All Forum Posts by: Curtis H.

Hello all, 

I have a place in the Jefferson Park area and am torn between using this as a long term rental or short term rental. I would love to chat with a Superhost or similar in the area about how well it can do. Long term I can get about $1500 per month on a $950 mortgage. Renter pays all utilities. Upstairs is a 2/1 about 1050 sq ft. Hardwood floors, stainless steel appliances. Downstairs finished basement is a 2/1 with no kitchen and plenty of space, and has it's own entrance from the back of the house.

Jefferson Park is a hot area for people in the film/tv industry, so I would think it could do well. 

Any referrals with hosts that are PROVEN in STR in Atlanta are welcomed.

Thanks, 

Curtis

@Chris Mason

Thanks for the tip! I'm going to try it, although I think its too late since I signed the contract before reading this. Not that it can't be amended easily, but it feels like bad form at this stage.  

@Stephanie Medellin

It is a SFH.

@Dave Skow

Credit is 785-790. 

@Chris Mason

I actually was going to do 25% down, and at that down payment we are looking at 5.25% rate. I really probably go that route. What seems to jump out a little at me were the fees more than the rate. Not that they are terrible, like mentioned above, but I'm a pretty safe bet as a borrower with the reserves I have, so I want numbers that reflect that. None of it would make me jump ship, I just will negotiate the fees down a little. 

Hey BP fam, 

So I'm under contract on an investment property, and here are the numbers I'm being quoted. Trying to determine if they look right for someone with great credit.

$200K purchase price

20% down

5.75% rate

30 yr fixed

Origination charges - $2295

Title fees including owner's title insurance - $1625

Thanks!

Property was purchased for about $850K before the crash, then paid down to about $500K. They could have walked away when the value dropped to $650K and they were underwater, but they wanted to save the sister's credit, which was honorable of them. How ironic is that now that the sister is screwing them over? It's now worth 1 million and she wants over half the equity. 

I don't see her getting out of capital gains since she hasn't lived there in 2 of the last 5 years. Capital gains on $500K is $100K in taxes. I need to tell my friend that no matter what you don't eat any of those taxes. My guess is once the sister realizes her tax situation, she will try to get the siblings to eat at least half of it. In reality she would have to cut a check for $250K, then get hit with a $100K tax bill, leaving her with $150K after taxes.

@Dave Foster

Yes! I told my friend (who is the husband of the sibling) that this is the smoking gun. If she doesn't lower her number to a reasonable amount (she is asking for $280K of the $500K equity) then threaten to report her to the IRS. He however is worried that she will simply just take ALL the equity in retaliation and he will get nothing. 

So now he and his family have to sell the house and move 2 hours away from the Bay Area just to give the sister her $280K, when she said she was doing it as a favor initially. Truly sad. 

If she were to do say, $50K in repairs before selling the home, could she claim all of that $50K as expenses? Thus lowering the tax burden to $450k capital gains?

@Carl Fischer

Oh boy are you correct. There is another post on it in another forum that had plenty of back and forth on the matter. The sister absolutely swindled her sibling. She has put practically nothing into the home, the sibling paid over $400K in mortgage payments, and once the sister realized the paydown and the appreciation left such a huge equity spread, and that she was approaching 40 years old with no hope in sight of being able to own a home in the Bay Area on a teacher's salary, she literally went from the model citizen to all out mafia overnight. General consensus on the post was despite just how wrong the sister was for what she did, since there was no agreement in writing, the sibling would likely lose in court, or at best only be entitled to half the equity. 

@Ashish Acharya

The sibling has been living there the last 7 years making the mortgage payments directly to the bank, as well as paying the taxes and insurance. Within the last 8 months, the sister made the sibling sign a lease agreement to make things look official probably expecting them to take her to court. Now she looks like a legit landlord, not a sister stealing her sibling's equity. She won't 1031 because she needs the money to be able to get into a home of her own. So if she can't write off the $250K gift as an expense, then she will get hammered on capital gains it seems like. On the flip side, if the sibling has to write off the $250K as a gift, then THEY will get hammered with a gift tax I would imagine? Unless the sister doesn't report it? Not sure how that works.

Hello all, 

Interesting scenario where I'm curious what the tax implications would be. 

Sister puts house in her name for a sibling, lives in it for the first 3 years, then moves out. Sibling continues to pay mortgage for the next 7 years, creating a $500K equity spread. Sister surprises sibling by saying "this is my house now, even though I said I was doing this as a favor, and I want half the equity despite not putting a penny into the house". 

House gets sold, and the sister gets an equity check for $500K, which she then has to cut a check for $250K to the sibling. 

My questions are...

1) Does the sister have to pay capital gains on $500K since she did NOT live in the house 2 of the last 5 years leading up to the sale? 

2) If the sister writes a check to the sibling for $250K, can she report that to offset her gains? Or is that not a justifiable expense? Sibling is worried they will get hammered on the $250K check from sister. 

Thanks!

Also, what do you guys estimate closing costs to be on a transaction like this with a double closing? I want to make sure I have all my numbers at least in the ballpark.

@Darron Washington

You are correct in your assumption, but I'm thinking more "wholetailing" than a true wholesale. I envision a family buying this as a bargain they can put sweat equity into at $1.05 million, and it will be worth $1.6 million after 4-5 years of them doing upgrades as they can afford it. There would be a line around the corner for the open house. I have already seen this myself when visiting relatives in the Bay Area. It's insane out there.