All Forum Posts by: Duane Angell

Also one more thing; please help me understand (again I am new):

Your Numbers:

Sales Price: $139,900

Debt Service (Assuming 80% Loan-to-Value ($111,920) and 4.75% Interest Rate): $583.83

Monthly Cash Flow: $221.74

Cash on Cash Returns (Assuming 20% Down payment ($27,980)

9.51%

Let’s say all of your costs are correct and your cash flow is $221.74 and I make a down payment of 20% ($27.9K) on my new 30 year mortgage. There is additional cost associated with closing on a loan correct? These costs would be a few thousand?

But you did say cash on cash returns assuming 20% down; not 20% plus all the other fees.

I Just thought of another question. Do most banks let you rent out a house after you get the loan? For investment property can I keep that same good interest rate of 4.75% your numbers are based on?

Sales Price: $139,900

Tax appraisal: $108,000 (ruff est)

Taxes Per Month:$210.77

$210 x 12 = $2,520 YR

$108,000 @ 2.6% tax = $2,808

2.6% on $108,000 is $2,808 / 12 = $234 Month

1.8% on $108,000 is $1,944 / 12 = $162 Month

I pay 2.6542% on a homestead in Brazoria TX

Every area is different

One of the comps you gave (per zillow):

1)$132,500 (http://www.zillow.com/homedetails/509-Patricia-Rd-Hurst-TX-76053/29134408_zpid/)

Year Property taxes

2012$2,880 $109,400

Thats around 2.6% TAX

IS THIS YOUR TAX WEBSITE??

http://www.tad.org/Webpages/taxrates.cfm

http://www.tad.org/Webpages/TaxRates/2013_tax_rates.html

I think the numbers you have for your tax is correct but not the percentage you think you may pay.

The Value of Comparable Properties you gave:

$132K

$132K

$158K

So Im to understand your selling this property at full market value?

$139K

I would agree your maintenance fee seems small @ $20; you do have the loan Amortized over 30 years. I would think at some point....

You have Insurance at $980 a year. This seems like a good deal for insurance on a loan; I would keep their number. Do I need to add my car to get that good rate?

Please forgive me. I may be way off on everything. I'm new to investing and new to this site as well. This is only my 10th post..

@Sharon Tzib

Thank you for your reply here. I'm new and without someone like you pointing out things or asking questions people like me would continue to make mistakes.

@ Everyone; Agreed...

Also keep in mind is not only monetary contributions.

You are in fact prohibited from providing any services that would be considered a contribution towards your IRA.

Such as; painting the property yourself, buying a $1.20 light bulb yourself, purchasing a property from yourself/family member, renting the home to your sister or even paying your brother to mow the lawn with IRA/personal funds.

Any prohibited transactions could result in your entire IRA to fall out of tax exempt status. At that point the IRS would consider the full amount as a cash disbursement and you would owe tax and early withdraw penalties.

Also keep in mind and cash contributions you make need to be through your "IRA" account and not the "LLC" you set up under the IRA.

You can always do some of the work yourself or funnel a few extra funds into your IRA account (exceeding the 5K); at least until you're pissed off "now" x-wife or family member turns you in to the IRS for some preposterous reason.

I am also new; my 1st month investing. I'm closing on my 2nd house next week and both the properties I have bought were foreclosed homes. It was not my intention to seek out foreclosures. I just looked for properties that fit my criteria and made an offer. Offer was accepted and I got an inspection to make sure there were no surprises that I was not equipped for.

I think everyone will have a different opinion of foreclosed homes. Mine is that it all comes down to the numbers. If all the numbers align then who cares.

The owner still has "intent to return" so I don't think there is a lien. I will make sure to check.

Where can I see if there is a lien without tipping of Medicaid; county recorder, clerk, or assessor’s office ??

I just know the title company will do this for me before closing.

Thanks

I found a distressed property for sale.

The owner is in a nursing home and the daughter that has power of attorney wants to sell the property and put the money in the owner’s estate. Medicaid is paying the nursing home bills. Medicaid is telling the daughter she must sell the property at full appraisal value.

I know Medicaid puts guide lines in place to stop the transfer of property below “fair” market value to prevent families from keeping/hiding assets that they feel should pay the medical bills.

Is there anyone here that has firsthand knowledge of this to be true?

Can the daughter sell the house to me at what she considers a fair market value?

@Sharon Tzib

- 65 Insurance (est.), - 70 Repairs & Capex (10%), - 70 Property Management (10%), - 56 Vacancy (8%), $273 x 12 / $37,800 = 9% COC Return...

OMG stop giving away all my money!! J/K

Lots of good advice. I will use these numbers when I buy or refi a property. I will make sure to run comps and do my due diligence on all new tenants.

@everyone

Thanks for all the good advice, kind words and encouragement. I look forward to posting my 2nd deal very soon.

Most LLC sale transactions (if not all) will be structured as taxable asset. When selling business assets, the federal tax rate on gains can vary from 20% - raised from 15% (long-term capital gain) to 35% (ordinary income rates), and there is an additional 3.8% Medicare tax applicable to certain passive investors. The tax-free exchange rules generally do not apply to LLCs. Converting an LLC to a corporation immediately prior to a tax-free reorganization also might be challenged by the IRS.

Now what state will the LLC's be structured and/or sold? Depending on the state they may want their slice of the pie also.

I think with the tax liabilities and the potential LLC liabilities this would be a hard sell.

You could structure the LLC's thru a 401K or IRA for some tax shelter but then you're still limited to holding for one (1) year.

If someone else knows how we can save a penny on tax I would like to know, it’s possible my thinking is flawed ??

@Robert Leonard If you sell an asset in less than a year from the time you buy it, you owe income tax, no difference if it's the LLC or the real estate as far as I know.

I agree; even with my "tax exempt" self directed IRA,LLC if I dont hold the property for one (1) year I can be hit with a tax. I might get away with doing it once but in sure to be red flaged if I kept doing it.

Im not sure about selling the LLC along with the property. I would think even if you technically could sell them together with no tax liability you may eventually end up in hot water. Opening 10-30+ LLC's a year to flip houses just to avoid tax obligations may draw unwanted attention from our friendly IRS. You do open the LLC in your name as Manager through the IRS and they give you the EIN tax number correct?

Cash deal, no mortgage.

I did not do a credit or background check (I will from this point forward).

The couple is in their mid to late 50's , both on disability.

I did not have a contract with me, I told them I will drop it by this Thursday.

They have been in their current home for 3 years. I know the landlord; I remember when he told me they were good tenants and he dropped their rent $100 a month just to get them to stay (last year).