All Forum Posts by: Nicalaus B West

 She was late on 2020 taxes and hasn't been able to catch them up. She's been able to pay 2021, but barely and now first half of 2022 are coming up.

If I were to just help pay them off this year and the back taxes, it would just happen again next year.  With the proposed solution I would have to come up with cash to pay the back taxes in order to take out the mortgage on the property.

If she doesn't do anything, she's gonna lose the property. If she sells it, she'll have nothing but cash that she's admittedly bad at managing. If I pay her taxes, my household of 7 is out that money and we can't afford it.

However, IF we work together to leverage my money management skills & credit along with her equity, then we can both win. She no longer has to worry about taxes, utilities, or selling and blowing her money. I get another rental to add to my portfolio that is used to pay back the mortgage.

The contract with my mom that ensures I don't become evil and kick her out at some point is why I really need some more insight on.

Situation:

My mother owns a house in Illinois in the country and has no mortgage or outstanding liens against it except 1 year of taxes that someone someone bought in a tax sale. She was injured in her 30's and now receives disability. With that income, her photography and modeling agency businesses suffering because of COVID, she has not been able to afford taxes on the house. Because of her income and credit scores, she cannot take out any loans or a mortgage on the house to take advantage of the equity in the house. 

if she doesn't figure out a way to make sure her taxes get paid on time and get caught up on her back taxes then she'll lose the house.

Proposed Solution:

I proposed to her that we write up a contract that states that I would pay the back taxes, she would Quitclaim deed the house to me, and I could take out around 150k mortgage on it.

I would put 10-15k in an account for cash reserves and use the rest to purchase a rental property. I would put the income from the rental property in the account with the reserves and pay off the mortgage and her utilities for her, so she doesn't have to worry about that anymore.

I believe that this would benefit her and me because the rental property would be in my name and I wouldn't owe anything on it. She wouldn't have to worry about her taxes or utilities anymore and have a place to live.

I would be responsible for any repairs that she would need done obviously. 

Things to note:

I can't afford to to just pay her taxes and utilities for her.

I also can't afford to just take out a mortgage on her house and pay that as well. So this was the creative way I thought we could do to benefit us both.

Questions:

1. Has anyone on here done anything like this before? 

2. Does this sound logical to you?

3. All opinions welcome. Good and bad. Looking for honest opinions and advice.

My wife and I bought a new house and will be moving in shortly.  We did not have to sell our current house and we can't decide if we should rent it out or sell it.  Here is some information:

• Appraisal Value last year: $80,500
• Comparable Average Sales past 3 months: $85,000 - $115,000 
• FHA Loan Balance: $62,000
• P&I + Insurance and Taxes: $496/month
• Water: $35/month
• Garbage: $35/month
• Bedrooms: 4
• Bathrooms: 1
• Lot Size: 7,200 sq ft
• Repairs needed prior to renting OR selling: 1K - 3K
• Parking: In back, no garage
• Rent Est. for this area: $1,000 - $1,200
• Schools: Probably the worst around
• Neighborhood: Getting better.  About 5-7 block up from a pretty bad area.

We've been in this house for 10 years and have re-done all wiring, plumbing, insulation, roof, siding, kitchen, bathroom, etc.  I like knowing everything about it and know I can fix anything that breaks.  

My wife, better half, thinks that if we can sell it for $100,000, then we should and take that money and use it for another property. She's worried about something big breaking and then dumping money into it.  Here is the rental report I made here on BP.

Thoughts?

Thank you Alex for the advice! I definitely don't want to do everything I did to my current property with this next investment. I want to grow my real estate portfolio overtime and was reading about BRRR, but with the amount of capital I have and the actual cashflow I'll be generating, I think it's going to take a few years to buy another property. Any thoughts or advice on that?

I bought my current residence in 2010 for 20k with the intention of living in it while I made repairs.  The initial goal was to fix it and sell it within a year or so.  I was 20 and knew nothing of remodeling and had no money or credit to hire contractors to make the repairs. Without going into to much depth on how the a 20 year old kid gets a 26K mortgage for a house selling for 20K, I still owe 23K on it because I've been taking the equity out to pay for repairs over the years.

My wife and I are now done with the repairs and are willing to stay here for at least another 5 years. It's been appraised at 80K and my wife and I are wanting to use the money to purchase a multi-family residence.

I've been on bigger pockets for a while and listen to a lot of the podcasts, so while we're searching for multi-family properties I've been using property analysis spreadsheet supplied by the biggerpockets community.

We're working with a realtor on available multi-family properties in our area and now my wife and I are getting nervous.  We currently only have 1 income, mine, and not a lot in savings other than what we'll get when we refinance our current property.  I have credit cards I would like to pay off, a car payment, and student loans.  

I want to invest our money in something that will build our net worth over time. I think purchasing a multi-family property can do that, but I'm worried about having money in reserves for needed repairs, vacancy, etc.  I've tried to include that in our property analysis, but I could use some advice from more experience investors about what path they would take.

Thank you in advance for your advice!

Note: Over the course of the 10 years I've lived in and remodelled the house, I had to do all the work myself so I've accumulated a wealth of knowledge and tools about how to do wiring, plumbing, roofing, drywall, tile, cabinets, etc.  I don't know if that comes into consideration.