All Forum Posts by: Account Closed

@Al Wilson

Is that 12% a flat percentage based on the total loan value, or is that the APR?

@Kevin Yoo

Re 1) My plan was to be the only person on the title, but both being on the title sounds like a potential simpler approach.  If we were both on the title, how would property gains tax work out?  Would we have to split it or could I pay the entire amount of the capital gains?   If he would be expected to pay any capital gains, I think we would go with me as the only person on the title.  I realize this question may be better suited for an accountant.  Thanks for all the info contained in your post!

I have never done a flip with a private loan before, but a good opportunity has presented itself and I know someone who is interested in partnering with me.  The way it would work is he would fund the purchase and rehab costs with cash.  I would buy the house, renovate it, sell it, and give him a flat percentage of the amount he loaned.  I have a few questions related to this.

1) How do we structure this deal between the two of us.  How does he protect himself if I were to skip town ,die, or just decide not to pay him?  Do we write up a lien?  How is that done?

2) What is a normal percentage to pay to a private lender?

3) How do we go about putting in the best and strongest offer?  Does the seller need to know that the money isn't my own?  Does he give me the loan before the closing, or does the money go directly from him to the seller at closing?

Thanks in advance, I'm sure I'll have more questions to add to the thread as the discussion gets rolling.

@Bill Gulley

How is fixing a broken pipe an improvement that would be added to the basis rather than a repair? It adds no value to the house.  I don't see it as trying to reach into my tenant's pockets.  He caused damage to the pipes by not keeping the temperature within the range that he agreed upon in the lease, and I need those pipes back to the way they were before he moved in. 

Are you suggesting that if I fixed the damage myself at $10-$20/hr plus materials (taken from security deposit), that would be a sham transaction, but hiring a plumber at $80/hr plus materials (taken from the security deposit) would be more fair and honest?  Or are you suggesting that I don't have the right to charge my tenant for these damages?  I'm honestly not looking to cheat anyone, I'm not that type.

I understand your statement about the work not being at arm's length, and I appreciate your insight there.  I can see why that would look a little suspiscious. I've heard of it being allowed for Landlords to charge for their time for labor in repairing damages in some states, but I wasn't sure about Virginia.  However, given your concerns about the IRS and potential fraud charges, it doesn't sound like a bad idea to just pay a little more and have someone else do the work.

I plan on collecting from the security deposit.  Much of it is used up, but a few hundred remains.  I wouldn't go to court for a a couple hundred dollars, if my expenses went beyond the security deposit.

Hi everyone,

My first tenant, who was a complete pain in the neck, decided to take my incentive and move out early.  I got a bottle of champagne and had a little party to celebrate... seriously, I did.

The problem is that he let the propane tank run empty and didn't heat the house properly, so now there's a water leak from frozen pipes.  It's in the lease that he's responsible for propane and also responsible for keeping the house above 55 degrees to avoid damaged pipes.  Luckily, I had a contractor come in one day to inspect the windows that he was complaining about (no problems with them, as I told him the first time).  That day we saw that the propane tank was empty and the temp inside was 42 degrees, so we have documented proof. I already have to take money out of his security deposit to cover money that he owes me, and I don't think there's enough left in the security deposit to hire a plumber.  Knowing that I don't want to take him to court for what the security deposit doesn't cover and that I don't want to take a loss, I was planning on doing the work myself, which I know I can do.

I know I can keep receipts and charge him for materials, but in Virginia, can I also charge him for my time making the repairs?  If so, is there an hourly limit?  I'm not looking to screw over my tenant, and I'm not looking to make a bunch of money on labor.  I just want to be reimbursed for the time I spent fixing what he broke.

Thanks for your responses!

-Joe

So my contractor checked out the crawlspace and underneath the area of the house where the tenant smelled the "mold" the worst, there was some standing water and moisture.  He didn't see any mold problem, but recommended having a sump pump installed and some additional ventilation since it could cause a problem in the future.  He also said he does notice a musty smell, but no mold.  So the plan is to go with the contractor's recommendations

In the meantime I told the tenant the plan and offered the tenant an out.  I said that if he still has concerns he can leave within the next three weeks and not even have to give me any notice.  I'll refund any remaining rent and I even offered to pay toward moving expenses, all because I really don't want to deal with this guy for the next year. I really hope he takes the offer but he hasn't indicated that he has.

My contractor is working on the sump pump and ventilation now and he just sent me a text complaining about the tenant.  The tenant seems to want to remove the water heater and toilet to look for mold, even though no mold is visible.  This jives with past emails he's sent me, telling me mold can be hidden in walls, around toilet wax rings, etc.  Sounds like he wants me to rip the house apart trying to find imaginary mold.

How do you deal with these people?!!!

I have a tenant  has allergy problems.  He moved in a week ago and immediately after moving in he complained about not being able to breathe because "the air ducts needed to be cleaned".  After running the HVAC for a couple days with a new filter, he said he no longer has that problem.  Now he says he smells mold in the half bath.  I checked it out and I don't smell anything or see any mold.  I honestly believe that he at-least THINKS he smells mold and that he isn't just trying to get out of the lease.

What would you do?  Do I pay hundreds of dollars for an air quality test when I see no evidence of a problem?  The problem with holding him responsible for the cost of the air test if nothing is found is that there is no clear pass or fail for the test, so he could say "well there is a slighlty elevated level of this type of mold which normal people aren't allergic to, so you have to pay because I was right... Now go fix the problem"

Ha! I was considering that response, but opted to send nothing instead

@Jon Holdman 

That was a very clear explanation and really helped me to understand.  You're right about getting a CPA, and I'm looking for one now.  Thanks for your response!