@Naomi Spira  not real tough to prove these are not valid arms length leases.market price is double leases done 3 days before foreclosure sale slam dunk

I understand there’s some nuance state-to-state in terms of deed of trust usage vs. using a mortgage for the second lien position (our investor in this case).So that we can arm ourselves with the most knowledge going into discussions, could anyone advise what the setup process actually looks like here?

Instead, go with something like “I’m in the neighborhood handing out” as you extend your arm to give whatever it is to them.

Theyre just ARMs with a different name and a one year adjustment period.

A lot of accountants now say that it is perfectly fine as long as it is documented as an arms length business like transaction.  

Even lending to an LLC, which Dodd-Frank explicitly excludes, will get you hammered if the intent of your borrower is to use the property as a personal residence.For example, you could make a real estate loan against a gas station.

It's hard to say Russell, because we don't have an arms-length arrangement when the buyer is representing himself/herself as agent. 

If I paid off the ARM, I would flip to black cash flow around $450 a month.

Some years ago, the IRS compliance chief speaking at a CPA conference told us explicitly: we will impose preparer penalties if you guys take an incorrect position based on OUR incorrect publications, because you should know better. 

In general, big banks dont invest a lot in their mortgage arms because they arent all that profitable.