All Forum Posts by: Mel Lobo

Jim,

Great closing cost of 450. What did it include?
What about title search and title insurance?

Mel

Totally agree, Richard. The moment we try to work around the legal system for tax or otherwise, we're open to slightly unethical processes and accept the risk/reward ratio.

If your entire contract was verbal, then you may be only in a position to negotiate a deal outside court. The judge may penalize for Mr. Moya to a certain extent, but its difficult to order him to return all funds immediately.

On the other hand, if this contract was on paper (which I think, it was) and he had promised to give you shares (also on paper), then, Mr. Moya is in trouble. He better be a rich man (having taken money from many people) to return all funds and serve a prison sentence.

Having said that, you carry a major responsibility in investing in a private company without securities (at that time). All investments carry a huge risk. The question is, were both parties honest on all aspects?

If there was a paper contract and there was no clause on when the money will be returned OR with interest, then Mr. Moya's lawyer may find something in the law books to get him out of it (like waiver under sick company, etc)

Just when you're ready to put it on the market, buy the home from the LLC. That way, you would be selling your primary residence and can take the tax exclusion.

Best of both worlds.

Wheatie nailed it...For proper tax cuts, CPA can guide you all the way.

For minimizing taxes every which way, your CPA may not help you (falsifying).

Creative ways are...(I'm sure, you have a good idea)

1. As you said, finders fee - keep it less than 20% total
2. Repairs, maintenance, travel
3. Listing, selling, transfer, closing fees, et al

These are just a few...

If you're in aggressive funds in your 401k, your returns should be negative in 2008. If you're still getting 6%, then I would say Vanguard is doing a fabulous job. Keep the 401k there...you'll be better off than investing in RE.

A. Advantages of getting an RE license

1. Save on commission/fees for your house
2. Home builders may sign a commission contract with you based on your popularity/marketing reach, so you can bring clients to them
3. You will even get marketing commissions from loan agents/companies.

B. Disadvantages of getting an RE license

1. You have to be strictly ethical in keeping the party's interest at the forefront without being selfish, get the best deal possible
2. Study to get the licence (go thru the process), renew license, zero complaints
3. Disclose your RE license in advance for your houses for sale. Most of the times, this is a turnoff for buyers.

Bottomline
=======
Clearly, the advantages outweigh the disadvantages, at least prima facie.
That's why, we see a lot of new investors getting an RE license. How successful they are on capitalizing on the advantages is totally up to them. The ones that don't have an RE license, act as a principal, are thinking of just the A1 commissions (3-6%) OR are just not ready for the hassles. Another reason being, they make enough on their core transactions and don't have to worry about the peanut commissions. This is especially true for established investors.

For an investor, money comes first. Also he has to decide, if he's gonna make that money ethically or not, maybe in-between.

Tough to tell if its too low...

If you're nearing a quarter, say end of June, they may close aggressively.

Also about the contingencies, how did you verify the structural soundness, underground sewage and wirings, etc?

Honest question:

What kind of buyers are you planning to finance?
1. The ones that don't have a solid credit history, with a higher interest rate
2. The ones that have a good history with low interest rate

Another way to make money is target people with bad credit history, take as much money down as possible with a decent interest rate. Chances are, he won't be able to make the 1st or 2nd payment, and the house is yours again. This will be your bread and butter until you decide to get rid of the house for good.

Who pays the HOA dues which were missed by the condo owner because he was going thru' a tough time/foreclosure?

A. Bank that owns the first mortgage
B. Bank that owns the 2nd mortgage
C. New buyer who bought the condo from the bank
D. Other condo owners in the HOA will share the payments