All Forum Posts by: Michael Morrongiello

Nathan - with such a major fire like this and the aftermath. This house is likely NOT going to be
view favorably by anyone other than skilled Contractor / builders or investors.

Dealing with a Fire Damaged multi level home. Its experienced a MAJOR fire years ago and has been vacant since. A lot of the floor joists and sub flooring along with staircases in the home were charred and compromised by the fire. They are challenging to even set foot on for viewing purposes. The Owners who received a settlement check from insurance in the past, have now surfaced and want to SELL the property. They are concerned about me or anyone else (contractors, vendors, tradesman, inspectors, etc.) injuring themselves when attempting to VIEW the property; particularly the interior of the house given the compromised floors and staircases.

The potential liability is what the are concerned with YET the property has sat VACANT for several years.

To Appease their concern; I suggested that ANY and ALL on site visits to view the property would be supervised and that
ALL visitors would be required to SIGN a Waiver Disclaimer - releasing US (as the Buyer/Wholesaler) and the Property owners/Seller from any liability.

Any thoughts on this approach to appease the seller and their attorney?
(much appreciated)

Understood - I am just looking to for a way to do a QUICK online search of an Address to SEE IF The property is located in a designated Opportunity Zone or not....

RPR - Realtor Property Resource out of Chicago, IL
is one company that does offer such a service FREE but ONLY for Realtors

Is it possible to see if a specific residential property ADDRESS is located in an opportunity zone?
Is there a user friendly FREE web site URL that one can visit to determine this?

There is a LOT of discussion about whether a bonafide Ratified contract to purchase or Option to purchase agreement with a property owner creates an equitable interest for the purchaser in the property and thus being able to now LIST that equitable interest for sale thru MLS Marketing.

There are also several so called Seminar Guru's touting this exact methodology of being able to market their Wholesale Deals thru MLS as well as other ways. The wording of the Agreement or within the purchase agreement / option is the KEY - that is the guidance I am looking for....

Also Using MLS exposure to market Wholesale Deals

Going into contract as a PRINCIPAL BUYER not an AGENT on a damaged fixer upper house. It has MAJOR damage and repairs needed. Will take a lot of Funds and bandwidth. Not too thrilled about rehabbing and renovating this one and prefer to "wholesale" the ratified purchase agreement with the seller to a builder or contractor who would be more in tune with such a large renovation undertaking. I also want to include in my purchase agreement with the seller that we have the right to PRE-Market the property for Resale INCLUDING formally listing it for sale with their permission in MLS to that it will get greater exposure to more eyeballs.

Here is what we were thinking as a clause:
Seller agrees to provide access to the property for the Buyer, the Buyer's representatives, partners, advisors, lenders, appraisers, contractors, and inspectors prior to transfer of title for more complete inspection, and repair assessments during the escrow period and to authorize and allow for the purchaser to be able to do some Pre-marketing of the property including the use of MLS and any signage to be placed on its premises.

Thoughts on the ABOVE CLAUSE and Does Anyone have a variation of the above sample clause that could be used for this purpose? (eg. specific authorization by the property owner to allow the Buyer (in contract) to be able to LIST the property for sale thru MLS) 

--Marcos
Yes we have worked with an Independent Title / Escrow company out of San Ramon, CA - call Green Escrow Services who can handle all of those types of transactions throughout NorCal and beyond.
Their web site is GreenEscrow.biz  # 925-523-3232 - ask for Kathy Lozano and you can mention my name.

Michael Morrongiello, 

Bill- All Good Thoughts..

The owner is in her 90's - and Ill
Unlikely she will find a love interest.
Just bidding time until she enters that Great Escrow in the Sky :-)

INCOME is what is driving the Sellers Decision - the income to provide care for her in these waning days. As you stated Under a CASH sale of the property she gets $1.1M maybe as the Property Sale Price- minus her $350K original property purchase price= $750K - minus their IRC section 121 exemption as a SINGLE INDIVIDUAL living in the property 2 out of the last 5 years of $250K = Leaves $500K of possible TAXABLE GAIN

At an assume 20% FED Long Term Capital Gains tax and 13.3% State of CA Tax (not to mention any Additional ACA- Affordable Care Act -a/k/a Obama Care) she would owe 33.3% of that Gain in Taxes! 
That works out to $166,500 in TAXES due - leaving her with $333,500 in AFTER TAX funds to invest and generate INCOME

This is WHY the Installment Sale is SO ATTRACTIVE to the family.
They get a HIGHER Property Sales Price
$1.4 M Sales Price - $200K Buyers Down payment = $1.2M  that they would finance as an Installment Sale. At $4,000 per month for 300 Months (25 Years).  Even if any "imputed interest" is deemed due by the IRS on those ZERO INTEREST PRINCIPAL ONLY PAYMENTS - The tax due on those payments would be spread out over 25 Years

Appreciate the reply - the negotiation is still ongoing. The CASH price (likely will be lower) and Actually its the Mom and her (2) TWO daughters who are PUSHING for an installment sale Vs a Cash purchase since they will need INCOME for Mom's ongoing care whether its in a care facility or in living with one of them. 

Seller is SINGLE - does not qualify for the IRS code section 121 $500K exemption since not married, only $250K - also units are NOT equally allocated in their size (the occupied unit is much larger than than the other 1/1 units)

Property is in the Golden State (CA) which does not recognize long term capital gains. 
Unlike the federal government, California makes no distinction between short-term and long-term capital gains. It taxes all capital gains as income, using the same rates and brackets as the regular state income tax (around 13.3%)

Benjamin - another low cost way to insert yourself into a proven network of Vendors, Lenders, ACTUAL Buyers, Sellers, etc. is thru a good local REIA - Real Estate Investors Association. One good one that has been around now for 22+ Years and is low cost but HIGH QUALITY is BAWB - the Bay Area Wealth Builders Association. Check them out or reach out to me and I will point you in the right direction.

Michael Morrongiello
Sunvest Property Solutions