All Forum Posts by: Gerald Jordan

Thank you. I shall throw the appraisal at the community but for now I am going with what the DC tax has stated. I know for sure the balance on the mortgage is 80K but the appraisal may as stated be low. It was purchased at 249K but there have been some renovations and there are items that I shall have to repair. I must wait until the transfer has completed before I work on the unit but I am putting a strategy together once the buy out is complete. 

Quote from @Randall Alan:

@Gerald Jordan

A few thoughts... assessed values are almost always low.  Most taxing districts subtract a percentage off the actual value of the property to not have so many people complaining about their tax valuations.  So anticipate your appraisal being higher than that.  From your post we don't know what the new balance on the loan is (ie. was it a cash-out refi or just a rate and term refi).  But if you said the house was worth $380,000 - just to pick a higher number - you would each be entitled to 'about' $190,000 if you were to sell the house (less expenses... which would probably be about 6-8% if you are talking 6% commission and closing costs.  Using 6% for closing that would be $22,800 less you would net... so more like $357,200 - then less the balance of the mortgage - which if we used the $249k as the balance... that would be about $108,200 that you would normally split.  The house would likely get a step-up basis in value I would think due to how it was transferred... so there would likely not be any capital gains taxes I wouldn't think. 

It would be fantastic if you could assume the mortgage at the lower rate, because today's rate would be in the 6's and cost you a lot more to hold the property.  That would be a phone call to the lender to determine.   If you have other assets to distribute that you could compensate your sister with you might have a path to assume the mortgage yourself... but if you have to pay her off and the house holds the majority of the proceeds, it would seem like you might need to cash-out refi the house to be able to pay her off possibly?  You would lose your good rate on the house at that point and likely be in the 7's on a rate if I had to guess.

Another path might be to rent it out and split the proceeds each month with your sister if that makes sense?  The house would hopefully continue to appreciate, so would always be an asset for the two of you down the line.   

Using real (ie. closer) numbers, you would just need to run the numbers and see if the property makes sense to hold given what rents are in your area, and what your expenses would be. For myself, for a rental, I am usually looking to make at least $300 a month after Principle, Interest, Taxes, Insurance, and a maintenance reserve of around $100. There are other expenses to think about... like Capex, and vacancy, and property management if you will be using that. But just run your numbers and see what they tell you. If it makes money in today's market, I would say try to keep it. If it doesn't... it would probably be best to sell it.

All the best, and condolences to your family!

Randy

 Yes Randy .... the District has given an assessment as I viewed the first tax documents that my mother has been sent for the 2022 tax year. There is a parking space that my mother kept as it came with the condo she bought. My uncertainty was paying off the mortgage or keeping it as I would assume that and a loan to buy out my sister, she is not interested in the condo and I would be the sole owner. Thank you Randy.

Quote from @Tom Gimer:

@Gerald Jordan Keep the 1st in place per federal law and continue paying it. Buy out sister with a 2nd/HELOC as you structure things within the estate properly and deed out to brother as sole owner. There would be no "transfer fees" other than the recording of a personal representative's deed which is exempt from transfer/recordation taxes plus perhaps paying a probate attorney for assistance. Good luck.

I really find this appealing and shall place this in the front of my mind. I told my mother before she passed that I have no intention to sale the condo. She worked for it and I shall do my best to keep and rent. I really like the "no transfer fees" as my aunt who owns houses in Ohio was throwing those fees at me when discussing the property. The first thing she was telling me .... sale the condo. Not this time.  Thank you Tom

Thank you Theresa. I am waiting for the appraiser now which my cousin is overseeing due to my mother selecting her to work the probate aspects. I tried to direct my mother to put everything in trust but she was not able to move in that direction at that point. Even though a will was in place I see the disadvantage when the administrator has to deal with probate rulings and procedures. My sister and I are on the same page but we feel my mother was speaking either with the accountant or the lawyer, just not sure.  

My sister and I are going to receive the condo my mother purchased for 249K and she refinanced it about a year ago for a 3.49%. I could not talk her out of this as I wanted her to pay the  mortgage in full. Although in good health she fell inside her home and did not recover. My sister does not want to keep the property and would rather I buy her out. That is what I look to do and currently the District has accessed the property at 348K. We are yet having a realtor to do an assessment according to the probate court, mother had a will but this is what the executor is wanting to do so that there are no issues amongst all parties involved. My sister and I are on the same page and the difference is I don't intend on selling the condo. I would like to get the BP community input as to what is functional and mutually beneficial for both my sister and myself. Transfer fees that have to be paid and the mortgage balance, I am thinking must be paid before any moves are made. I am open to what the community feels is best practice. Thank you 

@Todd Pultz By the way Todd as they say small world, I am from Dayton Oh and left WSU and went to school at HU. You may know my uncle, Byron Mayberry has been active in RE. So there we have a commonality.

@Todd Pultz Good information Todd. I have not given the approach a thought and this is some great information for me to churn on and begin to incorporate. I have held the LLC now for about a year and a half and have begun to think of the next property purchase under the LLC. The accountant I work with suggested that I not use the LLC for the first property as I did receive some perks and being that it was a foreclosure I was able to walk away with 6K in equity from the start. I tried to offer a price but the bank came on strong and my realtor said they are not going any lower. I received a small schooling at that time. Basically, I have done well and I had felt using the LLC for the next property shall be a go. Thank you!

I agree with Brett, I did not use my LLC for the property I purchased a year ago. I have the business so that I could acquire a property, weather it be a house or a commercial structure, so that I can operate the wellness center I am planning. Keep it simple for your first property. There are discussions on BP which make it clear that an LLC is a choice and not a mandatory position to take for RE.

That is a practical approach but I feel at the time the other two are being uncooperative and unwilling to do what is advantageous.

Thank you very much for both of your responses and I am going to convey these two responses. I am in the same feeling that she needs to get a lawyer from Virginia, the state where A resides but she tells me that this is not allowed and that complications exist as to statements and records from each. All this is in regards to a house being sold in Panama if I am correct. In my view I feel the three of them are going to end in the property being sold and the transaction costing them rather than gains being made. Two of the inheritors are not savvy about Real Estate where as my partner is so her struggle is with their refusal to see how the property could be a tremendous gain.