All Forum Posts by: Kevin Boylan

Oops, I meant I thought it was what beekrock was trying to do, avoid late payments by his tenants. I was just trying to come up with a creative idea.

I just assumed that was foster's problem and that the up-front money was an attempt to avoid late payments.

Or would this work? Raise the amount you charge for rent by some amount, say $20 a month, and tell them if they get the rent in on time, you will give them back $20 at the middle of the month. That would be incentive for them to pay on time rather than penalizing them for being late, and you don't have to collect the penalty if they are late. I guess the problem to overcome with this is that it may appear that you charge too much for rent.

It's not as easy as before, but I would think that if you have good complete documentation of before and after and a good valid appraisal then you should be ok. As long as you buy it at a legitimate price and sell it at a legitimate price, you should be ok unless your buyers are using a lender that insists on seasoning no matter what (FHA?), but there are plenty of loans out there that don't.

I would be absolutely sure that the building does legally appraise for at least $290k or you could be stuck owing more than its worth and it could be an illegal transaction. As long as its really worth $290k I would say its ok.

I'm curious, do you use the 70% rule when buying houses you are going to hold and rent out? I know the 70% rule applies to rehab/flipping, but I have heard that with rentals 80% - repairs works too. This allows you to refinance after repairs and have 20% equity.

Geoff,

I was more interested to know what sort of things you paid closing costs for and who did the closing? Do you go through a regular title agency?

Kevin

What kind of closing costs do you have with a "subject to"? That is something that never gets mentioned.

I assume in this scenario, you, the investor, do not get to deduct the interest for taxes, nor do you get to take depreciation, since you got the title subject-to. Is this correct? I assume the original owner still gets to deduct the interest.

Kevin

Tax appraisals can be used as a very general indicator and that is about it. In my area the tax appraisal is typically only about 75% of what a house in good/normal shape will actually appraise and sell for. They are usually drive by appraisals at best and they don't usually reflect the condition of the house and become outdated. I had one house I looked at that was condemned and boarded up by the city for years but the owners were still paying taxes on a tax appraisal that was based on the same house in great shape. It's tax appraisal was about $80,000 but it sold for $20,000.