All Forum Posts by: John S.

Hey everyone! 

So here's my situation.. My father transferred ownership of our family home to me. The house has 3 units and is currently being used as a rental, with me occupying 1 of the 3 units. The house is free and clear, with no mortgage.

Since my plan is to build a portfolio of long-term rentals, I made the decision to transfer the ownership of this property from being owned by me, personally, to my new LLC.

The property needs a lot of updating both interior and exterior. For interior, we need new kitchens, bathrooms, flooring, paint, appliances, etc. For exterior, I would like to get new siding put on, add additional electric meter/voltage to the house, new walkways, etc.

Since the property is now owned and being operated as a business, does that mean that I can write off 100% of the renovation expenses? Or would I be able to depreciate them in the same way over a longer period of time?

Thanks!

Town of West Babylon located in Suffolk County, NY if that helps

I was recently passed down a family home (Long Island, NY). The home was originally a single family build, but since we had more family coming from overseas my parents built an upstairs accessory apartment 30+ years ago (with legal building permits) to accommodate all of our family.

Both units have separate entrances, separate electric meters, full kitchen/bathroom, and 3 bedrooms each.

Since it was always just our family living in the house, we never bothered to get a rental permit with the town, since any rent being paid was kept within the family.

Fast-forward to now, I've been living in Unit 1 and renting out Unit 2 to tenants. They pay cash, since the process for the rental permit seemed like too much of a hassle at the time, so this rental is being run "under the table".

I've made the decision that I want to go full-time w/purchasing additional rental properties, and I plan to do everything strictly by the book, with all proper permits, income reporting, etc., so I decided that it's finally time to get everything in order w/the town.

I reached out to the town from a dummy # to ask a few questions about making my current rental legit, and I was basically told that since the house was originally built as a single family, that it could never be considered a multifamily house.

They said that I could apply for what is called an "accessory apartment" rental permit, which would allow me to rent the property after jumping through a bunch of hoops and inspections w/the town. The only issue is that they said that in order to be approved for an "accessory apartment" rental permit, that the property would need to be owner-occupied, and that the town would check to make sure that is the case.

Since my plan is to build a decent multifamily real estate portfolio over the next few years, and this home is not one that I plan on staying or building a family in, I can't see how I can satisfy the town's requirement of being owner-occupied for all of the time that I plan on renting out these units.

Again, I'm trying to do everything by the book here, and it seems like the town is forcing my hand to have an "illegal apartment" anyway.

Is there anything I can do here?

I appreciate the help!

 That's the plan! My question is whether it's better to just buy a few properties cash and immediately cash flow, or to buy many properties with debt and little cash flow?

 I'm not seeking any investors or anything of the like. Genuinely want to know the best way to put my money to work, without having to involve other parties.

 I own a merchant cash advance direct funding company, as well as a merchant cash advance brokerage. Basically super high risk business to business "loans" (merchant cash advances), at very high rates (but also very high defaults). I've done the part of being "the bank" for over 4 years now, so I'm not too inclined to do it again on the real estate end as some others have suggested on this post. I want to transition this money into rental properties.

So to keep things quick and simple, I currently own 2 finance companies which have provided me with approximately $3.5M in LIQUID CASH as of the time of this post.

Given that we are entering and many suggest, currently, in a recession, I saw the writing on the walls and decided to "cash out" in early August 2022. Considering the state of my competitors who have "held on", I made the right decision. I hated the work anyway, as I was working 80-90+ hour weeks for the past 4 years, and it literally robbed me of my happiness.

ANYWAY.. I have about $3.5M in my savings right now. I want to 100% transition from my previous field into real estate investing (with a complete focus in multifamily rental property investing).

I know that in the next 6-18 months, we should be seeing a 20%+ reduction in prices.

I always thought highly of the BRRRR method (in the sense of practice only, since I have never had to execute this myself), but given the interest rates, if you personally had $3.5M in liquid cash, with the intention on going "all-in" on multi-family rental properties for buy and hold strategy...

Would you:

1. Buy all multi-family properties CASH and straight cash flow (to avoid the high interest rates)

or

2. Buy all multi-family properties via mortgage w/20% down payment + deal w/the terrible interest rates, and hope to eventually be able to refinance at a lower late?

I would love any advice or input this community can provide me! Thank you all in advance!!