All Forum Posts by: Jody Hawkins

Thanks folks

Hi Folks,

Question for all the keyboard accountant types.  Curious on the capital gains of installment sale for property held less than 1 year.  Are all gains taxed as ordinary income or is principal returned in later years able to be considered long term gain

Thanks,

Jody

Loan closed last week, note paid in full.

Thanks all

I have a cheap little house. I have 50K in it selling at 65K. I have a buyer with 25K down that wants a 1 year loan @ 6% until they can get there affairs together for a conventional loan. I am almost seeing see this as a "Lonnie Type" deal, but with stick built house. I have done some owner carry's in the past, but usually with investors not occupants. Buyer is a bit timid concerning documenting income, but honestly the risk is pretty tempting with over 30% down which quite enough (and then some) for a complete rehab. Looking for open comments. Thanks Jody

I did close this deal, figured I’d post a follow up.

Sales price was in fact $25k, as buyer received cash back at closing.

Contrary to advice given did not double close the deal. All cash transferred outside of closing was deposited into realtors trust account approved by all parties.

Did get suggested lenders title policies. As attorney suggested we also did away with “release†clause on second deed of trust. Second property has a value of about $150K with approx $90k remaining on first mortgage. No appraisal, but I have a pretty good feel of the local market.

All proceeded well, all documents recorded, I officially have about $21.7K into the $25K note@ 11% with balloon in 3 yrs.

Why did I do this against folk’s advice here?
1) It’s a small town and with a little more homework I had numerous business associates (including my accountant) vouch for the integrity of the other two parties. I know personal recommends are basically useless, but it helps to know folks have had a good past.
2) This deal fit the buyers MO. He owes approximately 70 other rental properties in the area. Almost all are lower income rentals; a quick trip to the court house didn’t throw up any red flags on properties owned by him or his entities.
3) The second property used as collateral in this deal is in his personal name. Even if I was unable to produce cash from foreclosing on that property, A foreclosure to a property in his personal name would create harm to his business model.
4) If I end up owning this house myself at under 25K I'll be very happy. I drove by this weekend and the repair crew is hard at work. The buyer already has the house advertised as a $550 a month rental.

At this point it is what it is, and I am fairly confident my bases are covered. I did have my attorney look over everything. He (and his colleague) did give all documents a thumbs up.

If for some reason things go sour, I'll post so everyone can say I told you so.

Thanks again for all the advice, it was extremely helpful.

Thanks folks,

Advice noted. Property is an REO.

Still waiting for all docs to be put together for attorney review.

Jody

Am I missing anything? I am providing financing for the deal.

Wholesaler formed a land trust and said land trust has property under contract for 15K.

Buyer (LLC, but no personal garuntee) to pay 25K for property.

I bring in $23500 additional funding ($1500 earnest money is mine), The plan is to avoid double closing by having realtor (3rd party outside of closing) assign beneficial interest of trust to Buyer, for $11500. Of which buyer will return $5000 to me. Title compay then to close contract tranfering propety from current owner to land trust (now owned by buyer). End product is $25000 note @11%APR, amort 15 yrs, balloning in 3yrs (secured by deed of trust and $6100 DOT/release fee on another of buyers property (in 2nd position but more than adaquate LTV))

Thanks in advance for comments.

Can 2 IRA's be used to fund a "Checkbook IRA LLC". Basically wondering if my wife and I can use the LLC concept to increase our buying power?

Thanks

Well I sold this prooperty to my flipper for a quick 10K profit and agreed to carry the paper interst free for 6 mos. The contract included a 5% penalty for being late. They invested about 15K into rehabs. When default occured the penalty was added to the balance and I received 22K from them to avoid forclosure and extend the loan for an additional 12 mos. at 10%. Any critiques? I'm pretty happy, but curious if I should have done different?