All Forum Posts by: Mike Rash

Thanks Jessica!

I ran the title search and was aware of the 10k for the special assessment.

My question: is this Assessment 'assignable' to the new owner?  it seems like this was one time assessment that the original owner choose to spread out over 10 years...   This seems like a liability of the previous owner and should not be assigned to me after the foreclosure.

Is N.J.S.A. 46:8B-21(e) applicable in this case?

Unit was purchased at Sheriff Sale in NJ (Foreclosure on 1st Mortgage).

Unit is located within Community Association.  Five Years ago, Association undertook a project

to Replace Roof and Sidings.   At that time, homeowners were given an option to pay

the assessment in full (about $10k) or spread it out into payments over 10 years.

The previous owner choose to spread this assessment into 120 payments.

Does the foreclosure wipe out this assessment, since this is 'liability' of the

previous owner? or am I responsible for these assessment payments starting from

date of the auction?

To me it seems like these 'assessment payments' should be treated the same as loan payments,

and be wiped out as a result of foreclosure.

What are your thoughts?

Regards,

Mike

I purchased a property at the sheriff sale and just got the deed.  I am planing on selling the property in the next 3 month.  I am wondering if I can avoid paying the real estate transfer tax by NOT recording the deed.  

Essentially if I record now, I will have to pay $3k now and another 4k when I sell....

I am not sure if at the time of the sale, they buyer will require me to record my deed before the sale can occur.

The property is in NJ.

Please advise and offer opinion.

One more question:

1.  The improvements / construction would take about 1 year to complete....  Could that be viewed as creating inventory? 

I have a 1 FAMILY RENTAL property that I have been renting out for 2 years.

My cost basis for the property is 500k.

I would like to do substantial improvement to the property by building addition

and increasing square footage by about 200%. The improvements

would cost around 400k. Then, I plan to sell it for about 1,400,000.

With proceeds, I plan to purchase another rental property(s).

Is there way I can structure this so that it qualifies for 1031 exchange?

Hi Tyler,

I would like to clarify one point....

You mentioned the following:

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One more thing to think about: In your hypo, if you contributed $450k worth of property, and your partner then contributed half ($225), you would in fact own a 2/3 interest in the LLC and your partner would own 1/3. (Your contribution: 450k; Partner's contr: 225k). To make this a 50/50 deal, your partner would have tomatch your contribution.

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I will first contribute $450k to buy the property. After one year, the partner will PAY ME $225K for the 50% stake of the LLC where the property will be transferred... Then we will start contributing 50/50 towards construction cost... so his initial 'contribution' of $225k is not really contribution, but the buy-in towards 50% stake...

Would this be still considered tax free transaction? What is the best way to structure this?

Hi Eric,

The partner will be managing all construction, hence I am contributing the money initially (carry all risk for the 1st year).

Any suggestions on how to structure this ?

I am planing to enter into a JV with another partner and need some opinions on the best way to structure this deal.

1. I will by the LAND with my own funds for $420k (NYC area).

2. Will work with the architect on plans and get permits (will take about 1 year).

3. Once the plans are approved - will transfer the property into a LLC and my partner will pay me 50% of the cost basis (~$210k) for the the 50% stake in the newly formed LLC....

Will this trigger a taxable event? Is it better for me to form LLC at the time of the purchase and buy the property under LLC name?

4. We will then contribute equalty 50/50 towards the construction cost (which will be about $450k).

What is the most 'efficient' way to structure this deal from the TAX perspective and LIABILITY point of view?

I am a currently discussing a deal with another investor and wanted to see if you guys see any potential pitfalls in the structure of this deal... My main concern is 'capital preservation' and to make sure that I am not dragged into unnecessary litigation... In the past I have done similar transactions by myself (without any partners)... Does this make sense? Is this fair? Am I setting myself for a trap? Anything you would change this 'structure'?...

Any advise is really appreciated!

This is in NYC area:

1. I purchase the land with the deed under my name for $400,000

2. I pay the Architect and the Approval Fees: $20,000

3. Once the PLANS are approved, I transfer the property into a JOINT LLC and my partner gives me 50% of incurred expenses ($210,000). The approval process will take about 12-18 month from the date I purchase the property…

4. We Start the construction - splitting the cost 50/50

5. Since he is handling the construction, he wants the development fee of $1000/wk for 30 weeks… If he does not deliver a fully completed house within 30 weeks, we start subtracting $1000/wk from that development fee… The fee will be PAID at the END after the house sells.

6. The construction cost is estimated to be: $430,000

7. If the market remains healthy, we plan to sell the house for about : $1,450,000

8. There is a provision in the contract, that once the plans are approved - he has 30 days to deliver 50% of the Cost - to join the partnership… If he does not, the house remains under my name and the JV agreement is cancelled.

9. There is a provision in the contract, that if we decide to SELL the property after the plans are approved, but before we start construction, that I will be compensated 5% PER ANNUM on the money that I invested, AND we will split the remaining PROFIT / LOSS - 50/50.

10. In the good case scenario, we expect the APPROVAL to take 12 month. The construction to take 7 month and selling will take 3 month (we expect to market the house as pre-construction and during construction process) - so hopefully we will have a buyer before we complete the construction...