All Forum Posts by: Mike Landry

My wife is a newer Realtor.  She earned a commission on the purchase of OUR house that closed on December 30, 2016.  However because it was our house she forgot to pick the check up at closing...it was a busy day.  So the title company mailed it to her and she received it on january, 4 2017.  When is the income considered earned/received according to the IRS?  It doesn't matter to me which year it goes in but it might make a diffence if tax laws change in 2017. Thanks!!

If you can find the right deal, there is no need to worry about seasoning periods. Look up delayed financing exception. You can not get your rehab money back out but you can get all of your purchase price. I look for easy rehabs, carpet and paint. With minimal rehab I can have less than 10k invested in a property and have my purchase money back in a month or two. 

People act like BRRRRR is so risky because of the debt. It is NO more risky than buying a house at market value and putting down %20 - %30. If you plan to use leverage than it is a great way to purchase rentals. If you plan to have paid off, purchased in cash properties, than don't do it. I would argue it is less risky. You have less $$$ at risk in the market. The hard part is finding a property that you can be all in around %70 ARV. It forces you to find a good deal...or else you won't be able to refinance all or most of your money out.

Bottom Line:  Buy right and structure with leverage is a great plan!

just remember they can appraise it at market value any time in the future. Montgomery county texas used to lag behind market value for a long time.. typical to see 20% below market. Then a couple years ago they decided to get aggresive and are now over appraising sfr. It probably varies based on local county politics, I would think. Also not sure how multifamilies have been appraised. I protest my taxes every year but rarely get anything reduced.  Good luck.

Thanks everyone for the valuable information in this thread.  The buyers decided to not pursue it and are going to rent until they can qualify with conventional.  I suspect they had other issues with business debt.  Back on the market!!

@Michaela G.

I like your creativity.  We do have a mortgage balance of about 220,000.  So it would all have to happen simultaneously?

I'm not sure it would work in this case.  And while they could "subject to", we could also just write it as assumable to not stay on my credit. Or just write the loan to them initially.

@Chris Mason I'm trying to figure that out too but I don't want to get too nosy as this transaction does have realtors representing both sides. According to their realtor they applied for conventional and where denied pre approval (just now finding out). Then got pre approved with an FHA. We should have been suspicious from the start.....and we where...but they where putting down almost $200,000....

Is Freddie Mac smaller/easier than fannie for approval?  

We have our primary house for sale and under contract for $332,000.  We just found out (10 days before closing date) the buyers where denied their fha loan even though they are putting down around $200,000.  They are self employed and as far as I know the issue was with their business debt/income.  They have excellent credit and cash available.

I have found a private lender that would be willing to write a private note at 6% interest up to $150,000 in first lien DOT. This is a family member of mine. We are not sure if the buyers will move forward with this yet but I am trying to get a handle on how this would work and the risks involved. We will use my Real Estate Attorney to draft paper work and an RMLO if needed. DOT state

So here are some questions I would love opinions on or education.  

1.  Being that it is NOT an owner finance (just a private lender), do the dod frank rules apply?  Specifically no Balloon payments.  Any reason there can NOT be an adjustable rate after 5 years?

2. RMLO to qualify the buyer.  If fha and conventional won't qualify them, why would an rmlo?  As the seller I will remove myself from their personal finances but my private lender will need to see their big picture.

3.  For those of you that hold notes,  what risk do you see here for the private lender.  They will be in first position secured with a Deed of Trust in Texas.  With that high of a down payment we feel risk is limited.  They would ideally require escrow and use a mortgage servicing company.

4.  Is it typical to have the borrower pay the attorney doc prep fees, rmlo fees, ect.  I figure yes as this is why you pay loan origination.  

5.  Is my private lender willing to be too generous?  Would YOU loan on those terms?  They would ideally not like the loan to go for 30 years but understand the dod/frank balloon restriction.  Thats why we where thinking of doing an adjustable after 5 years.  

They are in turn helping me by doing this transaction, allowing me to close on my next house....(which we stupidly put nonrefundable money down with a builder).  Thanks for any and all opinions.

Mike landry

k. Thanks. 

Quick question for the tax gurus.  If you live in a house and sell it 1 year and  6 months later for $50,000 more than you paid for it (no rehab), you have to pay short term capital gains on the profit.  Does your interest expenses and property taxes count towards your basis in the property?  These have been deducted on an itemized personal tax return.  

If you do NOT live in it, are the taxes and interest expenses now considered in the basis?  Does living in it change anything?  I might be overthinking it. 

Thanks.