All Forum Posts by: Ezra Nugroho

Hi all,

I just read this related topic on tax implications of Subject To: 

http://www.biggerpockets.com/forums/51/topics/1303...

My question is what are the tax implications of seller financing that is done via the creation of a note, both for seller and the buyer?

Let's just create the following hypothetical transaction with easy numbers:

Seller owns a property free and clear, selling it for $100k. Buyer pays $40k down, and the rest will be paid via sellers financing at 5% interest on a 10 year note, 20 year amortizations with a balloon payment at the end.

Is it correct to assume that:

1. The $40k down is subject to capital gain on the year of closing.

2. The 5% interest is considered a regular interest income. Buyer can deduct this part. What about the portion of the payment that goes to the principal ?

3. When the balloon payment is paid, this is considered as capital gain on the year of the payment. 

Correct? Absolutely wrong?

Hi all,

Sad to say that I am going to miss this one. My family and I will be driving to Tahoe on Friday evening. I hope to catch up with you all next month.

@Shane Pearlman The last two meetings went all the way to past 10 p.m. 

@Johnson H. @Jay Y., Thanks a lot for organizing another one!

Adding @Kevin D. 

It was a great meet up! Thanks for setting it up @Johnson H. !

@Account Closed ,  @J. Martin It was nice to talk to you all today.

@Account Closed I also think that some of these ultra high net-worth people split their investments to both capital preserving assets and highly speculative ones. They have access to the ranks of Bay Area VCs! If they can put their capital to the next google wannabe, common real estate investing may sound rather boring. 

I am a typical Silicon Valley engineer. For the foreseeable future, I'll be employed by these high net worts via VCs. At some point ago, I was directly employed by one, so I got to peek first hand on their life style and a bit of their investment style. Do they buy real estate? The do, but when they do the buy something like a whole undeveloped beach strip or a sky resort.

@Account Closed I have no doubt that you'd reach 8 figures in 10 years. Even if Bay Area properties do not  double in this time frame, you'd be making other investments to help  achieve that. So congratz Bob and J Martin on your future cruise trips. As for significant others, maybe Minh has some cute relatives, Ha!

But Minh, your numbers for Midwest is a bit too pessimistic, with a $50k SFR, you can get $600-800 while paying 0 utilities. Of course you'd still need to pay for maintenance.

Yes, I concurred, this show was brilliant. Such an eye opener!

It's amazing how much you can achieve just by reciting different forms of "Can you go lower than that?"

Fascinating story to follow!

Our national unemployment rate is at a low 6%, almost exactly where we were 10 years ago!: http://data.bls.gov/timeseries/LNS14000000

Premise 1: Since this is average, then some places must be doing better, while some are doing worst.

Premise 2: Since some of the highly populated metros are doing very poorly (Detroit and the like), then some other must be doing very well!

Real estate in the bay area is rather unique. Because of our high tech oriented economy, real estate prices are driven by VC money and tech IPOs. While some stellar IPOs may create some local bubbles (e.g. Google, Facebook IPOs drove Palo Alto to the sky), VC investments in startups should drive general housing prices up. So far VCs are not slowing down.

Thanks to @Minh L.'s recommendation last time, I just completed the best $10 in my life. I am not just trying to be sensational here, but Mike Weese's book From Janitor to Multi-Millionaire is really an eye opener.  http://www.amazon.com/From-Janitor-Multi-Millionai..., especially the chapter about taxes!

I'll see if I can make to the meet up this time. A friday evening is hard for me to carve out.

@Account Closed Thanks a lot for the info!

I just checked at their website and saw their promo. Their promo rate is surely very nice. However, their requirement is for 80% LTV, which will provide me with little money to work with. Since the timing is tight, would they use Zillow numbers in place of real appraisals ? :D

However, I know it's possible to use HELOC to pay down payment for a conventional mortgage, right? Which is then quite reasonable to purchase something meaningful.

I am considering the pros and cons for me to pursue purchasing my second rental soon, or if I should apply patience for now.