All Forum Posts by: Michael Lerch

Need opinion on deal I'm trying to structure.

Seller has a house that would easily sell for $89,900 AS-IS. She doesn't want to sell outright, but she has to do something because she owes about $20,000 in property taxes. She wants to keep the house in the family if possible. Owns property free and clear. ungrateful grand kids currently live there but not much longer. We came up with this plan...

I loan her 20k (need private money deal) to pay off the 20k property taxes, and she will quitclaim the house to me. She'll make monthly payments to pay me back in approximately 5 years, and in the mean time I can rent the house out (would rent for around $900) and make money that way. The real kicker is she will sign on the agreement that if she fails to repay me in full in the agreed amount of time the house is mine free and clear! She is 80 years old so I said, "What if you should pass away?" She said, "If I pass away before then I will agree in writing that the house is yours." Whoa!

She just wants a chance to keep the house, and if she can't or misses payments I have it covered with the amount of rent that's coming in. Does this deal sound good or what? Any comments or words of wisdom? I haven't sought private money yet because I don't know if this is something they would even consider.

also this club is totally FREE! We just ask that you buy something at Panera so we don't get kicked out :)

Hey everyone! If you're in the Grand Rapids MI area of west michigan we've started an REI club for new and experience real estate investors.

We had our first meeting and it was really great to meet a lot of you! We're looking to grow our REI club, and that means we need more people to come!

Share this with a friend and let them know about it!

Eventbrite info for our next meeting
http://www.eventbrite.com/event/6346090327

May 8th, 6pm. at Panera Bread off 28th st.

Message me if you have any questions :)

I would contact someone in Michigan that understands the taxes for the state. If you want a close to home Grand rapids CPA I would go with Culver CPA group as they deal with a lot of rentals in the GR area. Also let me know if you'd like to sell any or buy more because I wholesale in this market. Let me know if I can help you at all if you need boots on the ground here.

Hi Juan Espinosa. I'm your northern neighbor here in Grand Rapids.

Hey Cameron, I'd be happy to help you out as I'm in the GR area (kentwood) and could give you some pointers.

Hey Luke and Seth,

I've been wholesaling here in Grand Rapids the past year or so. I'm looking to start getting rentals as well... so long as I resist wholesaling them first.

I agree with Seth it's a bummer we don't have a REIA group around here. The RPOA is the closest thing, but they're somewhat anti-wholesaling (old grumps) so I usually don't hang out with that crowd besides growing my network of buyers.

Just wondering. I'm using a postcard on cheap2mail that offers an ebook to absentee owners called The 5 Little Known Ways to Eliminate Tenant Hassles Forever! by Jason Hanson.

Anyone have this ebook so I can offer it to sellers or something like it? Jason Hanson if you're out there send me a message :)

I'm also looking forward to hearing how well this strategy works and if you continue to use it today.

Thanks!

Thanks everyone, and Steven Hamilton II for clearing that up for me. Now I have to get the payroll and CPA for this year as I do have deals in my LLC's name for 2013 :)

So I formed an LLC and opted to be taxed as an S-corp in 2012 thinking I'd save money on payroll taxes when I make a ton of money, well... like most new investors I only made a little... $1,650 I paid myself out of a $3,000 wholesale assignment and thought I could pay self-employment taxes like I would a schedule - C. Apparently not, and found out I needed to give myself a W-2, which involves payroll, which involves paying withholding qtrly, which I didn't know I was supposed to do (again, thinking I could do this at the end of the year).

My question is this... the first deal for $3,000 was in my name and not my LLC's name. Check was in my name, P&A was in my name. Can I legally claim it as personal income instead of income that went through my business? If so I'm hoping to avoid the mess of payroll taxes and penalties for not paying on time.

Let this be a lesson for newb wholesalers/investors out there doing an S-corp. It's not a schedule - C! You have a crap ton of forms, pay quarterly withholding/self-employment tax/payroll tax, give yourself a W-2, and so be prepared to spend money hiring a CPA and a payroll program/service. My advice is if you're starting out go with a simple LLC / schedule C and save yourself a lot of trouble until you start making a lot of money in real estate. I wish I had.

Any help with my question above would be great. Please explain your answer.

Thanks