All Forum Posts by: Daniel B.

@Alberto Nikodimov

Can you clarify your previous relationship with the investor? It looks like you said he invested through you as you being the agent, is that it, or did he loan you money for your own rehabs? Makes a big difference on who needs who. Did he have full ownership before and he is offering to bring you on as an equity partner - if so, he is doing you a favor.

50/50 is fair, or 60/40 to the investor as a general rule. However, if you are 10% of the investor you would get 10% of the investor profits/equity, and sometimes would still get the commission when buying/selling.

I disagree with most posts above. Investors and workers need each other. If you didn’t need the investor you could borrow money from a bank in the 3-4% range now and keep the equity for yourself. If he had enough people to find deals he would just pay someone commission and finders fee and a rehab/management fee. Everyone sees it from their own perspective and how important they are in the services or cash they bring, but a lot of people - especially starting out need to partner to grow and it’s mutually beneficial.

Part to have part of a whole pie then none at all...

@James C Clark Jr

Split is typically 50/50 or may be 60/40 to you on some trees, depends on tree type, current prices, etc. lumber is really high right now so if it makes sense to do, now is the time. Logger gets the other split, they typically will have the end buyer make your portion of the check out directly to you...

@Naresh Maragh

What is the square footage of the homes selling for the mid 200’s? Need to make sure they could be split into 4 lots...does the house sit in the middle of what would normally be lot 2 and 3 as an example? In addition to minimum lot size, typically each individual lot has to be a minimum width and depth, check with planning and zoning in the local city on this.

Don’t know what the typical cost per ft is there, might be hard to make a profit.

Another option: can you flip the house and sell it where you could own the other 3 lots free and clear? That would give you the option to joint venture with a builder, essentially they use the lot as their equity/down payment. You don’t get paid until the actual house sells, and get a split of the profits, good option to partner with small builder, but there has to be profit in houses after lot costs, engineering, site utility costs, etc.

@Sarah Buchanan

Absolutely accept unless there is other/missing info. Over 800 credit score, one makes 6 figures. My only concern is that they are overly qualified and will only be there a year before they buy their own place.

Is someone who makes $4,000 gross, $3,000 net a better applicant applying for a $1,000/MO property? Technically they have 3X NET, but only an extra $2,000/MO to cover all their other expenses...your scenario is better.

I would absolutely accept them.

@Daniel Gibson

If you are both on title you both will have to count the taxes and insurance against your DTIs when you try and buy the next property even if the mortgage is only In 1 name.

If you buy then refinance, you are stating you plan to live there another year at the time of the refinance (if it’s an owner occupied loan).

If your not married yet, do it in your name and the next one in your wife’s.

Other option: whoever has the tighter DTI ratios buys it (if the qualify). That allows them to start the clock sooner to get the year of income as a rental on your tax return sooner.

@David Acconcio

I haven’t heard of this. I have 3 in the area and live in STL. If you can’t find anything online, it’s probably not a thing. Did have to complete a new crime course a few years ago, may need a local property mngmt co for that...

@James M.

Can’t evict for nonpayment if rent....is writing fraudulent check the same thing? Might have legal leverage there...

@John Coffey

This could make sense for the seller depending on their tax rate. I disagree with previous posters. Depends on how much they will make on the sale. If seller is in a low tax bracket, making a big lump sum in one year can push him into a higher tax bracket, vs spreading it out MAY keep him in a low tax bracket in all 5 years...but he is at risk of future tax law changes. If this $10,000 equates to him selling at a loss he would save some of the 25% depreciation tax rate, which may be a higher rate than his earned income tax rate. Does he have risk that he knocks $10,000 off the price then instead of paying him 10% you refinance or sell after 6 months?

For you, you are lowering your cost basis on the property so eventually would have more capital gains tax to pay assuming you sell for a profit, but you can 1031 in the future, etc. Kind of a rough time to get seller financing. We are at near historic lows on interest rates, if after 5 years you pay a higher rate for the next 25, did you save anything? Can you refinance 6 months after you buy it? Bad deal for him...you are committing to 5 years of bigger expenses if you are locked into the loan. Will that mean this property doesn’t cash flow...will it affect your ability to buy future properties?

Hi,

We own our primary residence and several rentals, nothing is owned jointly. This was done so that we could each get the most conventional loans.

Our primary residence is currently in my sole name. Can I sell this to my wife and we will put everything in her sole name, that would allow better financing terms. We are looking to refinance, and that brought up a discussion on this scenario...

@Daniel B.

10 year bond...not 19