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Since my last reply I have also listened to the audio book and loved it! I would highly recommend it and I agree that listening to the old biblical-like language rather than reading it actually made it more entertaining.

Stop the presses! I have a solution that you should talk to your CPA about. I have done a couple of deals like this for the principal of my current company as well as when I was a practicing CPA (in California).

Talk to your CPA about the LLC selling the contract right to the developer (Kudos by the way that you found a developer that wants land right now! :shock: ). Hopefully, you set up your LLC agreement to keep the intent open as investment as well, which would help your situation. Since all you have is a contract right and you sell that (via a simultaneous COE on the same day) and you have held that contract right for longer than a year, it should still be treated as a capital gain to the LLC.

The capital gain recognized by the LLC will flow through to members of the LLC via a K-1 form, which will get reported on your individual tax return in the same character.

Caveat....please check with all the details of this transaction and make sure you can show you had and investment intent from the beginning to support your case and that you indeed have a binding contract that is assignable (most are if you have a good attorney).

As for keeping the cash in the LLC, it doesn't matter. You are taxed on the gain when the sale occurs, how you use the proceeds after the fact is considered after-tax. Remember a taxable event occurs when the sale is recognized, regardless of when you get the cash.

Bill,

Sounds like you got yourself a good system and that Gatten's system is well worth the money. I will definitely be looking into it.

Thanks for the info!

Sooz

John,

Did you invest in his system and take a look at it? I saw a post on our local board from someone who suggested it for finding creative ways for buyers with little to no equity....obviously a big share of our recent foreclosures. Just wondering if you too invested in the system and had anything to add to Bill's recommendation. I have heard that it is complicated, but that doesn't scare me! :lol:

Cindy,

Thanks for your reply. Although I have in the past stayed away from guru books, Rich Dad really was a good read and I would recommend it to anyone. I actually recommend his second book as well called the Cash Flow Quadrant. It is a little more in depth with his concepts and I do think there is value in a lot of what he says.

That being said, I will continue to read highly recommended guru books as I think they are great for motivation to keep moving forward. Especially for me in this market (So Cal) because all i keep hearing is that it is nearly impossible to find properties that cash flow here!

Looks like I need to keep reading those guru books to keep my creative mind functioning to find new opportunities!

Will,

Thanks for your reply as well. I love that I found this site as it is nice to hear detailed opinions/responses from those who work in the area one is interested in learning about!

I see your point in not waiting. I'm definitely not going to wait...still just figuring out what will interest me and what I can start looking at. I just started this process a month ago and am doing my best to find all my available free time for research, (which isn't easy with a full-time job and a toddler at home!) I continue to stay motivated though with each bit of information I get, so thank you for sharing!

Thanks for your reply K.

You bring up some interesting points....

I wholeheartedly agree and understand point 1, in fact it is the competition of all those smart investors that scares me the most, which is why I am studying so much right now!

Point 2, do you really think that the legislation will help these people as a whole? You have made me think that maybe it will just create some more opportunities for investors to capitalize on, similar to new tax laws. Often times, smart investors find creative ways to capitalize on these and the people that the laws were written for don't always have the information at the right time to really see a benefit.

Point 3, you would think the smart banks who have been down the REO road before would have already put plans in place months ago to be prepared for this.

Thanks for your great reply! You have helped me to open my mind and think of possible new opportunities down the road.

You are an inspiration to us other "chicks" looking to do well here. Sounds like you are off to a good start. I look forward to seeing more great success stories from you!

Hey Stephanie,

Welcome! Looks like you and I are in the same boat, same area too! I am also ready to stop being an employee and find financial freedom.

I am going to my first investor club meeting this week in SD and looking forward to learning more and meeting lots of new people.

I too have the same concerns as you as it seems like it is going to be real difficult finding deals in this part of the country, but I am up for the challenge.

I look forward to watching us both progress with success from all the wonderful knowledge we can obtain from this site!

I am looking at all my options at getting started in real estate and still in study mode to focus my efforts. I live in So Cal so the price for entry in this area is high.

Lately I have been trying to think of where the deals might be next year...I realize nobody knows for sure, but I have a question to those who have had success in buying REOs.

It seems like the influx of foreclosures that are hitting the market are people who overextended with teaser rates and the properties are worth less than when they bought. Now that the teaser rates have reset to variable, homeowners and/or investors are just walking away and letting the banks foreclose and take back the properties. Well, if that is the case, I can't see how you can find a lot of pre-foreclosure deals in this market if these owners/investors have no equity when the NOD is filed. That being the case, all these homes then become REOs So, here is my question/ thought for discussion:

Is next year going to be the best time to buy REO properties since these houses are going back to the bank with no equity and the banks will continue to have an increase in their REO portfolios, therefore possibly having to discount at extreme rates to unload them off their books? In simple terms, it seems that this would have to be the course, but from what I am reading, it seems banks are pretty conservative and crafty and not giving away deals. When I read the "Hype" of investing in REOs, I hear "these banks are not in the business of holding real estate, so they are practically giving these properties away." Then I read something from another source that shows that banks are sophisticated in this process and are not going to be just giving away deals.

In conclusion, if the influx of the problems of this "declining" real estate market is from people that are walking away, willing to have a foreclosure on their records and had no equity in property, then I would naturally assume we won't see the best wholesale deals until these banks really feel the crunch of having to unload all these REOs off their books. Is this a correct thought process?

Please share your thoughts, opinions, etc. Keep in mind, I am a NEWBIE, so please be frank and direct as I am a sponge right now trying to learn all I can from those who have experience success in REI.