All Forum Posts by: James Barnes

Is there a way to fix the countertops without replacing them? Buff them out(sorry, not familiar with quartz personally)? If they can be fixed without replacing then I would charge her the fee of repair. If they need to be totally replaced then you may be out of luck and put this one down as a hard learned lesson about having "very nice" things in rentals...

Or you could just take the entire SD for the damage that way you feel as if you atleast got some reimbursement for the damage...

It's been brought to my attention that a intra-family loan may have tax implications if not done correctly. The current deal I'm working on is going to go down like this:

Bank loan:

120k Conventional 30yr Fixed Rate. 80k of that loan is going to the actual pay off of the sellers existing loan. The seller in this case being the Mother-In-Law. 34k is going to "repairs" and the rest is being used to roll in closing costs that way it's no money out of pocket at closing. The seller will get all of the 114k(120k-6k for closing=114k), pay off her mortgage(80k) and use the remaining(34k) as a "gift of equity" and return that cash back to us for repairs. That's the "official" part of the loan that's being done by a Mortgage broker/lender.

Seller financing:

The other part of the loan is going to be around 120k over 30yr seller financing. We were wanting to do a interest rate as low as possible, maybe even 0%, but it's been brought to my attention that there could be tax implications if done this way.

What tax implications would the provided scenario have?

Anyone with experience doing intra-family loans that could give my advice on what to do next?

is it RE attorney time?

Thanks ahead of time for the input

James

@Randy Landman

Good point Randy. I was actually curious about this because I had heard of this before but considered it to be just rumor. I'll make sure to dot my I's and cross my T's with a tax expert. I spoke with my lender just yesterday, he doesn't seem to be worried about the tax implications because I had actually brought this very same point up to him(he's investor savy as well). I will make an appointment to talk with a tax representative to dispel the rumor, one way or the other.

Uncle Sam's a B****

Thank you for the input.

James

Kudos James,

Agree with the above poster, great podcast. Just listened to it today for the second time. I think you were the very first person to comment on my new member post and that's much appreciated! Thanks for being a a huge contributer to BP Mr. Wise and congrats on your accomplishments!

BTW-Cool name ;)

James

Hello Tammy,

It's nice to hear from you again! I just keep finding what look to be deals in Lexington park. Being that it isn't the "best" part of town I was curious about Section 8 rentals. Are we still good for next Thursday? You pick a place and I will accommodate you. I discussed the meet-up with my wife and we are excited! Time to get all of my questions on paper that way I can pick you brain :).

Thank you for the feedback by the way.

Have a great day Tammy!

James

Thank you @Michele Fischer.

I have searched for a couple of property management companies in my area, started reading reviews, and of course they say "we manage ALL types of properties. Typical fees are 7% to 11%. I'd be curious to see if they do.

I am going to go listen to your podcast right now before I ask anymore questions.

Thanks for feedback Michele. Much appreciated.

James

Gooood morning BP community,

I'm looking to get some info on Section 8/lower income areas particularly in MD, but I believe the same strategy will work in most low income areas. Any MD investors or low income investors, please chime in.

In my search to obtain buy and hold rental properties(3/2's) I have come across many houses that are priced extremely low. These properties are not in the most desirable neighborhoods but are also not considered warzones. These 3/2's meet the 2% rule by far (just found one for 32k($48 a sq ft) that would need about 15k in repairs). ARV is around 130k in this neighborhood to be conservative.

I know most investors say location, location, location but if you have a good property management company in place to deal with "low income problems" wouldn't they be a good deal?

Also, how does one get into section 8 housing? What hoops do you need to jump through to become a section 8 landlord? I don't really see how you can go wrong(if your okay with being a section 8 landlord) if the rumors are true about section 8. A tenant moves in, pays what he/she can pay, the state makes up the rest and after the tenant moves out the state pays for repairs?

Do I have that info right?

I mean don't get me wrong, I'd love to buy in great neighborhoods as well but the 2% rule makes options limited.

Can anyone with experience elaborate?

What are vacancy rates like with section 8 tenants? How do you go about finding tenants?

Thanks for the help in advance BP!

James

Just read this and WOW! Now that's a negotiation! I hope my numbers game gets as good as yours one day! How'd the deal go?

James

You have a hugggggeeee advantage compared to people that have no building experience. I think you need to be more specific on what you want to do and what you want to invest in. There are so many options and it may more helpful if people knew what you were interested in pursuing. SFH,Multi's, Apartment Complex's? Buy and hold...flipping? Maybe you would like to do them all! I know one thing is true- you wont have to hire a contractor to do the work(lucky you)!

Welcome to BP and I wish you the best of luck!

James

Seems as if you need to study a lot of what @Brandon Turner does. His "empire" is built around creative financing. His book is pretty good and explains different methods(all of which you can learn here on the site as well). I'm in the same boat as you! Not a whole lot of capital but as you'll find on this site, you don't necessarily need any of your own money. There has to be "money" for a deal but not "your money".

There are many loan options that are low money down. Do some research on the site(unlimited info on here, almost overwhelming) and I'm sure you will be well on your way. My REI knowledge has grown substantially over the past couple of months, all thanks to BP!

Good luck on that first investment deal! Oh and I've seen that a lot of successful people on BP have started off as just regular homeowners, so, there's hope for all of us!

Have a good day!

James