All Forum Posts by: Jonathan V.

Wow, that learning curve went amazingly well for you it looks!

I understand completely what you were saying now, way to go on that second deal, I'm betting it didn't take more than a couple hours worth of work for $3500 theoretical profit!

If you want to tell someone about the way things are going, you could always start a blog. I'd read it, I love hearing these stories, good, bad, and the ugly!

However, why was the selling price so low? I've followed your posts, and I would assume the Fort Meyers, Florida area would be a good, high priced area for mobile homes.

I'm not trying to sound greedy, arrogant, or anything of the sort. But around here I see homes for sale for 15-20k all the time (between 10-20 years old, 3 bed 2 ba 16x80 or 70)

I've also spoke with many people in the business in the area saying cash talks on these and you can sell for the amounts listed.

Just worries me a bit, yes $1500 profit is great, and it's a great % on your return. But why is this home not a 15k home?

I really don't mean to sound rude or anything, I'm just somewhat worried as I'm about to start doing my own deals, and that kind of deal just won't cut it for me.

This is what I wrote.
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The requirement of becoming a mortgage specialist/originator, or anything of the sort is a preposterous proposal when concerning small companies/individuals.

I understand the need to regulate large companies, i.e. banks. So that they are not allowed to make egregious loans or adopt predatory lending habits. But this act does the opposite of that!

By only allowing mortgage originator/officers, or whatever to lend money on primary residencies, your creating a higher barrier to entry, thereby giving large companies a huge edge. Joe Smith from the local town can't take a 6 month course, he has a real job that won't allow it. The banks can afford this, and now you've taken away from so many people.

The small level operations that lend money are an efficient market, that you will completely destroy with this Act. You will make it impossible for thousands, if not hundreds of thousands of people to be unable to secure lending on a home.

I say this because the people who wouldn't qualify for a bank's lending, can qualify from Joe Smith. Joe Smith should be allowed to sell a home to a person who doesn't qualify for a bank loan, based on his own personal judgment.

If the borrower ends up not being able to pay, the only person hurt is Joe Smith, he has to take back the home and try to sell it again. The borrower is at the same place they were before, arguably in a better place because they've had somewhere to LIVE over the past few months/year.

This process creates ZERO drag on the US economy.

If a bank with bad policies lends to three million people, then the US economy is HURT, your ONLY allowing for exactly THAT to happen with this act.

Reword the document that small lenders can sell THE PROPERTY THAT THEY OWN, without any of this red-tape.

I'm passing this along from another forum.
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HUD is proposing to end seller financing on all housing including mobile homes, with the exception of personal residences, unless the seller becomes a licensed mortgage originator. To implement these regulations they are redefining seller financing as loan origination, even though no money is actually loaned to the buyer under an installment sale contract The new regulations will effectively end all investor installment sales and will probably apply to lease options as well.

To stop these regulations from being implemented, please submit our comments at www.regulations.gov. Select proposed rules for "document type", search using the keyword "safe mortgage", click on "FR-5271-P-01 Safe Mortgage Licensing Act..." to read the proposed regulations and submit your comments.

We have until 1 minute before mid night tomorrow to comment on these regulations, and hopefully stop this government assault on our property rights and our businesses.

Please pass this on to your fellow investors.

Thanks,

Eugene

Follow Ups:

I appreciate the insight, I believe I'm going to pass based on the help I've received here, and my own calculations.

I believe I can spend that kind of capital elsewhere and make a lot more money.

Thanks again for all the help.

I agree with all of the points currently being said. The woman is selling for a few different reasons:

1. She lives about 45 minutes away, and is a pain to drive in.
2. The current tenant has left.
3. There is a lot of maintenance that needs to be done.

You guys are absolutely right in that she has deferred a crap-ton of maintenance, and I'd have to pick up the slack.

She had an estimate done on the siding @ $6,000. That would obviously be the big ticket thing, assuming the foundation is ok.

Rentometer.com says that $400 a month is a "good" deal. I feel that @ $400 would be appropriate if I were to completely rehab the home, in it's current condition I don't know how she is getting renters in the place.

Another issue is that I haven't seen the other side as it's currently rented and the tenant wasn't there. But he has a dog, and I'd probably want to end up having him go as I don't want to allow pets.

The place has floor heating, and the other side's out. They are currently using space heaters.

So the heater would have to be fixed as well.

Another issue of note is that the woman owns the home out-right, so she has a lot of equity to work with.

The majority of the work looks like it will be on the outside. But I'm pretty comfortable that, if I put enough $ into the place, I can get the $400 a month, 11 months out of the year.

As for the driving through thing, I don't care to go at night in the area, sorry if my original internet tone was more apprehensive, it wasn't meant to be.

Also, as for the property values in the area, the house next to it is selling for about $35 a sq/ ft. The duplex is about 1500 sq ft. Now if the one next door will sell for that much, I've no idea.

Looking up recent sales in the area and they are kind of all over the place, some in the mid 60's, some in the low 20's. But none sold or for sale recently in a mile radius.

And obviously I'd only buy contingent on an inspection and after taking a look at her tax returns for the past couple of years.

OK guys, here is the album for the duplex I'm looking at.

Both sides are 1 bedroom, 1 bath.

Again, $30,000 for the home, $400 a month rent on each side, currently has one tenant who is actually paying $100 a week, and has been doing so for over a year. The other tenant has just left so, that is the reason she is selling. She also did tell me that she has other rental properties that she is not selling.

The area is not a war zone, it is in an area that I would be comfortable driving through.

There were kids playing in the street, and people walking the streets.

This is the worst property on the block. Also the house has siding, even though it looks like brick.

Here is the album, it's 49 pictures. Let me know what you think, all advice is appreciated.

http://img401.imageshack.us/g/dscf2795.jpg/

I'm following up on an ad that has a duplex listed FSBO.

The price is $30,000.

Gross rent is $5,000 on each side a year according to the ad, leaving gross rent @$10,000 a year.

It does not give an address. It says all utilities paid by tenants.

It also says it has floor heat and window units. I'm located in Arkansas, we have cold winters and hot summers.

It says it's been rented for over a year w/ the same tenants.

When/if I call, what should I say, and when I show up, what should I look for?

Edit: Also no pictures available from ad.

Bank appraisal price does not equal the value of a home.

The value of a home is determined by what market conditions are present. (i.e. what someone will pay)

"If we can not trust a bank appraiser than we might as well never invest in real estate."

I suppose in some sense, your statement is correct. However, home x in neighborhood y can be appraised at $150,000 all day long, but if there isn't a buyer at that price range, that appraisal is of as about much value as the piece of paper it's sitting on.

Furthermore, appraisals can come in at all different ranges, in my area, it's based off of the last 3 comparable homes (sq ft., bed/bath) that were sold in the area. Yes they try to take into consideration how nice the home is and such, but these can still be way off. Just read Dan’s post regarding this variance.

I understand and appreciate that you are selling a product, but the idea that there is less risk involved in what you’re offering, rather than finding positive cash flow-deals, even just using the 2% rule, is a bit of a stretch.

Edit: I didn't realize this post was from 2008 until after replying.

http://www.irs.gov/taxtopics/tc409.html

About the best help I can give. Note:

"Capital gains and deductible capital losses are reported on Form 1040, Schedule D (PDF). If you have a net capital gain, that gain may be taxed at a lower tax rate than the ordinary income tax rates. The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than the sum of your net short-term capital loss and any long-term capital loss carried over from the previous year. Currently net capital gain is generally taxed at rates no higher than 15%, although, for 2008 through 2010, some or all net capital gain may be taxed at 0%, if it would otherwise be taxed at lower rates. "

I believe the 35+% you are talking about is if you treat the sale as ordinary income, which you wouldn't. Unless you received bad tax advice.

Another thing you should "attempt" to do, is make an estimate of how much money you are going to "net" this year. And talk to your accountant about starting to make estimated tax payments.

And as far as structuring the deal, you will have to have a longer talk with a CPA than I can give on here in order to figure that one out. Don't go to an H&R Block or whatever, but an actual CPA firm.

Your first year, it won't make a huge difference, unless your planning on doing more than 3-5 I'd say. But after that, you'll start needing more advice. They'll want to know how many deals you are doing, what kind of investments you have, if you have another job, etc.

I'd be interested in finding out what they would say, as I'm currently waiting for tax season to be over to start my first deal.