All Forum Posts by: Account Closed

Have you asked the taxing authority why the taxes are different?

Originally posted by Anthony Sulecki:

recording a deed is not illegal. that what a classic "sub2" is. you are taking the house, by a transfer of deed.

there is no reason to even contact anyone about this. there are simply no laws written anywhere, that say you cannot do this.

People like to think that "sub2" is a concept in itself. Its not. Its often taught as such, but its nothing more than you recording the deed. What you plan to do on the backend is what matters. You can LO, wholesale it, retail it, seller finance, whatever fits.

This is not entirely correct. Yes, you CAN do sub2 anywhere in the US, but SOME states have passed laws with special requirements you must meet. Some states require the paper work to be drawn up by an attorney others require specialized disclosures others like NC have even more creative restrictions.

Can you record a deed without meeting these requirements? Probably. However, if you fail to meet ALL of the requirements in your area you can face some rather severe consequences after the fact.

The 50% rule of thumb does not establish equivalency between two investment choices under consideration.

Kirk, in the example you gave at the start of the thread you listed all of the other information one should consider when choosing one investing option over another. All the 50% rule of thumb told you was if you bought EITHER of those and the revenue and expense numbers were in fact accurate, and you paid NO MORE THAN $45,092.27 you are likely to see positive cash flow.

That does not mean either of them is worth that amount; only that the rent and expense structure could carry that amount.

Where people sometimes get tripped up is with SFAs because there are really two entirely separate markets for SFAs. Well, three, but the third one does not lead to this confusion. The two of interest are the retail buyer looking for a place to call home and the investor looking for a house to rent to someone at a profit. The "at a profit" bit is the big clue. For an investor to ensure they will have a positive cash flowing property, the 50% rule of thumb is an important metric to understand.

The other thing to remember is the 50% rule of thumb is useful for analysis, not accounting. At any given period of time, your actual expenses may exceed 50% of revenue, but as a buy and hold landlord, we don't do acquisition analysis in small deltas of time. We are looking at the investment option as an investment that has an acquisition point, a holding time and a liquidation point. When considered over that entirety, the 50% rule of thumb is useful.

The Operating expense study summary report MikeOH referred to is available by clicking here. The study is based on over 33,000 rental units from 83 sources in 26 states. There are links to the more detailed report of the same study and to a discussion on using the 50% rule of thumb with other metrics in the summary report.

If you are a buy and hold landlord and you use the 50% rule of thumb as one of your tools for analysis you will be well served.

If both of the loans were originated to purchase the property there is no deficiency judgment issue.

Otherwise, the 401K is safe harbored by law. Distributions taken from it may not be.

The annuity is where the real risk might lie. It depends on the type of annuity, when and how it was purchased. This is the part where you are not going to get any correct answer without sitting down and disclosing all the details and paperwork to an attorney and letting them sort it out.

Originally posted by Jeff Z:

I was just curious, if the experienced investors here had to start all over again, right now, and were able to know everything they've learned along the way, how would you go about beginning?

If I had to start over today I would probably bypass sfh and small apartments all together.

This is a question everyone should ask themselves at least yearly. I know as long as I have the information in my knowledge repository I am good to go. That is why I keep adding to it and enhancing it all the time.

I keep mine on-line and share it with friends and family but a simple binder works too.

Originally posted by nacinvest:

They said it could be risky (a new income tax law, capital gains, etc.), and may even be illegal, because I would be acting like a realtor, even though I am not.

It depends on what you buy and what you assign. Maryland does have some strange laws relating to residential real estate. Well, unless there is a lender involved no inspection or title search can be "required". This sounds like a policy of this title company, not a requirement of law. If you don't understand your liability you should not enter into a contract. You need to find and consult a lawyer in Maryland who can advise you correctly. See comment above.

It doesn't work that way.

If you miss two payments and then start sending in your normal payment the lender will return the check because it is only a partial payment of the amounts you owe.

Originally posted by Ryan Vince:

First of all I want to thank all of you who don't have any financial ties to me who seem to care more the bank who stands to lose 75K or more.

You know, that is just uncalled for. Please explain what the lender owes to you. Did they put a gun to your head and force you to sign a loan with risk involved? Did they force you to buy at the top of the bubble? Exactly what is it the lender did that you now feel they owe you something for you having made a less than perfect choice? Which is presumably why they approved you for the loan. Well, of course you are free to default on your financial obligations. But, then don't whine when lenders aren't willing to loan to you in the future. So, if we have another downward correction in a couple of years will you walk away from that and leave Dad holding the bag? Wonderful. Good luck with that plan.

Originally posted by John Andre:

The banks taking 400B, and putting it in their vaults and not helping the home owners.

I know that is the spin being sold by the democrats in Congress and the President but it is just factually incorrect.

Disclosure about mold remediation is required in every state now. And yes, it does not matter how long ago it happened. It must be disclosed.