All Forum Posts by: Dustin S.

Hi all this is my first really creative deal I've worked on I want to make sure I get it right.

I have an owner who wants to get out of his house and start over but has no money to move and needs more flexibility in move out etc than a traditional sale would allow.

So the home is worth about $230k he owes $160K it looks like I will be able give him $30k and take over payments for the house. I plan on holding the property for a year + as a rental then selling avoid the higher tax rate and possibly do a 1031 exchange. If I wanted to keep it past a year I would refinance. So as a rental it looks like it will break even or make a little bit after all cost PITI vacancy management and maintenance.

So I know there are some pretty standard subject to contracts out there and will have a lawyer look over it after everything is ready.

I have heard different things about recording or not

In mind it is absolute necessary to protect my $30k investment    

but by recording you could trigger the due on sale clause in the loan. If this does happen I would think you still have time the bank would have to go through the foreclosure process and that could take a year or more where I live?

Additionally how do I give the owner the warm fuzzy's that I am gong to pay he is still on the hook for the loan?

I have thought about escrowing a certain number of payments PITI but this would be a lot of $ out of pocket. Is there a better way?

I have found rentometer to be fairly accurate maybe a little bit high but much better than Zillow for rental rates.  If you have Rentometer Pro it will give you addresses of some of the comps and living area.  I will go to Zillow, Craigslist, or Rent.com to see if I can find pictures of the comps and make sure they are similar condition and close to the same size as the property I am evaluating.  

If I am getting serious about the rental I am checking out I will pull county tax info on the comps and call for rent ads as a potential renter.

Hi all

I have a tenant who has been in one of my properties for 6 years now and has offered to buy the property in the past and has recently asked to purchase the property again in a lease option or lease to own. My plans for the property are a little bit different. but here is the situation. I purchase the property 6 years for $85k with 20% down refied a couple years ago and pulled out my initial investment. The property is now worth $150k and could be worth more like $170K with $8k-$10k in improvements. I was planning on starting these improvements this spring and summer. After completion I intended to raise rents closer to market. Current rent I am receiving is $1050/m and market is about $1250. Was planning on raising rents to $1150 after the improvements half in hopes the tenant would move out. I would then consider selling or refinancing to pull some of the equity and re-rent at market rents. How should I go about handling this situation and not become the jerk landlord. Also if I were to consider the lease to own or lease option how should I structure it?

If I am not mistaken the long term captal gains rate is 20%. But money you put into the propery and capitlize for tax purposes adds to your basis. Normaly you would capitilize rehab cost but not ongoing maintenance and repairs. M&R would cout as losses for the year. You can sell tax free by doing a 1031 excange or if the property has been your primary residence for 2 out of the last 5 years you can defer $250k in taxes if single and $500k if married. Make sure you check with a CPA but that is how I understand it.

As far as trust I on't know much if anything hoping someone will chime in so I can learn a little

@Jim KellerI saw it says you are from riverside several of my investments are in the IE do you have any suggestions for commercial lenders or protfolio lneders out in your area.

@Jesse Waters I am assumeing when you pledge part of your equity on a property they will be recording a lien on the property basicly a 2nd mortage? Also what kind of people/institutions should i be talking to?

@Jim Kellerso the lenders I've been talking to will allow 10 total fannie freddy loans. but will not allow cash out on investments if you have 4 or more loans. If you know someone who can do better on conventional loans i would like to talk to him. I think I am going to start calling commercal lenders and teh local guys. I have been using brokers who i assume field the loans to the big guys.

@Jesse Waters I am completely ignorant on the subject of cross colateralizations can you give me the quick and dirty so at least I'll know where to start.

@John Powell The problem for me in selling the properties is the tax implications I would expect to pay 30% maybe more on the procceds of the sale where on a cash out refi the proceds are tax free and I get to keep  a good cashflowing property

@Jesse Waters I have asked about Blakent loans but didn't get much of a response from the lenders I asked. I don't know much about them. Like what would happen if you wanted to sell one property that was covered under a blaket loan. Maybe i need to educate myself and ask my lenders more questions

@Elizabeth Colegrove I've talk to a couple of banks about equity lines but they seem to only want to go to 50% total LTV on investments and I would say the property is woth $170k and I owe $80k so we would be talking $10k max