In this situation, where there is no W-2 job or other earned income, the net income from real estate operations could be treated as subject to self-employment tax (FICA).It is therefore essential to maintain accurate and detailed records documenting your level of participation, income, expenses, and management activities.

My biggest challenge was this was my first property purchased so understanding the process and paperwork side of things.

All the more reason to get the paperwork airtight and avoid verbal agreements.If it were me, I’d hold steady on the month-to-month until the dust settles and everyone is on the same page legally.

She would need to file Form 709, but that is just reporting, not a tax bill.A straight gift is the cleanest option and the only real cost is paperwork.

Underwriting deals is an essential aspect of real estate investment.

If your loan is not assumable, you will eventually need to get a new loan (they look for tax bill changes and kick in the due on sale clause).A separate LLC for each property is the safest, as long as you keep proper paperwork. 

As well as the note is receivable, essentially they are lending me money secured by the property.

So the seller is free to let go of the deal but still has legal recourse if they lost money because the buyer didn’t hold up their end.In short: the lawyer’s saying “make sure the cancellation paperwork kills the old contract cleanly, protects both sides from future claims, but still leaves the seller the right to go after the buyer if they defaulted.”

If it just flipped into extended, you might want to tighten that gap (like $400K flat or $405K with $5K in concessions) to stay competitive.Bottom line: your logic’s solid — just make sure you have your lender, proof of funds, and HUD paperwork dialed in.

Jason is essentially the Rex Kwon Do of real estate negotiating.Honestly, you can get 10x the negotiating education by spending an hour on John Martinez's YouTube, BiggerPockets or any number of $20 books.