All Forum Posts by: Michael J.

Title insurance protects the buyer from potential undisclosed liens or defects in the title of the property that aren't discovered during the title search before the closing of the sale. These could include things like unpaid property taxes by the previous owner, errors in the property records, or claims of ownership by someone else.

Title insurance isn't a requirement to purchase a property, especially if you're buying with cash. However, it can be risky to buy a property without it, because you'll be financially responsible for any undisclosed liens or title defects.

Mechanic's liens are a legal claim against a property by someone who has done work on the property and hasn't been paid. This type of lien wouldn't automatically be applied just because you're not getting title insurance. Instead, it could arise if, for example, a contractor did work on the property before you bought it and the previous owner didn't pay them.

It sounds like what you are trying to say is that there is currently a lien on the property and if you don't get title insurance the lien will stay in place on the property until its paid.  I would get the title insurance and make the seller pay the lien out of their proceeds.

Based on your situation, it appears that a "subject to" real estate deal might be a suitable solution for both you and the seller. Here's a possible scenario for taking over the property subject to the existing mortgage:

1. Consult with an experienced real estate attorney to help you draft a subject to agreement. This is crucial for ensuring that your interests are protected, and the terms of the deal are clearly outlined.

2. In the agreement, specify that you will be taking over the property subject to the existing mortgage. This means you'll be responsible for making the monthly mortgage payments on behalf of the seller, but the mortgage will remain in their name and the property is deeded over to you.

3. As part of the agreement, negotiate the terms for your down payment and monthly payments. You mentioned putting 50% down in the beginning.  Determine if that will cover their equity in the current house and that should help the seller facilitate the purchase of their next house.

4. To protect your interests, include in the agreement that you will use a 3rd party servicing company to make the payments to to ensure that they are going to the mortgage company.  This way, you'll have some protection from the seller defaulting on their mortgage and the property goes into foreclosure.

5. Additionally, include a clause in the agreement that allows you to refinance the property and obtain a new mortgage in your name once you're able to qualify for one. This will enable you to eventually remove the seller's mortgage from the equation.

6. Work closely with your real estate attorney to make sure that all the paperwork is done correctly.

I can provide some general guidance on how income from private lending is typically taxed, but please keep in mind that tax laws can vary by jurisdiction, so it's always a good idea to consult with a tax professional or accountant who can provide specific advice based on your individual circumstances and the tax laws applicable to your location.

In general, if you engage in private lending as an individual and are not considered to be in the business of loaning money, the income you earn from private lending would typically be treated as interest income. This interest income is generally taxable at your marginal tax rate for both federal and state taxes. It would be reported on your personal tax return (e.g., Form 1040) and may be subject to self-employment taxes as well, depending on the specific circumstances.

However, if you are deemed to be in the business of loaning money, the income you earn would be considered business income or ordinary income rather than interest income. This means that it would be subject to the regular income tax rates applicable to business income, which could be different from the rates for interest income. Additionally, if you are in the business of loaning money, you may have additional tax obligations, such as the need to file business tax returns and potentially pay self-employment taxes.

Regarding your question about the Real Estate Professional Status (REPS),  I am not a tax professional, and the information provided here is for general guidance only. The tax implications of private lending and the interaction with other real estate activities can be complex, so it's crucial to consult with a qualified tax professional.

In general, if you qualify as a Real Estate Professional and meet the requirements set forth by tax laws, you may be able to offset the income from private lending with losses from other real estate activities. However, the specific rules and limitations can vary depending on your tax jurisdiction and the details of your situation. A tax professional can provide you with more accurate guidance based on your specific circumstances and the tax laws applicable to your situation.

Again, I highly recommend consulting with a tax professional or accountant who can provide personalized advice tailored to your individual circumstances and the tax laws of your jurisdiction.

100% if you are looking to purchase investments then you definitely want a realtor who has experience/is an investor themselves.   Most agents have no clue about investing and how buying an investment property differs from helping a family buy their first home.   Be sure to interview the agent before signing a buyers rep agreement with them.  You can typically find a local real estate investor group and ask in there and get good recommendations for investor friendly agents.

@Jonathan Greene can probably help you out.  He runs a team in New Jersey

What does your contract state as far as repairs and timeline to reply?   Your agent should be helping you navigate this.  

You need to get clear on your timeline. You can't let them drag this out indefinitely. Second, you need to be prepared to walk away if the seller doesn't meet your demands. You don't want to be stuck with a money pit of a property that's going to cost you a fortune to fix up.  Depending on your state and the contract, you may have different contingencies that have to be met in order to close.  Get with your realtor and discuss with them what your options are.

You need to do everything in your power to track down that scumbag tenant and get their new address. Start by contacting any family or friends they may have in the area, check social media, and even hire a private investigator if you have to.  Best of luck with tracking them down!

There are a few options you can consider to fund the purchase of another rental property without a W2 job or a lot of capital.

1. Look into using alternative financing methods such as hard money loans or private money loans. These types of loans often have higher interest rates but can be a good option for those who don't qualify for traditional loans.

2. Consider using your equity in your current rental property to get a cash-out refinance loan. While the interest rate may be higher, it will probably be less than using a hard money loan.

3. Consider alternative investment strategies such as flipping properties or wholesaling properties, which can provide a cash infusion and allow you to build up a down payment.

4. You could try and find someone who would seller finance a property to you as well.

Ultimately, the best solution for you will depend on your individual circumstances and financial goals. It may be helpful to speak with a financial advisor or real estate attorney to explore your options and make the best decision for your situation.

Niche Investments LLC

Niche Real Estate Holdings LLC

Based on your description, it seems that you are looking for a financial partner (lender) rather than a business partner. You are seeking someone who can provide financing for the purchase and renovation of the property? Unless I'm misunderstanding and when you go to refinance it you are buying out the business partner so that you can house hack it?

Your estimated numbers don't scream deal to me.  You are probably way low on your reno budget based on it being 5 beds its over 2500 sq feet most likely.  On a light rehab that would be $100k.  full gut would be closer to $200-$250k rehab.   

This is also a huge project for a brand new investor, I doubt you will have an easy time finding someone to lend you the funds to tackle this as a first deal especially with these numbers.   I'd be happy to chat more in depth if you want to reach out.