All Forum Posts by: Carey L Rouse

I want to sell a wrap mortgage around my existing conventional loan on a rental house.  So, I want to sell my house using owner financing.  I'm wondering if anyone has any tips on how to find those buyers?  Is it just a matter of advertising myself?  If so, where?  Do I try to go through real estate agents or mortgage brokers or maybe there is some really great targeting marketing techniques?  Any suggestions would be greatly appreciated.  Thanks

Thank you Mike.   If could paraphrase to ensure I understand, do these 2 statements sound correct?

1. If the first note has an original principal balance of 62k and then I sell that 1st note to a note buyer for 62k...there is no gain and no tax.

2. For the 2nd note, the portion of the payment that I get on a monthly basis from the home buyer that is interest (most of the payment will be interest initially) will be considered income...to be taxed at my normal income tax rate.

Thanks again!

What are the gain or tax implications with selling my wrap note? I'll provide an example to explain. Lets say I get into a rehab project. I pay 40k for the house and 20k for the repairs and eventually refinance into a conventional loan. The ARV is 100k and my new conventional loan is 70k. Now instead of renting out the house, I do an owner finance deal and create a wrap mortgage for a new buyer who can't get conventional loans. I take 15k as a down payment and I create 2 mortgages in the wrap. 1st wrap mortgage is for 75k. 2nd wrap mortgage is 10k. At this point I'm still on the original 70k conventional mortgage but my new buyer is on the 2 wrap mortgages and they are holding the deed to the house. Now I sell the 1st wrap mortgage to a note buyer for 62k. Assume all this happens in less than a calendar year. What are my gain or tax implications? Is the sale of the 1st note for 62k taxable? How are the payments that I get from the 10k 2nd wrap mortgage taxed? Are there any other tax implications I should be thinking about?

Thanks

With that kind of starting cash, you have some choices.  Do you want to be more conservative and just pull in a reasonable cash flow each month or maybe you want to be a bit more aggressive and build equity quickly and your not so concerned about the monthly cash flow at this time?  Or like most people, maybe you want a bit of both.  If I was in your position at your age, I would want to build even more equity now and consider cash flows deals later.  Either way, both of the strategies can be done via multi-family deals.  And deeper "value add" deals are the ones you want to be a part of...maybe as a passive investor first.  Find a deal sponsor with a track record of turning around deep value play apartment deals.  And you can find that out by networking, meeting other sponsors and especially talking to the passive investors on those other deals.  And I agree, San Antonio is a much better market than Austin.  But I think there are other great examples of places throughout Texas and beyond.