All Forum Posts by: Tyler Sterns

Are your properties in Maryland? Maryland does not make it easy to transfer properties from an individual to an LLC without paying transfer taxes and recording taxes. Those taxes can be substantial depending on the value of the properties. Whether or not you transfer the properties to an LLC is really a question of your circumstances and risk tolerance.

What the above poster said is not necessarily accurate. Typically if a foreclosure is done properly all junior lien holders are wiped out. Every state is different though so you should figure out what your state specific laws are. You may however become responsible for any expenses associated with the property from the day you purchase the property at auction. These expenses could include HOA dues, property taxes, water bills and even interest on the mortgage that was just foreclosed.

Maryland transfer taxes and doc stamps can be substantial. I have worked on deals where the LLC was purchased instead of the real estate. It is something that may be worth looking in to. A few things you may want to consider (this is in no way an exhaustive list), a title search for any liens or mortgages, if there are liens and mortgages how will they be satisfied? Is there pending litigation against the LLC or the owner of the LLC? Is there a title insurance policy for the property that will transfer to you if you buy the LLC?

As far as depreciation, generally speaking yes, typically the assets of the LLC would stay on the same depreciation schedule. There is something called a 754 election where you step up the basis of the assets of the LLC upon transfer. This is not intended to be legal advice and you should consult an attorney before making any decisions.

If the property is really worth 500k why doesn't your friends dad just sell the property? If you assumed the loan you'd have pay the entire arrearage amount to make it current. This would include all missed payments, any legal fees, etc. Depending on how far your friends dad is behind this could be a considerable sum.  If you assumed the mortgage and started making payments the bank may never find out.  If they did find out they could however accelerate then loan and you would owe the remaining balance. Many states also have laws about acquiring distressed properties when there is equity, be careful. Another thing is to consider is that there could be other liens on the property. You need a title search to see what other liens are on the property. 

This may not be a specific answer to your question but the DC Homestead law exempts the first $71,100 of the property from property taxes. You would likely lose this exemption once you transferred the property to an LLC.

Yes, you will have trouble finding a conventional loan. You could try a hard money lender, they are more likely to loan considering only the value of the property. It would probably be a loan at 65% to 75% of the value of the property though. 

I'll start with this caveat, you should research Florida law or contact a Florida attorney. I do not have knowledge of what Florida law requires. Typically you record the deed in the county where the property is, what county the LLC is in is usually irrelevant. The notary is going to want ID for yourself the grantor. If Florida requires a grantee and grantor signature on the deed, you probably need proof that you have the authority to sign for the LLC. I.E. the operating agreement or whatever you have that shows you can sign on behalf of the company.

The title company is not being unreasonable. You might want to call the lender yourself and see if there is anyway you can get the letter quicker. 

The general rule of thumb is that closing costs are about 3% of the purchase price. But as the previous poster said there are just so many variables it's hard to predict. Title insurance is typically about $5 per thousand but that varies by state. Most title companies also charge a title binder fee, settlement fee, deed preparation fee etc. On such a small purchase price, I would expect your closing costs to be higher than 3%. The amount of title insurance you pay is correlated to the amount of the purchase price, however, the settlement fee, deed fee etc, are all flat fees. 

Do not sell anything without contacting a local attorney. Most states have something called a personal property eviction for when personal property is left over. You also mentioned that the homeowner is deceased.   All of the property may belong to the estate.