All Forum Posts by: N/A N/A

Last January I was looking at a house I wanted to buy. The owner & I couldn't agree on a price and I quickly forgot about it. Then, a few months later while scrolling through some county records, I noticed that HUD had taken over the property in February. (If only the owner hadn't been so stubborn, we were so close on a price and I didn't even know a foreclosure was in the works!) Anyway, here it is almost December and that home is still just sitting there owned by HUD. How long do they wait before they try to sell it? I've seen others listed within two months, I think. I had inspected this place and it seemed to be in decent condition except that the Heating/AC unit was completely dead.

I think there are services that will take these things off your hands for you. You'll have to pay them to take it, but as you are discovering they are nearly impossible to sell and they cost you lots of money to "own" because of the fees. In the end you'll be better off than if you keep it.

I did hear one alternate approach, which actually comes from Dave Ramsey, I think. It will probably only work if the timeshare is in a place that is still selling new timeshares. He says (1) first call to find out what one very similar to yours for a similar week sells for new. Then (2) call again and find out what the salesperson gets in commision for a sale (this can be hard info to get, but if you keep asking you'll get it). Finally, (3) offer the salesperson something like the twice the commission to sell yours for about 50% of what it sells for new. Even though they insist they only sell new ones, if you make it a good enough deal they might bite. I don't know if it will work, but what have you got to lose?

And, I've heard of deals in the past where the city (or its equivalent) determines what fair market value is, and it can be quite lower than what everyone else in the world thinks fair market value is. If you disagree with their assessment of FMV, it can be quite a struggle to get it changed.

It sounds to me like it is the line for your dishwasher.

Have you tried to disconnect the faucet altogether to see what pressure you get flowing right out of the hot water pipe? Obviously it can be messy and there's a scalding risk, so be careful if you do that.

I use an umbrella policy through my insurance company, but I haven't had to deal with the dealer issue yet (though I have been inquiring about it: http://forums.biggerpockets.com/viewtopic.php?t=6073).

While a simple LLC may (or may not) protect your non-LLC assets from a lawsuit related to one of your properties, I don't see how it will protect your ownership of the properties from any other lawsuit. Once you have acquired assets, you become a target for all kinds of lawsuits. From what I understand, the most common are related to automobile accidents (boy my neck hurts...). Make sure whatever plan you come up with doesn't leave you wide open that way -- a small accident that may or may not have been your fault and somebody else ends up owning your LLC. Mintz's stuff does offer that kind of protection, since it's geared more towards people who already have large assets and have multiple potential lawsuit exposures (physicians, business owners, etc.), but it gets incredibly complicated and expensive.

I'm with takleberry on the umbrella policy. As far as the "out there" business plan goes, it's pretty similar to some stuff that Robert Mintz wrote. He goes into quite a bit of detail of exactly how to do it, and I think he uses a Family Limited Partnership (FLP) instead of a land trust, but you can read all about because he's posted his stuff as two free pdf books:

http://www.rjmintz.com/apptoc.htm
http://www.rjmintz.com/wintoc.html

It's a great read, and you'll be totally paranoid for about a month after reading it, but it never tells you just how incredibly expensive it can be to set all of these entities up.

One thing I found interesting is that a lot of your liability protection really only comes if there is some reason other than asset protection for doing what you are doing. In the Mintz plan, most of what is recommended seems to be useful because it also has a significant estate planning role. I get the impression that things done for the sole purpose of asset protection are fairly vulnerable once you end up in court.

I spent time discussing all of this with my estate attorney and I concluded that the umbrella policy was the best way to go for me. I guess it all depends upon your level of exposure, your total assets and the laws of your state. If you are even considering doing something like this, you would probably benefit greatly by buying some time from a good local attorney who specializes in these kinds of things.

Another thought is to look to your local real estate investment club. Mine has lots of material available for members to check out. Mostly it has books, but there are also some courses and audio programs. Might be a good way to get a lot of different material without spending a lot of money.

I hesitate to recommend a course, because the hype always turns me off. I did hear Larry Goins speak not too long ago. He was selling his guru product:

Ultimate Buying & Selling Machine

I didn't buy it, but a lot of people at the meeting did. Anyway, he's definitely focused on wholesaling. You could search the web to see what other people think of his course. The price is around $700. I don't know exactly what you get in the course, but he did address your specific questions in his talk. He's the same guy who wrote some of the articles posted here at biggerpockets:

http://www.biggerpockets.com/articles/

Maybe some people here have it and will comment on it.

I think land is a bit more expensive in Brooklyn than it is in Georgia. I would suspect they have some pretty big apartment buildings on lots smaller than that. What's on the adjacent lots?

I've been warned that doing too many buy/sell transactions may cause the IRS to designate me as a "real estate dealer," and force me to pay self-employment tax of 15.3% of the first $72,600 of income. I'm wondering:

1. Is that number an aggregate for all self-employed income I may have? I would assume the answer is yes, but I'm just checking

2. Can that be at all offset by earned employee income? I assume that the 15.3% is the payroll tax (maybe not) that I and my employer pay. Even if it's not, is there any way that any other taxed income can offset that $72K?

[I'll also check with a CPA, tax attorney, and all of them, of course.]