
- Investor
- Posts 45
- Votes 11
Originally posted by @David M.:
I look at it this way... Anything other than a conforming residential loan is a "commercial loan." So, commercial loans have different types of products, just like residential loans have different products (e.g. conventional, FHA, USDA, VA, etc.). I believe a portfolio loan usually refers to a loan that covers multiple properties.
Hard money loans are different since they are specifcally short term, interest onlyi loans for 3,6, or 12 months or so..
Good luck.
Thanks David! this is very helpful!
I guess i will need to look into portfolio loans lenders! Not sure if they are willing to accept 20% and 30 years fixed but we'll see!
On another note, i might just send a sweeten offer on the 4-plex and move on if they dont. Better time spent on searching other deals :)
Post: Should I just forget about this deal?
- Investor
- Posts 45
- Votes 11
Originally posted by @Mike Dymski:
Make a quick offer on the 4-unit and move on if they pass or move forward if they bite. Money talks. If they want to sell as a package, that's understandable and you move on...they will also have your offer in their hip pocket if that plan does not pan out.
Honestly, great advice! i might just do this. Send them a sweeten offer on the 4 units and let them come to me if they changed their mind. Currently, the area that they are selling are in the range of 150-250K for MFR but their package is $600K+ so i know it will sit for a while.
Post: Should I just forget about this deal?
- Investor
- Posts 45
- Votes 11
Originally posted by @Troy Jones:
A portfolio loan would work best for a scenario like this and like you stated a lender would be needing 20% or more as a down payment depending on experience and fico. I'm curious as to why it would impact your cash flow? Is the rate you were quoted?
If i buy the 4 units then i can get a low 30 year fixed rate while if i buy it as a package then i'll have to take out a commercial loan which will probably be 20 years and 4.50% which eats away the monthly cashflow :/
I probably need to up my knowledge on portfolio loans as i dont fully understand dynamics but i assumed it will have higher rates similar to a hard money lender?
Post: Should I just forget about this deal?
- Investor
- Posts 45
- Votes 11
Originally posted by @Rolland Wimberley:
There are many reasons that a seller might only be interested in selling as a package deal. Perhaps he is trying to get out of the market or just selling one would make it too much of a hassle to just have a fourplex in the area to have a team there. Or maybe they are trying to 1031 exchange and need to sell both at the same time in order for the timeline to work for their bigger deal. If they are willing to tell you their reasons for packaging together, that might help in how to best come at this deal so that it works for both of you.
As for not having the money for the full 25% deposit for both properties, it there a way to make the numbers work with both together. If you had the full 25%, would the COC return be worth it? Is the deal strong enough if you brought in a partner to fund part of the deal?
You say you are newer to the multifamily deals (4-5 units). So would it be worth the experience if you trade some of the equity or share the deal? Just some thoughts on how to make it work. If the numbers dont work though, it is best to walk away instead of trying to force the deal to work and fudge the numbers. This is just a way to look at the deal from several different angles before getting to that point. Hope this helps
Thanks Rolland, this is some great advice! I like the deal because it has a good CoC and yes i have thought about bringing in a partner but none of my networks are currently "active" in real estate investing and alot of it is also me since i like to do things myself and full control in a deal.
Perhaps i'll up my offer on the 4 units one since it's more attractive to me in terms of location and interest rates, and see if they bite!
Post: Should I just forget about this deal?
- Investor
- Posts 45
- Votes 11
Hi BP'ers,
Recently came across a packaged deal in PA (1x 4units + 1x 5units) where the seller is adamant about selling it as package rather than selling them individually. I am very interested in one of the building (4-units) and have more than enough funds to buy it with a conventional loan but like i mentioned, they want to sell both simultaneously to the same buyer. Not sure why or whats the reason and unfortunately my larger pool of capital is locked up in another property.
Asking Price $600K-$630K
Capital available $135K
Should i just walk away from this deal? How can i proceed with this? The lenders I've talked to requires min. 25% down and 20-years loan which would impact my cashflow/month. A bit new to 5+ units, should i set up LLC for this potential deal and new LLC will really drive up the interest rates.
Appreciate any kind of guidance here! Thanks!
Post: Wholesale inspection contingency in New York?
- Investor
- Posts 45
- Votes 11
Unfortunately, it's a seller's market right now.
I have seen some really outlandish demands, such as "Sold as-is, no contingencies, sight unseen, all cash"
Jessica - IMO, you should not proceed if you're uncomfortable with that arrangement. There are plenty of other good deals out there.