Hi I have been viewing this forum a while and finally I will be investing in real estate (rental property) with a Partner (50/50)in Boston near a university in Boston. We are both 23/24 and think this is a great oppurtunity after doing extensive analysis

Little Background on the property:

Fully Renovated (granite, stainless steel appliances, hardwood floors)
2 Bedroom 1 Bathroom
~700 Sq Ft but (open layout)
Potential buying price (280k)25% down
HOA fees 175
Insurance ~800 (not 100% sure.. based on realtor)
Taxes 2K/year
Transitioning of tenants 500.00
Thikning about a 30 year fixed with 1.75% pricing hit (freddie and fannie mandated)@ ~5.5
Time horizon 10-15 years
Realtor will be finding the tenants for us and we will be able to screen them (tenants pay the Realtor a fee)

After doing some analysis we realized that we will have a monthly cash flow of about ~700$ and I would increase rent ~2% a year and taken into consideration inflation as well.

Few questions:

1: What are the upfront costs other then appraisal, home inspection, and attorney fees for partnership agreement...?

2. We are planning on putting the property into an LLC so that we don't have the liability against our personal assets. I hear its pretty easy to set up. What about an LLP? what is the difference? We will be making income on the property and plan on only re-investing it into new property do we still have to pay the taxes and if so do we pay them on our personal income taxes? Does it make sense to hire a tax accountant to help us file our taxes because we will have write offs and all sort of deductions?

3. What are some other things to consider prior to getting into this property or once the buyer accepts the offer?

4. Most likely we will be more then 200-300 miles away from the property most of the time what advice can you give on that? We were thinking because its renovated we might need to hire a property management group to look after it. It might make sense to hire someone on call to watch over the place just in case something goes wrong.

5. Is a 1.75% pricing hit on an investment property normal? I have not heard of this in many articles I have read but the mortgage broker said this is normal when the funds are coming from freddie or fannie?

6. Any advice when going into this with a partner?

Any answers, advice, or discussion points would be great. We are first time investment property virgins and would love your insight.

Thanks!

I assume by cash-flow you meant positive cash-flow/net of all expenses per month. Clarify that as a lot of suggestions would depend on that. What is your expected rent on it and what is a typical lease period in this area. Ideally you should plan for 10 months of rent unless you are very sure of rental demand in the area.

LLC route would make sense only if you have couple of inv properties otherwise you can go for umbrella policy.

yet another example of why we need stickies back....