All Forum Posts by: Travis Tannahill

Does anyone have any experience using the FSA for rural farm ground? I have found a piece of ground I want to buy. This is not a development play this is to put my personal residence on and farm income. 

I've read all the regs on their site, just would like some advice for someone who has gone through it. Farm ground makes no sense financially if I have to put 25% down, if I can put 0-5% down the number work. 

I live in a rural town (About 2500 ppl) and below is my experience. 

You have to get the house DIRT cheap. Good news is that it definitely is possible to find great deals. There's lots of bad tenants, but if you keep a quality place there's still some good renters out there. Your insurance costs will kill you, $100/mo insurance and you're only taking in $500/mo is hard to make the number work. Only count on cash return, as appreciation will be non-existent. 

I personally would not invest in a market that is not growing/appreciation. Insurance and repairs are just too much of a percentage in rent IMO. 

 

 His payoff letter will show $160,000. He doesn't' want to pay the IRS 160k. He want's to pay the IRS $80k which has been told is probable by his attorney. 

He writes a letter to IRS offering to settle for $80,000.... he has to send in 33% of his offer or they won't even look at it. He then has to come up with the remainder in 60 days. 

I'm just repeating what he told me... I'm not well versed in IRS tax liens.

 650-675 range. Good report just tax lien keeping him down obviously. 

@Wayne Brooks @Tom S.

Would any bank give him a HELOC with a 1st and 2nd already on his home? I don't do HELOC's so very unfamiliar with them. Can that terminology be written into the HELOC contract that he has to pay off the lien?


He has the option to refi and pay the IRS back at closing, the negative with that is there's not negotiation. Titel company would take 160k and mail it off. Where if he has the cash he can negotiate with the IRS and hopefully pay 80k. 

I'm a mortgage broker and have a client who is in a little bit of a rough situation. 

Client lost a business in 2012. He owes about $80,000 in IRS back taxes. That number has grown to $160,000 over the years from penalties/interest but he has been advised that he can settle with the IRS for the original $80,000.

He owns a $500,000 house in Kansas City as his Primary. Owes about $200,000. Bank is sitting in 1st, IRS is sitting in 2nd.
He's tried to pull money out of this house but obviously can't because of the IRS tax lien no bank will sit in 3rd.
He's searching for a hard money lender to loan the $80,000 so he can pay off the tax lien, have the IRS lien removed, then re-fi his house to payback the hard money lender.

We're just thinking outside the box here he's been paying $2,000 a month since 2012 and just can't get out from under this.
Owns his own business, 150k-250k/yr, no collateral on the business side unfortunately. 

Let me know if anyone has any ideas on ways to help this guy out... he's very frustrated to have $300,000 in equity that he can't tap into. 

Here's my situation: 

I'm 9 months in to owning an independent insurance agency. Things are going good, we're growing and profitable, but this business model is not a get rich quick scheme. I am fully willing (and prepared financially) to suck up the 3 year starvation period. A good friends dad approached me to see if I would be interested in opening a mortgage brokerage in my town. He is from out of state and his brokerage is looking to expand. He would be my mentor, train me, and allow me to use his service staff remotely until I could justify my own. He's doing over $30M of production, granted he lives in a market that is about double pricing what mine is, with 20 years expirience. 

First off is it legal? Could I be a licensed mortgage lender along with owning an independent insurance agency? 

Second off is it feasible? Right now from an insurance standpoint I get 80% of me leads from realtors anyways... So I'd lose 20% of my referral partners because now I'm competition for the banks(can't blame them)... I'd just double down on my real estate agent partners and focus 100% on those relationships. 

Right now I make about $300/yr per house/auto combo package.... every year forever until the client leaves. His brokerage pays 1%-1.4% of loan depending on production. Average home is about $200,000 in my market. So instead of making $300/year I would be making $2,000 year one along with $300 insurance commission as long as I hold the client. I like that math a lot better. 

Seems like a too good to be true opportunity which is why I'm asking.

Thanks in advanced. 

As mentioned many times on the podcast there are two types of people. Those with time and those with money. I'm one of the ones with time. I'm an insurance agency owner about 9 months in and that's not a get rich quick scheme and has a 2-3 year starvation period. That's totally fine we live off my wifes income.

That makes it hard to put money aside though for a down pay so I'm considering pitching friends and family. I'm fortunate to have a couple dozen friends and family who make well over 200k/yr and a 3-4 that make well over 500k/yr. 

So if you were in their shoes, retirements maxed out and looking to put money someplace, would you take this deal: 

Hypothetical example for easy math: Typical 1% rule single family dwelling with $200/mo cash flow: 
$100,000 Purchase Price
$20,000 Down Pay
I put in $5,000 (25%)
Investors put in $15,000 (75%)
Investors get 100% of profit until their initial investment is paid back. (happens in year 6 @ $200/mo cash flow)
After that, equity and cash returns are split 50/50
I bring the deal, find bank financing, and manage the asset (hire out property management but I deal with the PM)

Conservative numbers (not accounting for rent increase or appreciation) show a 16% return for investors the first 5 or so years when they are getting their initial investment paid back. After that it drops to an 8% cash on cash return (since they are now sharing 50% of the profit with me). When we add equity to the equation, in year 6 the would have a 13% return, slightly improving year after year as the equity gets paid down more and more each year, ending at 26% total return. 

The ideal goal would be to BRRRR a property and pull that equity out as quickly as possible to pay the investors back year 2, but this example is showing a simple buy and hold strategy with no re-fi.

Let me know your thoughts... my initial feeling is I'm being a little greedy and would have a hard time getting someone to do this deal for only 8% cash on cash return long term. But I'm delaying my payday to limit the investors risk and get their initial investment back as soon as possible. 

Can't make this one but hope to make ones in the future.