All Forum Posts by: Account Closed

@David M. Of course. Lots of liability and tax implications. I’m not headed that route.

@Brent Coombs thank you. The reason I don’t sell the property outright is because it’s in what I would consider an expanding area. There is a great deal of planned development surrounding the house that I don’t yet think has been priced in. I imagine we are another year or two out from people realizing the value that the city council approved and massive mixed use development nearby will have on prop values. It’s currently a dirt lot that came out of bankruptcy 3 years ago, got tied up in lawsuits, and is about to go vertical.

Suffice it to say, it’s tough to walk away from knowing what I know about the area.

@Henry Lazerow that was my next best option. I know people who have formed an LLC/S-Scorp and sold the property to the entity.

They then pay the entity rent to run their business out of their own house. This allows them to deduct their rental expense in the newly formed LLC and still depreciate the asset at the new basis. Great strategy, but they have to put 20% down which isn't the goal for me here.

@Matthew Olszak thank you sir. That officially puts the idea to rest.

@Matthew Olszak I understand it would be scrutinized and I’d have to have a solid appraisal...but otherwise, which part of this is illegal? To my knowledge, non-arms lengths transactions are done regularly when one family member buys from another.

@Jonathan R McLaughlin which part is a violation of FHA loan terms?

@Patrick Britton I appreciate it Patrick. I’d never do something like this without legal and a CPA signing off but figured I’d bring it to BP first on the off chance someone else had executed it.

I don't have a family member that has that kind of equity. I'm the family pioneer when it comes to REI but it's got my mind spinning about private equity, maybe an decent ave.

Either way, thanks for my prized star!

@David M. no problem. I AM going to sell it to myself but a sale to a family member is not arms length either so I am wondering if this falls in the same bucket as being legal...but tricky to do in practice for tax purposes.

@David M. I feel like as long as I get an appraisal and sell it at Fair Market Value it shouldn’t be an issue. Sales like this are done between family members all the time. Curious to see if anyone has ever seen it done in practice tho!

@Derek Dombeck interesting idea but the second mortgage would appear on their credit which is not ideal. Appreciate the feedback tho!