All Forum Posts by: Andrew S.

Thanks, yes, I'm well aware of potential gift tax implications. My question only pertains to what the IRS might find acceptable for determining FMV. I'm not trying to skirt taxes at all, just trying to minimize transaction fees (such as formal appraisals, if possible).

I'm considering selling a property to a family member below current market value. For the purpose of determining potential capital gains/losses, I need to establish a fair market value that will hold up to IRS standards. So, what ARE IRS standards for a case like this? Can I just reasonably comp the property myself? I purchased the property 5 years ago - can I simply use the purchase price plus some reasonable inflation adjustment? I assume that the iron-clad way is to pay for a professional assessment, but I'm trying to avoid that cost and hassle, if possible. Does anyone here have experience with what might be considered a "reasonable" attempt at determining FMV?

I’m considering the purchase of a couple of tracts of land in Wilkes County at a Sheriff auction.  I’d like to have a title search done ahead of time so I know what I’m bidding on.  I called a couple of title companies and I’m told that in NC only attorneys do title searches (I’m not sure I fully buy that but that’s what I’m told).  I called a couple of “closing” (real estate) attorneys and they tell me they only do title searches as part of the actual closing process.

Does anyone have a recommendation for an attorney or a title company that will do “one-off” searches?  I’ve tried to do some of this myself at the court house but found it hard to use their records and I’m not confident that I was able to cover it well.

Anyone with access to MLS (via a realtor or direct access) can get daily, automated searches. When the parameters are chosen carefully, it just takes a few minutes every day to review those searches. I think you are wrong in assuming "most people aren't looking at MLS". I think ANY even halfway serious investor will happily spend a few minutes a day scanning MLS searches.

Yes, ANY investor (at least local ones) can also drive for dollars and assemble the same 500-600 property list you did.  However, very few have the time and/or inclination to do so.  Also, not everyone wants to go through the trouble of contacting those 500-600 owners and generate the 2-3 leads a month.  That is real work!  Therefore, THIS IS WHERE YOU CAN ADD VALUE as a wholesaler.  

Just scanning searches on the MLS adds little or no value to most people, so nobody will be prepared to pay you a fee for finding those types of properties.

I know @Eric F. has done such deals.  Eric, you still doing mobile homes?

 Sure, but lets calculate that cost "on the back of an envelope": say, rent is $1000.  Say they earn 5% interest for 5 days.  That's 68 cents.  I can live with that.

Even if they collect the float for a few days, so what?  It is an otherwise free service for the landlord and the tenant.  If a landlord's funds are so tight that a 5 day wait causes serious problems then they are dangerously undercapitalized anyhow.  For what its worth, I use Cozy for some of my properties and a (excellent) property manager for the rest.  My Cozy funds are ALWAYS first to arrive in my bank account.  Not complaining at all, just an observation.

Congrats on your move to Seattle @Jon Holdman     I lived there during most of the 80-ies and really miss it.  Great place - I'm jealous!

This will depend a lot on where the property is located.  I just sold a piece of land for 10K in Wilkes County, NC and the closing costs ended up at around $750.  Most of that goes to the closing attorney (if you are in an “attorney” state) - about $500 flat fee (included title search) in my case.  Title insurance, various recording and delivery fees, etc. make up for the rest.

By 6%, you are referring to agent commission?  You would not want/need to use an agent in your case.  If you do, then they will likely charge a lot more than 6%.  For lower priced land sales, agents typically charge flat fees, or commissions in the 10-25% range.  I helped my mother in law sell a piece of land in Texas not too long ago where we did not know the market at all and the property was 100 miles away, so we decided to use a local agent.  In that case, the agent took 20% - very reasonable IMHO, as she had to do a lot of the legwork (including finding a buyer and showing the property a couple of times), and for that, she ended up with just a couple of thousand bucks.  Not a huge hourly wage, I’m sure.

A word of caution about your willingness to look up to 1.5 hours from where you live.  I know that this has become a popular “rule of thumb” (@Brandon Turner), and I suppose some people might find it acceptable, but if you consider self-managing or doing some of the maintenance yourself then a 3 hour rountrip is a lot.  Picture yourself dealing with a tenant call about a leaky toilet.  You either hire a local plumber/handyman ($100-150), or you get in your car and spend the afternoon on the road.  That is an expensive toilet flapper either way!  

It’s an individual choice, of course, but I have owned a duplex 45min away for several years now and I’m putting it on the market, exactly and exclusively for this reason.  Just too much hassle for me to make that round trip - and that is half of what you think you are willing to accept...