All Forum Posts by: Angie Menegay

I'd think a licensed listing agent would use a state promulgated contract, which should dictate where earnest money deposit should be made out to (typically an escrow agent, i.e. Title company).

I Google MA contract, and it specifically says the deposit "shall be held by __________________, and escrow agent..."

http://www.amortgage.com/xSites/Mortgage/AlexanderMortgageCorp/Content/UploadedFiles/contract%20to%20purchase.pdf.

On a side note, I think you should get your own buyer's agent, especially to walk you through these contractual terms. People think they can save money going straight to a listing agent, but most of the time, that's not the case, since the seller is normally locked in a fixed commission rate with the listing agent already. Going represented just simply means (in most cases) the listing agent will keep the entire commission instead.

Hope that helps,
Angie

In TX, we don't have a state promulgated lease, but we have one provided by the Texas Association of Realtors. And of course, I use it because I feel it's very thorough. However, the lease states that only members of TAR can use it.

So yes, I'd recommend it unless non-members are not allowed to use it (like ours). Or you can compare it with one you can get from the office supply store and compare.

Angie

I'm not really a land contract expert, but I believe you also cannot charge more than what your state's Usury Law allows for the loan. So I guess that will at least help set your maximum rate :).

Howdy Brian -- You can't choose not to join MLS :-( All brokers around here will require you to join their board (very likely MetroTex), and that comes with MLS membership as well (NTREIS). It's not a broker's choice either. The boards require agents to join MLS, or they will charge the broker.

Angie

Just curious on why you need the insurance to cover the LLC if you own the property?

Thanks Bill Gulley :). Agreed. I'd probably just let those go for now until I figure out how to put this whole thing into a business entity.

I don't want to deduct it first before the income (i.e. interest received) because then the amounts won't match what I sent the buyers on their 1098s.

Lesson learned for the next note gig :).

Thanks all for your thoughts!

Bill Gulley: The notes are under our personal names. Yes, I agree in principle that I should be able to expense these administrative expenses, but on which tax form is my struggle.

As a side note, I don't understand why the IRS has this 2% AGI limit. They expect us to pay taxes on every dollar we receive in income but there are limits and restrictions on the legitimate expenses we incur to get that dollar? Sigh.

Hi Steven Hamilton II

Thanks for your response. Yes I did all of those. The only part I'm left with are other miscellaneous costs associated with servicing these notes (e.g. fees paid to the servicing company etc.). As mentioned, if I put them under "Miscellaneous Expenses," it's just a waste since they don't add up to be anywhere near 2% of AGI (even though they're legitimate expenses). Unfortunately, we pay for those extra costs, not the buyer. Can I claim them under Schedule C by any chance, since after all, they are business expenses?

Thanks,
Angie

I believe per FNMA, it's 75% LTV for investment single family and 70% LTV for 2-4 units.

Your credit scores will impact the rate you receive (if you qualify).

Your income, of course, will be used to calculate to see if you can make your payments and whether you'll qualify based on your Debt-to-Income ratio.

David A.

I second what John Chapman said. Assuming you can get an appraisal at the price you're purchasing (not ARV - if you want to borrow against ARV, you will have to find a HML or a broker who lends from private investors), some banks don't do small loans or charge some extra points for loans less than $50K etc.

If you have fewer than 4 mortgages, one bank to try is Regions Bank. We got 2 small loans from them 2 years ago without some hefty fees. If you have more than 4 mortgages, you can try Omni American Bank or Bank of Texas. Another bank who might lend against purchase price + rehab is Preston National Bank.

There are, of course, many other banks around here you can start talking to for a feel, but those are the ones I've personally dealt with.

Also, I believe they will also check your wife's credit if you're using her income. Might not be an issue if your scores are good, but I'm not 100% sure on that.