All Forum Posts by: Kelby Schimming

 David, did you find a good property management company in Friendswood that you would refer?

BP, 

I am working on a deal in Texas, and I have found an off-market portfolio that the seller is willing to finance. 

I've done some underwriting, but I am caught up on what interest rate to start negotiations with. 

It seems the price is most important to seller, he is motivated to sell, but doesn't have to sell. 

Any suggestions or starting points for interest rate negotiation? 

 I don't want to come in higher than I need to, but also don't want to get laughed at for coming in too low. 

I am also motivated to get the deal.

Any feedback is appreciated. 

Thanks in advance 

♦ furnishedfinder.com
♦ airbnb.com
♦ shorttermhousing.com
♦ vrbo.com
♦ theblueground.com

Thanks for the feedback! I have managed to get the seller finance to 80% of the sale price and plan to have private money cover the other 20%. I need to figure out a clean and clear way to secure the private money to something, so they have the confidence and security they are looking for in lending. 

I do have other properties that have enough equity to cover the 20%. I am not sure if adding the private lender to the second position on a different property is the best way to go. The lenders on these properties are banks. If I were to secure it against my target property, I guess I would have to get permission from the seller to have the second lien?

In reality, I'd rather just personally guarantee it and pay back with my W2 in 6-12 months. My lender knows I could do this, it's just he wants some sort of security just in case I have a run in with a bus or something.

Hi Kenny, 

I have found a potential private money lender to lend me 20% of purchase price for down payment. I plan to finance the other 80% using a commercial loan. This will be a turnkey rental. How do I offer the private money lender a security on this property as I plan to hold it long term? 

Put him as a second lien on the property? 

Any feedback is appreciated. 

Thanks in advance. 

Great Follow Up and Great Questions. 

Our intent was to rent the home, we posted it on Zillow, Hotpads, and put a "for rent" sign in the yard. We have 3 other rental properties and planned to hold the replacement property(s) as rentals. So with that, I believe our intent of renting is pretty clear, but I do know the IRS is not so understanding.

 @Dave Foster Thank you for your feedback, specifically "don't not do something that is right simply because it may be questioned"

Circumstances that are making me sell include the fact that we spent more on updating the home than we anticipated due to latent defects. Also, I reside in Qatar and my wife is in the states. She originally was going to stay in the states for a while, but she is now moving to Qatar this year. I guess the location of my wife is a moot point considering we would plan to buy something else within the 180 days. 

Can I do a 1031 Exchange even though my original property might be considered a "flip"?

Answer: Although there is no direct rule stating this is unacceptable, according to case law "flips" are purchased with the intent to resell. If you cannot prove your intent, then the 1031 will be null.

Can I buy two properties with my proceeds from the sell?

Answer: Yes

Does my original down payment and rehab costs have to go into an escrow account? 

Answer: No, but if not, it is considered "boot" and can affect tax liability. 

Is it only the capital gains that have to go into escrow account and I get my original down payment and rehab costs back tax free?

Answer: No, but if not, it is considered "boot" and can affect tax liability.


Pretty sure these answers are correct. The only one that concerns me is the question related to the "flip" as there is nothing that clearly states you cannot do this. All answers I have found are just suggestions.