All Forum Posts by: Bill Gulley

Because you can't get a HELOC on rental property, you might get a commercial line of credit. It's Home Equity Line Of Credit, not Rental Equity LOC.

Dante, they  are the same, a portfolio lender holds the loans they make, but hey can sell them as well, a commercial  lender usually holds as well, but it gets much deeper with participation loans where one lender may "sell off" part of a loan.

You can't cash out on conventional secondary market non-owner occupied loans any longer,  you'll need to go commercial, a bank may do so, but they will not be "booking"  the loan on the residential side. At the street level, it makes no difference what lender you go to, but you will have different loan to values, experience in management, tax returns, rates and terms on the commercial side.

BTW, I'm not a fan at all of lines of credit as they can be terminated at  whim. :) 

@Mindy Jensen

There ya go! :)

Actually, options that are greater than 12 months are viewed accounting and tax wise as an installment sale, unless you can show the buyer has no intention of buying, how about that, an option to buy but no intention to buy, LOL. If the property was in service you'll recapture depreciation, hope the option price covers the taxes due! And, with owner occupants, like I mentioned,  it will  be considered an installment sale subject to Dodd-Frank......

:)

Then @Cody L. might puke when he learns a note is a security and the kicker of expected profit for a lender can still trip SEC requirements. 

In real estate, it's not so simple as to make a loan and agree to additional unknown profits for a lender,  everything a lender makes from a loan can be considered interest, regardless of when it is paid, future unknown amounts effect usury laws, points, the status of the lender and their relationship in a project or enterprise. That is not healthy and it can cause you more issues than a simple puking.  

The proper structure is a partnership with one partner making a loan to the partnership,not to a "partner". 

BTW, the TIC I mentioned allows a lender to advance funds to acquire, maintain, operate, improve or conduct related business, being in title keeps the lender status at arm's length generally, allowing an owner to manage isn't an issue like a third party manager.

Another point,  where ever three or less gather together they may be excluded from SEC requirements, risk accepted is related to management, but the management tasks may be different.  This all goes much deeper than the three inches below the surface where inexperienced real estate operators/investors frolic along with W. J. Howey Co. and his demise. 

Don't wear a lender's hat and the investor's hat at the same time, pick one and be happy!  :) 

 True, my exit was usually at 7 years, the max holding period could be longer, each property and tax obligation is different, just need to run the numbers. By 15 years, most any investment begins to turn red. Get while the gett'n is good!

I do have another saying, "if it don't eat any hay let it graze".  Depreciation is the nature of the tax beast, it's not always the driving force in a portfolio. :) 

Explore Tenants In Common (TIC) and is most common for apartment owners who don't want or can't go with a condo form of ownership. Your TIC Agreement governs the owners and it is not considered a security between owners in title. I suggest you speak to an attorney and your CPA, to gain any real insight in public forums you really need to know who to listen to. Good luck :)

@Rachel Fazio

Your tax advantages begin to drop in 12 to 14 years, you shouldn't be waiting until they disappear, gear your exit around 15 years. This may be in sync with your maintenance schedule, you might get by without ever replacing a roof!

While it is true that not all options are taken, that does not mean load up unqualified buyers with options, that is predatory dealing and predatory lending when credit is given toward a purchase price.  

No, your actions or deals do not need to be outrageous and you don't need to lie and con your buyer to be predatory or deal illegally. Most of the violators are simply unknowing, much of that comes from the guru hype you're reading on BP and elsewhere. 

The "slip up" shows an attitude, profit from the failure of your buyer, when you are the one who is responsible (in real estate) as an operator, dealer, investor to ensure your deals are more than reasonably able to be successful and close as agreed. That comes` out by the insinuations made in that book  you're holding as some holy grail, it's guru stuff and does not teach real estate, fair or ethical dealing or legal implications of being an operator in real estate. 

You can be held responsible for the situation you put other people into, any financial loss they suffer because of your actions or lack of actions when you should have known as a dealer-operator or investor! You don't have to be outrageous or con anyone.

These issues are compounded dealing with low income people, might as well look at these "buyers" as a protected class, they are seen as the most vulnerable, least educated or business wise who may be the easiest to take advantage of,  just a fact.  It's kinda like pick on someone your own size.

Didn't say this "class" was dumb, they can be very clever, they know they have legal aid and you don't. And who do you think cries out "poor me, please help me", the person with a decent job making money and paying their  way or the financially troubled type without means? There are many organizations out there that serve this population and they can cause you grief if they even think you're screwing  their client.

This is also true in the moderate income levels to a lesser extent but still needs to be understood. 

Contrary to investor/dealer thinking, everyone is not fit to own a home! 

 If someone lacks home ownership skills and the financial ability to buy and maintain real  estate, then forget them as a buyer, rent to them and I would suggest Section 8,  let the PHA deal with the financial and social matters. 

I've been around this stuff for more than 50 years, I've worn many hats in this business and low-mod housing is not for newbies trying to sell homes. 

My BS Meter blasts off when I hear some unqualified type say they are trying to help others in home ownership, total  BS, they aren't running a charity operation, their goal is to profit. Secondly, I know that they understand this lower income group is easier to deal with, they can be naive, trusting and  simply lack business sophistication, that means they see them selves dealing with an advantage, if they deny that, they are lying to me and probably themselves, either that or they are really ignorant.

Learn real estate, learn basic business operations, before reading guru wheeler dealer junk on the internet thinking you're getting an education.......not!  :)    

@Don Spafford

You almost had it, you buy with them in a TIC, Tenants In Common, a TIC agreement governs use and ownership as well as other details. Do not use a lease-option with tenants!

Their ability to buy you out is in the TIC Agreement (TICA) and this is generally not filed for record.

SS# or not, there are many laws governing lending with owner-occupants, like Dodd Frank which could be tripped by a lease-option having a term more than 12 months. 

Being in title with your "buyers" mostly keeps you out of a lender status, however you still have compliance matters dealing with a certain nationality in real estate. You need a clean and fair deal to stay out of "concentration of business" issues and predatory dealing/lending arrangements.

Another issue, you all ready  know they cannot obtain financing for a conventional mortgage, this means they are not qualified buyers, giving them an option is pointless and predatory dealing, knowing they can't meet the obligation reasonably. 

Your TICA can go out 15 or 30 or more years, they can pay you and buy you out over time without a mortgage. A fully amortized installment arrangement. They are buying shares of ownership under your TICA.

A TIC can be refinanced, since you are in title you would be the primary borrower.

You need two folks,  a RE Attorney and a good CPA/Accountant initially. 

You might own 15 homes your way, this way you may own say 1/3 interest in 50  homes, which increases your net  worth?  You can also have administrative control without a majority interest under your TICA.

State laws vary, all states allow a TIC ownership, but you need to see an attorney, small price to pay to set up a great business. Good luck :)

Looks like an underground home.......ooops, no, it's a gable roof on an upside down picture of a house.

It's a variance with a higher center gable with lower gables at each side, a little more interesting than a straight gable breaking up the different areas of the house. 

That one needs gutters too!  :) 

Call a title company in your area, where the collateral is located. They generally use a standard note and deed of trust, this is pretty common stuff, they (and their attorney) will most likely be the cheapest way. It's commercial, so you aren't under loan compliance matters for servicing as a residential lender. Only doing one private loan, you don't need registration in Il. Tell them it's a blanket loan and your borrower needs a title search on each property $$$$.

I'm not saying don't seek qualified legal advice, just saying this is pretty slam dunk stuff at a title company and they can give you title coverage on your loan. :)