All Forum Posts by: Darryl S.

Hello BP. I am approaching retirement and am looking at selling my rental properties owner financed. My thoughts are that this would continue my great cash flow without the rental maintenance issues. Plus maybe delay a huge lump sum payment of capital gains taxes.

I have heard that owner finance rules are possibly different in each state? I am in the TN area. Any tips or information would be appreciated.  I had a attorney tell me recently that there was a law passed that prevents any owner finance without a mortgage license but from my internet research I believe the fella may not have been knowledgeable or at least had not kept up with current laws and exemptions. (hard to get good help nowadays)

From what I have read you will not be allowed to set up a contract for deed in your LLC unless you have the contract underwritten by a licensed mortgage broker. You may already be figuring on doing that but if not that is going to run you afoul of the new federal laws. You are allowed in most states to do a few of these land contracts in your own name per year so that might be a possibility. I have a few paid for rentals that i am currently studying on selling on contract for deed to establish a solid retirement income minus the rental hassle. Looks pretty promising so far but need info if anyone has some.

Bill;

It looks like that in TN I can do 5 land contract transactions per year without being affected by the new federal laws as long as it is in my name and not a business.. (part time small time investor here) I am looking for a simple way to establish a great income stream for a few paid for properties without the hassle of renting. I can see where a full time guy would not be able to take advantage. It does sound like you have some past experience could you possibly share some of that? It might be very helpful to an individual investor wishing to use this strategy on a few deals since it appears that under certain conditions it would not be governed by the new rules. You said this WAS your favorite strategy so there must be some advantages?  

I am trying to figure out how to do this properly myself. From my research each state has its on rules and regulations. Some states make it so that you would NOT want to do this due to the way the equitable title is recovered if there was to be a default. My state TN seems to be a good place to use it since we are a nonjudicial state and on a land contract it would be a simple forfeiture notice. I have put out some feelers for my local expert attorney. I think I will use an attorney on my first one to get all the forms and learn what to look for. If someone here is familiar with TN land contracts any tips would be greatly appreciated. 

Run your numbers for doing an all cash deal and if you are not getting a pure 10% return on YOUR money I would as an investor RUN in the other direction. 

Example: You have 82k to invest so you buy this little money pit. Now at 10% return annually is $684.00 monthly that you have to clear to make it worth your while. You stated a monthly rent of 1500 which sounds great so lets take our return of $684.00 out which leaves $816.00 you state expenses of whatever it was like 932 maybe (too lazy to go back and look) anyway you are in the hole and NO I would not purchase this and shuffle dollars back and forth just wasting energy stirring up dust. You need to purchase this property at a large discount to make this work man. I will let you do the math but 70% ARV sounds like a good number. That would be about 58k purchase price which appears to make your numbers work now. As most everyone here knows there are also tax writeoffs like depreciation that put the icing on the cake that is why 10% is acceptable (at least to me)

NEVER PAY RETAIL......................   Good Luck on your deal.

I am always suspicious of numbers for condos showing good positive cash flow. that is a rare bird. Go back and double check your figures one more time. You might have a winner here but I am betting that you have missed something or have incorrect info from your ins agent (needs to know the property is a rental) / property tax numbers (look for state/county and CITY property taxes not just county taxes) / attend a HOA meeting meet the leadership and get a feel for their agenda IE New roofs Paving etc that will cause fee surges. Closely check for utilities costs for connect and disconnect fees. water utilities sometimes will have a 100 dollar connection fee if you have a vacancy just so you can turn water on to clean it up! As you can tell I am not a Condo fan LOL

Dang it man you would have thought that a 126k annually came with enough perks such as generous vacation time and no clock punching (lots of working from home today boss type stuff) that you could have carried on a few more years. Come on man all us clams in the bucket NEED to pull you back down LOL. Just messing wit U  enjoy your hard fought freedom.

Rental amount with Kitchenette? Rental amount without Kitchenette? If they are close to the same rental with or without the Kitchenette I would remove it as appliances are very trouble prone little money eaters 

Hmm well lets see here 180k. First I would go buy a GMC Z71 4x4 PU truck SLT crew cab 20" wheels and all the extra goodies 50k cha ching so now we are down to 130k so next I buy my wife those new triple pane windows for the crib she has been wanting 22k cha ching now down to 108k so next I buy a master bath remodel 18k cha ching so now down to 90k so next I buy those new plantation blinds (must have for new windows) 3k cha ching so now down to 87k  so next my wife has to have a new car 37k cha ching so now down to 50k so next I use 20k cha ching to pay off credit cards and misc debt so now down to 30k so next the kitchen has to be remodeled 35k cha ching OOPS now I am 5k in the hole YIKES. We will need more cash than 180k that is for sure. Dang it man that 180k cost me 5k OUT OF POCKET Cash on Cash LOSS

Same thing here scarce properties at premium prices. (Irrational Exuberance).    Might be a good time to cash out some of your weaker property holdings? Pretty sure it is not a good idea to be buying right now when the markets are hot and every tom dick and harry is out there chasing crumbs. Might want to sneak at peek at those big oil stocks to sink some of that cash into?????? Come back in 3 years and tell me I am wrong haha. Gota go do some big url stock research see you later