Pittsburgh, PA · Member since 2013 · 29 posts · 0 votes
Ok so here is what I need to know..Im buying a property with cash, what do I need to do to get the title transferred to me? I know I need to get a title search done but then what? Do we Need to go to a real estate attorney? Title company? Both? Ive got the cash to buy today so what exactly do I do next?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
First you need a contract to buy, then turn that over to a title company and they will take care of everything, you also need to see you insurance agent to get coverage on the day of settlement if you want it insured. The money needs to go to your bank and the title company will let you know how much to bring to closing, the sale price plus costs of the transaction. You'll need to bring certified funds from your bank made out to the title company, they will give you the instructions. Show up, provide the funds, close the deal, walk away owning it. Good luck :)
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
You can use a title company -- you definitely want to get clean title so make sure you do your due diligence. If someone is willing to quickly sell for cash, you might get surprises otherwise (liens that you were unaware of). A title search will help you find these things.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
First you need a contract to buy, then turn that over to a title company and they will take care of everything, you also need to see you insurance agent to get coverage on the day of settlement if you want it insured. The money needs to go to your bank and the title company will let you know how much to bring to closing, the sale price plus costs of the transaction. You'll need to bring certified funds from your bank made out to the title company, they will give you the instructions. Show up, provide the funds, close the deal, walk away owning it. Good luck :)
Pittsburgh, PA · Member since 2013 · 29 posts · 0 votes
13y
Dev Horn,
Im not sure yet, it really just fell in my lap to be honest lol! I know a guy that needs badly to get out of his payments. He owes 5 grand and thats what im giving him. I really have not thought much about what the best option would be...
Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
13y
I don't know that I'd ever recommend buying mortgage notes over investing in real estate. With mortgage notes, it seems like all you're doing is investing in a fixed rate of return with very little upside. Although you aren't putting in any effort dealing with tenants either so if thats a concern then maybe it would make some sense.
With real estate, you're giving yourself far more ways to make money off your investment that owning a note will ever do.
1) Profit from the rental.
2) Principal paydown
3) Appreciation
4) Tax benefits
And where is your leverage in buying notes? I'm guessing you're talking about getting some sort of discount when you buy the notes. But I'm guessing you'd be hard pressed to get 100k note for 30k.
In 20 years, would you rather have a paid off note or a house worth 200k that is completely paid off and making you 1k a month?
I'll take the ladder any day of the week.
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
13y
If possible, hire an inspector - maybe $300 - to get in the house before you purchase so you can get an assessment of what repairs it might need. You need to make sure that you are purchasing at enough of a discount so that you can make repairs and still make a profit if you were to sell it after making repairs. Other costs to consider are taxes, utilities, and any other holding costs - plus a Realtor commission if you decide to sell. People think buying at 70% of ARV (after repair value) leaves a lot of room for profit but often find unexpected repairs, holding costs or commissions, etc. eating into their margin on the deal.
If you are buying to rent it, you'll still need to make repairs to get it ready to rent - carpet, paint, appliances, etc.
Point is, you want to know what you're getting into. And involve the right pros in your process - like a title company. =)
Are you assuming this guy's existing mortgage after paying the $5K he owes?
Pittsburgh, PA · Member since 2013 · 29 posts · 0 votes
13y
Dev Horn, 5000.00 is all he owes on the house then its his free and clear, but im trying to understand how we go about paying off his morgage, and getting it into my name. Does the title company help with that or a real estate attorney?? He is a family friend and he just wants to be rid of this payment. He is not currently living in the house.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
Yes the title company will get a pay-off statement from the mortgage company. You would make a check out to the title company and they would do the disbursement.
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
13y
Bitsy Voloskie -- $5K for a whole deal? Holy cow, where do I sign?? LOL
Yeah, just call up a local title co. and tell them about the deal - they will help you understand and execute the process. It's their job to do the title search, transfer, etc.
Pittsburgh, PA · Member since 2013 · 29 posts · 0 votes
13y
Dev Horn, Yes for the whole deal lol! Believe me Im well aware that I wont get another chance like this again. He's been in the process of fixing this house for a while himself so Its already got a new kitchen and all new unfinished drywall threw out!! New siding and new windows! It is just a small 2 bedroom house but certainly worth way more than 5. He is going threw a terrible financial time right now and doesn't have time to fix and sell so......thats my story lol:) also in a great area and a great school district.
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
13y
Bitsy Voloskie This has to be the best "I just found this deal" story I've heard so far on BP! The lot is probably worth more than $5K. Good luck on this!
Stone Mountain, GA · Member since 2013 · 28 posts · 1 vote
13y
In your contract, you want certain things to protect you and your earnest money. You want a clear and marketable title. You also want a contract that makes it easy for you to get your earnest money back if you were putting up any and the deal doesn't go through. I'm disputing over $2500 earnest money as we speak on a house where the seller clearly did not have a clear title. GAR Forms...read up about them. It sounds like since its a friend of the family, it may not be an issue but its something to think about for the future. Call a couple of closing attorneys. They may be able to help you out with some of your questions. Most importantly, you should think and plan out what exactly you plan to do once you purchase the property. If you fail to plan, you are planning to fail. And I'd much rather see you do well with your investment.
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
13y
Bitsy Voloskie
Contact either a title company or an attorney, you don't need both, besides a title search, you also should get title insurance, unfortunately the rate is regulated by the state and starts at $500.
Stone Mountain, GA · Member since 2013 · 28 posts · 1 vote
13y
I hope so too. Getting involved with biggerpockets is a great step for you. The network is amazing. Both of those sites are nice because you can set a price you want to pay, for example $300 and have multiple designers submit ideas. They work off your feedback and what you provide and if you don't like the end result they have a 100% money back guarantee. I've used it for a 20 page renovation investor plan, business cards, t-shirts, logo, website design, etc...
Larsen, WI · Member since 2013 · 45 posts · 7 votes
13y
Is anyone concerned for Bitsy that this may not appear to the IRS as an arms length transaction (think that is the right term) and she might get hit on taxes on the difference between purchase price and value (becuase they deem it a gift)?
Larsen, WI · Member since 2013 · 45 posts · 7 votes
13y
Ok, so I haven't had to deal with this situation so just doing some reading on it now. If anyone has more definitive info please chime in.
Well the way the IRS puts it it on their web page: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Gift-Tax, and I understand it:
"The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not."
Generally if something is on the open market and you purchase it in a competative enviroment then the IRS deems the purchase price as the market price (or value). However if something never goes to market and you purchase it for substantially below assesed value, they can easily make a case that it was a below market purchase and deem it as a "gift". There is a $14000 exclusion that doesn't need to be reported, so you could be covered by that, but probably not. Beyond that It is a bit more than I have had to deal with, as it is unclear to me by reading the IRS documents weather the gift would be taxed to the donor or the recipient (looks like they say donor is generally responsible, but that part is a bit confusing to me).
http://www.bankrate.com/finance/retirement/know-the-gift-tax-rules-1.aspx also talks about the lifetime exemption limit of $1,000,000 from the donor and that the donor is the one that would need to pay taxes (not the recipient). So maybe you would be ok, but maybe your friend who is in financial trouble might end up owing a large amount of taxes (he might get buy by filling out a Form 709, as the total he has ever gifted is less then $1,000,000). Maybe someone can confirm that part.