All Forum Posts by: Troy P.

Quote from @Todd Rasmussen:

@Troy P.

What's the interest rate on your underlying debt and does she have a down payment? Doing a wrap is a little bit of effort, but well worth it to continue to capitalize on a great interest rate.

 Currently 3.5% so definitely not itching to get rid of it tomorrow.  I haven't discussed her down payment options yet as I'm trying to gather all of my best options first, but I'll ask soon.

Quote from @Jacob Sherman:

nope can just sell it subject to the mortgage 

 I believe the deed needs to be transferred so I can release the equity and shelter it from taxes, correct?  I have a current conventional mortgage, so I believe it cannot be assumed by a wraparound, correct?

I know I have a few requirements, and I believe the only option is to sell it to her with a separate mortgage so mine can be paid in full.

Quote from @Jacob Sherman:

You can possibly seller finance it to her and then she can refinance when her finances are in line 

This would require me owning it free and clear, correct?  I currently have my own mortgage for it.  Also, doesn't the deed stay in my name until the wrap mortgage is paid off?  Would that satisfy the "2 out 5 years" requirement? 

Quote from @Taylor Dasch:

Why would you have to evict her? Do you have to sell it? You may be able to carry a note on the property but I believe it is hard to find lenders that allow that.  Could whoever cosigned the lease cosign the mortgage?

Cosigner was a former step-father who is no longer part of the family.  It was my previous primary so I'm hoping to sell, recapture the equity tax-free, and deploy elsewhere.

Hi all,

I have a tenant who is wanting to purchase the property from me, but by the end of the lease, she will only have 6 months of employment and credit history under her name.  She was a single mom in the past and did not build credit of her own.  She had a cosigner for the lease and has been a terrific tenant.  I'd really like for her to purchase the home from me, so I'm curious if we have any options.  She was told if she doesn't have 2 years of tax returns, then she won't get approved.  Is this true?  Is she entitled to previous joint returns with her ex if that is required?  I know a lease-opiton is typically a good strategy, but I don't want to set her up for failure just to make a dollar.  Are there any other options?  I feel like I'm stuck either evicting her or continuing to rent it to her...

Quote from @Sean O'Keefe:

@Troy P.

Does the size of your rental portfolio matter? In Smith v. Commissioner, T.C. Summary Opinion 2014-112, the taxpayer was a 63-year old disabled veteran. He had no other job due to being disabled and made himself available 24/7 to take care of his one three-unit property. The Court agreed that he qualified as a real estate professional even though he only had one property.

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

I also read "being on call" for your tenants does not qualify you. So why can't it be more black and white?

Refinance or line of credit if you want to keep it.

1031 exchange if you want a different property.

Pay taxes, or move into it for 3 years then sell it as a primary home (you also have to recapture all the depreciation you took over the years).  This all depends on the numbers and I suggest a tax advisor.

Hi all,

I believe it is common to have a situation where one spouse brings in majority of the W2 income and the other is either a stay-at-home parent, works part time, etc. and they can easily qualify as an RE professional for tax reasons.  My question is, what are the simplest or most basic ways for a spouse to qualify for this?

We have a small number of SFH LTRs that we self-manage, and we have an LLC that is currently sitting idle. I'm assuming the spouse is required to work for a legitimate business and receive either W2 or 1099 from that business, but is this the easiest route to take? Would it make sense to start your own PM company for this purpose and have spouse as sole employee who receives compensation from the small rental portfolio? I think PM makes the most sense because being an agent would require leaving the home more frequently. Am I missing anything legally or am I way off base? What are your thoughts on this? Thanks!

Quote from @Theresa Harris:

Have a lawyer draw up a sales agreement. As part of that agreement, have a closing date that both you and the tenant agree to.  On the closing date, state that the rental lease is automatically terminated and the security deposit they gave you is returned in full.

If there are problems with the closing, you need to decide if you want to extend the lease or not.

 Would this be a title company attorney or someone else?  Is this required to provide to the title company or is it just a good practice? 

Hi all,

I'm planning to sell one of my properties to the current tenant at some point near the end of the lease period.  I'm curious what others have done and what is the typical sequence of events in this situation.

I'm in the middle of a 6 month lease with it ending this summer.  Should I first get a signed contract with the tenant, then create a lease addendum with the projected closing date and modify the lease end date for the closing date?  Then, if that is not met, create another addendum as needed.  This is my first attempt at this and I'm obviously trying to avoid the tenant living on the property with no lease.  Any advice is appreciated.  Thanks!