All Forum Posts by: Scot Howat

Most of the time the names match, but there's usually a SSN listed for those other people.  That should be enough for title to issue a policy on it.  They can let your lender know that it's not you and you can move on.  It happens all the time.

CAREIA meets in 2 weeks.  You should check it out.

It's ok to lose a good deal.  Good deals will come and go and if you get too focused on finding money then you may never actually get a deal.  If you get it under contract and can't find the money then cancel the contract and try it again. 

You need to find a great deal first.  Hopefully then you'll be able to attract someone who is willing to parter with you on the deal.  Hard money and commercial lenders will care more about the deal than your income.  But the more you can put down the more attractive it will be for them.

Look for someone who wants to partner with you without doing any of the work, basically just a cash investor.

Flipping houses is cool, someone will want to jump on board if the deal is good enough.,\

Stick with it.

Worry about it after you close your first deal.  Most people (myself included) spend too much time on all those little things and that really takes away from the core tasks (getting deals).  Don't worry about the name or the tax structures. 

Just focus on getting deals done.  The rest is secondary.

How do I avoid taxes if I use my own funds for the rehab costs and downpayment?

Other than a 1031...

Example

If I put down 20k (20% of 100k purchase price) and put another 20k into the rehab and sell it for 150k, I would get a check from escrow for $70,000, when in reality I would "net" about $30,000.  But I would be taxed on the whole 70k right? 

Or is there a way that I could only be taxed on my "net" profits?? 

And all of the fees are estimated.  You'll most likely get an updated, more accurate, TIL once the loan fees are set. 

I'm considering buying a property to fix & flip where I'd borrower 75% of the purchase price from a commercial lender and the remaining downpayment (25%) and rehab costs will be wired in by a friend from his IRA.

At closing I should receive a check back from the title company for the rehab costs (less fees etc).  Will I be taxed on the cash back I get once I purchase the home? (Net 25k+/-)

Make sure that the underwriter is grossing up their fixed income if it's nontaxable. If they have an IRA see if they're willing to take a regular monthly distribution and that can also be used towards their qualifying income. What's the debt ratio?

Are you paying them for a pre-purchase rehab estimate? 

I'd get the contract locked up first and then bring them through during the inspection period for a quote.