All Forum Posts by: Mike Komenda

Brian, my current t neighborhood that I referred to as "fringe" really isn't too bad at the moment but the problem is a completely dilapitated, falling apart, slumlord 2 unit right next door that has tenants that Are hit or miss. We had to bring one of the prior tenants to court In the past. The street I live on is 70% 2 unit rentals, which I hadn't realized until after I moved in and kills any chance for appreciation of the area.

Like I said, there are no Trouble makers currently, and haven't been for about a year so my feeling is "sell while we can" as the crap 2 unit next door is vacant and when occupied is typically inhabited by "porch people".

I owe a family member 50k@2% off the books on this house. We love the inside of our house and have done a lot of cosmetic work that makes it very homey, but the high amount of rentals on the street kills rent prices too. Id be lucky to get $750/mo for my house in rent. I have a gut feeling id be better off selling my house for 70-75k and move on. Id pay back the 50k owed, and use the 20-25k equity to completely pay the 21k into the "flip" i paid cash for (i have a comfortable cash cushion)and pay out of pocket for renovation (in cash), live there for 2 years, profit 50k and roll that (tax free) into a new home, with excellent schools, outside the city,where we really want to lI've. Is 2 years the minimum time to live there to roll profits tax free?

If I did place a tenant in the flip temporarily, am I screwing myself for future tax rolling forward?

Thinking out loud a bit here but there is no better place to do it. My wife and I are at the in between stage of our careers where our salaries are going to more than double in the next 4 years.

My family has been in a house for 4 years and we would be happy right now selling for break-even of the price we paid (73k). We owe about 50 on it through family member issued private loan.

I just purchasd through auction what I intended to be a single-family house flip for 21k. ARV of 8-10k repairs is 83-85k, a profit of 50+k (160%) in the very short term.

. Its twice the size of my house, in a better location in the city, and needs about 8-10k in from what I see So far to be cosmetic and some plumbing work. I originally intended this to be a 3 month flip. However, factoring in taxes as ordinaryi income from profit, I am leery of shelling out that much in taxes. Single family homes don't really appeal to me from a buy and hold standpoint, as I already own a 2 unit doing that. if I found a good tenant, market rent of about $750-800/mo would allow me to pay off a 30k loan in 7-8yrs. This area is not an area of appreciation, so we can't figure on that.

I mentioned to my wife the idea of moving in to the house (after a 3 month renovation) due to it being in a better location and to my surprise, she was tentatively on board (with about an extra 5k of upgrades of course (new walk in shower, open lower level floor plan, some flooring, etc).

What makes the most financial sense and why?

1. Sell my home for break even and move into the newly renovated "flip" for a few years, allowing me to sell my home in a fringe neighborhood and move to a slightly better neighborhood mortgage-free. Then after 3 years sell the property and transfer the profits tax-free into our dream home we plan on building (or renovating).

2. Stay where I'm at and sell the "flip" quickly for approx. 160% of price+repairs and pay the tax bill (on 50k profit)

3. Try to rent the flip for a year, then sell to get long term capital gains tax rates.

Being that its the end of the tax year and I plan on shelling out a lot of repair/ upgrade money into the house in 2013, how would I handle it from tax perspective if I am unclear of my plans for the property (move-in/rental/flip)?

Hey all, I had a heck of a time with an auction.com property recently too. My agent found a foreclosure property that looked intersting and is within a mile of my home. The property would list on the MLS but say all offers must be made through auction.com. Upon going to the property, it did have a legitimate agent's sign with a brokerage. We toured the inside and outside of the home (lock box on it my realtor had the code for) and it was in pretty good shape, comps go for 70-80k in the area. I had my agent contact the listed agent and he said after the auction ended, and if no bid was accepted, the agent would take an offer to the seller (Nationstar mortgage). Well, we made an offer of $20,000 through my agent and didn't hear anything for a week.

I then logged into auction.com to see that the property was relisted for auction. My agent then contacted the listed agent and was told "not accepted, all future offers must be made through auction.com". My agent then grilled the sellers agent about the legitimacy of auction.com and he assured her it was legit. Well, I then bid $18,500 on the property (plus $2500 auction.com premium) for a total bid of $21,000. I won, but it was below reserve. I then got a phone call about 20 minutes after the auction ended from auction.com congratulating me on winning the property and told me they were emailing me the documents to sign and asked me to escrow $2500 earnest money deposit. I then related that the auction had not reached the reserve price. I was then told I was legally obligated with any bid I made, even if it is below reserve. After consulting my real estate attorney, he told me that was not the case. He did say, however, that as long as the escrow delivery site was legit, I would be able to get the earnest money back if the deal was not accepted. So, I docusigned the papers, wired the earnest money to escrow, and waited. 5 days later, I was told the mortgage company accepted! I was in disbelief considering the property was listed on auction.com 3 times and each time the auction ended at close to 30k and didn't meet reserve.

Over the last 2 weeks or so i've been dealing with the settlment company and the title searchers. The title search was performed by my agent's title company, at the sellers expense. Everything came back clear. I'm now awaiting the hud-1 settlement statement and we should be closed on the property within a week. All of the paperwork has been through email and my real estate attorney has reviewed the documents - so far, so good. I'll let you guys know when we close. Apparently the closing will be through emails and scans and then I will meet up with the agent to transfer the keys. They said we could do the closing in a formal building like is traditionally done but it would be at my expense - no thanks! Will let you guys know when I close and begin the flip!

Also, the lease on one of my units expires here on May 1st. It will be vacant less than a month, as I already have another tenant lined up. How would you handle that as far as having an appraiser in?

1. Would you have the appraisal scheduled immediately while it is 100% occupied (with tenants leaving dirty dishes and clutter everywhere)

or

2. would you rather show it with the downstairs vacant, but with a signed lease showing it will be occupied within a month and the unit professionally cleaned and staged (it is a furnished unit)

what would be the best bet in order to get a higher appraisal?

Thanks for your advice!

Thanks for getting back to me-

Yeah, I'm not keen on 2pts but considering he will give 80%ltv non-fannie mae/freddie mac vs the 75% and use an in-house appraiser to pretty much assure me of the amount, I think iit may be decent.

He also offered 4.5% on a 15yr w 2 pts but the monthly payment would be spreading me a bit thin, hence the 30yr.

I guess what I need to know is, do the other charges look appropriate?

My single family home is mortgaged by wells fargo as well and I am awaiting a return call from them regarding their rates.

25% income tax bracket
780 credit score
$15,000 in retirement accts

Hey all, I just started on the BP forums here and have already learned a wealth of info but as always, every situation is unique, therefore i'm reaching out for advice.

My situation is as follows:
1.Mortgaging my primary residence (SFH)

2. Own a 2-unit residential home free and clear (I was originally going to finance it but a nightmare appraiser came in $500 low and the broker ordered a 2nd appraisal for $500 more of my money before closing, delaying closing by 2 weeks and I had great tenants planning on coming cross-country to move in the following week so I ended up taking an undocumented personal loan from a family member for $59,000 @ 4% interest, in addition to $20,000 of my own money (purchase price $79,000).

So here I am with my investment property working out great for me with gross rents of $1395/mo (about 1.8%) but I need a cashout refinance to pay back my family member in full + interest as was the understanding. I have owned the property for over 6 months.

I was in contact with a broker today that said he could get me 80% LTV on a $100,000 mortg ($80,000, 30yr fixed, 4.99%, 2 points)

He broke down the fees as follows:
[b]
Mortg Broker's Fee (2%) = $1600
Underwriting Fee $295
Other charges:
Appraisal fee = $400
Credit report fee= $38.50
Closing/Escrow Fee = $150
document preparation fee = 55
notary fee= $15
lender's title insurance= $664.88
closing protection letter= $75
endorsements= $155
wire/disbursement fee = $25
courier fee = $46.50
mortgage recording charge = $187

hazard ins. reserves = 73.33 x 6 mons = 439.98
county tax reserves = $162.50 x 6 months = $975

daily interest charge = $10.937 x 5 days = $54.69
__________________________________
Est. prepaid items/reserves = $1469.67
Est. closing costs = $3306.88

So from my $80,000 loan, I end up netting $75223.45 after fees. Does this look appropriate or am I getting nickle/dimed?