All Forum Posts by: Jarrod Williams

@Account Closed Great thing to keep in mind.  Thanks Ken.

@Account Closed Assuming they put down 3.5% on their original loan in 2012.  I worded that poorly.  Just meant to explain that I was basing the mortgage payments on $205,500 ($213,000 - 3.5%).  Taxes and insurance wasn't calculated into that.  Taxes would be about $2100 for the year, insurance about $1300.

Hey guys.  Trying to iron our the details of "subject to mortgage" deals and finding little examples out there that actually walk through the numbers.  So I made up a real example from my current market and I'd love to get some feedback about the various parts of it, do's and dont's, things I am missing or need to look further into, etc.  Please refrain from discussing the merits of this strategy as this is more for understanding everything more thoroughly.

Home listed on my local MCC website.  Individual owes $205,380.01 (5/26/17), paid $213,000 in 2012.  Appraisal amount for MCC is $235,000.  I think this is way low and in the current market would sell for $265,000+, supported by recent comps.  Plenty of room in the nieghborhood for appreciation with homes over $450,000 in the area.  Median sale price in the neighborhood rose 7.7% last year.  I know the area well and expect that to continue if not increase.

Example offer:  Offer the owner $220,000 subject to mortgage.  I pay the owner $14619.99 and take over the mortgage payments.  Mortgage payments based on around $205,500 assuming they put down 3.5% would be around $972.  The owners are a family that would love to stay in the unit.  I offer to rent it to them for $1000 a month.   This covers the mortgage and I just gave them 15K so it buys them a couple of years to stay in their house.  We agree to eventually increase the rent to something comparable once they get their finances in order.  If all of this works well once they eventually decide to move I can sale the home for around $250,000 x 7% for the # of years they rented.

I took this all the way out and made a ton of assumptions just to get the dynamics out for discussion.  Again, please don't focus on whether this is a good or bad idea but rather is this how it would work?  Thanks.

@Kurt Kwart: Could you expand on that please?

@Account Closed Will do.  Thanks for helping with the conversation.

@Account Closed In your example above, what is the 1.155?

@Account Closed Yes, relating to Kentucky.  I read all of those but didn't feel like it answered my questions or at least I'm still confused.  Have you had any experience with short-term rentals?

In addition to that where do you go to find out such information.

@Jeff B. What do you mean clarification from the officials?  A CPA or someone associated with the city?

I am trying to get my barrings straight on taxes, fees, etc. associated with short-term rentals.  In my state short-term is considered less than 30 days.  According to my reading once classified as a short-term stay I am required to collect sales tax (6%), hotel tax (8.5%), and a state fee (1%).  Many questions in regards to this:

Most of my stays are over 30 days.  If I have someone come for 1 week and then return to the normal longer stays do I just charge the taxes for that single occupant or does that make my entire unit subject to the taxes or is it some average of length of stay?

The occupant is supposed to pay the fee.  If I roll the whole thing into the rent and don't specify the taxes is that okay?

Anything else I should know that I am missing?  I have been unable to find much information regarding this stuff.