All Forum Posts by: Jacqueline Gardiner

I was looking at a service called Zimplemoney that someone recommended to service the loan. And, yes, I can put together a 1098 annually. I'm not too keen on making quarterly inspections, but is that really necessary for a vacant lot when it's no longer in my name?

@Caroline Gerardo Thank you! That's a huge cost for a foreclosure on a $100K lot.

Hello BP members!

I have a 2 ac. lot for sale in CA ($110K value). I stated in the advertisement that I would consider owner-financing because the lot is in an area where lot sales have been very slow for years. I have the property paid off, but I'm tired of paying the taxes and insurance on it and having the equity tied up.

There is an interested party who is asking for specifics on what I would accept. Below are the terms that I am thinking (all to be verified with a CA real estate attorney if we get to that step):

• 5%-6% interest rate
• 10 year loan with either interest only or payments amortized over 30 years
• $10K down payment (enough to cover attorney's fees and closing costs now + money for foreclosure if it becomes necessary)
• Due on sale clause
• No subjugation to any other loan - so it would have to be paid off when a construction loan is taken out.
• No home construction to begin within two years of the sale (to avoid some of the Dodd-Frank provisions). A mobile home could be put on the property sooner, but not if it requires a lien on the property or requires construction that could result in a lien on the property.
• Buyer to provide proof of identification (driver's license or passport with current address)
  
• Buyer to provide proof of income (two years tax returns)
  
• Employment to be verified (I assume this would be with a call to the employer)
• Credit score of at least 650
• Late charges -5% of the monthly payment if over 10 days late.
  

I would appreciate input regarding the above terms and anything else important that I might be forgetting. Thanks so much!

You could consider leasing the property to someone who owns (or wants to buy) his own mobile home to put on it. That way you wouldn't be responsible for maintaining the mobile home. That angle is one that makes mobile home parks so desirable.

Hi Mary, I'm sure one of the pros will weigh in, but the intent is important in doing a 1031 exchange. It is only intended for investment properties. So, if your parents are planning to move into the new home, then a 1031 exchange won't work. If they plan to rent it out, then that can be done and you can be their partner in that. There is probably more than one way to do that, but for this example, let's say that they bring $600K to the investment and you bring $290K, your investment being the loan liability. You would then own 32% (perhaps as a tenant in common) while they would own the balance. The intent can change down the road, so perhaps in a couple of years or more, you could all move in there together. 

@Vince Coffeen Have your considered just paying the capital gain tax and forgetting about the exchange? I think you're saying that you will have a $61,000 gain, so if your long term capital gain tax rate is 15%, you'll have a year to save up a little over $9K for the taxes. It seems like it might be the simplest solution. 

I would also recommend searching the forum for similar posts. I think you can probably put the current property back into your names and go ahead with the exchange. Perhaps
@Dave Foster can weigh in on that.

@Nik L. Do you already have a 1031 exchange intermediary involved who is holding your funds? That's a requirement prior to closing the sale if you're going to do a 1031 exchange. An OZ investment doesn't require an intermediary and only requires the reinvestment of the capital gain rather then the entire amount of the sale. However, the tax on your current capital gains will only be deferred for 6 years, so the 1031 is better for long-term deferment.

I was weighing some of the same options when I did my exchange a few years ago and ultimately went with two TIC investments. One turned out to be a big failure, while the other is providing cash flow, though at a relatively low cash-on-cash return.

You might consider two or three build-to-rent 4-plexes in another state with good professional management if you can find them. 

It sounds like you're off to a great start, Nate. Can you tell a little more about the  insurance rider covering public utility connections? I haven't heard of that before. Was it part of your homeowner's insurance? Did it pay for the replacement of your water and sewer services from the street? 

Good Morning, Julie! I'm thinking about pretty much the same thing. I have money in a medical building and it's been a slow, steady earner, but I'm only making about 5% on my money. I started looking at build-to-rent homes, duplexes and quads in a part of the state a few hours away where cash flow is possible. I could potentially leverage into as many as 14 houses, but I'm concerned about how to finance that (which I have yet to investigate). My first step is to put together a project team as I have heard advised numerous times. I started with the NARPM website yesterday (National Association of Property Managers) and found 3 property managers in the area where I have interest. I recognized one of them from BiggerPockets and started a conversation with him yesterday. 

I have one thought about your transaction and that is that it might be easier to manage it and all of the moving parts in multiple transactions. I suppose if you're selling the townhomes to individual buyers, it's probably going to work out that way regardless. But, it would give you more time and flexibility in finding the properties you want to purchase. 

If you're interested, we can keep in touch and help keep each other on track to meet this goal. I'll send you a connection request. 

@Brandon S. Hi Brandon, I am wondering if you were successful in finding some build-to-rent homes that were available for private investors. I have found one promising source, but am thinking that I might buy a few via a 1031 exchange and that it might be better to have different markets and developers. Thank you.