All Forum Posts by: John-David Herlihy

Any upcoming meetings? 

@George Blower @Dmitriy Fomichenko this is completely academic question... The transaction is really the SDIRA creating a note for the buyer, and not buying or selling the underlying property. Wouldn't the SDIRA be doing business with the tenants/buyers and not the seller IRA holder? In this way couldn't you argue that the transaction isn't with a disqualified individual?

@Rich Hupper I unfortunately don’t have any experience with the combined foreclosure and MassHealth/Medicaid situation to give a helpful or insightful answer. I am not even certain if a MassHealth lien would be senior to the 1st mortgage. I know tax liens are senior to everything, but not sure how the MassHealth ones are handled. I’d ask my lawyer for her thoughts, but she charges me by the hour for these issues :-0

As a partial answer from my understanding, if you can substantiate FMV you should be good with MassHealth and/or Medicaid.

I have had similar opportunities. In the one I am working through now MassHealth has a lien on the property which is more complicated as the house is being purchased at a deep discount due to the distressed nature of the home.

I don’t think this instance need be overly complicated if there are no liens. If you purchase the house for more than what is owed on the mortgage, than the foreclosure issue is taken care of.

In my experience with Medicaid the seller would not be eligible for Medicaid until after the house was sold. Once the house is sold, the seller will have to spend the proceeds on their medical care and other normal expenses. Once they have spent all their money (I believe you can have no more than $2,500 in your bank account), Medicaid kicks in. The proceeds from the sale would also be used to pay off any unpaid medical bills etc.

So if they already are receiving support, make sure their is no MassHealth coverage currently, which could lead to liens and more complication. The patients can often be confused by the difference between Medicaid and MassHealth, using the names interchangeably. 

I have had Medicaid question the sale of a house retrospectively, questioning the sale price because we bought below FMV, however, a letter explaining the price based on the "as is" condition of the house and the expenses required for renovate to get the house to FMV was sufficient. Doesn't sound like this will n ecessarily be the case here, but to help the seller in such a case, as an agent you should be able to prepare a BPO of the property "as is" that they can use for this purpose should it be required.

You will not have to conduct lead abatement until the unit is occupied by a tenant with a child under 6 years old. 

There are many houses listed in Springfield that promote lead free, so if you are really tentative, those would be good options.

With the DIY home test kit for your personal home, remember, if you know there is lead you will have to disclose to future buyers. If you have a child and are concerned about lead then I would skip the home test kit and hire a professional. I have seen somewhat ambiguous results from the home kits and wouldn’t bother again. Of course, our painter just tasted a flake of paint to test...

The person referred to in the podcast could have started a Roll-over Business Startup (ROBS) with their 401K funds. In this system you establish a C Corp with a 401K plan. You roll-over existing 401K and/or IRA funds into the new C Corp 401K plan. The 401K plan then invests in the C Corp, thereby funding the C Corp with your 401K plan funds.

With a ROBS you can work in the C Corp funded by your 401K plan. You can work on houses that you purchase and resell. You CAN NOT live in the house(s). Similar to a self-directed plan you also need to be cognizant of transactions with disqualified persons, including yourself.

It is commonly said that for investing you should only use LLCs; however I believe, for fix-n-flip investing a C Corp is a good organizational structure. The ROBS method is a viable way to fund a fledgling company.

Do you know how long ago they put the sign up and sidewalk in?

I would have a discussion with a lawyer immediately and find out what the real situation is and what your rights are. With that information you can then make decisions on how to proceed.

I am not an expert in this field, but it seems to me this would be a disqualifying transaction. If it is by chance technically “OK”, it appears to me to be skirting the intent of the regulations around disqualified persons.

Who's name would the 5th Maryland LLC be in? If it is a lineal descendant I believe that would be the major determinant.

Looking for advice. I have a lead on a house with a USDA mortgage. The owner has defaulted and the foreclosure process has started. The house needs considerable work that she is not willing/able to do to sell on MLS.

Anyone have experience with USDA Mortgage Short Sales? Are they willing to negotiate. Seller indicated they were not willing to modify loan.

So what do you all think is the actual CAP Rate in Holyoke? I have a lead on a multifamily in Holyoke, but I am struggling to settle on a CAP Rate to value the property.