Refinance. Consider a ARM or interest only loan or as simply put, raise the rent. You can do this by passing some or all of the utilities to the tenant. Make it a boarding home.....
You might also consider a lease option to your tenant if this is a single family residence. You will have option consideration income on top of rental income. The option consideration is not taxable until the option is exercized, abandoned or expires.
The differences between this method and a lease option are:
1) In a lease option, you have the option to purchase the property at a future date for a set price. In a land trust transaction, you have first right of refusal to purchase the property at a later date at Fair Market Value if you so choose.
2) In a lease option, the Tenant has no ownership rights and cannot deduct the mtg interest or the property taxes, major benefits of the trust transaction.
3) In a land trust transaction, because real property has been converted to personal property, there is no foreclosure in a default situation -- only eviction. In a lease option, if the tenant has been given rent credit or has paid option money toward the down payment, he may be considered to have an "equitable interest" necessitating foreclosure.
4) A lease option is a violation of the DOSC. Much has been written about this. It is NOT a crime. It is simply a violation of the mtg contract and could result in the lender calling the loan due. This happens rarely nowadays and is more common when interest rates rise. The trust is exempted from the DOSC under Federal law.
5) A trust transaction provides privacy and all docs are legally unrecorded after the simple transfer of deed to your Trustee.
I hope that provides some helpful info to you. Good luck.
[addsig]
Go down to the clerk of courts office and ask to see the case file. This will contain all the info on liens. In my state it has the appraisal report in there as well (not very accurate however).
Very true. You can also see if your county has an online website for public records. Also fetermining the property value of the home ahead of time and producing comps in the area can be helpful in determining equity.
Raise the rent.
Refinance. Consider a ARM or interest only loan or as simply put, raise the rent. You can do this by passing some or all of the utilities to the tenant. Make it a boarding home.....
Be careful about raising it above market - if the people move any increase could be offset by a months vacancy to fill it.
Thank you for your replies any other suggestions?
reduce expenses...higher insurance deductable...new insurance carrier.
Protest the taxes and get them lowered.
etc. etc. etc.
Look over each expense and see if there is a cost effective way to lower them.
You might also consider a lease option to your tenant if this is a single family residence. You will have option consideration income on top of rental income. The option consideration is not taxable until the option is exercized, abandoned or expires.
Sell part of your current and or future equity to a partner in exchange for having them cover some negative.
Again, thank you for all of your suggestions! please keep them coming in!
Thank you
suggest you put down some specs about the house for more suggestions
Coin-operated laundry.
[addsig]
Dont understand your reply "monkfish" in regards to my question
Install coin-operated washers and dryers.
[addsig]
Oh, yah....
And the machines I believe cost him roughly $1500. So he recouped that initial investment in about 6 months.
[addsig]
Thanks alot monkfish you have been very helpful I will entertain the thought of coin opps!
Thank you, mnt wizard I have a question what is a NNN? and what is the difference between this technique and a lease option?
Thanks,
The Mogul
NNN = Triple Net
It means just about all expenses are paid by the tenant except for structural issues.
Thanks rmdane and everyone else that has replied to this post
any other suggestions?
The differences between this method and a lease option are:
1) In a lease option, you have the option to purchase the property at a future date for a set price. In a land trust transaction, you have first right of refusal to purchase the property at a later date at Fair Market Value if you so choose.
2) In a lease option, the Tenant has no ownership rights and cannot deduct the mtg interest or the property taxes, major benefits of the trust transaction.
3) In a land trust transaction, because real property has been converted to personal property, there is no foreclosure in a default situation -- only eviction. In a lease option, if the tenant has been given rent credit or has paid option money toward the down payment, he may be considered to have an "equitable interest" necessitating foreclosure.
4) A lease option is a violation of the DOSC. Much has been written about this. It is NOT a crime. It is simply a violation of the mtg contract and could result in the lender calling the loan due. This happens rarely nowadays and is more common when interest rates rise. The trust is exempted from the DOSC under Federal law.
5) A trust transaction provides privacy and all docs are legally unrecorded after the simple transfer of deed to your Trustee.
I hope that provides some helpful info to you. Good luck.
[addsig]
thanks again wiz
Go down to the clerk of courts office and ask to see the case file. This will contain all the info on liens. In my state it has the appraisal report in there as well (not very accurate however).
Very true. You can also see if your county has an online website for public records. Also fetermining the property value of the home ahead of time and producing comps in the area can be helpful in determining equity.