All Forum Posts by: Dina Schmid

Curious if anyone has had any recent quotes on 30 year loans for an investment property.

I'm looking at something this weekend in Kentucky. Excellent credit and a 30% downpayment. My credit union quoted me 6.375% but they won't finance a log home. The in-state lender recommended by my realtor quoted me 7.0% if I paid $1300 towards points, which to me seemed ridiculous; back in April when we put an offer down on a property in Indiana we were quoted 7.0 without points. I'm trying to figure out which of these is the anomaly.

 Thanks. This will likely be the scenario moving forward.

Thanks @Drago Stanimirovic. I will definitely be consulting a tax professional with this, but I do think we can make it work. (I know BP is focused on making money through REI where this scenario is really about using RE laws to minimize losing money.)

Thanks for the response. I don't want to go into details on a public forum, but the house is worth very little and at their age/state of health, they will really need the full amount from their house. 

I will definitely speak to a tax professional about this to see what the best way is to get them the funds they need in a dignified way and also minimize the amount of it that comes directly out of our pocket. 

And to address something earlier - siblings talk regularly, know the funds are limited and all expect a $0 inheritence. This idea isn't coming out of the blue.

 We were already planning that. I always like to go into things like that having done my homework.

Husband and I are considering buying his parents' home and I have some questions about this and would love any feedback on how to minimize hassle and our costs. We're doing this for two main reasons: 1) Prevent his dad from doing something like a reverse mortgage and 2) Minimize the amount of money we need to contribute to their care. 

We're currently paying for lawn care, snow removal and cleaning services + husband is doing some of their home maintenance himself. They are covering cost of insurance, taxes, utilities and all medical expenses which are rapidly draining their available funds. We were going to start gifting them money to help cover those expenses when the idea came up of buying their house to give them a cash infusion. (We're aware of the five year look back period for Medicaid eligibilty but it's not a big factor in our decision to do this.)

We would get the house appraised so we can document paying FMV.
House would be purchased with cash (it's a small home in a rural area and value is low)
Inlaws would sign a lease so that it becomes a legitimate rental and we can deduct expenses, etc.

*Do we charge them rent and then gift that amount back to them (the FMR is well below annual gift limits) or can we gift them rent and still deduct expenses on our taxes?
*Could we deduct the expenses of any modifications made to make the home more accessible (ie adding a ramp to the front door)?
*Anything else I should consider?

We are going under the assumption we would sell the home after they pass so as to not be seen by siblings as making money off the situation. I'm not sure the house would make a good rental property anyways as rent estimate is below 1% of value.

I don't see it lowering costs for buyers in most cases. As a buyer looking for my first (STR) investment property, I'm very skeptical of lower costs for buyers. Had to sign a buyer's agreement with our agent, who wants 3% commission. The first two properties we looked at were only offering 2% commission. That means we have to come up with an extra 1% cash to pay our agent if we want to purchase one of those properties. Comps don't take into account that everyone used to offer 2.5-3% commission, but now they don't feel they have to. So now I'm expected to pay the same for the house + pay extra to my agent, which means reducing my down payment and increasing my mortgage. I can't figure out how that is potentially going to "result in lower overall costs for investors who are purchasing properties."

I agree with you on reduced seller commission burden - becuase it's pushing it onto the buyers (and reducing the amount I have to put towards the purchase price of a home.)

Where my daughter goes to school it is quite common to sign leases over 1 year in advance. Most students have signed a lease for their junior year before they've moved out of the dorms Freshman year. I hate the practice. Lots of parents do, but the madness continues. There are always parents of students who have failed out, transferred or chosen to study abroad offering discounted subleases every semester.

Peace of Mind.

I'm rather risk-averse myself. Wouldn't be considering getting into the STR world if I was still carrying a mortgage on my primary residence.

I know your mind is made up on this but I still suggest you look up "planned obsolesence." Today's appliances are designed not to last long. I've had several in my house have issues and most recently replaced my built-in microwave. The control board went out on it, just like the control board once went out on a relatively new front load washing machine. I can guarantee you that neither of those was caused by neglect or misuse.