All Forum Posts by: Frank Adams

Tim wrote; "Katie Couric is now live hosting colonoscopies."

And yet any noises coming out of Harry's butt would have made more sense, and been more truthful than any noises that ever came out of Palin's mouth. lol!

Frank

The OP wrote; "Why would anyone flip houses when you have to pay 50% in income & Self employment taxes?"

50%? You need to turn off the right wing radio. IIRC the TOP (marginal!) RATE is about 35% so even if you made $100,000 or so and it was your only source of income you'd probably pay about $15,000, which is 15%, NOT 50%.

You don't pay FICA and Medicare on this income.

Frank

"You mean owe commission even if I don't accept that offer"

More than likely, yes! Read your contract BEFORE you sign it. In fact, drop this idiot agent right now and get a smarter, and ethical one.

Frank

Back when I had rentals and someone would ask, "do you accept pets?" I would reply with, "what kind of pet OWNER are YOU?".

Their typical response was, "he's a lab-mix", which tipped me off that if they're so stupid that they can't answer a simple question then they're too stupid to be my tenant.

Note, I once had a service animal (blind spouse) and they were wonderful tenants for 4 years.

Frank

I wouldn't use trash, not the right way to dispose of it and too much settling, but I would fill that bad boy in TODAY. They are a sink HOLE for money and an insurance and liability issue.

I guess most of my buyers have been credit challenged. I NEVER ran a credit check on them (of course this was in TX where foreclosures can be done in less than 60 days), collected a cash downstroke, did the documents myself (and charged for them) had my bank lady notarize the docs and charged a not usurious interest rate.

I've done well over 50 of these and gotten a few of them back. I made more money on every one of those turnovers too.

The buyers that my ads tended to attract (2/2 in running rat acres, owner will finance with $2,000 down) pretty much guaranteed that they didn't care about price (NONE of them ever offered a lower price, and most of them never asked about price), interest rate or terms. They were like people who walk onto a car lot and tell the salesman, "this is how much we can afford per month".

I don't know about a fortune but I quit work in my early 50s with an income about 3 times the average.

Frank

"There is a good chance that the Capital Gains Tax may increase, and maybe to as much as 50%".

While it's likely that the rate will increase (I for one think it should) what would make you think it would ever go that high? It's never been that high in the past, I could see 20% or 25% at the outside.

You'd also have to pay the TOP California rate which was 9.3% the last time I paid it. That was one big reason for me doing a 1031, I had about $275K gain and would have owed a big chunk to CA as well as the Feds. By doing the 1031 and waiting a few years to dispose of them I avoided having any of the gains show up on my final CA tax return.

"We want to purchase several SFR across several states and trying to close all of those within the 1031 time frame would be difficult."

Not nearly as difficult as MANAGING that many geographically dispersed properties. While the cost of LOCATING and doing due diligence on that many is high, I know it's doable because my former CPA did almost exactly what you're describing, a SF apartment building into a dozen or more rentals IN ONE METRO AREA of TX.

The key is to get most of the scouting and due diligence out of the way while the sale is in progress. By the time mine closed I had 7 to chose from. By CPA had about 30 to chose from by the time her sale closed so even if some of them were no longer available she still had many to narrow down to.

"The sold property is in California and the accomodator fees could reach over $10,000."

You've found an accomodator who is trying to SCREW YOU. The last CA based 1031 I did was one SFH in the Bay Area into 3 SFRs in Austin and it cost be about $500. Granted that was 8 years ago, but something is way wrong with the $10K number.

"My goal is to buy 20 SFRs in the 50-60 range with around 50% LTV mortgages. To 1031 ONE to TWENTY would be daunting."

I think the mortgages are a bad idea (I think that generally), better to just do 1/2 that number and have them free and clear is better. 1/2 the management, 1/2 the due diligence.

"To 1031 ONE to TWENTY would be daunting."

Daunting, but not impossible as noted above.

"Like trying to get a Democrat to cut Social Program Spending. Possible, but not likely."

Or like trying to get Republicans to give more "corporate welfare" to the corporate keepers; Halliburton, Blackwater, Exxon/Mobil?

Frank

One of the causes of leaks at the pipes is that whoever installed the unit didn't take the FINAL AND IMPORTANT STEP or removing SHARP EDGES from the ends of the pipe nipples. The manufacturing process leaves a sharp edge on the end of the nipple. This edge can and will CUT THE RUBBER SEAL, leading to leaks.

It only takes a few minutes to do it right, but almost noone does it right.

Frank

When I say owner financing I mean that I become the bank on a place that I own FREE AND CLEAR. So my answers only apply to that situation. I've done upwards of 60 of them and I prepare my own Warranty Deed and Deed Of Trust. I don't offer title insurance so I don't have a title company handle anything for me.

Actually I once had a buyer that wanted title insurance, her best friend was a Realtor and she told her to pay for it herself. When I called the title company they accepted my paperwork without any questions.

That said I don't put my interest rate too high, although it is higher than "market". I don't want to get the place back because they couldn't afford it, but they are getting in for a very small down payment. I usually do mine on a 30 year amortization with a 10 year balloon. I don't want to be collecting the mortgage when I'm 90.

I always have a due on sale clause in mine. I have an old copy of microsoft excel which had an amortization schedule in it but I'm not sure if the newer ones do, but there are plenty of them online.

Good luck

Frank

Back when I had rentals, in TX almost ANYTHING the owner possessed was covered by state law to prevent the landlord from attaching it. Wage garnisheement was a non-starter too.

I always made sure that my security deposit EXCEEDED a month's rent so the tenant didn't think that "I'm leaving at the end of the month so just keep my deposit" would fly. By staying on top of the rent collection I was always able to minimize lost rent so the deposit would cover any damages.

On those rare occassions that damages exceeded my deposit I would send a statement of the debt, a letter stating I was willing to FORGIVE THE DEBT, and a 1099 (income statement) for the forgiven debt. Sometimes this resulted in earnest attempts to make good on the debt since these guys usually didn't want any more attention from the IRS.

A couple of times tenants left enough stuff that I was able to yard sale myself back to whole.

Frank