All Forum Posts by: Brian Gibbons

Thanks @Mark Brogan

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Hi @Rae Remer

What is market rent?

Talk to a divorce attorney after seeing the divorce decree.

It costs 10% to sell or $39K to sell.

$391K - $335K loan = $64K - $39K =  $25K

So buy it sub2 and resell it fast

I hate that $2700 pmt...

You can always use PatLive.com as an answering service

Prospects need to feel valued and important

The way to explain value of the property

ARV is 140, loan is 125,

costs to sell are 10% of ARV 140 or 14K,

140 - 125 - 14 = 1K profit

Do a lease option assignment make 3% of 140K or $4200 and get out of that deal.

Give a $1000 to seller if you want.

@Michael Colin

You might want to post this in Marketing forum

@Account Closed

You may want to contact buyers agents is that specialize with just buyers

Be willing to pay the buyers agent 3%

Ask the buyers agent for someone who has credit that just missed FHA financing and has ten percent down

@Lizina Green

@Steven Hamilton IIis an awesome tax resource.

Get a CPA in real estate investment.

If you are going to be involved with seller financing and installment sales...

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What Is an Installment Sale?
An installment sale is a sale of property where you receive at least one payment after the tax year of the sale.

The rules for installment sales do not apply if you elect not to use the installment method (see Electing Out of the Installment Method under Other Rules, later) or the transaction is one for which the installment method may not apply.

The installment sales method cannot be used for the following.Sale of inventory. The regular sale of inventory of personal property does not qualify as an installment sale even if you receive a payment after the year of sale. See Sale of a Business under Other Rules, later.Dealer sales. Sales of personal property by a person who regularly sells or otherwise disposes of the same type of personal property on the installment plan are not installment sales. 

This rule also applies to real property held for sale to customers in the ordinary course of a trade or business. 

However, the rule does not apply to an installment sale of property used or produced in farming.

Special rule. Dealers of time-shares and residential lots can treat certain sales as installment sales and report them under the installment method if they elect to pay a special interest charge. 

For more information, see section 453(l).  

Stock or securities. You cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market. 

You must report the entire gain on the sale in the year in which the trade date falls.

Installment obligation. The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you.

General Rules
If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method.

See Electing Out of the Installment Method under Other Rules, later, for information on recognizing the entire gain in the year of sale.

Sale at a loss. If your sale results in a loss, you cannot use the installment method. If the 4797 6252loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale.

Unstated interest. If your sale calls for payments in a later year and the sales contract pro-for little or no interest, you may have to figure unstated interest, even if you have a loss. See Unstated Interest and Original Issue Discount (OID) under Other Rules, later.

Figuring Installment Sale Income
You can use the following discussions or Form 6252 to help you determine gross profit, contract price, gross profit percentage, and installment sale income.

Each payment on an installment sale usually consists of the following three parts.
Interest income.
Return of your adjusted basis in the property.

Gain on the sale.

In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. You do not include in income the part that is the return of your basis in the property. Basis is the amount of your investment in the property for installment sale purposes.

Interest Income
You must report interest as ordinary income. Interest is generally not included in a down payment. However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. Interest provided in the agreement is called stated interest. If the agreement does not provide for enough stated interest, there may be unsta-ted interest or original issue discount. 

See Unstated Interest and Original Issue Discount (OID) under Other Rules, later.

Adjusted Basis and Installment Sale Income (Gain on Sale)

After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts.

1. A tax-free return of your adjusted basis in the property, and
2. Your gain (referred to as installment sale income on Form 6252).

Download

http://www.irs.gov/pub/irs-pdf/p537.pdf

@Ben Leybovich

knows OH

Why don't you find out what PITI is on each property and see how close it is to market rent

If market rent were less than PITI you might lease with option, your lease payment covering the cost of the PITI, but you getting a cheaper option to purchase price

@Tyler Walker

Remember you make your profit at the purchase, you don't ever pay retail even on terms

@Tyler Walker

Sub2 is not a buy and hold strategy. Good for fix and flips. Get on title, fix, fli

Land contracts in OH and you pay all PITI.

DOS exists but legal title remains with Seller.

https://www.ohiobar.org/forpublic/resources/lawyou...

When you do sub two or with repairs you need to get out of it fast

Unfortunately lease to own is not fast, so I would look at flipping the property

The problem you got with flipping is it's not part of the 70% of ARV minus repairs minus wholesalers fee

There's not enough equity in this deal right?

So I would show the seller all of her options:

Listed with an agent on the MLS and discount it severely, Pay about 10% for the cost to sell

Lease it out as is and wait for some appreciation

So what do you want to joint venture where you bring money to the table to fix it and resell it and pay her all the equity possible

To do a joint venture with a lower equity deal,

First you buy it subject to the existing financing and give her a note for her equity and fix it then resell it with an agent

Let's say you want to 10,000 on the joint venture

135 ARV

Owes 109

Sales cost 10% or 13,500

I don't know what the repairs are

Repairs plus sales cost plus costs to sell equals X

135 minus X

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Compared to Wholesaling deal

.7 times ARV minus repairs minus wholesaling fee

You are in TX 

Do a Lease Purchase

Create the S and P at the same time.

Lease plus Sale and Purchase.

Or Do a Lease plus ROFR.