All Forum Posts by: Matt Devincenzo

This is true in every state so far that I know of, however municipalities have nipped the flipper "owner builder" permits by saying that it must be OO for a minimum of 1 year or something similar. So you might get away with doing one that way but I bet someone will catch on and you'll end up in some hot water for pulling permits on a resale.

Welcome Luis Chavez, try the search feature up in the right hand corner of the page. There are tons of threads dealing with the ins and outs of this.

The long and short of it is if you are really wholesaling you have a signed contract with the seller, meaning they can't back out and sell to someone else. If you don't have a signed contract then you're not really wholesaling you're unlicensed brokering which is a no no. But search up there and you'll find lot of info.

Sorry I didn't clear that up P&S, I meant purchase and sale agreement. Basically the same thing you signed buying before only difference is the realtor walked you through "sign here initial here sign sign date" otherwise if you use your state realtors standard contract it's the same to purchase any property.

Open escrow (could be different terms depending on the state) take your signed agreement to a closing atty, title company or whatever is used in your state and have them start the process to close the deal. When they are doing everything they'll start working through the who owes what to whom part and tell the owner and you. If your purchase agreement states the owner must provide clear title then if he can't or doesn't want to(because it's too expensive) then you can walk. The other option is to put say a 30 day option to purchase on the property, you now have 30 days to figure out if you need to adjust your price or walk away.

Obviously the BK complicates things and K. Marie Poe is going to be a better authority on how to deal with that since she has actually dealt with these things before. Like she said though you'll either get a good deal out of this or a great education on how the process works either way I'd follow it through to learn as much as you can.

If it's still deeded in the owner's name then he is the one that can sell it not the bank. So I would enter into a P&S with the owner take it to a title company and open escrow so you now have an equitable interest. Now the title company will pull title and by so doing know who the lender is and what the payoff is. Then you can start figuring out what you need to do(likely a SS since the fees and interest has built up to quite a sum by now I'm sure). Good Luck.

Michael Immordino that is incorrect. Only the interest portion of a mortgage payment is deductible. Said another way the interest portion is pre tax dollars the principle will be post tax dollars so paying down the loan will not benefit you from a tax perspective. If anything it will be negative in that you will reduce your interest expense and therefore your deduction that you could take.

I keep it to reinvest into another property or now I'm looking at notes so it may start going to that soon.

Here is the reasoning, if I pay down my principal at 3.5% that $100 is essentially giving me a return(saved interest) of 3.5%. Now since my rentals are producing about 12-16% CoC then I've effectively cost myself 9.5-12.5% return on that money. That is definitely not how I want to invest. So I save it as a fund towards my next investment this is because I have a good W-2 job still so my RE money doesn't get touched yet it's for growing a passive income for me in the future so I can retire before I'm 30 haha (that's the plan at least)

I think to Mike Franco's reasoning, you can state what ever you want in the lease, but since it is an illegal conversion that you knowingly did to circumvent the laws, then it is also not a binding legal agreement. Also you'd have an illegal kitchen, since I doubt the city would issue the permit for a second kitchen without an explanation so now you're open to code violations ect.

You can ask a RE attorney to be sure, but I think you'll find you don't have a leg to stand on if anything happens.

This is a little different topic than your post but Marco Santarelli handled all of those questions I think. Just be aware you will still owe state income tax on those properties. I have rentals in FL which has no income tax and I haven't done so yet but I will be paying CA state income tax on my rentals starting this year I believe. The link below has a recent discussion on the issue.

How-does-investing-out-of-state-impact-your-tax-status

Ok I'll start with what I or my family members have in ours. 3 rental properties and 2 1st position notes.

You probably don't want to bother with flipping, here's why. It is a business activity, if you have a business activity in your IRA tax advantages go away.

Rentals, many will say no on rentals because you lose leverage and the tax benefits of depreciation. Both of those are true, however it does work and the return isn't bad if you buy right, though not as good as if you could use leverage.

Notes, here is where a lot of RE investors put their retirement funds. You can get discounted notes that will produce great returns without losing out on any tax advantage or the ability to use leverage.

Lending, the other big area for RE in a retirement acct. Find a local flipper and lend your funds to them, not a bad return either but you do have to more consistently reinvest. You do have the advantage that if you want to shift your focus you don't have to sell anything just wait 3-4 months til you get paid off and choose not to lend proceeding on to your new venture.

Me personally I have no problem with holding rentals in my IRA I am however probably going to minimize that in the future. I'll still buy cash flow rentals but the tax and borrowing loss makes it less attractive than buying notes which is where I'm beginning to shift my focus.

Now one way that I created a great return for my IRA was I bought a property cash held for about 6 months and my tenant wanted to buy so I sold it to him on owner financing for 10% and the purchase price was full retail which was now about 30% more than my cash purchase price netting me about a 20% return annually for the next 5 years until he refi's.

I'd start by going down to the city zoning and development departments. Those are the two areas that will have to be dealt with in order to start the process for what you want.

It will look something like this: File some sort of application for zoning change (possibly requiring engineering studies to support you case), posting notice on your property and notifying the properties within a certain vicinity (say within 500' of yours) of the proposed change, go through the approvals process and most likely have a public hearing where residents can object if they choose to.

Obviously this will take money everything from filing the application to studies and notices. I work as a Civil Engineer and these are the kinds of things we do for our clients. I would suggest calling a local firm and explain what you want to do and they should be able to give you an idea of what it will cost to do it.

I would also hire them to do it, the rules and processes change constantly so having someone who works with the city frequently will make it much easier and smoother. Besides you will probably have to hire them anyway to conduct the studies and do plans ect to submit during the process.

Know going in this will likely not be cheap and it may fail in the end, that's the business risk associated with trying to improve the value this way but it is definitely doable.