All Forum Posts by: Michael Garofalo

@Tony Nguyen, if the numbers you have presented are in fact accurate and I'm understanding everything correctly, then this is an incredible deal. If it's truly cash-flowing $73/month off of one unit and both units are rent-ready,  then that would mean the other side would provide 100% pure cash flow and you'd have to put nothing else into this deal other than a down payment. In your calculation did you factor in vacancy, property mgmt, and capex reserves?  

All that being said, what looks good on paper often times might not be what it seems if you have issues finding quality tenants or are dealing with an extremely old building that requires a lot of maintenance/upkeep. Make sure you understand the property and your market well before deploying any capital, and best of luck!

@Claudia Everett, foreclosures happen in all markets and in all neighborhoods (however some more frequently than others). All of the information you need to get educated is contained within the forums here on BP. I'd recommend taking some time to educate yourself on the specific area you are interested in and the particulars about how foreclosures work before deploying any capital or trying to do a deal.

@Dane Gullakson, others may not subscribe to this philosophy, but I am a big fan of being proactive rather than being reactive. Upgrading/replacing as many things as possible before tenants move in will save you hassle and stress. Construction is not something anyone wants to deal with or live through, so if the roof is on it's last leg and you know it's going to fail soon, I'd say replace it before you get your first tenants moved in. The last thing you'd want to get is a phone call stating the roof has begun to leak. Then you'd have to make sure there is no mold or other water damage that was caused by the leak. 

@Jeremy Stark, thanks so much for your insights and for confirming all that. Very much appreciated

@Scott Holmes, out of curiosity, what is the inventory like these days for small multi-family (2-4 units) in the Richmond market, and what is the typical price range for acquiring such property in standard B-Class neighborhoods? 

I currently own a few properties in Washington DC, but am starting to consider other markets for my next purchase. I grew up in the northern VA area and Richmond would make sense for a variety of reasons.

Hi everyone,

I am an investor in Washington DC, and currently have a single-member LLC that is treated as a disregarded entity for federal tax purposes. My question pertains to local business taxes in Washington DC. I believe I would be required to file at the local level using form D-30, but only if my LLC's gross revenue exceeds $12,000 for the given tax year. If its gross revenue is less than 12k, it appears I wouldn't need to submit anything based on information I have gathered.

Can anyone who has experience filing business taxes in Washington DC confirm or deny this? And are there any other forms I would need to consider besides D-30 when preparing my taxes next year? For reference my LLC is used purely for buy-and-hold properties.

Thanks!

For the kitchen, the cheapest and easiest things would be to add backsplash and paint the cabinets. Beyond that, you could re-tile the floor and swap out the appliances. Avoid replacing cabinets or countertops unless it's absolutely necessary.

For the bathroom: re-tile the shower walls and repaint the trim/walls. Beyond that, you can swap out the toilet, vanity, and light fixtures (if they are simple). If the bathroom has a tub, avoid replacing this if possible as it's quite labor-intensive.

No problem. The biggest advantages of being an all-cash buyer include being guaranteed to close the deal, and in a shorter window of time. If two offers are presented at the same price to the seller (let's say 70k in this example), and one has a financing contingency in the contract but the other is all cash, the seller will almost always go with all cash. This is because the non-cash offer will require the involvement of a bank, and banks will always need a minimum of 30 days to close a loan due to the nature of the underwriting process. If the property doesn't appraise at or above the agreed to purchase price, the deal may fall through unless the buyer is willing to bring money to closing to bridge the gap between what the bank will lend and what the seller is asking for. In this situation, the seller would be frustrated and would be forced to take the property out of contract, then place it back out on the market to find another buyer, and wait even longer to liquidate the asset.

Does that make sense? If you have any further questions or want to dive into more details, definitely feel free to PM me. 

@Gary Marcus, in my opinion, using the HELOC and then refinancing would be more advantageous because you'd be operating as a cash buyer, which will give you more power. If the deal is good enough, you shouldn't have an issue refinancing, but the question will be how much the bank will allow you to pull out. Each set their own rules so just make sure you understand what their policies are on how much they would be willing to lend. Just because you pay 70k for a property that appraises at 100k does not mean you're guaranteed to receive 80k through the cash out refi

I agree 100% with @Ivory Hayes, the HELOC is great because it's a revolving door of credit. Refinancing an existing loan will give you one opportunity to invest and then you are back at square #1. I am not advocating over-leveraging but a HELOC is one of the most powerful tools available to all real estate investors, in my opinion.