All Forum Posts by: Dylan J Berget

 My distinction here would be you still conduct the sale and sign the agreements. But you don't record the deeds. Some states are a race jurisdiction, some are a notice jurisdiction, and some are a race-notice jurisdictions. 

Jurisdiction's approach to property title records, generally fall into three categories: Race, Notice, and Race-Notice.

Race Jurisdiction: In these jurisdictions, the first party to record the deed has the superior claim to the property, regardless of any prior unrecorded claims. Delaying recording could be risky here, as another party could record a claim and take priority over your interest.

Notice Jurisdiction: In these areas, the priority is given to the last bona fide purchaser who buys the property without notice of any prior unrecorded interests. Here, not recording the deed might work in your favor, as long as the buyer genuinely lacks notice of any other claims.

Race-Notice Jurisdiction: These jurisdictions combine both rules: the first bona fide purchaser who records their deed without notice of any prior claims holds the superior claim. In this case, delaying recording is risky because another party might record a claim first, gaining priority.

The risk mainly arises if the seller attempts to resell the property, which is generally unlikely because most sellers are unaware they still have this ability when the deed remains unrecorded. This makes the strategy viable for managing a due-on-sale clause, as it effectively keeps the transaction off the lender's radar, delaying or avoiding the clause's enforcement.

While this method can solve the due-on-sale clause issue, it does come with a calculated risk—primarily depending on the trustworthiness of the seller and the specific legal environment. It’s a tactic that can work, especially when both parties understand and agree on the process.

I see a few ways of handling it depending on the actual loan terms and relevant local state laws: 

1. Sell or refinance the property to clear the existing loan. - As mentioned above. This is the simplest. If the loan gets called due find a way to pay it.

2. Deed Back & Lease Option/Contract for Deed: You can deed the property back to the seller and enter into a lease option or contract for deed. However, be cautious as banks may still enforce the clause if they detect the transfer of control. The trick here is to get a signed deed and wait to file it. Or have the signed deed held with a 3rd party where they will record it once the loan amount it paid off. This way the deed isn't recorded so the bank won't have knowledge of it. (However not recording a deed can create further issues so its worth talking to a local attorney.) 

Additional options:

1. Seek lender approval for property transfer
2. Explore assumption of the existing loan, if permitted

Hi All, 

I am getting deployed soon to a place where it's hot and sandy, and I will be gone for 10-12 months. I want to rent my house out as a mid-term nurse rental while I am away. It's located within 7 minutes of the Children's Hospital in Aurora. It's a relatively large house 3-bed 2 bath upstairs plus an unfinished walkout basement with a bathroom and a home gym.  

I'd like to get references for a property management company in the Denver/Aurora area that handles short/mid-term rentals. Any leads would be greatly appreciated!

Hey Dan, 

I think Lawyers, by nature, are skittish. We see the worst-case scenario all day, every day. People typically don't come to lawyers when everything is going swimmingly. In fact, we are paid to think about all the bad things that could happen and make sure that the contracts we use are air tight. 

That being said, any endeavor over a long enough time horizon runs the risk of having legal issues. I think it's inevitable when you are making any kind of impact. 

It's just a risk verse reward. LLCs are nice because they can limit any potential claim to the assets within that LLC. But 99/100 you probably don't actually need an LLC.

I don't have any data but I just wanted to weigh in. 

Hey there love the strategy. I'm going to through in some food for thought. 

Seller Finance is definitely a good path to take. And it sounds like it would accomplish your goals. 

I hate paying capital gains tax. So here are some other options to consider: 

You could consider a Delaware Statutory Investment Trust or syndication. These are both options that may allow you to avoid the 20% capital gains tax and get out of being a landlord.

A Delaware Statutory Investment Trust is a type of investment vehicle that allows you to defer capital gains tax by exchanging your property for shares in the trust. You can then sell those shares later and pay the capital gains tax at a potentially lower rate or just continue to receive cash dividends. 

A syndication is another option where you pool your money with other investors to purchase a larger property. This allows you to spread out the risk and avoid being a landlord while still receiving rental income. You can have someone else run the operations side. Monthly check, but much less work. 

Another option to consider when selling your rental property is to take advantage of the home sale exclusion rule. If you have lived in the property for at least 2 of the last 5 years as your primary residence, you may be able to sell the property and avoid paying capital gains tax on up to $250,000 (or $500,000 if you're married filing jointly) of the profit from the sale.

I hate the idea of paying uncle sam any money. So I always try to find ways to deter paying that 20% haircut.  

 I think it varies from state to state. But typically, no. Attorneys are only usually used when things get complicated or messy. 

Some states traditionally have attorney's offices conduct the closings. But many other states use title companies. As long as you have a good real estate agent, and read and understand your real estate contract. You don't need an attorney. 

I was just trying to say that Attorneys can sometimes be used to draft clauses and amendments to standard real estate contracts. You definitely don't need one. But they can be helpful when things are less straightforward. 

*Edit* - Or you can use an attorney if you know the buyer and or seller and want to avoid paying realtor fees. If you know the Buyer or Seller and they don't have the property listed anywhere. You can avoid paying the 6% realtor commission fees by using an attorney. We have a high hourly rate, but even still it is unlikely to cost as much as 6% of the purchase price. 

Based on your budget and investment goals, Cincinnati and Cleveland could be good options for you, especially if you're looking for areas near hospitals that could go the short term nurse rental route. However, keep in mind that every market is different and there's no one-size-fits-all answer to your question.

If I were starting from scratch and could go anywhere, I would focus on finding a market with strong job growth, a diverse economy, and a growing population. These factors can often indicate a healthy real estate market with potential for long-term growth and appreciation.

In addition to these broader factors, I would also consider local regulations, tax policies, and other factors that could impact your investment. Some places may not allow STR or MTR type rentals or have a high tax on such rentals. Ultimately, the key is to find a market that aligns with your investment goals and risk tolerance.

I hope this helps, and good luck with your search for a multifamily property!

Hey there! As an attorney, I think I can provide some insights:

When it comes to purchasing an investment property, it's always a good idea to include contingencies in your contract to protect yourself. Some common contingencies include financing, inspection, appraisal, and title contingencies. These contingencies give you an out in case the property does not meet your expectations, or if there are issues with the financing or title.

In addition to these standard contingencies, you may also want to consider including specific contingencies that are unique to the property or your situation. For example, if you're buying a property that needs extensive repairs, you may want to include a contingency that allows you to back out of the contract if the cost of repairs exceeds a certain amount.

Regarding who writes the contract, it's typically the responsibility of the buyer's real estate agent to draft the contract. However, in some cases, the real estate agent may provide a standard contract template for the attorney to work from, or you may want an attorney to draft the contract on more complex deals. 

I hope this helps with your research. Good luck with your investment property purchase!

As an attorney, I've got a lot of thoughts on this. To put it simply, you probably don't need an attorney for what you're currently doing. While an attorney can be helpful in some situations, for deals in the $100k-$150k range that don't have a lot of legal complexities, it might not be worth the time or money. It's important to check who holds earnest money in your state, as it can vary. Your mentor may be in a state where attorneys handle the closing process.

One issue with involving an attorney is that it can make transactions more complicated, as they may view certain aspects as risky that an investor is okay with. For smaller deals without many complexities, it might make more sense to proceed without an attorney.

It's worth noting that there are some situations where involving an attorney is recommended, such as with probate deals or foreclosures. However, for most deals in this price range, it's likely unnecessary.

That being said, I don't think real estate agents are worth their expense either. Their commissions are often much higher than what an attorney would receive for a similar amount of work. In the future, if you become more comfortable with the process, you could consider writing your own offers to make them more competitive. This can be simple once you learn the process, and it can be more enticing to sellers because they can end up with more money in their pockets.

If you do decide to engage an attorney, it's important to find one with experience in real estate transactions. Not all attorneys have that background, so it's crucial to do your research.

*Edit* Almost any contract used by a real estate agent was reviewed by an attorney at some point. These contracts are just plug-and-play now.  Just know what contingencies you have, and get title insurance. I might be coming at this a little biased because I am an attorney and understand the process. But I swear it's a lot more simple than people make it out to be. You want contingencies so you can walk away from a deal if you find out it's a bad deal. You want to make sure that there are no restrictions on the property that stop you from using it the way you want. And you want it to make you money. 

Here are some thoughts off the top of my head: 

Monthly Tasks:

Collect rent from tenants and deposit it into your account
Check and respond to any tenant requests or concerns
Pay any bills or utilities that are your responsibility as the landlord
Update your rental property accounting and record keeping

Quarterly Tasks:

Change air filters and inspect HVAC systems
Check and clean gutters, downspouts, and drainage areas
Test smoke detectors and carbon monoxide detectors
Conduct a property walk-through with tenants to address any issues or concerns
Evaluate current rental rates and compare to the local market to ensure you are charging a fair rent price
Inspect the property for any needed repairs or maintenance

Yearly Tasks:

Renew or update leases with current tenants
Conduct a deep cleaning and inspection of the property
Check and replace any worn or damaged appliances, fixtures, or equipment
Evaluate and adjust your rental property insurance coverage as needed
File your taxes and ensure all rental income and expenses are properly reported

Additionally, look at fireplace here on biggerpockets. They have some good checklists. 

https://www.biggerpockets.com/...