Darcy Tafoya
Active 2 years, 9 months agoForum Replies Created
-
Posts
-
Dee,
Thank you so much for your detailed analysis. You brought up some very good points. Things I’ve never either heard of or thought of, mostly the inflation index which really could eat away at any income that our home could produce if sold with seller financing.
The idea of renting is a real possibility for flexible income changes but it does come with it’s caveats. We’ve “been there done that” and really don’t prefer to either manage it ourselves or hire a property manager. Master leasing is something I haven’t studied up on much and I may check that out on CFD to see those options.
I agree, it’s difficult to see what either the economy or the laws and how they would change in the next 10 plus years. So far, it doesn’t look great. I hadn’t heard about the Quantitative Easing possibility but it’s probably a given, with the extreme debt our country has currently.
I really appreciate the time and thought you put into this idea. We have done many other deals where we turned tenants into owners with seller financing. It has given them opportunity when they didn’t have a chance and gave us a nice, easy return over 5 to 7 years usually. These were small inner city houses ranging from $15,000 to 30,000.
Our house is in a good suburban area and county. Very good schools and prices are very strong right now. Currently, I’m leaning to selling it for top dollar and moving on from there. There are too many variables as you have mentioned that it might not be worth it in the long run.
Thank you again for your input. I love the way our CFD forum folks think! Always thoughtful and creative. 🙂
Darcy Tafoya
We just started using Cozy.co. It’s for tenants and landlords but we have a seller financed property that we are using this software to receive payments. They can do automatic payments every month taken from their checking account for free. They can also pay with a credit card though they charge the buyer/tenant a 2.75% fee. We had to help the buyer set it up but it keeps track of everything for you. Seems okay for now. It had a good review on Bigger Pockets.
My husband and I would love to go. We had planned to go to the last one that was canceled. We were so disappointed as Jackie has been such a good mentor and the others in the community forum on deals we’ve done. We’d love to learn and love to meet others. Topics I’d like to know more about, finding off market deals, virtual wholesaling, flipping, leasing whatever they do “virtually”, trusts to protect our identities in investing, marketing skills. Let us know when and where you are planning to schedule this as we are ready.
Darcy & Rich Tafoya
http://www.TheTafoyaTeam.comMy husband and I would love to go. We had planned to go to the last one that was canceled. We were so disappointed as Jackie has been such a good mentor and the others in the community forum on deals we’ve done. We’d love to learn and love to meet others. Topics I’d like to know more about, finding off market deals, virtual wholesaling, flipping, leasing whatever they do “virtually”, trusts to protect our identities in investing, marketing skills. Let us know when and where you are planning to schedule this as we are ready.
Darcy & Rich Tafoya
http://www.TheTafoyaTeam.comJackie,
I still have my air reservation to come to Panama City in May for my husband and myself. Any chance of a small mastermind meetup still? I hate to pay the cancellation fee on my tickets. I can cancel the resort without penalty. I would really love the chance to even spend the day with you Jackie and ask questions, get advice, and learn tips on how to do things better in our real estate business. You alone are a fountain of information. I was searching for some info on the International Living Conference. That might be interesting to include in our time in Panama. I can’t afford nor are we ready to do the Panama Relocation Tour at this time. We need to crank up our real estate biz to create monthly cash flow. We are up for meeting in Panama City, the resort, Boquete, whatever works for any others that may be interested.
We were SO looking forward to the conference. We would really love the chance to see Panama and learn how to plan our future through real estate. 🙂
Thanks Jackie!
Darcy Tafoya
Thanks Jackie,
I like your comment of replacement value being a subjective number….I agree.
Everything you answered makes sense to me. I appreciate your input. I will continue to keep
listening and learning from the premium member’s area.
Just wondering, at this point in your life and with your experience, do you have a preference?
Sub 2, Master Leasing, or something else?Just curious what you’ve found that seems to work well for you.
Thanks!
I have a couple of questions about the advice you gave Jackie.
First, does the POA from the sellers give you the ability to sign the insurance check if there is ever a claim on the property or does it specify just in the cancellation of the previous seller’s policy? i.e. five years in on the wrap and there is a hail damage roof claim, can you and the buyer’s sign for the reimbursement check?
Second, if you sell the Sub2 property on a “wrap around” is this a mortgage or deed of trust (depending on the state)? If so, if the buyer’s default do you have to go through a foreclosure process? What do you give the Seller’s when you take over the Sub 2?
Third, insurance question, do you insure for “replacement value” or “actual cash value” if you sell the Sub 2 property on a wraparound?
Please let me know if there is a book or coaching call or something where I can learn the finer details to this as I feel it is a great way to buy “pretty homes” with little to no money down. I’m leaning towards using them as rentals rather than selling ONLY because of the insurance and legal issues that I can’t seem to get my head around. I prefer to create notes and not have tenants. What’s your opinion?
Thanks for your help. You always give great advice. Much appreciated!
My first step right now is learn how to write up a land trust. Got to get these properties out of our LLC name!
Darcy Tafoya
Dee,
I like your idea about an auctioneer. I agree that you’re right about small towns, they don’t warm up to “outsiders” very quickly. I also agree that leaving a farm house vacant is a sign for thieves. We lived out in the mountains in New Mexico years ago and I heard stories of thieves backing their trucks up to houses in the daytime and stealing everything with no worries as the house was “secluded” in the woods. No one around to report it!
It’s good to know that it’s not just about numbers as it is location too. I also think it’s best to not stray too far from home. An hour or so drive should be as far away as I’d feel comfortable with owning or managing property.
Thanks for your comments and suggestions. All is appreciated.
Darcy
Jackie,
Thank you again for your clear and concise information. I really appreciate it, a “light bulb” goes off every time I get your advice.
I still have a couple of questions to be able to learn and follow through with Sub 2 transactions.
1) where can I learn how to do a land trust correctly? I’ve heard Randy Hughes webinar about how to use land trusts and I’ve heard some information on CashFlowDepot but I’m not sure where I can get all the specifics. Do I need a lawyer for that?
2) When you cancel the Seller’s insurance that the underlying mortgage is escrowing for and re-bill with your insurance under the name of the land trust, is it Actual Cash Value or Replacement Value and is it a Landlord policy, not a homeowner’s policy? Do you go with a higher deductible or does it depend on the value of the property? Do you have a commercial liability coverage to protect you over all of your properties or do you cover each one individually?
3) We sell with a contract for deed mostly to avoid the hassle of foreclosure. Eviction court is cheaper than hiring a lawyer to do a foreclosure. It’s usually faster too. Missouri is a Deed of Trust state and Kansas is a Mortgage state. Missouri can foreclose pretty quickly but Kansas can be a nightmare. So, yes, we’ve used the CFD as something better than a rental lease but not as in depth as a mortgage or deed of trust. I need to learn about the selling of Beneficial Interest in a Trust perhaps? We don’t want renters.
4) Don, we do disclose the underlying mortgage to our buyers. We disclose as much as we can since we are also licensed realtors in MO & KS. We try to do all the CYA we can so as not to get in trouble.
5) Jackie, is there a class, webinar, book, something that spells out each step for Sub 2 properties like you talk about? I know that I would probably do many more deals if I felt comfortable about the insurance and the taxes and conveyance of title, etc.
By the way, do you treat the extra you make off a Sub 2 deal every month as Installment Sales Income or treat it as a Rental property and take the depreciation, interest, etc like a rental? I think it should be an installment sale but my CPA treats our 3 Sub 2 s as rentals…..Thanks again, you are awesome. Your advice just makes SO much sense!
Darcy
Thanks Don for your input. You are still landlording with a lease or do you make them do repairs too? I will see what I can find about Jack Shah, I don’t know that name. We also tell them to get renters insurance for their personal property in our paperwork. We also turn them into renters if they get more than 30 days behind payments and will take them to eviction court if necessary.
I still think there is an easier, cleaner way to do Sub 2’s and sell them. I keep trying to learn more and more.
Thanks again Don. Your coaching call regarding Investor Carrot has spurred me onto to getting our website going. We’ve had one for a while but it’s been rather stagnant. I’m encouraged after hearing about your success. Thanks!
Darcy
Dee,
Thank you so much for your ideas about an ALF home. My mom has been remodeling this house the last few years on her own, it’s not HGTV, but it works! But it’s all one level living in about 1000 sf. She’s thinking long term so she can stay in this house as long as possible. I will definitely do some research though, especially if this could be an income producing project and help her later down the road.
Thank you!
Jackie,
You made some very good points about the house and her will, whether she keeps it how it is or changes it, it all matters. She thinks she owns the house but she’s not much more than a renter at the moment.
I had not thought about a USDA being assumable. Not sure why but good to know.
At the moment, after talking with the loan officer we work with in our real estate retail biz, here is what we’re thinking. I’d love some feedback.
1) Call the seller and offer him $35k on the $43500 balance CASH. The house then can be deeded in my Mom’s name. Not sure if he’ll take that much of a discount but we’ll go for what we can.
2) Borrow the money from other family members and write up a Deed of Trust or a Promissory Note. Once she has the house in her name she can then qualify to re-finance the house, with a Conventional loan and pay off the borrowed cash/Deed of Trust and have her own mortgage on the property.
The loan officer is confident her bank can do a loan for her and she can even put the closing costs in the loan and take out a bit more money if she needs to.
Right now I just need to get the cash. Even my dad (her ex-husband) could afford it but he’ll want interest I’m sure. Any private money lenders out there that could float $35-$40k for about 6 weeks, max 60 days?
Thanks!
Darcy Tafoya
Jackie & Dee,
Thank you SO much for your help and thoughtfulness on this project. To answer a few questions:
No, the house does not have a HOA at all.
Yes, the lawyer has mentioned he would be interested in buying the house but since he is the neighbor’s estate attorney, he currently has some “conflict of interest” in regards to the price he would pay.
Yes, we have had a thorough property inspection. The inspector we use is extremely good and thorough. The only good report that came from it is that it doesn’t have radon in the house.
We have some rehab experience, we are landlords, we’ve been realtors over 12 years, my husband has a construction/engineer background. This wouldn’t be our first time but the fact that you brought up the costs for holding plus the costs for repairs and considering having to sell the house possibly lower than expected IS worth thinking long and hard about.Jackie, you suggest buying the house “subject to” the HELOC. That would be our best bet. We are not thinking of doing a full rehab on the house, we want to get the property cleaned up, proper drainage with a dry basement, any plumbing issues, and overall functioning so that an owner occupant could get a conventional loan and then live in the house and fix it up over time. That would be our ideal buyer. In it’s current condition, it would be very marginal if not impossible to get a loan on the property through regular banking channels. As realtors we have seen several HUD foreclosures that are difficult for our first time home buyers to buy due to a few minor plumbing issues or something similar that causes their conventional financing to fail.
Would you suggest giving the heir/son a Deed to do the Subject To as a wrap? Or would/could we do a Contract for Deed or an Option if we take the house subject to the HELOC financing? This is where I am trying to learn how to improve our deal making from our past experiences. We’ve used Contract for Deeds mostly but legally they have their own issues. I’m open to suggestions on how best to take over this note and property, do some minor improvements and sell it to a nice family.
Thanks,
DarcyDee,
Thank you for your input on my question. I always assumed that HELOC’s were secured by the property and their equity. I had no idea they could be secured by other collateral such as a life insurance policy. I’m thinking it is secured by the property, most likely, but again, something to inquire about with the son. Good points in regards to the timing of a foreclosure. Not sure if they’d allow us to continue the payment but hopefully so.
The neighbor and attorney is a friend of ours. His concerns are valid to a point as to the nature of this neighborhood. Long story. He is not making crazy demands, he just wants a nice family living there that they won’t have problems getting along sharing the long driveway and repairing and cleaning it during the winter, etc.
My biggest question is do we list it and sell it with a Highest Bidder Sale? Do an option and repair it enough to get an owner occupant and make more money than as an agent? Take it subject to the HELOC? If so, in our LLC or a Land Trust? Or just borrow some hard money and buy the family out with cash? We’d prefer to go the least expensive route so we can use our funds toward fixing it up and making a profit.
Thanks again for your advice.
Darcy
