All Forum Posts by: Manuel Diaz

What would be the costs associated with gifting a fully paid off house to your children? I know that you would have to file a gift tax for anything over $14k in a year, and if they were to sell the home they would pay capital gains tax, but what other things would need to be addressed? Title fees? Just wondering what would be the process?

Hi Oyoshy,

I know exactly the area you're talking about but never really figured to look there to invest. I figured the area was already out of my league due to the rising prices but I might have to take another look. I live in the Dorchester area and I am in a similar situation as you (except I will be taking over the house in my name). It is fully paid off and I plan to take a heloc out on it to invest in multifamily properties. I was thinking of looking for a fixer upper to see how I can fix it up, force a little appreciation and then refinance.

There are many things to look into when shopping around for a heloc besides the rates. I might decide to go for an interest only line during the initial draw phase. Hoping to utilize the buy, rehab, rent, refinance method to replenish the line before that variable interest rate gets too high.

As far as your question of diving in: I would dive in if the numbers looked right. Getting the appraisal done will let you know where you stand and either motivate you going forward or help you revise your plans. I have also thought about waiting until the bubble burst but I have no idea when that will be so I try not to let it weigh too much on my decision. Looking forward to your progress on this journey.

I just read something about a lifetime gift tax exemption. http://wills.about.com/od/understandingestatetaxes/qt/calculategifttax.htm

Any thoughts on this?

Thank you very much for that information. I knew it wouldn't be as easy as signing a title over. And yes the gift tax, I believe for anything over $14k now, would be a killer. She would like a more short term way to transfer it over than doing it $14k at a time. Might be 20 years going that route. Probably more due to appreciation. So we are left with either paying the gift tax or buying the property from her. I wouldn't sell the property and would be living there so I'm not really worried about capital gains tax.

My mom has a house that is fully paid off. She wants to pass it on to me. What would be the best or easiest way to do that? (While still alive)

Hello all,

Correct me if I'm wrong. My mom has a house I believe worth around $300k. It was purchased 20+ years ago for $110k. She is tired of it and wants to have me take over it.

I believe that since it would be a gift (and a substantial one) I would pay the taxes on the value over $12k (so I guess on $288k). Is that correct? 

Also if I were to sell it (I wouldn't though) I would pay either short-term (less than a year) or long-term (more than a year) capital gains tax. I think I read that since it would be a gift and I sell that gift, I would pay capital gains tax on the profit from her original price of $110k. Is that correct?

If it had been an inheritance that I sold, I would have been taxed on the profit based on the current market value of $300k?

What would be the best way to take over the house? I would later see about taking equity out of it to purchase multi-family properties.

Hey Alonzo,

I am also looking to buy and hold multiple properties. I believe my best option so far would be to use an FHA 203 loan for my first triplex, build it up, live in it for over a year or two, save up the rental profit, see how much equity I will have in that time frame and then see if I can pull out that equity for a down payment for a second triplex that I will occupy. For the second one I will try using my VA loan. Are you thinking something along those lines?

Hi Alonzo,

I am new here too and am also separated from the military. There are tons of info on here. I would imagine you are looking into using your VA loan. I am considering this also but I read somewhere that the home (or, in my plans. triplex) you intend to buy with that loan must not need extensive repairs. I'm hoping to buy a fixer-upper and force a little appreciation. I was wondering if you or anyone had any insight on this?

Yes, to start  out with, I would like to buy and hold, owner occupy my first 3-4 family. 

Hello BP!

I have been around the forums and podcasts and looking through all the wonderful resources here learning a lot from you all in the past few weeks. I have decided to take it a step further and this is my very first post.

I have always been interested in owning real estate (primarily multi-family units) but I am not quite set up for it yet. I'm going through a debt settlement program and my credit is not where I want it to be. Hopefully by next year I will be in a good enough position to make this dream a reality so I am leaning as much as I can until then an formulating my plan of attack. Could always use another opinion on how to go about it.

A little background: I am an army veteran. I served active duty and national guard. So the VA loan is available to me. I am currently making $300 monthly payments into the debt settlement program as well as saving $500 monthly set aside just for investing. Once that debt is paid I will be setting aside more to my house fund. The sooner the better!

Option 1) VA loan

Low or no money down. No PMI. Sounds good to me but I believe there is a requirement that the home I buy can not require much in repairs. Is this true? I'm hoping to buy a fixer upper and force appreciation at least a little so I can live in the property over a year, refinance, gain some equity ( I think I read somewhere that most banks need you to have at least 20% equity in order to be able to refinance?), and try to do it again.Also, buying at the higher end would also mean a higher monthly mortgage payment, and with limited funds at this time it might not be the right move. But I guess if it cash flows, it might be worth it. One other thing, I believe there is something called a fund fee? Don't know if that's for all VA loan lenders or all lenders in general. Can anyone elaborate on this?

Option 2) FHA loan

3.5% down but since it is under 20% there will be PMI. There's also closing costs to consider. With an FHA 203 loan the repair costs can be rolled into the loan. That would probably fit best into what I want to do with my buy an hold strategy.

Option 3) NACA

Neighborhood Assistance Corporation of America. They are an organization that helps people with low income or credit problems (which I have) to get a home loan. No money down. They say no closing costs but there I will probably have to pay some in inspections and things. I have found other BP members have dealt with them with mixed reviews. I believe the best part about this program is that it is not based on your credit score I believe they do however go through all your credit history and try to get a better picture of your situation. The process could take a while. I will be attending one of their workshops tomorrow morning to check them out more in detail.

Option 4) Conventional loan

Easier process but I would need at least 20% down which I'm not sure I could do on my own. Maybe a strategy left for some time down the line after I have a few properties.

I know I have probably taken a lot of your time and I don't have any definitive numbers yet since I'm still working my credit issue but I just wanted to get my ideas out there and maybe some others would pop up. Thanks for reading and please reply with any thoughts on how I should proceed. Much appreciated.