All Forum Posts by: William Johnson

From my understanding this would be "self-dealing". You or an entity that you control is transfering the property to your IRA and therefore a PT (prohibited transaction).

I would think you would need to rewrite the purchase agreement to only have your IRA named as the buyer.

You may be able to contact your custodian or a CPA who is an expert in this area to clarify this point.

John- Thank you for your insight. If one protests the appraisal, won't that take too long for the bank?

Rereading the reports I saw the $59k appraiser used sold comps 3, 5, and 9 months old and and for sale properties with 194 and 499 days on market. The $10k appraiser, being an exterior only, "assumed" it was in the same condition as when it sold as and REO and comped as such even after given rehapped properties to use as comps. I see mistakes on both sides.

Jonathan- North of downtown. Pine Lawn and east of Jennings and Pagedale. Do you know these areas?

Thank you for your insights.

Nation- How do you define bread and butter homes? I always took it to mean low to mid income homes, nothing fancy. I may need to go and take a view myself.

Steve- Sellers best solution would be to find a cash buyer.

Bill- All appraisals were ordered by the bank and done in November or December.

Two appraisals were on the same property. The first was the original full interior appraisal for the loan. Came in at $59,000. Wells Fargo then ordered a review appraisal exterior only. That one came in at $10,000. The appraiser "assumed" that the interior was in the same condition as when it was bought from the bank for $8000 in April 09. In fact it had been rehabbed with full kitchen and bath and new mechanicals. The appraiser did state that if an interior inspection was done the value could change.

The other two were on two separate properties that had similar rehabs located same area. One came in at $18,000 (exterior inspection) and the other I have not seen yet but is in the low $40's (below what the seller is willing to sale). They used REO as comps also.

The appraisal is important as I am using bank financing.

Dawn- With the market in flux or even disarray, the appraisers are either scared or incompetent. They, as a group, are paying for their sins.

I am attempting to buy bread and butter 2 bed/1 bath rentals in St. Louis, MO. I am in Sothern California (wore shorts and a golf shirt today). I am buying them from a rehabber who has bought them from the bank. He believes these proerties are worth $60,000 or so. I would buy them at a discount from that price.

When I have gone into the loan process, the appraisals have came in at $59,000 and $10,000 for the same property, $18,000 for another, and low $40,000 for a third.

I believe the seller is trustworthy. The reports show comps that are (to me) from non-rehabbed REOs not "retail" sales. My research shows that the $60,000 prices are possible.

Are other investors haveing similar issues?

What can I do to be certain of these values?

Can anyone in St. Louis give advise?

I used Nabers Group to set up my checkbook controled self-diercted IRA.
nabersgroup.com
I live in California but they set the LLC up in Oregon. The state fee is lower ($50) but then you have to pay a company to be your proxy in that state. At the time I didn't have an investment in mind. Check with them to see if this is permissible in your situation.
Over time the lower fees should offset the additional cost that the other providers charge. And the convience of immediatly writing a check or sending a wire is nice.

I'm a newbie so take it as its worth.

Two ideas I've read in books:
1) On the "Wrap Mortgage": a third party company can set up an account so that you would pay them the monthly mortgage payment. The Third party company would then pay the original mortgage and the rest to the seller. They act as an escrow agent.

2) On making your offer: If possible make two offers- one all cash and the second seller finance or some other combination that makes financial sense for you. Instead of makeing the seller make a choice of "Deal or No Deal", the extra option make him do the deal.

I don't know if this works in the real world but it might.