Buying & Selling Real Estate Discussion

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Eric V Harding
  • Investor
  • Los Angeles
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Reverse Mortgage - Best Options

Eric V Harding
  • Investor
  • Los Angeles
Posted Jun 6 2022, 18:53

The time has come where we lost someone special and they have moved the estate in our names.

There was a reverse mortgage taken out in 2017. Our angel used a little bit, not too much, and kept a line of credit open.

By the RM nature, we need to sell within 12 months now. Its a solid condo in Orange County, CA which is a good rental pull, so we were wondering if its possible to hold on somehow? We dont know any RM hacks, so any wisdom is appreciated.

Orange County, California

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Joe Homs
  • Flipper
  • Mission Viejo, CA
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Joe Homs
  • Flipper
  • Mission Viejo, CA
Replied Jun 6 2022, 20:38

@Eric V Harding let's start with how the property was titled?  I hope it was in a living trust and that you are the trustee.  If it was just in their name, then you may have to go into Probate.  There are really no hacks that I can think about so you will just have to refinance the debt and pay off the RM.  You can save on Property Taxes, but the new rules are that you will need to move in.  You might be better off selling it as you will not pay any capital gains taxes with the step up in basis.  Hope this helps.

Good Investing...

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Robert Reynolds
  • Real Estate Agent
  • Los Angeles, CA
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Robert Reynolds
  • Real Estate Agent
  • Los Angeles, CA
Replied Jun 7 2022, 01:13

@Eric V Harding sorry for your loss. If I were you and wanted to keep the condo I would reach out to a real estate investing friendly loan broker and figure out my options refinancing the home. I would love to help you run your numbers, and find the best option moving forward. 

Robert Reynolds

Real Estate Agent California (#02166235)

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Kushaal Malde
  • Lender
  • Redwood City, CA
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Kushaal Malde
  • Lender
  • Redwood City, CA
Replied Jun 9 2022, 21:04

@Eric V Harding sorry for your loss. As @Joe Homs mentioned, based on how the property was titled, your best bet if you want to hold as rental will be to refinance into long term fixed debt and pay off the RM. If you have good credit, you could command several attractive refinancing options- rate/term and/or cash-out, depending on equity, to choose between based on your specific investor goals. 

From a rental property owner perspective, holding would benefit with no property tax reassessment. And a sale would benefit from no capital gains liability from a step up in cost basis. Not to say you couldn't hold and sell later.

Good luck! Let me know how I can help or if you would like a 2nd opinion on anything.

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Erik Browning
  • Lender
  • CA AZ TX
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Erik Browning
  • Lender
  • CA AZ TX
Replied Jun 9 2022, 22:30

Hi Eric, also Erik here. Sorry for your loss. Yes, holding onto the property is ideal to capture the benefits of owning real estate - including the depreciation and ability to cash flow. Like the other folks mentioned the trust document and how the property was last recorded will determine your ability to capitalize on the property. 

We have a reverse mortgage expert on our team, not me, that can assist in this effort if you'd like to schedule a call and work out the details. Feel free to reach out, best of luck!

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Replied Jul 29 2022, 05:43
Quote from @Eric V Harding:

The time has come where we lost someone special and they have moved the estate in our names.

There was a reverse mortgage taken out in 2017. Our angel used a little bit, not too much, and kept a line of credit open.

By the RM nature, we need to sell within 12 months now. Its a solid condo in Orange County, CA which is a good rental pull, so we were wondering if its possible to hold on somehow? We dont know any RM hacks, so any wisdom is appreciated.


 If HECM balance is small, you can refinance it and keep it. 

If HECM balance exceeding the value of the property, you can short sale it.