All Forum Posts by: Thomas Coburn

Hello. I'm Thomas and could really use some guidance on protecting and eventually receiving my share of equity in the marital home.

I'm finalizing a divorce in Washington state. I paid for two different consultations with a divorce and real estate attorney. And received different suggestions.

I'm happy to pay someone here for a consult on how to protect myself and reach an agreement.

My ex's attorney is waiting for my response. Trial, which we've already postponed once, is set for early March. She said we need to have everything agreed to and entered in the final order with the court to prevent trial, even though we've agreed on every point except this one.

Specifics:

*  Finalizing divorce.
*  Washington state.
*  Wife and I both on title.
*  Only wife on mortgage.
*  Equity in the home.
*  Wife will continue to live in home.
*  Wife responsible for maintenance and repairs.
*  Wife cannot refinance and pull out my half of equity because she is self-employed and W-2's minimal income.

Obviously, the cleanest and safest route (for my half of the equity) is to force sell of the home. However, there's a human element and I do have compassion for my ex. So, I don't want to do this. And, I don't want to carry a note. The less contact between my ex and I, the better.

My ex's attorney has suggested the following, which feels like it provides little protection for me:

*  We both remain on title.
*  We get three CMAs and/or appraisals and agree on current market value.
*  Include a "forced sale" clause executes in 12 months if ex is unable to refinance and cash me out during that time frame.
*  Wife pays a to-be-agreed-upon interest rate on my half of the equity until it is cashed out.

Questions:

*  How would you resolve and protect yourself, outside of selling the home?

*  What requirements and contingencies (i.e. umbrella and earthquake insurance policies; ex to forfeit some or all of her share of equity to make me whole, etc.) would you include for protection against possible forms of loss (i.e. lawsuits, natural disasters, mortgage default, property neglect/deterioration, etc.? )

*  Should I remove myself from title to limit potential liability while placing a second lien in the amount of my share of the equity?

*  Can/should I include a clause that home be appraised now, and at the date of my equity cash out, and the higher of the two values be used?

*  What language to include in the "forced sale" clause so ex has no legal recourse or ability to stall or delay?

Thanks a lot for your time and consideration in replying. I truly appreciate it.

Thomas

Seattle, Washington

@Tarl Yarber

Congratulations! 

That's a great turnaround, especially with the partnership issues. Glad it worked out. And your improvements look great!

And you've inspired me... I never posted the pics or deal details on my first flip. I'll do so tonight!

Looking forward to connecting with you and potentially doing deals. 

Thanks,

Tommy

 Hi Adrian. Great post.

A few of my thoughts.

* Economy: Knock-on-wood, but Seattle is among the lowest risk of recession anywhere in the country. The influx of tech jobs directly into downtown is staggering. My wife has a wellness center right on the edge of South Lake Union, and there already 10,000+ tech employees into an expected 50,000+ migration over 5 years. We're in year 2 of that process. Combine this with the strong blue collar/trades like Boeing, etc. and it's solid.

* Houses prices: I agree, prices have rebound, even surpassed 2007 in Seattle directly. They're close in surrounding areas. 

* However: wages have not been increasing to match housing prices, from my experience. Also, and probably most importantly, the market - everywhere - is STILL highly artificially propped up by interest rates. I simply can't and don't believe interest rates can continue at historic lows given that many foreign investors have been pulling out because of not making a decent return.

* So, in my humble opinion, while I don't think we're in a bubble scenario, we're certainly at the top, and looking down, if not starting. Think about it... even a 1% increase in interest rates reduces the purchasing power significantly. A 2% jump? And prices are really affected.

So... that's what I'm planning on. Great to buy-and-hold, if you find a deal. But I'm trying to find and flip as fast as possible while loans are still cheap!

PS - If you follow the economist Harry Dent, he'd advise to sell everything and stock up on cash. My inference is he thinks we're on the verge of a MAJOR bubble nationally. That may exceed the last recession in terms of national housing values. And that the millionaire-maker days are just around the corner... if you have cash and credit.

@ Kevin S.
@ Loren Thomas
I'm getting 1.1 in Des Moines.

And my potential rent increases isn't matching property appreciation. And the 'equity' in the property isn't valuable until I sell, or loan against it. Kind of house-wealthy, passive-income poor right now.

@ Curtis Bidwell
Great suggestion. Thank you.

@J. Martin

Congratulations! What an accomplishment. Starting with $0. Working full-time. And especially... having this success in the ultra-hot SF Bay market. Wow! 

Very inspirational. And very cool how you give back/mentor. A great, great example.

Correct. They emptied their accounts. Took the penalty and tax hit now, while still earning income. Thank you for your opinion.

And Bill, sorry if topic went astray. I was commenting on the returns cited by another member in his reply. It was good learning for me. Thanks, and take care.

Dmitry - Your answer helps A LOT. Thank you.

We are self-employed. Our business attorney set us up with SIMPLE IRA's about 7 years ago. So, my wife and I are both contributing whatever the maximum is. I think it's about $12K/year each.

HOWEVER... a few of my mentors have personally drained all of their retirement accounts. They've paid the gains just to be done with them, and then used the cash to invest in real estate, betting on themselves rather than being tied to the stock market. 

I've seriously been considering this. I'd be very interested in hearing your investing opinion on this.

Thanks a lot.

@Rod Fisher

Sorry for double post.

 Very interesting post. Thank you. When you write that you're getting a "18 to 20% return", what do you mean? Is this appreciation? Increase in the market? Just curious the return is driving by the market/economy or is static/based on rents paying down principal.

I'm curious because I have money sitting in a cash retirement account. Not even making 1%. Been debating about pulling it all out and using as more investment capital. Then I've heard of scenarios like yours.

Also... do you know if I can place an existing property I own into my retirement account?

Thanks a lot.

 Aaron - Thanks A LOT for that summary. Honestly, that's one of the most powerful summations, written plain-and-simple, that I've ever read, about anything.

It's a VERY good reminder and very applicable to my life right now, my aspirations in real estate and life in general, and more importantly, with how can impact/benefit others.

So... thank you for posting. Very, very helpful.

Tommy