All Forum Posts by: Mark Fedorov

This is a bad plan.

About 90 days after your Dad writes the quite-claim deed on the house the BANK will come knocking on the door and say that their loan now has no collateral and that it needs to be paid off.

The entity that is on the records at the bank will receive the 1098 giving the interest credit, because that will be the SS#/TIN on file with the bank.

You have a few options to discuss with your experts: (I am assuming the property is a rental), and you don;t really say what your goal is (cash for the siblings?, Divestment of Dad?, have Dad do less work?).. the worst plan is one without a goal, but here are 2 ideas:

- You could have your Dad put the house in an LLC, have the members of the LLC be your siblings and your Dad, in the LLC you can split the Capital ownership and the revenue ownership, so have your Dad own 90% of the capital (since he put in the building) and you and your siblings get 90% of the cash (since you are managing), and every year he gifts you and your siblings shares of the LLC and you "buy" shares of the LLC from him with the cash that is coming out of it. That will take some years for him to fully divest, but is it 100% legal (I think), also, have him co-sign the loan with the LLC after the property is in the LLC's name.

- You could create the LLC to manage the building and still have your dad own it, the LLC collect all the rents, and charge your Dad some number that would cover the mortgage expenses.

There are plusses and minuses to each plan, once you find out what your goals are, finding the path to get there is easier.

I have never done this, but I know that grapes take like 7 years of growing to create grapes that are good for wine, I also know that if a solar company wanted land, they would want to lease it for like 20 years, so they make money on the investment.

I don't see them eliminating interest expense from business taxes.. if the business is paying interest that is to buy capital and expand, saying that interest expense is not a business expense would be slicing the throat of business expansion, and that is ALL business in the US, not just real estate.

Eliminating the mortgage interest deduction for people would generate some weird stuff (I think). First of all investors (in a business) would be able to pay a higher price for houses than individuals (since business would be able to deduct the interest), though house prices would go down, the cost of owning a house would go up, so there would be a balance there, but I think that there would be a net loss of individuals buying houses and more renting, since the comparative cost of renting would look cheaper to buying.

Then if this happened suddenly (not phased in over some years), immediately the house prices would go down and immediately many people would be underwater in their homes (again) and we would have a crisis.

However, in thinking about this, to be in the same place financially, a person would just have to start an LLC to buy a house, and have that LLC rent it to themselves, and thus the company would be able to deduct the interest... so in the end the only people to gain are the lawyers setting up the LLCs

@Thomas S. is correct, but that last line is the most important. Offer the best number you can do. It is better to be outbid than loose money....

Eliminate every other possibility that you could set out of the deal... that would make the seller accept yours.

If it is all apartments, then a regular home inspector can do it, if you think most is ok, I would just ask you favorite contractor to walk though with you (for the cost of a lunch), take lots of pictures and tell the seller that you might come back with some experts if you find anything of note.

Whoah... Call a commercial realtor in Indianapolis, get someone else's opinion on the offer and the management of the place.. more red flags pop up every time you give more details...

call the county, you will be surprised how eager to please the average tax clerk is if you are polite, they can explain the details.

You did everything that reasonably would be expected to, and frankly you went overboard. The problem is that sound and vibrations travel through solid objects and unless you do drastic things (isolation of the floor joists to the structure?) you are going to have some degree of noise. 

Some people live with it, some people can not, that is why they make BOTH single family homes and apartments... you can pick.

Most tenants will not care do the degree that you do.

I would suggest that you sharpen the pencil and see if you can squeeze out the 20% down.  Extended vacancies only really happen due to bad management or renovation.

Really.. don't sell, he will be fleaced. 

To get the best price you need to have a properly performing property.. get rid of the manager, find another one.. use google if you have to... you are going to get 60-80% of the value if you sell with a vacancy.. suck it up, get a new manager, claim some proffit and then get out.

Honestly, you should dig deep with these potential buyers and see if they are related to the manger...