All Forum Posts by: Michael Ealy

We paid his mortgage during the 15 months we held it but the money came from the income from the property anyway (so technically, the tenants paid for it - LOL)

This is why I like value-add apartments more than trying to fix-n-flip a single family house. With apartments, while I am renovating the units as they turnover, I have positive cashflow. With a house - I have negative cashflow until I am able to sell it. In that regard, value-add apartments (the right deal of course) has LOWER RISK than flipping houses.

 Long time no talk Shiloh. How are you my friend?

Did Wen tell you I can buy apartments in 50 cities across the US now? It will be awesome to partner on a project in the future. How's your lease option houses doing? When are you transitioning to MF again?

 Exactly. Where in Cincinnati you invest in?

 I started with a duplex too - and did "house hacking" when it was not called "house hacking". I have a roommate in 1 unit and rented the other. Rent free :)

You have to start somewhere and I commend you for starting.

It's not an easy journey but it can be done and sure beats working for someone else

 There are deals everywhere even in NY but your chances of getting a good deal increases as you expand your geographic area. Are you open to buying outside of NY?

 Thanks. A "wrap around mortgage" can be done with any asset as long as it has an existing mortgage. The profit is over $600K

 No it's not. The $1.25M payoff to the seller includes the $256,696.26 payoff to the bank. So the seller has given that amount to us. That's what I tried to explain in my post.

It's called a "wrap". In other words, since an amount of $256,696.26 has been wired to the owner's mortgage company, our pay-off to the owner is really $1.25M less $256,696.26 or $993,303.74

That amount is deducted from the $1,620,947.06 sales proceeds giving us the net profit from sale of $627,643.32

($1,620,947.06 - $993,303.74 = $627,643.32)

Makes sense?

 You're very welcome Glidden. What help do you need in your real estate investing?

 David,

Most (not all) of the answers you got so far are from landlords who own single family homes and small multis (2-4 units). In those cases, I agree: an LLC is not necessarily mandatory and might even hurt your chances of getting bank financing. Loans on single family homes and 2-4 units are considered residential loans and those, generally, don't want to lend on LLCs.

However, when you're dealing with bigger apartments like 20-units...having an LLC is for all intensive purposes, required (loans on those are commercial loans). MF lenders will require you guarantee the loan personally and will likely require you to take title to the apartment building into an LLC or corporation.

Also, with larger apartment buildings, and say you need to raise capital (through syndication), having an LLC/corporation is again, better. The passive investors are buying LLC membership interests when they invest money so you really can't do it without an LLC.

What are you buying when you said 1st multi family deal? If 2-4 units, an LLC is a good idea but not required.

 Thanks Jeff. I can see you're a developer as well. Do you specialize in apartments?