All Forum Posts by: Randy King

@Marina Wong

When making a HUD offer, the listing agent gets 3%. This amount can't be changed. The selling agent can get up to 3%. This amount is a fillable field and defaults to 3% reflected in dollars.. Next is buyer asked closing cost as a dollar amount. These three numbers added to HUDs minimum acceptable bid would equal the sell price. HUD only cares about net to them and other costs are added to that. A HUD 10 to 15% discount would be inclusive of those costs. So on a $100,000 house and HUD agreed to a 85,000 net, add on realtor fees and closing cost asked for and that would be your price.

@Luis Montanez

Their counter offer is a net price to HUD and is (usually) the lowest they will take for the next Bid Open Date. You can resubmit your offer for each Bid Open Date.

My experience is that HUD will discount between 10-15% net to HUD for the first month or so regardless if it is within the O/O period or not. Then they start dropping the price and increasing the discount they will take until the property is sold.

In researching my own question, I ran across these 2 links. One is a BP post and one is from the The CPA Journal.

http://www.biggerpockets.com/forums/51/topics/103451-how-many-flips-per-year-after-holding-a-year-and-keep-cap-gain-rate

http://www.nysscpa.org/cpajournal/2007/607/essentials/p44.htm

Both were very informative.

Our exit strategy is to sell to tenant/buyer using a lease and separate option agreement. We are trying to hold each property over a year for long term capital gains. Could the IRS at some level of activity (2/yr, 5/yr, 10/yr) step in and say we are actually flipping the houses and declare us dealers and be subject to short term gains and FICA?

This is kinda fun. It's my 1st back and forth discussion on BP. Learning a lot.

An attorney mostly wants to sue suable people. To be suable, one needs assets, insurance polices, etc. of value to be a profitable law suit.
"Even the bad lawyers know how to do a basic asset search and prepare discovery documents requiring asset disclosure." Correct. Just trying to appear less suable and not get to this point!

@Joe Gore,

All bets are off if you have already been sued, that's what I was talking about by court orders. A lot of what is being talked about is making oneself less visible and less attractive to being sued. And I wholeheartedly agree that once you are sued that no entity can protect you like a good umbrella policy. But on the flip side, a large umbrella is a huge target for an attorney.

I would disagree that it is easy to see what is behind a Land Trust. As per the example above, John Smith Trustee of 123 Easy St. would be title holder and on public record and John Smith would be easy to search on and find. However the Beneficiary is identified in the Trust Agreement which is a private document and never sees the light of day except by court order. Then add a good umbrella policy for added security.