All Forum Posts by: Rajeev Kotyan

@Greg Christensen: from experience I would suggest, that both you and the tenant get independent appraisals from two separate appraisers. You are both transacting a large ticket item, this cost for both you would be minimal. You can both also agree that if the appraisal difference between the two are >$xxx (whatever you mutually decide), then you both would get a tie breaker appraisal which is paid by both and that appraisal would be final. If it <$xxx (whatever you mutually decide), then you both will take the midpoint as the transaction price. Sometimes even the third appraisal may not be necessary, if you state to both the appraiser what you are doing, and if the appraisal price and too far apart, they would speak to each other as professionals and help get this resolved.

@Tyler Leonard: When speaking with any bank, request to speak to the commercial loan officer for your situation. This 5 property limit appears to imply that you are working with a residential loan officer. You should be looking for a commercial loan on residential properties. Hopefully I am not speaking out of turn here.

@Brianna H.: All the questions you ask are all good questions. I would highly recommend that you work with your local financial planner (someone who you like and trust) who incorporates all these real estate scenarios and questions into a larger investment portfolio to see how it applies to your case. Taking into considerations your entire portfolio, including the options of current property as rental or sell the property to acquire 2 rental properties, with and without leverage.

One of the reasons I specify someone local to you, as they would understand the local real estate market and should also be able to analyze where the rental and real estate trends are headed.

@Anthony Crawford: As a newbie, I would highly recommend you work with an attorney to help you through the process, but is also willing to educate you about the legal nuance and caveats. It is money well spent as you initiate your business. As I am not an attorney, 26 years later I still learn something new at each transaction.

Both of you, thanks for the input, it answered some of the questions I had regarding VA loans and the assume-ability.

@Brian Eastman: I apologize that I have not completed my profile, and will do so shortly... I do not work for a firm providing legal or tax advice, and anything I am stating is purely from experience and for education of others. Do not have any commercial interests... I will update my profile shortly. Thanks pointing me in the right direction (am new here)

@Shelly P.: A 401k plan or an IRA that invests in a business (excluding real estate and venture capital business), assuming that the investment is in a pass-through entity like an LLC (taxed as partnership) or LP, could be subject to Unrelated Business Taxable Income/Loss. For example a 401k or IRA investing in a local pizza store (assuming the pizza store entity is structured as an LLC or LP), the 401k or IRA is subject to tax on the business net income/loss (of course tax paid on income).

@Taylor Shapiro: Are you speaking about funds within the 401k (post contributions) for investing or the gains from the sale to be done as a 1031 exchange? Done correctly both are feasible and possible.

@Nathaniel T. Landrum; (Note I am not an attorney) BK laws are at the federal level, but they are coordinated at the state and county level for real estate. While Jeff could be correct, you may want to check if your state may consider the transfer to you subject to debt as a fraudulent transfer (i.e. hiding the assets and retaining the debt so as to be able to file for bankruptcy), in which case the transfer may be nullified and added to the assets of the debt holder. There may be also statute of limitations for such things which can vary by state... as Jeff recommends, please work with a local attorney familiar with bankruptcy and real estate.

@Dmitriy Fomichenko: Estate planning: Solo(k) is governed under ERISA (Federal) while IRAs come under the state laws, so as an example lack of beneficiary designation (not that I am advocating that), can have different impacts. For a solo(k) plan the plan fiduciary is generally the plan participant, and any if no care is taken to name a successor plan fiduciary prior to death will have to go through the federal estate probate (please excuse me if I am using the wrong words), to identify a replacement fiduciary, even if it just the spouse, and that is so that solo(k) plan participant account may be transferred to the named beneficiary on the plan account (assuming beneficiary is named). Assuming beneficiary is named on IRA the steps are limited. Solo(k) plans under ERISA by challenged for beneficiary disputes, and the plan fiduciary has to spend time and resources before the plan participant accounts can be distributed. These are only naming a few aspects, all of which are solvable and must be considered as part of the estate planning of the solo(k) owner.

I agree with your statement "you need to know the rules period", having a custodian generally (not always) helps prevent some of the obvious errors.

Please note that I am not advocating one type of account is better than the other, just that each type of account has to be carefully assessed and managed from all aspects.

Alexander: Glad to hear that she is accepting the prorated amount. Would recommend you have her sign that this pro-rated amount is full and final payment and that accepting and depositing the check with not allow her to come back to you for any additional funds.

Recommendation: As I have done with my rentals, is that with the rental applications, there is "non-refundable application fee", which generally is priced to cover the cost of processing the application (time, cost of background check, etc..). Replies, positive or negative are provided with a specified number of business days (2~3). If positive then I schedule a time for lease execution and collection of deposit and rent. It is also clearly noted on the application that the property will continue to be marketed until the lease has been executed and the deposits and rents have cleared in my bank account. Hope these ideas help...