All Forum Posts by: Account Closed

I'll tell you this, but try not to spread it around.

Being a Real Estate Attorney is like having a license to print money.

And I don't mean that you will be over-charging people, or suing people and taking their money.  That's no way to live your life.

I mean that you will be creating economic wealth with the knowledge you have.

It's also a Hell of a lot of fun.

My suggestion is hold off on Law School.  You might go ahead with the application process, and if you are accepted, then request that you delay it for a year.  Then you will have that taken care of.

Of course, this assumes that you will even have the GPA to get in.

Meanwhile, go talk to Realtors.  Go to their office and sit down and tell them that you will be their "Go-fer" and whenever they need to do something that they don't have time to do, they call you, and you do it for them.  For instance, they need to go unlock a house for someone who wants to go back a second time and do some measurements, they give you the keys and you do it.  You are not showing the house.  But you are there.  And this is the type of experience you need.  Just soak it up.  Or he might show you how to go pull records for him.  This is stuff you need to know.  In a year, you can learn about 80% of what you would learn in three years.

Work for different Realtors and learn things from different angles.

Law School is a *****.  But you do it.  After that, you learn how to be a Lawyer.  It takes a while.

Just my take.

Good Luck.

Michael Lantrip

For you, as the Buyer, there is no difference between Seller Financing and Bank Financing, except that you would bypass the loan qualification process that the bank loan would involve.

You buy the property, you own the property, the Seller has a lien on the property which he will foreclose on if you stop making payments on the debt that you owe him.  Just like bank financing.

I don't have any idea why the Seller you are referring to would do Seller Financing, but since you say he is "an older gentleman" he might have retirement income, and social security that would be taxable if his other income goes over a certain amount, and he might just like the idea of not paying all of the tax on his Capital Gains in one year.

In Seller Financing, the Seller reports the amount of the Down Payment plus a fractional amount of the principal portion of each note payment received in the year of sale as Capital Gains.  Then, in subsequent, he only reports the principal portion of each note payment that represents Capital Gains as income, in addition to the interest portion as income.

There are many reasons to do Seller Financing.  The only negative is the risk of having to foreclose on the property and take it back if the note payments are not paid.  Of course, you will also have to put the Seller on your property insurance policy as a co-payee to protect his interest in the property.

I hope this helps you.

Good Luck.

Michael Lantrip 

Here's an idea.

Instead of a new company, or creating a partnership, why not consider a Joint Venture.

This will allow your LLC and the partner to enter into a JV Agreement for just this one project.

You can specify all of the terms within the agreement, how the project will be initiated, each contribution, duties of each, how profit will be computed, when and how the project will be completed and dissolved.

At the end, each party reports half of the income and expenses, just like a General Partnership, but, depending on state law, there is no requirement for filing papers.

Once you work everything out with the partner, both of you go to the same Attorney, have all of the information ready, tell him exactly what you want.

Don't try to write something yourself.

Something to consider.  I hope it helps.

Good Luck.

Michael Lantrip

Read the loan documents.

They will tell you exactly what your obligations are, and the results if you fail/choose not to meet them.

It will depend on a number of factors, many of which you will not be given details on, just the rules.

Good Luck.

Time is money!

That 1-3 years that you are planning to spend in a 2 BR apartment could be spent in half of a Duplex that you own with 95% FHA financing, with the other tenant paying most of the note payment.

That three years of equity, reinvested using Section 1031 for the next 30 years, could easily turn into half a million dollars.

And your monthly expenses would be even lower.

You would also be building a solid credit history.

Just a thought.

Good Luck on your real estate investing.  

Michael Lantrip

If you have lived in the house for at least two of the prior five years, you can exclude the profit from Capital Gains tax under Section 121 of the Internal Revenue Code.

If your tax return filing status is "single," you can exclude up to $250,000 of capital gains.

If your tax return filing status is "married (or whatever) filing jointly," you can exclude up to $500,000 of capital gains.

There is no requirement for what the money is used for.  

So, it looks like you are good to go.

You are right to be looking at how to handle the profit on your real estate investment before you even buy it.  What you learn will probably impact the buying decision.

I am not allowed to tell you which book I think you should read because I wrote it.

I hope this helps.

Good Luck on your investing career.

Michael Lantrip

Steven Taylor:

Congratulations!

Using your Air Force enlistment as a springboard to a career (as I did, too) probably indicates that you have what it takes to be successful in real estate investing.  It is the hardest work, and the greatest reward.

Here's something I would suggest.

Talk to a Bookkeeper.  Not a CPA.  A Bookkeeper.

Have your books done, and learn how the Bookkeeper is doing them, and then start doing them yourself.

There is more to the process than most people realize.

For instance, if you have a family member doing work for you and part of the compensation is a reduction in rent, this is actually "imputed income" to that person, under IRS rules.  It would probably never come to light and will probably not be a problem for you, but it is there.

Why not just charge him full rent, pay him a comparable fee for his services and deduct the fee as an expense, and you are in the same place.  So is he, except for the additional income.

Just a thought.

Welcome to BP, and Good Luck.

Michael Lantrip

Where did you find your "Memorandum of Standard Purchase and Sale Contract?"  What did it say?  Did you attach anything to it?  Which record at the County Courthouse did you file it in?  Exactly what "investment" were you protecting?  I am a Texas Attorney and I can tell you what to do if you answer these questions.

I'm sorry to hear that you are going through this.  I can't count the number of times I have seen it happen in the past 33 years.

First, you must close or lose your 1031.  That's obvious.  No choice.

But you cannot solve this problem.  You will not change the facts or the behavior with negotiation.

At this point, you hire an attorney.

He will have an inspection done by someone who he can later qualify as an expert witness.

He will send legal notification to the seller of what the problem is, what the solution is, and the type and amount of damages he will ask the Court to award.

He might even take the case on contingency, or partial contingency.

But you need to get this under control right now.

Good luck.

Michael Lantrip

Bill is correct.  If you are someone who would be affected by a change to Section 1031 and you feel that it is in danger, you should contact your elected representative in Washington.  But do so as an individual.  That way, you represent one potential vote, and you will carry weight.

However, it is still ridiculous to think that a man who became incredibly wealthy with real estate investments and understands what a critical role they play in the U.S. economy, and who used Section 1031 in every single one of his deals, will now make a concerted effort to do away with Section 1031.

This "article" is still a blatant attack on Republican values and based on something they haven't even done.  I'm not taking sides.  All I'm saying is, let's look at this clearly and ask ourselves what is going on.