All Forum Posts by: Brian Gibbons

You cant have your cake and eat it too. Be a Landlord on a lease option.

Straight option and lease, use a current appraisal as purchase price. Dodd Frank needs to be observed.

You need to be a landlord and observed your states' laws. No tenant paying for repairs.

You can look at other Seller Financing tools like contract for deed, wrap - aitd, and have the buyer go to a RMLO, pay like 10% down and sell at current appraisal.

@Bill Gulley , take it from here.

There are entity specialists @Douglas Dowell and others

http://www.biggerpockets.com/renewsblog/author/douglasdowell/

I have a JV idea that I feel has merit. I have done it once a long time ago.

Say you have a $400,000 ARV, free and clear, $50,000 rehab.

65% of ARV less repairs - sales costs

Say you offer to JV with the seller, offer to do the repairs for a JV for a profit, beating any WE BUY HOUSES offer by $10K or more.

You create a note and mortg/DOT to protect $50K plus say $20K profit. It takes 3 months time.

You borrow $50K from money parter for $5K interest for 90 days use of the money.

You have no holding costs, no conveyancing costs. You get your $70K in 90 days, your seller gets $400,000 less $70K less sales costs less holding costs, less closing costs.

I know that depends on the deal and its particular numbers, but I like that you are helping the seller make more money and you have a guaranteed profit with security.

I can sense people would say, "What if the Seller fights you on sales price?" I imagine an attorney can create a JV Agreement that compells the Seller to sell at an agreed price.

Thoughts anyone?

@J Scott

The ATR rule is the Dodd Frank major concern.

See http://files.consumerfinance.gov/f/201308_cfpb_atr-and-qm-comparison-chart_V2_final.pdf

I bet if you asked 100 people on Bigger Pockets the would not be able to define "imputed interest".

I am thankful to @Bill Gulley to motivate and to write about "imputed interest" re: seller financing.

The definition of IRS imputed interest is interested the IRS creates on a personal loan, and taxes the lender down the road, even if the lender is not actually collecting interest.

What if you let your son $30,000 to be paid back over 10 years interest rate, the IRS will imputed interest rate on the loan and tax year as if the imputed interest were actually being collected by you as income. For many reasons it makes sense to charge a minimal interest rate on all loans, including loans made to trusted friends and family.

The imputed interest rules apply to loans that are made interest-free, or at a discounted interest rate that is below market. The imputed interest rules prevent the transfer of wealth for the purpose of avoiding higher taxes.

How can you avoid imputed interest? The obvious way is to charge a minimum interest rate on all loans, including loans made to family.

What I understand the minimum interest is calculated by the IRS depending on the size of the term of the loan. The rates are frequently updated, so it's best to check with the most current IRS tax tables, which can be found on the IRS's website.

Sunday charge at least the minimum rate listed on the stable, referred to as the applicable federal rate, you and I have any problems with the imputed interest.

And you do need paperwork that portrays the loan. If you own $30,000 to your son, and your son cannot pay you back, you will want to write off the $30,000 off your taxes is a bad loan docs, which can reduce your total taxes paid.

Three need good documentation. Also you will want documentation explaining whether or not your daughter must pay back the loan to your state if you pass away, or when the loan is going to be forgiven. For many reasons, it makes sense to avoid imputed interest by documenting the loan and charging the minimal amount interest, even to family.

In Seller Financing, charge 'em interest, no 0% loans.

See http://apps.irs.gov/app/picklist/list/federalRates.html for IRS Tax Tables

This issue is if it is a SALE, then there is concern for you as an owner lease optioning to a tenant buyer.

If it is a straight option and a lease, no rent credits, so you are not financing something toward the deposit or the purchase price, you can do as many as you want, and not be under Dodd Frank. If you are doing some kind of financing with rent credits or financing . But send them to a RMLO any way, can only help your success rate.

I am sending all my lease option buyers through a thorough 1003 mortg app with a RMLO (Reg Mortg Loan Orig).

I dont have to, but it will protect the Seller in a Lease Option Assignment.

Like this post!

Seller financing purchase is the way to go in 2014. I have many posts on seller financing. http://www.biggerpockets.com/search?utf8=%E2%9C%93&term=seller+financing+brian+Gibbons