All Forum Posts by: Richard F.

Made a mistake. Accidentally included 100% of Transfer/Recordation taxes in Selling Costs. That number should be reduced by 50% (buyer/seller split). I can't edit the post, but the new final tally would be:

• Selling Costs: $31,585  -  (10.52% of ARV)
  • Change --> [Transfer/Recordation Tax: $3,600]

6) Total Costs: $113,684

7) Profit:  $36,316

8) ROI:  ~15.5%  (23.25% Annually)

Hello All,

My computer processor has been completely exhausted trying to help me determine whether my conclusion is valid in regards to investing in Maryland (Montgomery, Prince George's, Anne Arundel, Baltimore Counties, etc). I'm finding that:

• An All-Cash Offer in Maryland is basically equivalent to a Financed Offer in most other states? 
  • Due to Maryland's hefty Transfer/Recordation taxes, which totals 2.4% of Purchase Price (Buyer Expense on REO properties), I'm finding my potential Buyer's Costs to be 4% of PP, even with All Cash 
    • Even on standard/non-reo deals, I'm looking at 2.68% Buyer Costs, which is far and above my past investments in California

My essential questions are:  

(1) In Maryland, are investors finding deals below the 70% ARV figure to compensate for the high taxes/transfer costs?

(2) How are investors who utilize financing/hard money lenders able to make this area work, seeing that a loan would add another 2%-3% to the Fixed Costs?

• I know that in order to hit my profit metrics I need to further reduce the [% Discount ARV] figure, but ideally would like to get some feedback from others in the area who are dealing with these county/state costs - and how they adapt to profit.

Thank you all for your wisdom!!

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Assumptions:

1) Purchase Price (PP): $150,000   (just over 70% ARV Rule)

2) Financing: Interest-Only Loan - All Project Costs

3) ARV: $300,000

4) Rehab Cost: $65,000

5) Fixed Costs: $52,284 (17.41% of ARV)

• Buying Costs: $5,951  -  (4.0% of PP, or 1.98% of ARV)
  • Inspection: $400
  • Settlement Charge: $900
  • [Transfer/Recordation Tax: $3,675]
  • [Government Recording Charge: $60]
  • Survey: $195
  • Owner's Title Policy: $721
• Holding Costs: $11,148  -  (3.7% of ARV)
  • Assuming 8-Month Hold Period
    • Loan Payments: $6,532
    • Property Taxes: $1,896
    • Utilities: $1,600
    • Insurance: $720
    • Maintenance: $400
• Selling Costs: $35,185  -  (11.73% of ARV)
  • 6% Commissions: $18,000
  • Home Warranty: $400
  • Settlement Charge: $425
  • [3% Seller Concession (standard for area): $9,000]
  • [Transfer/Recordation Tax: $7,200]
  • [Government Recording Charge: $60]
  • Termite Report: $100

6) Total Costs:  $117,284

7) Profit:  $32,716

8) ROI:  ~14%  (21% Annually)

• Not very attractive in my opinion

Hi guys,

I have an interesting scenario that I need some advice on. I am a licensed realtor in California, and I have a transaction where all parties are in the same family. My sister is the buyer and our father is the seller. My sister is going to purchase the property from my father at fair market value, so the arm's length restrictions will not apply (and lets assume they won't for the conversation).

I don't want my parents to pay commissions on the deal, and I'm trying to figure out the cheapest/most effective way to go about the sale. The options I am thinking of are:

1. Use myself as the buyers and seller's agent, take 0% commissions, and complete the transaction that way. With this system I will have a broker fee of about $1000

2. Use a For Sale by Owner approach and just use the documents you can purchase online. 

I have no experience with FSBO, so my question is would it be cheaper to use the FSBO documents that can be purchased for $49.99 on some of the websites (won't name them) and have an attorney do a quick read over, or just go with the 0% commission and have the broker fee of $1,000?

Is it possible to use the Realtor Docs (CAR Forms) on a for sale by owner transaction? If not, which document package would you recommend? One website has  the  CA Real Estate Home Sales Package with the following:

1. Contract for the Sale and Purchase of Real Estate 2. Sellers Property Disclosure 3. Natural Hazard Disclosure 4. Lead Based Paint Disclosure 5. Smoke Detector Compliance 6. Earthquake Safety 6. Mello Roos Disclosure/supplemental property tax 7. Additional disclosures that may be required by city or county

Essentially it sounds like it covers the majority of the disclosures that the CAR forms have. Does the above package sound complete? And once this package is signed by buyer/seller, can we just take it to escrow/title company to complete the sale?

Thanks again for any insight into this. FSBO is a new territory so I'm trying to get a better feel for it.