All Forum Posts by: Mark Fedorov

It's probably a good deal when it is rented, but you need to see all the expenses, and a couple of months of vacancies would hurt. Buying two properties next to each other does make it easier to manage.

I am not 100% sure, but you are saying that you want to do a cash loan from your business credit cards and put that cash into your bank accounts..?

If that is the case 1) if you go from your business credit cards to your personal account, that will count as a withdrawal from your business (it is is an LLC or a C corp that could be an issue, if it is a DBA, then it does not matter)

.. but really why would you want to spend credit card interest (18%?) for a real estate investment, that is just going to cost you too much cash...

The 1031 rules are confusing, the rules state that the tax credits stay with the "tax paying entity", so does that mean the LLC ? or since the LLC is a pass through entity, does it mean the individual who pays the tax?

yeah.. I don't know either.. pay the money and get a good CPA/lawyer/ 1031 expert, you are playing with fire, you want to make sure you get it right.

Also the change of ownership will be on the LLC's 1065......

The 1031 rules are confusing, the rules state that the tax credits stay with the "tax paying entity", so does that mean the LLC ? or since the LLC is a pass through entity, does it mean the individual who pays the tax?

yeah.. I don't know either.. pay the money and get a good CPA/lawyer/ 1031 expert, you are playing with fire, you want to make sure you get it right

I would start getting information about the properties that are for sale. You can get paralysis by analysis if you stay at a high level too long. Find out what is available, what the costs, rents and expenses are, and take that information and bounce it off the data you have, obviously someone working at the McDonald's, will be living in a different apartment as a producer, you have to see what you will find.

Generalities will kill you in this business.

That is the nature of cold calling. My suggestion is that you also mail them your card, they might not want to sell now, but if in a few months they are in a bind, they can not sell to you if they do not have your number.

You also have to remember that multi-families are probably the majority of that family's capital. The have it and they are not going to let it go, in fear of deasticly changing their lifestyle... perhaps you can find the 8-12 plex owners that want to bump up to a 40 unit, and you can offer to take their smaller unit when the time suits them.

As for the pricing... yeah tough to answer, you are obviously valuing it differently than they are, you should search as to what the difference is in the calculations.

Depending on your payback time line, you could get a hardmoney loan. If you or the wife has a 401K, I believe that you can withdraw half of that, and you pay yourself back the interest, you should talk to your employer about any specif rules that they have for the loan.

Are you getting a mortgage for the purchase? I would think that the bank would extend you a line of credit as well...

Another option would be equity loans on the existing rental properites...

There is no set structure for a partnership deal, I have found, as @David Krulac said, it is always best to go on your own, have the money come from a lender. However if you want to get your feet wet, the ideal partnership deal is one that you would accept the other side of.

Would you put $30K into this project to get 15% of the profits, if someone else did the job? if yes, then it is fair. Just remember if you write up doc to cement the partership, EXPLICITLY spell out how the partnership will break up, spending time now, when the deal is good, mapping out what will happen when the deal is bad, will save you much time and headache.

1) I would guess commercial, however your bank would tell you if they would let you "slide", getting the 4 plex in your name would open you up to getting a 30 year loan rather then the business 5 or 10 year balloon loans.

2) To change retail to residential, you need to talk to your local zoning officer, and probably building inspector. Everything about that decision is local. 

3) (the question you did not ask) I would guess that the bank would require that you had approved building permits in hand before they would take the risk that you would convert the retail to residential.... they might want to put you in a 5 year commercial loan, that had the cavoit that you could convert it to 100% residential, then in 5 years you get a residential loan.

..My unsolicited opinion: Commercial is usually a higher rate per sqft than residential rates, why spend money to change it?

If you are still looking, are you looking for 2-4 units or 5+?

There are duplexes all over the place, Bethlehem (near Moravian is nice), the large props are harder to find.