All Forum Posts by: Alain Perez-Majul

Hey @Grant Anderson!

I second what Steve said. I also have no affiliation with BAM, but they're respected locally, and I personally know Ivan. He's always been receptive and helpful with me! 

I do believe they've been growing a ton lately, so check in with them, as they might not be managing properties from outside those they acquire internally.

Cheers

I'm currently testing out Propstream. Off the bat, it appears to be phenomenal (capabilities, reasonable monthly costs, interface, provided information, etc). However, I did just send a mailer last week with underwhelming results. Hopefully it's a one-off occurrence, or people are slow to call. Either way, I'll test for a bit longer.

If curious, this is a good video to check them out.

@Mark Jones hey Mark! Thanks a lot man, I appreciate it.

Hey Andy! Definitely. The buyer paid their insurance upfront, so they won't be handling that payment. As far as taxes, yes, they'll be escrowing for me. I filed the land contract for the buyers in time (literally at the last possible minute, on the 31st of Dec) so that they can take advantage of the homestead, and have lower taxes for 2019. I'll be making the tax payments myself, and they'll simply be paying 1/12th every month. Yes, the escrow company will account for that.

Hey guys!

Wanted to share my experience with a recent land contract deal I finished late last year, for anyone that might care to read and could maybe pick something up from it. It was my very first, and although definitely no expert by any stretch of the imagination, I learned a good amount and enjoyed the process. *Disclaimer (lol): results probably not typically, as in my opinion it went better than expected, but the deal structure/approach would be the same for anyone looking to do something similar*

To start, I'll share where I acquired the property. My partner and I run a wholesaling company in Indy, so we're direct to a lot of off-market opportunities (shameless self plug: anyone looking to purchase in Indy, reach out to me!). Naturally, this one came in through the pipeline, and I wanted to give it a shot. The property was located in one of the better areas of Indy (Washington Township), was a nice 60-ish built brick ranch on slab with a decent yard, so I know it wouldn't have trouble selling. My idea was to buy, rehab it (above rental grade, but not a full blown flip), and sell it off-market.

Pre-Rehab:

Post Rehab:

The rehab took a little longer than expected given miscellaneous issues, but my GC and his crew were amazing and did a great job for me; there was no hand holding or watching over anyone's shoulders at all during the entire process. I did fear that given I would be finishing at the beginning of December, with the holiday season and winter setting in I would have to sit on it for a while- luckily, that did not end up being an issue. I anticipated having to use a local realtor that does a lot of land contracts to get the deal sold, but figured it wouldn't hurt to throw up some signs during the rehab to see what type of buyers I could drum up on my own. Again, I was lucky in that it worked. I only put out a handful of signs (which were taken down within a couple of days, other than the one in the front yard), I got upwards of 40+ leads. I lucked out in that one particular family had been looking for a land contract purchase in the area a couple months prior, and had lost the house to someone else. At that point, the house was practically sold prior to the competition of the work.

The entire process took about 2.5 months. I have a friend that frequently does land contracts also, and was able to get contract from her and an explanation of how the entire process works. I ended up doing a "kitchen table transaction," and saved money on not having to close through a title company.

Numbers:

Purchase:  $54,499.50 (to include assignment fee and closing costs on the front end)

Rehab: $30,925 (had anticipated for large "unknown" budget, which luckily never happened)

Holding costs: $1,207.12 (to include builder's risk insurance and utilities)

Saved on: real estate commissions and closing costs on the back end (of which I anticipated when initially running numbers)

All-in: $86,631.62

I sold the property for $130,000, and was able to secure a $20,000 down payment from the buyer. I sold the home at a 9% interest amortized over 20 years, which comes out to $990.00 in monthly P/I payments. I will have a third party out of state company receive payments from the buyers and then disburse to me; they'll keep the schedule updated, report to the IRS at tax time, and provide online portals to both myself as the seller and the buyers so that they can see their payment history at their convenience, as well as make payments online.

Anyway, that's the gist of it. Didn't want to write an entire book on just one deal, but wanted to share, as perhaps someone could learn something or my experience might spark someone to look at one of their current deals differently. If anyone has any questions or anything to add, please comment away! And for those interested in Indy, feel free to reach out!

Cheers

Hey guys! Sorry if I didn't post this in the most appropriate category, but couldn't find a better one haha

So here's the run down: I am rehabbing a home that I will look to sell on contract and carry a note for some time (likely amortized 20 years). I haven't done this before, and wanted to see if I could get a little guidance from anyone that has, and that is knowledgeable for whatever reason.

My questions pertain to how to qualify a buyer. Obviously, I would want the buyer to have the down payment amount I'd be asking for, to be comfortable with the monthly payments, etc. Seems like common sense would be to check employment, income, and perhaps to a lesser degree (depending on the strength of other areas), credit.

With that being said, what should I be looking out for with a buyer for land contract? How much important do you put on credit? What I have missed above that I need to keep in mind, or what have I included above that might not be that important in comparison to another factor? Any recommended third party companies that help with qualifications for these buyers? As I mentioned, I'm new to this, so anything helps.

As always, thank you guys for your time and help!

@Louise A. a little bit of what we were chatting about.... :)

@Brian Eastman

Thanks for the reply- makes perfect sense! I can see how you'd be looked at with more scrutiny if you're a full time wholesaler who on the side only wholesales within their SDIRA, as opposed to someone who might have a 9-5, and buys stocks, private lends, and the occasionally wholesales a deal here and there within their account.

Given that there is no hard rule, like you mentioned, it seems that it would be a matter of personal comfort with the risk involved, driven to a large degree by your particular situation as well (i.e. wholesaler vs not).  Perhaps a person wholesaling full time wants to invest in equities with the money in their Roth, and chooses to grow it by doing just one or two deals a year in the account, and is ok in assuming the risks of doing so. I'm personally on the conservative side, and agree with you that the CPA's opinion should be held to a high regard.

Thanks so much for your response, Brian!

For example, there is literature such as:

http://americanira.com/2013/12/21/flipping-contrac...

Or from people that are quite active in the business, like Seth:

https://retipster.com/self-directed-roth-ira-real-...

Someone did follow up with a comment, stating:

His comment about no one really knowing the amount of deals the IRS would consider "running a business" is what I've gotten hung up on. I've heard from so many that it's such a grey area.

For you guys in this thread that clearly have a ton of knowledge and experience in this area, what are you thoughts on that?

As others have mentioned here, I've also experienced the frustration of getting a varying degree of different answers when it comes to the question of "wholesaling within your SDIRA?" As people have mentioned, there are sales pitches that promote it: I've heard from Equity Trust presentations that one can do it, not to mention also from known wholesaling figures like Vena. Perhaps the reps are not aware, and neither is Vena, that it's not something one should be doing? My CPA, like those of others who have commented, advised against doing it, while at the same time I've heard that as long as you're not running an entire business out of your account, and maybe doing one or two deals a year in it, you should be fine. I suppose it comes down to how likely you think your chance of being audited is, and your risk:reward threshold when considering possible UBIT?