All Forum Posts by: Dan V.

Thank you again @Account Closed! I appreciate your time responding to my questions.

Thank you Zachary, that helps a lot! With regards to the interest, where do the Applicable Federal Rates (AFR) come into play?

Me and my wife are planning to purchase her mom's house. She used to live in the house and now lives with us for about 2 years now so the property still qualifies as primary residence. She is open to seller financing the house and we would like to make sure that I covered all the necessary requirements for this type of transaction and to minimize any tax implications on her end as well. The plan is to give her 10% downpayment and the balance is seller financing. Tax basis is $215K, we will buy it for $200K with 10% downpayment and 90% seller finance (30 year amortization) with a balloon payment option within 5 years. She only received social security income, no other income.

1. How will the installment sales impact capital gains? 

2. What if we made the balloon payment in year 5, will she be paying capital gains in proportion to the proceeds she received at that time or will the sale of primary residence still apply since technically she qualifies for it when she sold it?

3. What is the minimum interest rate we can charge for the seller financing without causing any red flag with the authorities?

4. Any other things I need to consider in this type of transaction tax-wise or compliance-wise?

Thank you very much, any input will be much appreciated. 

@Devin Sidbury As Jacob said, there's a bunch of real estate investors' groups in FB. Some of them will allow you to post your deals and if it's a real deal, you'll definitely get some leads. I myself is na investor in the area so if you have any send it my way and I'll take a look at it. I can help you dispose as well if I'm not interested. 

I disagree with this one. I think it depends on your REI status. For newbie, cashflow still matters especially if you don't have a lot of capital to play with. It's harder to grow without cash. But for seasoned and well funded investors, stable equity investing is preferred since they're less risky and more passive.

It's just harder to find cash flowing deals right now since rehab costs and borrowing costs are more expensive. So either adjust your offer to meet your return criteria or keep looking. 

 I have reached out to a few but not those you mentioned. Do you have any contact on any of those banks you mentioned that you're willing to share?

 Between 5-15%, seller carry 20% as second position, so we are lookng at 65%-75% loan.

Hello, we are looking for lender on a 15-unit motel located in Virginia (Hampton Roads Area). Loan amount is about $700-$850K with some seller carry. NOI is around $124K. Will provide more info if needed. Thank you!

We are using our business line of credit to purchase property where we pay around 8-9%. There are different options to fund deals but whatever route you take make sure to run your numbers. Having cash ready is good since you can move quicker if you are more liquid so start saving now cause you won't know when the deal is going to show up. Funding is just one part of the process so I would recommend start building your team and business relationships.

Welcome to BP! Happy to connect!